Below you will learn the key steps to starting an engineering consulting firm.
10 Steps to Starting an Engineering Consulting Business
1. Conduct Market Research To Determine Demand
An important step to starting an engineering consulting business is conducting market research. To begin, you must learn what services your clients want and how much they are willing to pay for them. There are two ways you can go about conducting this research:
- Survey your target market. This can be done through online surveys, interviews, or focus groups.
- Analyze competing businesses. This can be done by looking at their websites, reading their customer reviews, and contacting their clients to get feedback.
Once you have analyzed the survey data, determine which types of businesses are likely to hire you and how much they are willing to pay. Use this information to set your consulting prices.
2. Name Your Engineering Consulting Business
Once you have analyzed your market and determined what services clients want, it’s time to name your engineering consulting firm startup. While naming a business can be difficult, there are a few rules of thumb to keep in mind:
- Keep it Short: Your business name needs to be short enough for clients to remember and say.
- Keep it Relevant: Your business name should be relevant to the engineering services you offer and your target market’s needs.
- Keep it Memorable: Using clever ideas and words, help your audience connect with your business.
- Focus on Your Target Market: Make sure that whoever sees or hears your engineering company name understands who you are targeting as clients.
Read our article about choosing the right business name.
3. Choose Your Business Structure and Set-Up Your Company’s Legal Entity
As with any business, the type of legal entity you set up is critical. After all, you want your company to be treated as a separate entity, not just an extension of yourself. There are several types of structures in which you can start your engineering consulting company. Three popular options are sole proprietorship, S-corporation and LLC (limited liability company).
- Sole Proprietorship: A sole proprietorship is one in which the business and the owner are considered to be one entity. Therefore, you are personally responsible for all debts and liabilities your engineering consulting firm may incur. One benefit of this type of structure is that it’s easy to set up and there are no formal filings required.
- S-Corporation: An S corporation is a type of C Corporation that was designed by the IRS to help small corporations minimize their paperwork while still gaining many of the tax benefits of incorporating. It also offers protection for business owners in case of lawsuits and other liabilities.
- Limited Liability Company (LLC): An LLC is a structure in which the company is considered a separate legal entity from its owners. This means that the company is responsible for its own debts and liabilities. This type of structure offers protection for business owners in case of lawsuits.
Read our article comparing the most common consulting business structures.
4. Write an Engineering Consulting Business Plan
A business plan is a document that outlines your business goals, strategies, and how you plan to achieve them. Your engineering consulting business plan should include the following:
- Business Description: Describe what your engineering company does, who your target market is, and how you will differentiate yourself from the competition.
- Industry & Market Analysis: Detail your research on the industry and what services clients are most likely to want.
- Financial Plan: Outline your estimated income and expenses for the next three to five years.
Other sections of your plan will answer other key questions such as the following:
- What are your areas of expertise?
- What services can you offer your clients?
- Who is your target audience?
- How will you differentiate yourself from the competition?
Your business plan should also include several sections that detail your company’s history, current financial situation, and future goals. These sections will allow an investor to learn more about your company before they commit to investing in it.
Read our article about how to write a consulting business plan.
5. Apply for the Necessary Permits and Licenses
You must register your engineering consulting business as a legal entity with the state in which you plan to do business.
To file your business with the state, obtain the necessary forms from the Secretary of State’s website or local County Clerk’s office. You will be required to pay a small fee for filing your business with the state.
Registering with the federal government may or may not be required. You can register your business on the federal level by obtaining an Employer Identification Number (EIN) from the IRS.
Read our article about obtaining the proper consulting business licenses.
6. Determine Your Budget & Apply for Funding as Needed
As with any business, you will need to use your own capital to finance the initial stages of your engineering consulting company. Your budget may also include several other costs including marketing expenses and the salary you wish to pay yourself.
After determining how much money you will invest in starting your business, review some options for financing your business. Here are several financing options that may be available to you:
- SBA Loans: The Small Business Administration (SBA) is a government agency that provides financial assistance to small businesses in the U.S.
- Bank Loans: Many small business owners are able to secure loans from their local banks. Often, you can borrow money for any purpose that relates to the growth of your company.
- Friends and Family: You can consider getting loans and/or equity investments from friends and family members..
- Angel investors: Angel investors may provide debt or equity funding to you.
Read our article about the costs associated with starting a consulting business to help you determine if funding is needed.
7. Get the Technology & Software Needed to Run Your Engineering Consulting Company Efficiently
As an engineering consulting firm startup, you will need different types of technology to complete projects and keep track of your company’s operations. To simplify the process of starting a consulting business, we’ve provided a list below detailing some items that you’ll need:
Computers: Even if most of your work is done remotely with clients on the other side of the country or world, you will need at least one computer that is dedicated to your engineering consulting company.
Software: Software is an essential component of any consulting business. The right software can help you manage projects, track expenses, and communicate with clients more effectively.
Here are some popular software platforms that may be beneficial to your business:
- Microsoft Office: This software suite includes a variety of applications that can help you manage your company, including Word, Excel, and PowerPoint.
- QuickBooks: This software is designed for small businesses and can help you track income and expenses, create invoices, and manage payroll.
- Basecamp: This project management software can help you manage multiple projects simultaneously and keep track of deadlines and milestones.
- Gmail: Google’s email platform offers several features that can be helpful for businesses, including the ability to access the same email from multiple devices.
