This document provides guidance for engineers becoming entrepreneurs and starting their own engineering businesses. It discusses establishing an identity for the new business, forming the business legally, acquiring necessary tools and setting up basic engineering processes. It also offers advice on financial planning, developing business style, mentoring future leaders, planning for growth and ensuring work-life balance. The overall message is that starting an engineering business takes planning, hard work and a focus on serving clients and community.

1. Engineering
Entrepreneurship
From Professional Engineer
to Principal
Presented by J. Mark D’Amato, P.E, S.E
DCI Engineers

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. As Professional Engineer
Eng.
Eng.
Clients
Clients Dept.
Dept.
Mgr.
Mgr.
Professional
Professional
Engineer
Engineer Work
Projects Work
Projects Team
Team
Family
Family

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. 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. Evolution of Business Identity

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. 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. Making the Business Official
File for Master Business License, on line
File the appropriate Corp Form with IRS

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. 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. 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. 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. 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. 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. Budgeting for Internal Transition

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. Work Hard and Rewards Will Come