As the owner of your own engineering business, you have incredible flexibility in terms of the type of projects you choose, the work hours, the people you work with. If you set up your business in the right way and protect it with the right kind of Professional Liability insurance for Engineers as well as other insurance coverages, you are well equipped to deal with the challenges that may come up. But what is the right way to set up the firm? Here is a quick guide:
Find your niche
The very first step is for you to survey your competitors in the area and then identify a niche where you can offer something that they don’t. If necessary, build more credentials so that you have clear expertise to provide in that specialty area. Make sure to find a niche that is not saturated because you do not want to lose yourself in the crowd.
Make a business plan
Your business plan takes into account your specialty area and how you wish to take your business forward. Look at your business plan as a road map for your business, that lays out clearly your plans or the structure of the firm, marketing ideas, goals, operational nuances, and everything else. Taking help from a mentor, someone who has been through this already and emerged successfully, can be incredibly helpful here.
Estimate your capital needs
Evaluate what kind of capital you will need and make the necessary arrangements. Estimating projected costs and profits is also something you should do at this stage. Avoid overextending here, both in terms of taking a loan for capital or expecting too much by way of profits. Identify the areas where you should spend judiciously and earmark funds so that you do not end up with very imbalanced distribution of capital investment. Gaining a sound understanding of quoting is also a critical aspect to focus on at this time. Study the marketplace and learn what competitors are quoting for different kinds of projects. If you overprice your work, clients are likely to move away to competitors. However, you cannot allow profit to take a massive hit either.
Evaluate and understand your risks
While you are working on getting your business up and running, you also need to set up safeguards to keep it protected from risks. Taking out the right kind of insurance is a necessary step right at the initial stages so that your business is protected from Day 1. Apart from your regular insurance like general liability coverage, you also need to protect yourself against claims by clients who are dissatisfied by the service you offer. E&O insurance, also known as Professional Liability coverage, is the insurance plan that every professional service provider should consider having in place at the earliest. This kind of coverage protects you in case you make a professional error that results in damage to your client or his property. You can have Professional Liability coverage that takes care of your legal expenses as well as the claim you have to pay out if the judgment goes against you.
A few simple steps in place at the initial stages ensure that you have a strong foundation for your engineering consultancy business. They also make sure that you can invest all your energy in your projects without worrying about the nitty gritties of operations on a daily basis.
1) Anthony Fasano, 2012. How to Start an Engineering Company: Owning and Managing an Engineering Business Through a Tough Economy. Last updated on January 25, 2012. Available at: https://engineeringmanagementinstitute.org/how-to-start-an-engineering-company-owning-and-managing-an-engineering-business-through-a-tough-economy/
2) Genevieve Van Wyden, 2017. How to Start an At-Home Engineer Business. Last Updated September 26, 2017. Available at: https://bizfluent.com/how-7293852-start-at-home-engineer-business.html
3) Archistar Academy, 2019. 8 Tips for Starting an Engineering Consultancy. Last updated: 30 August, 2019. Available at: https://academy.archistar.ai/8-tips-for-starting-an-engineering-consultancy