I have always dreamt of starting my own business. Recently, this dream has become a reality, and I started Surf City Hydraulic Engineering. Starting and running a business has been great, but it has come with a lot of challenges. Starting a business is scary and comes with risks. Fortunately, there are some ways to minimize your risk. In this blog post, I am going to share what I have learned during the early days of starting a civil engineering firm. I should note that I am by no means an expert or seasoned businesswoman. I am still learning a lot and will continue to learn more throughout my whole career. This blog post is informational, and I recommend consulting with your attorney and/or accountant if you want to start your own business.
Learn About Business
If you want to start a civil engineering firm (or any business), I recommend making an effort to learn about business. Many older engineers I know who have started a civil engineering firm have earned Master of Business Administration (MBA) degrees. I explored this option, but it can be expensive and time-intensive to earn an MBA. For this reason, I have opted to take online business classes through the local community college. This has worked well for me for a couple of reasons. One reason I like community college classes is that they are typically taught by “professors” who are professionals with practical experience related to the subject matter. For example, I took an entrepreneurship class where the professor provided important feedback on my business plan. I also took another class where I learned how to compile an effective proposal. In addition to the way content is taught, the flexibility of online classes has also worked well for someone like me who has a busy schedule. This is extremely important when you are juggling a job, family, and working hard to start a business on the side. It is also worth noting that in California, community college classes are affordable and accessible. Classes cost $46 per credit hour, and California residents are allowed to apply to any community college in the state.
My next steps
In the next several months, I will be making a concerted effort to learn bookkeeping. I have been reading through Dummy’s book and am taking a bookkeeping class next semester. If that course goes well, I might consider taking an accounting course.
Company Structuring
Many YouTube videos recommend structuring your company as an LLC because it is simple and has some tax advantages. However, in California, engineering firms cannot be structured as a limited liability company (LLC). The only choices are a limited liability partnership (LLP), S-Corporation, C-Corporation, or sole proprietorship. This is not necessarily the case in other states. For example, in North Carolina, engineering firms can be structured as professional limited liability companies (PLLCs). Surf City Hydraulic Engineering is structured as an S-Corporation. I consulted an attorney to identify which structure would work best for my financial situation and my vision of the company. I hired a lawyer to draft the paperwork required to form the corporation. It is an involved process and would have taken me many areas to understand. Before I hired the attorney, I attempted to use LegalZoom from my corporation. This was a complete disaster, and they ended up screwing up the paperwork. I would highly advise against using LegalZoom. It’s worth the extra cost to hire an attorney at the beginning.
Marketing and Finding Clients
Marketing has been the biggest challenge for me. When I first thought about starting Surf City Hydraulic Engineering, my first concern was about finding clients. I couldn’t (at least in good faith) poach my previous employers’ clients, so I needed to find a way to cultivate my client relationships myself. This is a daunting task. My advice is to do something every day and don’t be afraid to try many tactics. I have found most of my clients through Upwork, my website, cold emailing, and attending the CASQA conference. It’s an organic process and takes time.
Systems
File System – I have been using Google Drive to store my files. I am thinking about switching to DropBox soon. Even though I am still a “one-man show,” I have been diligently working on developing a file storage system that will help me keep project files organized. At my previous employers, I have found that folder structures can be overly complicated. I like a simple system that can be somewhat customized. Complicated systems do not work in the long term and make it difficult to find important files down the road.
Timekeeping – I use a Google Sheet to record my time, and I keep it open all day for convience. This works well for me because the spreadsheet includes a report tab that generates the information I need to copy into an invoice. This may seem overly simple, but I know of a small (about 10 people) consulting firm that does all of their timekeeping with a Google Sheet. I think the key is to remember to make a backup of the spreadsheet every week or so.
Accounting – My accounting system is very simple right now and consists of a Google Sheet. I purchased a pre-made spreadsheet from an Etsy seller and have modified it to fit my needs. It is easier to modify something than it is to start from scratch. I do use Gusto to run payroll (for myself).
Proposals – I am working on a more effective proposal template. Right now, my proposals are a combination of methods I have used at previous companies to develop proposals. In general, each proposal will include a paragraph outlining my understanding of the project, the approach, the fee, and what I need from the client to complete the project. I also have my clients sign a consulting agreement created by an attorney.
Operations Manual – I am preparing for future growth by developing an operations manual. This process has allowed me to better articulate my vision for the company and put “pen to paper” when it comes to systems and operation procedures. I hope for this manual to serve as a guide for future employees.
Insurance
Insurance is a very important aspect of starting a business, especially for civil engineers. You will need errors and omissions (E&O) coverage, which is also known as professional liability insurance. My insurance costs $2,800/year and is through biBERK. You can get ridiculously cheap insurance through companies like NEXT Insurance, but I have heard horror stories about direct providers like this company when you need to make a claim. There are also many types of projects not covered by this insurance. Paying a couple thousands of dollars for insurance is not fun when you are not accustomed to it, but I try to remember this is the cost of doing business.
Resources for those interested in starting a business
- Engineer to Entrepreneur by Rick De La Guardia
- TAP Into Your Potential: How to Think, Act, and Practice Like an Entrepreneur by Rick De La Guardia
- Raise Your Value by June R. Jewell, CPA
- The AEC Professional’s Guidebook – 70 Lessons To A Stronger Career by Gabe Lett
- Engineering Management Institute (EMI) YouTube Channel
- Cliff Ennico’s books and YouTube videos