Overview of the Seminar

I attended a virtual seminar which was set up by Engineering New Zealand Special Interest Group . The seminar had a panel of engineers who had set up their own practices, and had many years of experience in different industries. Most of the panel had experience in structural engineering but one was an electrical engineer.

Tamlyn Adams was the host, Pete Van Grinsven was interviewed, and Ian Watson gave out the ten tips. After the more formal part of the seminar was over there were several questions posed to the panel (of which there were about eight individuals including Pete and Ian). Overall the seminar was concise and time was managed well. If the seminar is released on Youtube then I’ll update this post with a link to it.

Miscellaneous Tips

Put a bit more into the costing of a project to allow for extra to be needed as things change, and unforeseen issues arise.

Most clients are okay with paying. It can be frustrating to chase them, so it helps to have an accounts receivable person to sort it.

SIGEGP helps with networking - accessing tools, a Slack channel for questions for the community. Usually someone will have the answer for something your struggling with.

The more people we have in SIGEGP the bigger the voice for the community ( Special Interest Group for Engineering General Practitioners )

Every building that you work on has unique complexities that need to be considered.

10 Tips for Starting your own Practice

  1. When you leave employment, cash flow may be down for a while. Plan ahead for this. You could contract yourself out for a while until you get your own practice set up and going.

  2. Get your professional indemnity insurance sorted. CEAS ( Consulting Engineers Advancement Society ) can help out with this.

  3. Don’t be afraid to pay for work tools and pay for outsourcing. If you’re slow doing accounts, maybe get someone else to do it for you. Rather than you spending the time, and not doing it efficiently. Monthly invoicing and other admin can gobble up time quickly, so watch for distractions for your money earning activities. Work in a separate room to your normal living quarters so you get into a “work mode” easier. This could be an office room, or a shed.

  4. When approached by a client, put yourself in their shoes. Find out what they want, not what you may think they want.

  5. Have a list of tools, templates, and standardised things to refer to. Reference material is useful.

  6. Have a support network for technical stuff. Have a mentor.

  7. Join the EGP Slack channel. Share your problems that you aren’t sure about.

  8. QA(Quality Assurance) - check your work and have systems to check the work.

  9. Know when to say “No” to work. Watch for red flags and trust your instincts. Do you have the capacity and ability to do the job.

  10. Hourly or fee basis? If the scope changes then tell your client immediately, up date the contract. State your hourly rate so the extras are transparent. State what you are NOT contracted to do.

  11. Look after yourself. You are an asset to the community. There are big risks and there isn’t anyone above you. Have someone that can give you feedback and tell you when to take a break. Be conscious of your flags to tell you you’re too stressed.

Q and A

The following are some questions that were posed to the panel. I have taken down a couple of quick notes for each question. The answers have been paraphrased so I could jot them down. Take the information below with a grain of salt, talk to an adviser.

  • How do you manage the stresses of start ups?

You will need to be self-aware, know your limits and communicate this to your client. They need you and you need them. Be open and honest.

  • How do you do your own accounting?

If you’re going to be doing your own accounting, then get an easy to use accounting system. Xero has several levels, the basic level should be good enough for a beginning solo engineering practice (there are other levels, and they ramp up in price). It’s useful for GST returns and provisional tax. Knowing about these things helps. Take a photo of a receipt and it’ll do most of the work. Xero automatically loads the information into digital format so you don’t have to type everything out by yourself. MYOB is similar.

  • Hawk Cowper - Managing Cash flow

Hawk recommends paying lump sums for software, rather than a subscription for SaaS. Operating costs were $11k in the first year of the practice. An accountant can help with managing costs and give good advice for streamlining bookkeeping.

  • Matt Stewart - Building a Life plan

Work flexibility helps with taking care of the family as well as meeting work requirements. Being able to shift time around is useful. Consultants are selling time, so you have to know how much time you are willing to sell. “Consultants are time farmers.” was a quote that many of the panel seemed to be aware of.

  • Should I go Sole trader or Limited Liability as a single engineer?

It depends on your operations. Talk to your insurer, accountant, or adviser.

  • How do we manage Peer Review (internally or externally)

Regarding External Peer Review: If you do a peer review for another firm, keep in mind that you are taking as much responsibility as the original designer. So take it seriously and take an appropriate fee.

Have a network of engineers that you can ask, so you can get feedback.

  • How many years practice before going on your own?

It depends on your network, and if you have a good understanding of the ins and outs of your industry. Maybe eight years as a ballpark figure.