- CRM: Customer relationship management software can help you track customer communication, manage leads, and create reports that detail your sales activities.
There may be additional software that is specific to your engineering consulting business. This may include CAD software, software for writing proposals, or software to manage your inventory. Be sure to research the different types of software that are available and find one that will fit the needs of your business.
Read our article about the technology and software you need to run a consulting business.
8. Market Your Engineering Consulting Firm to Potential Clients
Once you’ve established your engineering consulting company, the next step is to market it to potential clients.
Here are some common marketing strategies used for engineering consulting startup firms:
- Networking: Attend local industry events and meet with people in your network. Introduce yourself and your company and be prepared to pitch your services.
- LinkedIn: LinkedIn is an excellent platform for marketing your engineering consulting startup firm and engaging with engineering industry influencers. Use the site to connect with potential clients, build industry connections, and share content that is relevant to your target market.
- Online marketing: Marketing your business online, such as through a business website and pay-per-click and/or social media marketing, can help you reach a larger audience looking for your services.
- Blogging: A blog can be a valuable marketing tool for your engineering consulting firm. Share engineering industry news, insights into your work, case studies, and more to help potential clients learn more about you and what you offer.
- Guest Posting: Guest posting is a great way to reach potential clients and showcase your expertise. Find blogs in your industry that accept guest posts and submit a high-quality article that will be of interest to their readers.
Marketing your engineering consulting firm can be daunting, but by using a variety of marketing strategies, you can increase the visibility of your company and attract more clients.
You should also consider ways to incentivize potential clients to choose you over another engineering consulting firm. Some incentives that work well include:
- Lower rates: Many consulting businesses offer lower rates on their services to attract new clients.
- Discounts on services: Offering discounts on certain projects may help you win bids against other firms.
- Free consultation: Providing potential clients with a free consultation can help them determine if your company is the best one for their needs.
Learn more about how to market your consulting business.
9. Establish a Price Structure and Billing System
There are a few factors to consider when establishing your price structure:
- Hourly rates: Charging by the hour is a common way to price consulting services. This allows clients to budget for your services and gives you the flexibility to charge more for complex projects.
- Project rates: Charging a flat fee for a project can be beneficial for both the client and the consultant. It ensures that the client knows what they are paying up front, and it allows the consultant to charge more for more complex projects.
- Retainers: A retainer is a set amount of money that the client pays upfront for services. This can be a good option for clients who need regular consulting services.
No matter which pricing structure you choose, be sure to clearly communicate it to your clients. Additionally, have a detailed invoice template that includes all the engineering services you provided so the client knows exactly what they are paying for.
10. Manage Client Relationships and Deliver Projects
After finding new clients and marketing your engineering consulting firm, you should begin delivering the projects and getting paid. This means managing client relationships and making sure that clients are happy with your work. Some of the ways to manage relationships with your engineering clients include:
- Regular communication: Keep in touch with your clients regularly, whether it’s through email, phone calls, or in-person meetings. This will help ensure that they are kept up to date on the progress of their project and that any questions or concerns are addressed quickly.
- Detailed reports: Send regular reports to your clients detailing the progress of the project, including how much has been completed and how much is left to do. This will help them stay informed on the project’s progress and ensure that you are meeting their expectations.
- Client feedback: Ask your clients for feedback after the project is completed. This can help you improve your services and ensure that clients are happy with your work.
- Delivering on time and budget: Make sure that you meet your deadlines and stay within the budget that you agreed upon with the client. This will help keep them happy and ensure future business from them.
Delivering projects on time and within budget is essential for an engineering consulting business. It can be beneficial to create a project management plan that outlines how each project will be completed. This will help ensure that all deadlines are met and that the client is happy with the final product.
Learn more about how to effectively manage client relationships.
Starting an Engineering Consulting Business FAQs
Why Start an Engineering Consulting Business?
There are many reasons to start your own engineering consulting firm. The most likely is that you are an experienced engineer who wants to use your skills to help others while earning a nice income and enjoying the flexibility of being your own boss.
What is Needed to Start an Engineering Consulting Business?
There are a few things you will need to start an engineering firm:
- A business license
- A website or brochure to market your services
- A portfolio of your past projects
What are Some Tips for Starting an Engineering Consulting Firm?
The following tips can help you to start an engineering consulting business:
- Choose the right business structure: There are a few different business structures you can choose from when starting an engineering firm, each with its own pros and cons. For example, a sole proprietorship is easy to set up and maintain but offers limited liability protection for the owner. A limited liability company (LLC) provides more liability protection but is more complex to set up. You should consult with an accountant or lawyer to help you choose the right structure for your business.
- Create a website or brochure: A website or brochure is essential for marketing your engineering consulting services. Be sure to include information about your experience and qualifications, as well as examples of your past work.
- Get insurance: It is important to have insurance in case something goes wrong while working on a project. Be sure to get the insurance that will protect you and your business.
- Market your services: You will need to market your engineering consulting services to find new clients. Use your website and brochure to market your services, and network with other professionals in your field.
- Stay up to date on the latest technologies: As an engineer, it is important to stay up to date on the latest technologies. This will help you better understand your clients’ needs and how to best help them.
- Manage client relationships: It is important to manage client relationships effectively to keep them happy and get future business from them. Be sure to keep clients informed on the progress of their project, meet deadlines, and stay within budget.
- Keep track of your expenses: Keep track of your expenses so you can stay within your budget. This will help you be more profitable and increase your chances of obtaining future contracts.