Engineering

Entrepreneurship
From Professional Engineer
to Principal
Presented by J. Mark DAmato, P.E, S.E
DCI Engineers

Define Entrepreneur:
A person who organizes and operates a
business or businesses taking on greater
than normal financial risks in order to do so.

As Professional Engineer
Eng.
Eng.
Dept.
Dept.
Mgr.
Mgr.

Clients
Clients

Projects
Projects

Professional
Professional
Engineer
Engineer

Family
Family

Work
Work
Team
Team

As Principal
Property
Property
Managers
Managers

Clients
Clients

Community
Community

Partners
Partners
Ins.
Ins.
Brokers
Brokers

Vendors
Vendors

Design
Design
Team
Team

Engineering
Engineering
Entrepreneur
Entrepreneur

Projects
Projects

Operations
Operations

Lawyers
Lawyers
Bankers
Bankers

Family
Family

Accountants
Accountants

Company
Company
Staff
Staff

Establishing Your Identity

Services to offer public, private?

Business plan what you want to be

doing and where you want to go?

Business card?

Evolution of Business Identity

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

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

Making the Business Official

File for Master Business License, on line

File the appropriate Corp Form with IRS

Locating Your Practice

Many successful businesses start in the

basement or garage

Short term leasing to start, preserve

flexibility (Growth may be inevitable)

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)

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)

Business 101

Metrics Metrics Metrics

Direct Labor & Expense

Indirect Labor & Expense

Net Revenue

Breakeven and target multipliers

Operate on a Cash Basis, Not Accrual

Developing Your Style

Becoming a Good consultant

understand your clients needs

Becoming a Good employer and

Good mentor for future engineers

Join the Club

Learn to market

Get involved in the AEC world

golf, hunting, fishing, sailing, breakfasts, lunches,

dinners

Maintain Your Ethics

preserve your integrity above all else

Renewal, Growth and Transition

Mentor future leaders/partners

Create mechanisms for transfer of ownership

Identify and Promote your rainmakers

Assign Operational Responsibilities

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

Budgeting for Internal Transition

Operations and Growth

Regional and national growth

Separate profit centers or not?

Grow as circumstances permit

Multiple offices can balance the bumps in local economies

Accounting system set up will influence decisions

Advantages of Separate Profit Centers
Advantages of One CompanyOne Profit Center

Remote office staffing

Vice Presidents or Principals?

Work Hard and Rewards Will Come