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Suggestions for starting your own consulting firm

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I am electrical PE working for MEP consulting firm with more than 7 years experience. I would like to know the lessons learned, suggestions, pitfalls from people who quit their job to start their own consulting firm based upon their past experience.

Sometimes I think I want to jump into it but it is a scary thought not having a regular paycheck.

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I started my own Civil firm with a fellow worker last year. My advice would be to really examine your capabilities. If you know that you can do everything technically, study the business side and get familiar with Quick-books. Set up an LLC using legal-zoom or other service; its not that hard.

I also would not do it alone. There are not enough hours in a week to: get the work, do the work, and bill the work on a consistent basis. A business partner of the same mindset can greatly help reduce the stress and keep you both headed in the right direction.

Estimate 25-30% of your income will be taxes. Find a good accountant. Buy only what you need. If you need CAD, Bricscad is a very good AutoCad clone for less than $500.

Don't bill less than the value of your work. If you do it once as a favor, that's your new price - forever. Be competitive, but don't cut your throat (and your peers) just so you can later find out why the billing rate was 3x your pay.

Figure on 2-3 months of interrupted cash flow IF you have something to work on from Day 1. In this environment, I would not start up something with a "hope" of getting the work (unless you can do without a paycheck for 3-6 months). Don't take existing work away from your current employer, keep it ethical.

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rktman - How many years experience (after graduation) did you have before you ventured out on your own?

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14 (years)

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Dont jump until you have a client, if you cant get clients before you jump, you cant get clients after you jump. I worked for the MAN for 12 years before I made the jump, and I took my clients with me. I know many firms think they own the client but that is not the case, or if they do, they won't jump.

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EnvEngr is correct. It is business, not marriage. My previous response was not clear. If they come to you, that's one thing. If you go them while getting paid for your current job, that's another. Almost all start-ups have had to deal with this issue. I would guess that most end up taking a client or two with them if they've developed the solid relationship.

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I started my own Civil firm with a fellow worker last year. My advice would be to really examine your capabilities. If you know that you can do everything technically, study the business side and get familiar with Quick-books. Set up an LLC using legal-zoom or other service; its not that hard.

I also would not do it alone. There are not enough hours in a week to: get the work, do the work, and bill the work on a consistent basis. A business partner of the same mindset can greatly help reduce the stress and keep you both headed in the right direction.

Estimate 25-30% of your income will be taxes. Find a good accountant. Buy only what you need. If you need CAD, Bricscad is a very good AutoCad clone for less than $500.

Don't bill less than the value of your work. If you do it once as a favor, that's your new price - forever. Be competitive, but don't cut your throat (and your peers) just so you can later find out why the billing rate was 3x your pay.

Figure on 2-3 months of interrupted cash flow IF you have something to work on from Day 1. In this environment, I would not start up something with a "hope" of getting the work (unless you can do without a paycheck for 3-6 months). Don't take existing work away from your current employer, keep it ethical.

RKT - This is a fairly spot on assessment when I compare it to my situation when I started my own firm in late 2009. Although it hasn't been always the easiest road, it's been well worth it.

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We work with small and medium sized businesses every day. That is what we do. I would STRONGLY SUGGEST taking some business training, like Next Level or Fast Track BEFORE you decide to jump. Your Small Business Development Center or community college will know what these classes are and when they are offered. Basically, they are business 101 and 201 combined, 13 weeks, 3 hours per week. If you do the homework and really pay attention, you will be golden. My experience having taught these courses for several years is that the ones who really do well are the ones that "buy into the philosophy" and do the homework.



You will end up with a rich business plan if you do this right. You really need a business plan before you start. Otherwise you will flounder and possibly look at the window most days, wondering why the phone is not ringing.



Depending upon what you are going to do, you can find a lot of used equipment that is perfectly serviceable. Of course, I would not buy any computer/software/printer products pre owned. I would buy office furniture, etc preowned.



There are some great books on how to start a legal practice on the web. Read those. The domain, engineering v law is different, however, the paradigm is exactly the same.



If you take a partner, make damn sure that you have a partnership agreement drawn up by a lawyer. Somebody has to be the 51% partner-- ideally, you will find a partner that has complimentary skills, one guy likes going out and getting the work, the other guy likes doing the work. If both guys like doing the work and nobody is out selling, the days can get mighty long and you will go hungry.