  • Tips on finding new clients and work.

Yellow pages, visiting the local designers in person. Letting people know you exist. Do a good job, give good service and you’ll get repeat work and word of mouth.

  • What is the work load like - what is expected?

Not good, at the start it’ll be over 40 hours, and you’ll work it down. It depends on how committed you are, how long it takes to get contacts and so on.

  • What are the costs for starting your own practice.

Approximately (these numbers were from several years ago) include renting an office $17k software $2k Phones internet $1l insure $4.5k Website $1k PDF software $0.6k

Shared office renting can be a bit cheaper - desk only can be cheaper. $500 per week There are meeting rooms for clients Printers - good quality printers as well. Reliable internet connection compared to some house connections.

  • Good but simple QA system - what does it look like?

This is where your experience in the industry will pay off because you will have a list of things to be aware of when approaching a project. Have you answered the questions that the project will be about? You have to know what the questions are. Get your brief correct, make sure you have communicated well with the client and are transparent with them. Do the job, finish the job, and then put it away for the day. On the next day you’ll have fresh eyes to do a review. Make sure to do a reflection cycle after sub-projects and large projects so that you are better prepared for the next project.

  • Approx time split for gen admin and business development

Depends on age of practice.

  • How do you protect your personal finances?

Lawyers protect your assets. Running your company, limited liability, your accountant will give good advice on how to do this as well. Use a trust to protect the assets, the trust shouldn’t own the business though.

  • What about GST and tax returns for business related expenses?

It needs to relate back to your practice then for sure, if it is general then probably not. 10% can be claimed from your house as a rule of thumb. You need to be careful because if you get it wrong then the tax man will come after you, and you want to avoid an audit because it can be brutal. Talk to a tax accountant.

  • Join and EGP group

These groups are great, have a chat and you end up discussing ideas that you haven’t thought of. Do safety courses, flick through the emails from professional engineering organisations and you’ll get ideas. Store the ideas away as reference material. CPD points are available in the Slack channel.

  • What difficulties did you come across in the first year and how did you fix them?

Interesting jobs and quotes that come through that are first principle stuff. You may know what it is, but you need to document it, and you may question yourself and your abilities at several points. Make sure to keep up to date, rely on your network, meet up with other engineers every month or so. If you listen to others and ask questions then you can avoid issues that could have arisen.

  • Indemnity insurance - cost for sole practitioners?

Insurance is a massive cost, but what we are doing as engineers (structural building engineers) is having buildings that don’t fall on people. So it’s worth having insurance.

For more information about professional liability insurance, this video from the SIGEGP could be helpful. The interviewer is Ian Watson, and the interviewee is Craig Lewis on behalf of CEAS ( Consulting Engineers Advancement Society )

Insurers and lawyers do a thing called “ring fencing” with insurance and practice. Ring fencing prevents entities interfering with each other (e.g. your business interfering with your personal assets).

  • Managing Health and Safety

Business risk management is needed all the time. You have to up skill, and there are mandatory requirements for the Health and Safety Act.

  • How long did it take to form a company?

Five minutes on the New Zealand Business website, the rest took a long time. You have to build that network, and market when you need more clients.

  • What makes a strong brand?

Getting yourself known, providing a good service.

  • What is the stimulant that makes you leave employment and start your own company?

Wanting to do something different, and do it your own way. The company I was working for closed the project down. I saw a hole in the market opening if the project ended, so I filled the niche. This ties with the idea of finding customers, so I knew the clients that would need the jobs done. I was able to keep in contact with those clients and start the business. Dealing directly with the industrial companies means you’ll make a name for yourself with the clients. So if the company folds then they’ll hunt you down for your continued work.

  • What about restraint of trade when leaving a consultancy?

That can happen if you’re in direct competition. You need to negotiate that with the practice you’re leaving, it’ll be difficult to get around it if you have already signed a contract. It’s something to keep in mind before you pick up employment.

  • What about sub-consulting?

I’ve done it, still have PI insurance to cover yourself.

  • Can you make more money alone rather than with a large firm?

Don’t do it for the money, do it because you want to be your own boss and for flexibility of time. You don’t end up making more money than those who . Your work life balance can be all over the show for a year or so. You’ll set yourself up for failure if your reason is to make tons of money in a solo gig.

Review

I think the seminar was a great sounding board. The Q and A section alone was awesome to listen to, and to get ideas off the people that were present.