San Jose State University September 15, 2016
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1 How to Start t Your Own Consulting Firm San Jose State University September 15, 2016 Joubin Pakpour, P.E. Pakpour Consulting Group Pakpour Consulting Group 1
2 Why Do You Want to Start Your Own Business More Freedom / Time Off Better / Work Life Balance More Money Legacy, Want My Name in Neon Lights Tired of Working for the Man or Woman! I Can Do This Better Myself It s the American Dream I am Retiring and Looking for Something to do Make Sure Your Partners Measure Success the Same Pakpour Consulting Group 2
3 To Partner or Not to Partner? A Partner Will Help Spread the Load A Partner Will Help Fund the Business A Partner Will Spread the Risk A Partner Will Spread the Profits A Partner Can be a Pi Pain in the Ass Choose Wisely! Make Sure You Complement Each Other Pakpour Consulting Group 3
4 What Are You Up Against Over 12,000 A/E Firms in the United States * Close to 1,500 firms in California * 66% of the firms are small (50 people or less) ** ENR list of Top Engineering firms in 2012, small firms growth outpaced all others Have you heard of.. James?, Warren?, Carl? Why not you? *Source PSMJ ** Source Salontai Consulting Group (9/13) Pakpour Consulting Group 4
5 Go All In! Percentages of Marriages that end in divorce? 50% Percentage of Businesses that fail in the first year? 80% * Don t half ass it! Go all in Get an office, insurance, license for your software, hire professionals for your branding, etc. If you are going to do it, do it right, it is not a big investment compare to other industries *Source Forbes Online (9/13) Pakpour Consulting Group 5
6 Business Plan Is a bunch of BS The only thing you need to make sure of is Income > Expenses You need to make more money than you spend We are not going to spend time on the income side Expenses Rent, Insurance, Salary, Accounting, etc. Pakpour Consulting Group 6
7 Step One Find out what your employment contract, employee hand book, etc, says about competing with your current firm Hire a lawyer, it won t cost you that much The higher your post the more restrictions there will be on starting ti your own firm Do not work on setting up your firm on company time Do not go live with anything until you have left your current employer (websites, etc) Do not talk about what you want to do to co workers and especially clients Document your rtime! Pakpour Consulting Group 7
8 Bare Essentials Decide on your entity: C Corp, S Corp, LLP, Sole Proprietor Find and rent office space Buy computer Buy software Open a bank account Brand your company, logo, company colors, etc Get insurance (Prof Liability, General, Auto, Workers Comp) Business cards and website All this before day one. Once you are open for business, you should be marketing your firm and providing service Pakpour Consulting Group 8
9 Your Entity C Corp, S Corp, LLP, Sole Proprietor Consult your tax advisor Consider the protection of corporate shield What do your potential clients prefer? What is the perception of one entity vs. another? Pakpour Consulting Group 9
10 Office Space Work from home, could work (maybe) Location, close to you, clients, is the address really that important? Drive around and call the leasing agents, or hire a broker Consider your needs now and for the future In this market, minimum 6 month lease, usually 12 months, longer lease, lower cost Class A, B and C Tri Valley area $2.25 / sq ft / month for Class B Need dthe address for your business card, website, bit letterhead Pakpour Consulting Group 10
11 Computer(s) Including a server Pi Printer Copier Fax Scanner Office Equipment Consider an all in one machine $500 / month for 5 year lease all maintenance is included Plotter Consider refurbished Software (AutoCAD, etc) Annual Subscription Cell Phone / Land Line Pakpour Consulting Group 11
12 Branding Don t do it yourself, hire a professional! Will save you time and will look better I m tech savvy, creative, I ll save money... but not time! Your time is better spent elsewhere Consider your clients Clean and consistent Cost ~ $3,000 $5,000 for logo, letterhead, envelopes, domain registration, website, , etc Pakpour Consulting Group 12
13 Yes you need insurance Insurance Professional Liability Insurance Will pay for your design mistakes. Highest cost insurance Based on your annual billings, risk pool. Structural engineers pay more, municipal ii engineers pay less, first year is based on an estimate General, Auto and Workers CompInsurance Health, Dental and Vision Call a broker, ASCE (best place to start) Some brokers have attorneys that review contracts for free PL $7,500 (based on $500k billings) all others $2,500 Health, Dental and Vision $2,000 per month Pakpour Consulting Group 13
14 Computer(s) $7,500 Server $10, Plotter $5,000 Branding $5,000 Insurance Furniture $2,500 Misc $5,000 Start Up Cost $10, (Non Medical) Office supplies, lawyer(s), accountant, etc Total: $45,000 Pakpour Consulting Group 14
15 Rent $2,000 Medical Insurance $2,000 Equipment Lease $500 Software $300 Phone (Cell + Land) $200 Misc $500 Salary?? Monthly Total: $5,500 Monthly Expense Pakpour Consulting Group 15
16 Income Side Where will your clients come from? Existing clients? Why would they hire you? How many clients will you have? What will you bill them? How will you market, cold calls, associations, existing contacts Scary, since you will not have all the answers until the day you start Pakpour Consulting Group 16
17 More Thoughts Number 1 reason businesses fail in the United States? Cash Flow You are awarded dda contract t(day 0) It takes a month to get the contract signed and start work (day 30) Work for a month, send a bill (day 60) Average time a bill gets paid 60 days (120 days) 4 months that you are accruing costs and have not received any cash Pakpour Consulting Group 17
18 What Can I Do Now to Get Ready? SYM (save your money) Buy your firsthouse before you buy your first new car. Pay your savingsaccount account out of each paycheck Outline your monthly expenses & stick to it Pakpour Consulting Group 18
19 Gain Experience Become a Great Engineer Become a Great Presenter What Can I Do Now to Get Ready? Understand the Accounting Side Overhead drates Audits Cash Flow (#1) Pakpour Consulting Group 19
20 Develop Your Network Build a Client Base What Can I Do Now to Get Ready? Get Involved (ASCE, APWA, etc) Be a Social Butterfly (in your own way) Don t Burn any Bridges Bid Be well respected Pakpour Consulting Group 20
21 What Can I Do Now to Get Ready? Other Thoughts Put yourself in a position to be LUCKY Don t be afraid to take a chance Outline your Plan Be Prepared Be good to people (KARMA) Pakpour Consulting Group 21
22 Joubin Pakpour, P.E. Pakpour Consulting Group (925) Closing Nick Panayotou, P.E. The Hanna Group (650) Pakpour Consulting Group 22
23 Frequently Asked Questions Why are you doing this? You are creating more competition! When will I know I am ready? Where will my clients come from? Did you have an exit strategy? What is the toughest challenge you are facing right now? Pakpour Consulting Group 23
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