ENTREPRENEURSHIP. Understanding Entrepreneurship Chapter # 1.
Wspe Seminar 4 B May 15, 2009 Eng Entrepreneurship
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Transcript of Wspe Seminar 4 B May 15, 2009 Eng Entrepreneurship
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Engineering Engineering EntrepreneurshipEntrepreneurship
From Professional EngineerFrom Professional Engineerto Principalto Principal
Presented by J. Mark DPresented by J. Mark D’’Amato, P.E, S.Amato, P.E, S.EEDCI EngineersDCI Engineers
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Define Entrepreneur:Define Entrepreneur:
“A person who organizes and operates a business or businesses taking on greater than normal financial risks in order to do so.”
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As Professional EngineerAs Professional Engineer
ProfessionalEngineer
ProfessionalEngineer
Eng.Dept.Mgr.
Eng.Dept.Mgr.
ClientsClients
ProjectsProjectsWorkTeamWorkTeam
FamilyFamily
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As PrincipalAs Principal
EngineeringEntrepreneurEngineeringEntrepreneur
DesignTeamDesignTeam
ClientsClients
ProjectsProjects
FamilyFamily
CommunityCommunityPartnersPartners
Ins.Brokers
Ins.Brokers
OperationsOperations
CompanyStaff
CompanyStaff
AccountantsAccountantsBankersBankers
LawyersLawyers
VendorsVendors
PropertyManagersPropertyManagers
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Establishing Your IdentityEstablishing Your Identity
Services to offer — public, private?
Business plan — what you want to be doing and where you want to go?
Business card?
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Evolution of Business IdentityEvolution of Business Identity
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Financial PlanningFinancial Planning
Personal line of credit Arrange this BEFORE you quit your job
Usually based on equity of your home/property
Business line of credit Assemble marketing materials and business plan
May take one or more years to qualify
Will need to sign a note or even a deed of trust
Conserve cash Watch your cash flow
leases and loans conserve cash for large expenses
Operate on a Cash basis, not Accrual
Have a Safety net
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Forming the BusinessForming the Business
How do you want the IRS to regard you —C-Corp, S-Corp, LLC, Partnership?
Start work on the “shareholders agreement”ASAP
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Making the Business OfficialMaking the Business Official
File for Master Business License, on line
File the appropriate Corp Form with IRS
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Locating Your PracticeLocating Your Practice
Many successful businesses start in the basement or garage
Short term leasing to start, preserve flexibility (Growth may be inevitable)
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Acquiring the Tools of the TradeAcquiring the Tools of the Trade
Accounting system (time and expense entry, billing, financial statements)Computers (engineers, designers)Software (analysis, drafting, MS Office)Furniture (desks, chairs, you-name-it)Banker (checking account, line of credit)Insurance Agent (E&O, Commercial, Auto, Health)Office equipment (copiers, printers, IT support, etc.)Marketing Materials (printed and web oriented)
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Establishing Basic Engineering ProcessesEstablishing Basic Engineering Processes
Contracts (Resources include NSPE, ACEC, ASCE, AIA)
Work flow — internal organization, staff designations and job descriptions
Quality Control (consult with E&O provider)
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Business 101Business 101
Metrics Metrics MetricsDirect Labor & Expense
Indirect Labor & Expense
Net Revenue
Breakeven and target multipliers
Operate on a Cash Basis, Not Accrual
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Developing Your StyleDeveloping Your Style
Becoming a “Good” consultant understand your clients needs
Becoming a “Good” employer and “Good” mentor for future engineers
Join the “Club”Get involved in the AEC world
Learn to market golf, hunting, fishing, sailing, breakfasts, lunches, dinners
Maintain Your Ethics preserve your integrity above all else
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Renewal, Growth and TransitionRenewal, Growth and Transition
Mentor future leaders/partnersMentor future leaders/partnersIdentify and Promote your Identify and Promote your ““rainmakersrainmakers””Assign Operational ResponsibilitiesAssign Operational Responsibilities
Create mechanisms for transfer of ownershipCreate mechanisms for transfer of ownershipShareholders agreement must outline share transfersShareholders agreement must outline share transfersConsider intermediate sale of sharesConsider intermediate sale of sharesUtilize shares for bonusesUtilize shares for bonuses
Internal Internal vsvs external transfer of ownershipexternal transfer of ownershipComplications and Advantages to eachComplications and Advantages to each
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Budgeting for Internal TransitionBudgeting for Internal Transition
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Operations and GrowthOperations and Growth
Regional and national growthRegional and national growth““Grow as circumstances permitGrow as circumstances permit””Multiple offices can balance the Multiple offices can balance the ““bumpsbumps”” in local economiesin local economies
Separate profit centers or not?Separate profit centers or not?Accounting system set up will influence decisionsAccounting system set up will influence decisionsAdvantages of Separate Profit CentersAdvantages of Separate Profit CentersAdvantages of One CompanyAdvantages of One Company——One Profit CenterOne Profit Center
Remote office staffingRemote office staffing““Vice PresidentsVice Presidents”” or Principals?or Principals?
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Work Hard and Rewards Will ComeWork Hard and Rewards Will Come