NOT use legal zoom or some other web based service. Why? Well, depending upon your situation, the business structure may be different.



We always recommend a good attorney, accountant and consultant (like us!!) before you start. Yeah, you are going to spend some $$ up front, however, rest assured that they will be nothing like you will spend if you get yourself in a bind and have to get out.



I have enough stories to curl your hair and if you have curly hair, it will look like a fuzz ball!!!!!!



Go slow and think this through very carefully. Employees and supervision are another challenge. Remember, the troops have to eat first before you eat--- ie, you have to pay them first, then you. This can be a real challenge.



Think about this real hard. It is worth doing, but worth doing well.


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When y'all went out on your own, what did you do about cad blocks, specs, notes and all that stuff? Did you use the same stuff that you used at your old employer?

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When y'all went out on your own, what did you do about cad blocks, specs, notes and all that stuff? Did you use the same stuff that you used at your old employer?

No firsthand experience here, but I'd sure as heck draw everything back up from scratch.

My non-legal opinion: they can't claim ownership of your experience and ideas you've seen implemented well or poorly (minus certain proprietary information and non-competes), but I wouldn't use anything they can trace back to a file developed on company time. Even if you end up doing things the same, starting from scratch should give enough differences for it to be clearly arguable as your own set of blocks/specs/notes.

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What is the best strategy to get clients? I think this is the most difficult part in starting your own business. For example, I am working in a company that deals with Huge companies only and I do not think any of them would be interested to work with small companies. I do not know how to get clients if I started my own business.


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I recently found that California law does not allow you to form an LLC to offer professional services. What is the structure typically used for start ups in CA? Sole proprietorship?


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There are several excellent resources on this topic (i.e. forming a new engineering business), including information that can be found through the Small Business Administration (SBA) and the American Consulting Engineers Council (ACEC).



If you're also looking to take Business and Management classes, I would recommend Coursera. It's an education technology company founded by two Stanford professors that offers free online classes. I recently took "Foundations of Business Strategy" which provided an excellent explanation on how to perform a strategic analysis.


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Also, if you are minority, you can offer DBE/MBE Engineering services. Work long enough to built relationship with bigger engineering firms that need to meet the MBE requirement. This is where you come in and offer reliability services to them.



From my experience, I see a lot incompetence MBE/DBE firms. They do not offer real engineering work. Most of the MBE firms offer procurement, scheduling, paper work crap. When they are given some real work, a good percentage of them can't perform.


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What is the best strategy to get clients? I think this is the most difficult part in starting your own business. For example, I am working in a company that deals with Huge companies only and I do not think any of them would be interested to work with small companies. I do not know how to get clients if I started my own business.

Most clients are based on relationship you built overtime when you are working with the firms..

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1. Where do you shop for professional liability insurance (E&O)? Do you just google that? I was looking at CNA. Any other suggested one's based upon your experience?



2. For registering your company, can you have PO box number as your address in that state if you plan to work from home and it happens to be in other state where you are not licensed? I looked at the SBA website and could not find any information. I was not able to find any mentor either from SCORE.



I think, I am ready. I have figured out many things and I realize that I can't wait to figure out everything. I have a client who is willing to offer me project and I am doing it in ethical way.



Well if it doesn't work, I will always have my license and work experience to find a job.

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1. Where do you shop for professional liability insurance (E&O)? Do you just google that? I was looking at CNA. Any other suggested one's based upon your experience?

2. For registering your company, can you have PO box number as your address in that state if you plan to work from home and it happens to be in other state where you are not licensed? I looked at the SBA website and could not find any information. I was not able to find any mentor either from SCORE.

I think, I am ready. I have figured out many things and I realize that I can't wait to figure out everything. I have a client who is willing to offer me project and I am doing it in ethical way.

Well if it doesn't work, I will always have my license and work experience to find a job.

1. I just asked my insurance broker that provides my home/auto insurance and he found me someone in the same state.

2. I'm slow so ... you are going to work from home in State A that you are also licensed in. You want to register and have a PO box in State B that you aren't licensed in? Contact the state board.

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