After talking about it for decades, an old friend/engineer finally walks into my survey office, hangs his license on the wall, and sits at a desk.
We've talked about the opportunities for decades but never took the step.
My friend did not come in as a shareholder and has limited clientele. I have relationships with other engineers that will surely be stressed by this new arrangement. I have no doubt I can pull in work for him from my existing client base and he has potential to grab Public work.
What to do with all the money to be made from engineering design work is my question for those of us offering professional services besides surveying?
How much of the engineering fees should he expect to be left to the firm to cover costs and "reinvestment"? Do you handle it as a % of net? Is there a typical percentage? ...
Have a great weekend!
In my case it's 100 percent. Everything that comes in I put in my bank account.
HC, P.E., L.S.
A better question: What percent will I get? Now that you have a "firm," I would guess you guys are depositing all payments to a "firm" account. Now you can haggle out what part each of you gets.
Holy Cow, post: 333919, member: 50 wrote: In my case it's 100 percent. Everything that comes in I put in my bank account.
HC, P.E., L.S.
HC,
If you were to give it some thought as a non-owner PE only in a LS/PE "shop", the "shop" being a well established surveying firm, and you have no investment in the "shop" other than your time/knowledge...what would you consider a fair cut of engineering income for the "shop"?
G
mattharnett, post: 333930, member: 6458 wrote: A better question: What percent will I get? Now that you have a "firm," I would guess you guys are depositing all payments to a "firm" account. Now you can haggle out what part each of you gets.
Matt,
Yes...been a firm for over 25 years and I'd rather not haggle.
How would you go about the haggling?
Thanks,
G
The engineer gets a salary commiserate with experience and an annual performance bonus based on a percentage of engineering design revenues (10%-20%). The rest of the engineering revenue pays for your beach front retirement house.
A lower salary and greater percentage of profits might hold his feet to the fire on the business development side of the job.
James Fleming, post: 333934, member: 136 wrote: The engineer gets a salary commiserate with experience and an annual performance bonus based on a percentage of engineering design revenues (10%-20%). The rest of the engineering revenue pays for your beach front retirement house.
A lower salary and greater percentage of profits might hold his feet to the fire on the business development side of the job.
James,
OK...85% for the "shop" and my beach house...check.
I'm meeting with him tomorrow. I'd like to illustrate the stake my firm has in this new arrangement and I'd appreciate a bit more of your opinion. Please consider again...
I'm sole owner and surveyor for an established SURVEYING firm.
I have profitable working relationships with a number of strictly ENGINEERING firms in my area that will fade as I compete.
Even though my friend brings only his PE to the table, aren't the doors he can open worth more than 10%-20%? (FWIW, the only mention of money to date had him offering 10% back to the company).
I'm convinced the firm should only share 10%-20% of the design revenues he enables the firm to gain. B-) Please assist me in convincing him.
Help me get my beach house!
Thanks,
G
George Matica, post: 333916, member: 6663 wrote: After talking about it for decades, an old friend/engineer finally walks into my survey office, hangs his license on the wall, and sits at a desk.
We've talked about the opportunities for decades but never took the step.My friend did not come in as a shareholder and has limited clientele. I have relationships with other engineers that will surely be stressed by this new arrangement. I have no doubt I can pull in work for him from my existing client base and he has potential to grab Public work.
What to do with all the money to be made from engineering design work is my question for those of us offering professional services besides surveying?
How much of the engineering fees should he expect to be left to the firm to cover costs and "reinvestment"? Do you handle it as a % of net? Is there a typical percentage? ...Have a great weekend!
In New York, unless the PE is a shareholder, you can not offer engineering services as a part of your land surveying business. Better check with your State board.
NYLS, post: 333941, member: 1722 wrote: In New York, unless the PE is a shareholder, you can not offer engineering services as a part of your land surveying business. Better check with your State board.
NYLS,
Registrations, licenses, authorizations, insurances, ... all satisfied.
How would you divvy up the pot?
Thanks,
G
You probably know this already, but this conversation needed to happen before the certificate ended up on the wall. Now you stand to lose existing clients and a friend.
With no stake in the business you need to give him incentive to sell work. Whatever split you decide on needs to pencil out or it will fail (taking your business with it).
I concur that a salary with bonus potential is the ticket. Make the bonus quarterly and discretionary. The second you tie it to an index you have surrendered control of your business to someone with no interest in it.
One of the firms I worked for in OK had been a successful survey business, serving many engineering clients, which then merged with an engineering company. They maintained their relationships with existing engineering clients to a very large degree, in part by having the 2 sides of the business "dba" under different names. And the 2 had different phone numbers and email domains.
Most of the clients were perfectly aware of the arrangement but just not having it stuck in their faces with every piece of correspondence was enough to get most of them to overlook it.
thebionicman, post: 333965, member: 8136 wrote: You probably know this already, but this conversation needed to happen before the certificate ended up on the wall. Now you stand to lose existing clients and a friend.
