Tips for starting a consulting business

Hello everyone,

I am a recently graduated mechanical engineer with a PhD focused on
numerical modeling of Thermal/Fluid systems. I have been lately
entertaining the idea of starting an engineering consulting business
which focuses on providing Computational Fluid Dynamics services to
private companies (perhaps government too?). I would be starting a
2-owner LLC with another mechanical engineer (also PhD graduate plus
1.5 years CFD Post-Doc experience). We both have extensive academic
experience and some industry experience (internships). So here are my
concerns:

1) I currently live in Lubbock, TX and to my knowledge no company in
town would require the services my company would be offering. I
understand that moving to another city even within the state of Texas
(Dallas, Houston, etc.) would bring me into close proximity to large
companies that could make use of CFD-related services. Nontheless,
moving would deprive me from my current stable source of income. Also,
I have free office space in town. Is physical proximity to my clients
a concern? Can most business functions be done via phone, Email, etc?
It seems somewhat reckless to move to a larger city just to fail. What
do y'all think? I do not mind traveling to meet clients.

2) I am considered a minority. Would it be advisable to obtain a MBE
certification for my company? Will it facilitate finding initial
clients? The certification costs money which I would not like to spend
if I do not have to.

3) My friend and I both have a good deal academic research experience
in CFD and computation, plus internships in industry. Is it a good
idea for people with our experience level venture into something like
this?

Please let me hear what you experts have to say.

Thanks!

My opinion - little to no industry experience and no client base sounds like a recipe for a consulting startup disaster.

You didn't mention if either you or your friend has a PE licenses. If your only experience is academic and internships, you don't have the experience or credentials to act as an engineering consultant. I would recommend that you and your friend work in the real world for a few year (at least 4) and get your PE licenses. Then you'll have the experience AND credentials to pursue a startup.

Alex007 said:

 Is physical proximity to my clients a concern?

Click to expand...

Yes.  You need to be close to where they are or be prepared to travel to them often.  IMHO, Lubbock isn't close to much that isn't oil and gas or agriculture related.

1. Yes it can be done, you will still need to travel though.  As the executive you will travel more since you have to bring in the work.  Also figure out if your clients care or not.

2. If it benefits you.  Unless you're chasing federal and state government work, I doubt it will.  Most people don't care.  Even then it doesn't matter a huge deal.  

3. If you know how to get work and perform then yes go for it.  But by asking question #1 I would say no.

Current PE license is definitely important as well as working experience in this area. This seems like a very specific area of work which will limit your potential clients.  Assuming you both have your PE, have you thought about going into a broader market to attract clients while you try to build client base and bring in this particular field? Without good exposure to the field, I feel like the main clients you would get at the start would be people who happen to randomly stumble upon your company who is required to have this service done, but has no clue where to start.  Since you may need to travel to meet with most of the clients, have you thought about running the company out of your house to start? While you may have free office space available in town, you may have to pay utilities, phone/internet, signage to identify the office, office furniture (unless it comes furnished). In a specialized field you may be able to charge more for your services, but would you be able to generate enough to justify the carrying costs while you wait for that money to come in?

The other thing to keep in mind is that "real world" is not the same as academic experience. I am not trying to discredit your PHd or experience, but want you to consider if you would be able to make design revisions on the fly to accommodate situations that you come across or if you think you and your partner may need to try to find more hands-on work experience to get to that level. Academic experience is usually based on theory and ideal situations. For example, consider a traffic engineer who is working on site plans for a new WaWa/ 7-11 along a 2-way highway with solid double lines.  When examining the traffic impact of the new store, Academics is going to tell you that the people driving across the street, will go down the road and make a legal U-turn to enter the site. Real world experience will tell you that the car will stop in the roadway holding up traffic, wait for cars to pass by and then cross the double line to enter the site. 

Whatever decision you decide to make, good luck to you and your partner.

My advice is for you to find a "job" now where you can use your knowledge and gain experience. A lot of times, engineering problems are more about communicating with the client and end user, and finding an economical solution than running a model and analyzing those results. You really need to get your feet wet in the industry on what is expected from engineers. You will also learn how to price out a job (very very very important if you want to survive in this dog eat and devour dog world of consulting engineering) and interact with clients. Academic knowledge is the stepping stone only and you need industry experience and contacts to get projects. Plan on working for a reputable organization at least till you get your PE and build a good network with clients. Then take that leap of faith.

Good luck.

Thanks everyone for your responses. I guess I have a lot to think about now!