Wspe Seminar 4 B May 15, 2009 Eng Entrepreneurship


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Wspe Seminar 4 B May 15, 2009 Eng Entrepreneurship

  1. 1. Engineering Entrepreneurship From Professional Engineer to Principal Presented by J. Mark D’Amato, P.E, S.E DCI Engineers
  2. 2. Define Entrepreneur: “A person who organizes and operates a business or businesses taking on greater than normal financial risks in order to do so.”
  3. 3. As Professional Engineer Eng. Eng. Clients Clients Dept. Dept. Mgr. Mgr. Professional Professional Engineer Engineer Work Projects Work Projects Team Team Family Family
  4. 4. As Principal Clients Clients Community Partners Partners Property Property Community Managers Managers Ins. Ins. Brokers Brokers Vendors Vendors Design Design Engineering Engineering Team Team Entrepreneur Entrepreneur Projects Projects Operations Operations Lawyers Lawyers Company Company Staff Staff Bankers Bankers Family Family Accountants Accountants
  5. 5. Establishing Your Identity Services to offer — public, private? Business plan — what you want to be doing and where you want to go? Business card?
  6. 6. Evolution of Business Identity
  7. 7. Financial Planning Personal line of credit Arrange this BEFORE you quit your job Usually based on equity of your home/property Business line of credit Assemble marketing materials and business plan May take one or more years to qualify Will need to sign a note or even a deed of trust Conserve cash Watch your cash flow leases and loans conserve cash for large expenses Operate on a Cash basis, not Accrual Have a Safety net
  8. 8. Forming the Business How do you want the IRS to regard you — C-Corp, S-Corp, LLC, Partnership? Start work on the “shareholders agreement” ASAP
  9. 9. Making the Business Official File for Master Business License, on line File the appropriate Corp Form with IRS
  10. 10. Locating Your Practice Many successful businesses start in the basement or garage Short term leasing to start, preserve flexibility (Growth may be inevitable)
  11. 11. Acquiring the Tools of the Trade Accounting system (time and expense entry, billing, financial statements) Computers (engineers, designers) Software (analysis, drafting, MS Office) Furniture (desks, chairs, you-name-it) Banker (checking account, line of credit) Insurance Agent (E&O, Commercial, Auto, Health) Office equipment (copiers, printers, IT support, etc.) Marketing Materials (printed and web oriented)
  12. 12. Establishing Basic Engineering Processes Contracts (Resources include NSPE, ACEC, ASCE, AIA) Work flow — internal organization, staff designations and job descriptions Quality Control (consult with E&O provider)
  13. 13. Business 101 Metrics Metrics Metrics Direct Labor & Expense Indirect Labor & Expense Net Revenue Breakeven and target multipliers Operate on a Cash Basis, Not Accrual
  14. 14. Developing Your Style Becoming a “Good” consultant understand your clients needs Becoming a “Good” employer and “Good” mentor for future engineers Join the “Club” Get involved in the AEC world Learn to market golf, hunting, fishing, sailing, breakfasts, lunches, dinners Maintain Your Ethics preserve your integrity above all else
  15. 15. Renewal, Growth and Transition Mentor future leaders/partners Identify and Promote your “rainmakers” Assign Operational Responsibilities Create mechanisms for transfer of ownership Shareholders agreement must outline share transfers Consider intermediate sale of shares Utilize shares for bonuses Internal vs external transfer of ownership Complications and Advantages to each
  16. 16. Budgeting for Internal Transition
  17. 17. Operations and Growth Regional and national growth “Grow as circumstances permit” Multiple offices can balance the “bumps” in local economies Separate profit centers or not? Accounting system set up will influence decisions Advantages of Separate Profit Centers Advantages of One Company—One Profit Center Remote office staffing “Vice Presidents” or Principals?
  18. 18. Work Hard and Rewards Will Come