With no stake in the business you need to give him incentive to sell work. Whatever split you decide on needs to pencil out or it will fail (taking your business with it).
I concur that a salary with bonus potential is the ticket. Make the bonus quarterly and discretionary. The second you tie it to an index you have surrendered control of your business to someone with no interest in it.
Bionicman,
Yes...we're old enough and mature enough that I believe our friendship is not at risk. I've been concerned about the impact on my existing engineer associations as well.
Although he has not had his own business in the past, I have no doubt he'd find a way to survive. So he probably wouldn't hesitate to go it alone if we don't agree. I don't think he's looking for a salary.
I think the bottomline is he does not need me in the same shop and I don't need him in my shop BUT it seems we could both benefit from the closer relationship.
I just need to put some numbers on it.
Thanks,
G
Norman Oklahoma, post: 333995, member: 9981 wrote: One of the firms I worked for in OK had been a successful survey business, serving many engineering clients, which then merged with an engineering company. They maintained their relationships with existing engineering clients to a very large degree, in part by having the 2 sides of the business "dba" under different names. And the 2 had different phone numbers and email domains.
Most of the clients were perfectly aware of the arrangement but just not having it stuck in their faces with every piece of correspondence was enough to get most of them to overlook it.
Thank you!
G
James Fleming, post: 333934, member: 136 wrote: The engineer gets a salary commiserate with experience
I think we can all commiserate with engineers; after all, they're *engineers*, not surveyors. In this case I suggest setting his salary *commensurate* with experience.
As a strictly survey business branching out into the engineering field, there is much to consider. Being as it is still your business, then you will now be accepting the liability that engineering brings with it. I myself am both an engineer and surveyor and believe me, there is a big difference in liability and I'm not talking just E&O premiums. If a design flaw is exposed during or after construction, and it will, are you prepared for the responsibility of those obligations and liabilities?
I myself, if in your position, would consider setting up a separate company. Keep it all separate from the survey company and put your friend in the position of engineering manager with an hourly rate. The survey company would then charge the engineering company office, copier, vehicle, equipment, etc. rental rates and place an additional 110% overhead on top of his hourly rate to cover insurances, unemployment, workman's comp, etc. Then add another 15% profit rate on top of his hourly rate to put some chingaling directly into your pocket.
Once you've got some time under your belt with the new company, then you'll see if it generates revenue on its own and/or if you want to change the mix.
George Matica:
I have never been in your position, and I never will be.
This is a major change, it could go either way.
As a lifelong employee in many shops, I have seen many styles, and some really sucked for everyone involved.
If he becomes a partner/share holder what happens when one of you dies? Does the survivor end up being proprietor with his Widow or Children as partners? WoW!!! One method I saw was a partnership agreement stating the heirs would Only get the proceeds of a Life Insurance Policy, that was paid for by the company. The policy amounts were reviewed annually, based on the value of their respective shares.
I have been in a position to sub out a lot of survey work as a manager at a large engineering/surveying firm. We Never used any firm that could compete in any way. The last thing we wanted to do was introduce The Goose That Laid The Golden Egg, no matter how small.
on the very positive side: Those firms I worked at that provided a large menu of Survey and Engineering skills were able to weather the storms and promote for each other. Clients like one stop shopping that they have faith in.
Good Luck!
Finding a rate is dependent on a myriad of things. First, list all of the things you are providing to him at no cost to him. How long is that list and what is the annual dollar value of all those things combined. Second what is he bringing to the firm besides himself. Third, why does he need you and why do you need him. Fourth, if you want a cut of new business he brings to the surveying side, then you need to give him a cut of new business you bring to his engineering side.
The final analysis could be on either end of the scale.....and subject to significant change every six months based on results.....in both directions.
My brother is a Civil PE. I have no plans to go into business with him, though.
I think I'll just work another 7 years and take my pension and retire for good, have fun.
I had a limited arrangement about a decade ago and everything was done in my house and under my my letterhead and for clients contacting me that needed more than boundary surveying that I had formerly turned away because I was only interested in rural boundary work and only traveled so far.
He never did any actual projects that required a PE seal, It was mostly construction & topo and boundary surveys in metro areas that required gradeplan or topo and endless approvals from agencies.
On the jobs he did we would take out the overhead for the project that included everything from vehicles, supplies, gas and any rented equipment and wages to employees on the job and any other contributing expenses to be taken off the top and split what was left over 60%me and 40% him.
It only lasted a few months.
I have always thought it should be illegal (maybe even a felony) for a Surveyor to work FOR an engineer or the other way around. But after the crash, I guess I'm fortunate to now have a job at an Engineering firm. I get salary and a percentage of all work that comes in through me or my former company.
