Engineering Business – 5 More Keys to Increased Revenues and Profits
Welcome back! There are multiple strategies that can be implemented without having to cut staff. In our first article on Increased Revenues and Profits, we discussed the following strategies:
Key 1: Increase Service Fees
Key 2: Workload determines the Company Size
Key 3: Do not Focus on Sectors with Very Small Profit Margins
Key 4: Contact Existing and Previous Clients for New Contracts
Key 5: Deliver on Your Promises
The business strategies for professional service firms like engineering are quit different from the typical business. Most of the business books in the book store and library will not apply to your business. You could attach all of the door hangers you want and that will not increase your business contacts. You can place all of the advertisements you want in the newspaper and your phone will not ring. Why not? Professional Service is a very personal business; it more about networking and building business relationships. So the business strategies are different from that of a retail business.
Now we will discuss 5 more strategies to increase revenues and profits without cutting staff.
Key 6: Be Patient and Stay Focus in Your Marketing – Marketing is always ongoing. The way you dress, your attitude, your correspondence, and all of your literature affect your marketing efforts. Sooner or later your future client will need your services, and you want them to pick up the phone and talk to you. In the mean time you are building a relationship with your current and future clients. It seems that marketing becomes top priority when the revenues fall. But in reality marketing should be consistent. Constantly evolving as the company grows. If you want to increase your revenues then increase your marketing efforts. Also, not all marketing is expensive. In fact, most of the marketing required for professional service firm is very inexpensive.
Key 7: Provide Detailed Proposals – Engineering is a complicated profession that is guided by very detailed specifications and procedures, but why do engineering proposals are all too often vague without any structure? Very few projects performed by an engineer can be spelled out on one sheet of paper. Some clients may ask for a simple one page proposal, but if you can not describe in detail what services you firm will be providing with the fees associated with those services, you are taking a risk that may eat all of the profit and then some. A vague contract is open to interpretation. The client’s interpretation will usually win.
Engineers are not construction contractors. The professional services provided by one firm will not be the same as another engineering company. A complete professional proposal should include a cover letter, agreements, definitions, assumptions, services, fee schedule, and project schedule. A complete detailed proposal separates your firm from the competition, and clearly shows what the client can expect from you.
Key 8: Inform Your Clients of All of Your Available Services – If you are a Civil Engineer, every had clients hire an attorney to prepare and process entitlement applications. An attorney can be charging your client $300 or more per hour and providing a service that is no more effective than if your company had prepared and processed the application. Attorneys love it when your clients think that the best representative for Entitlements is them. Sure for some difficult sites that maybe the case, but 9 out of 10 times they are not. You may be surprised to know that most clients that utilize the services of a lawyer for Entitlements do not know that your firm provides the same services. They may think that you only provide Tentative Maps and Development Plans. That is why it is so important to state your services on all of your marketing materials. Believe it or not most people just do not know what engineers can do, which means we might be leaving thousands of dollars on the table.
Key 9: Cross Promote Your Company and Services to Other Companies – Many engineering companies sub-contract out several engineering tasks like Traffic Impact Analysis, Technical Drainage Studies, Surveying, Structural Analysis, Environmental Impact Studies, Geotechnical Reports, and many other tasks. If your firm provides these types of specialized services, it would be a good idea to let other engineering companies know. In addition, they may also provide a specialize service that would be of benefit to your firm. Your firm may specialized in Water Resources and Land Development, while you may find a firm that specializes in Transportation Engineering. Make an offer that if they will contract with your firm for Technical Drainage Studies, your firm will contract with them to provide Traffic Impact Analysis. Both firms can benefit from the agreement.
Key 10: Joint Venture with other Businesses to Increase Your Services – Often engineering companies will team with other companies to bid for a project; especially government projects. Usually the primary has completed several government contracts, and is sub contracting your firm to handle a small percentage of the work. Larger firms generally team with small business to satisfy the government requirement that a certain percentage of the work must be contracted with a small or disadvantaged businesses. The partnering also allows the companies to provide all of the services necessary to complete the task. Your firm is then not competing with other much larger companies.
Most engineers have excellent technical skills, but not necessarily the same level of expertise in business management. It is the responsibility of the engineer to develop these management skills through continuing education. This continuing education can be obtained through Community Colleges, Universities, Professional Training Programs, Professional Organizations, and online training courses. In most states these continuing education courses qualify for continuing education units (CEU) or Professional Development Hours (PDH).
In Parts 1 and 2, we have discussed 10 key strategies to increase revenues and profits. There is one main key financial indicator that is used to measure whether a business will stay in business, and that is whether or not the firm is creating a profit over a period of time. Without profit the firm will be out of business in short order. You can only leverage so much.