On Your Own
David Wood, president of David F. Wood Consulting, is used to keeping many balls in the air. When I interview him, it's a Saturday afternoon and the rock engineer is talking hands-free while navigatin...
David Wood, president of David F. Wood Consulting, is used to keeping many balls in the air. When I interview him, it’s a Saturday afternoon and the rock engineer is talking hands-free while navigating his way back to Sudbury after investigating a sudden rock fall in a tunnel project in Niagara Falls. The GPS murmurs inaudibly in the background while Wood explains in a clear English accent what events led him to leave his job with an international engineering firm to “hang up his own shingle.”
“I’m not by heart a businessman,” Wood says, “but things happened.”
He began his career in 1973 as the “most junior of junior engineers” at Golder Associates. A self-described rabble rouser and long-haired hippie, Wood worked his way up to become an associate. Then, after he had spent three years completing a research project in Sudbury, he was faced with a choice: either go back to being “a small fish in a big pond” as an associate in a large firm and a large city, or take the leap and become his own boss in Sudbury. For various reasons, he decided to stay, and in 1992 officially registered his consulting business. Ten years later, this once-reluctant businessman won the Greater Sudbury Chamber of Commerce’s Business Awards of Excellence, Small Office Home Office (SOHO) award. Now he’s so busy, he’s even turning down work.
“If I could clone myself I’d be happy,” Wood says.
Nimble and personal
Wood’s success is not unique. I spoke with engineers across the country who either work for themselves or in “micro-firms” — companies of five or fewer full-time employees — and all admitted to being very busy, despite the economic downturn and the growing trend towards the consolidation of engineering firms into larger, more international entities. What is it that makes these micro-firms not only survive in the competitive world of consulting engineering, but also thrive?
Micro-firms can offer clients certain advantages that larger firms can’t.
Being small keeps these firms nimble. “We’re very good at tailoring our work to our clients’ needs,” says Perry Mitchelmore, P. Eng., president of Mitchelmore Engineering Company (Meco). He started his Dartmouth, Nova Scotia-based firm eight years ago as a sole proprietor and now has five full-time staff: “We can tailor our work because we don’t have a “Mitchelmore engineering way.” We’re malleable, and can fit to what the client wants.”
Small firms can also often profit from smaller jobs. “I can offer a very good engineering service in the $5,000 to $10,000 range,” Wood explains, whereas a multi-national consulting firm, “can hardly even open an account [for that amount].”
Small also means personal. Quinn Saretsky Structural Engineers, a Calgary-based consulting firm with five employees, asked their clients what they liked best about working with their company. According to Kevin Saretsky, P. Eng., a partner in the firm, the majority of clients identified “knowing that the person they talk to about the project will be the one coming to site and actually doing the work” as one of the primary benefits. “There’s less chance of communication problems that way,” Saretsky explains.
Nor is it enough to be technically adept.
“You have to be good at many things,” Saretsky says, “not just engineering, [but also] working with clients and building business skills, and these take years of practice to develop.” How many? At least 10 to 15, according to Saretsky and the half dozen or so engineering colleagues he informally polled on the matter.
Experience counts, because even though an engineering company may be small, it still has to deal with big business problems.
Cash flow and staffing
“Starting an engineering firm is really no different than starting any other small business,” says David Shilton, a manager with the small business division of TD Canada Trust — which could be bad news, given the high failure rates for new firms, and especially micro-enterprises, in the first few years after start-up. But Shilton assures me that engineers and other professionals have a higher chance of success than the average start-ups.
“Engineers are lower risk,” he explains. “They’re professional, well-trained, and they tend to run their businesses well and prosper.” Which is why TD Canada Trust actively targets engineers with unique lending packages.
But there are still challenges to overcome for the smaller micro-firms.
“Cash-flow is generally the biggest concern,” Shilton says. It’s a particular issue in consulting, where a firm isn’t usually paid until after work is completed, and it can be especially difficult during dry spells.
“Cash flow is king,” Mitchelmore agrees. Now in his eighth year in business, he remembers the worries he faced when his firm was pulling in only enough to stay afloat.
“Running your own firm isn’t for anyone without faith,” he says.
Another struggle is staff turnover, which has been particularly difficult in recent years when the lure of larger firms has been hard to compete with. While the loss of one employee in a firm of 500 may be negligible, the same loss for Mitchelmore’s firm represents 20% of their workforce, and that’s a significant impact.
Then there’s the difficulty of wearing too many hats. How do you manage your engineering work while still keeping on top of administrative, financial and IT burdens? Most of those interviewed agreed that the best solution was either to contract or hire help.
“You need to get good advice,” says Wood. “Go and find yourself a very good accountant who sells his services at a similar rate and time frame as you do and get to know him really well.”
As for administration and computer technology, Mitchelmore and Quinn Saretsky contract and hire people to manage these areas.
“I’ve tried doing it myself,” Mitchelmore says. “but no way… You can fudge your way through it, but you can’t do it properly.”
Lifestyle and freedom
The challenges of operating a micro-sized engineering consulting firm are many, so why bother?
“If you’re just doing it for the money there are easier ways,” Mitchelmore says. “You’ve got to believe in what you are doing and have some underlying reasons for why you’re doing it.”
For Mitchelmore and others I interviewed, the reasons can be summed up in one word: lifestyle.
Doug Cathcart, P. Eng., president of Cathcart Mechanical Performance in Ottawa, relishes the freedom of being a sole owner. Prior to going out on his own in 2002, he’d spent many years working for larger companies, and while he had enjoyed the work, it consumed all his time and he rarely saw his friends. The breaking point came when his friends stopped calling because they assumed he was “probably working, as usual.”
Now Cathcart is busy, but “if it’s Friday afternoon and sunny out, and I’m done my work, I can just pick up my golf clubs and I don’t have to explain to anybody where I’m going.” He makes time to have a social life — something he’s come to see as essential.
Wood, as well as Saretsky and his partners, J. Charles (Choc) Quinn, P. Eng., and Dean Jeworski, P. Eng., agree that running their own business gives them more time with their families. As for Mitchelmore, when I interviewed him, he’d just returned from five weeks vacation with his wife and children. And if five weeks sounds luxurious, imagine this: that was his third vacation this year.
But while all this time out of the office sounds positively decadent, it can also be deceiving, and doesn’t necessarily equate with time away from the business.
“You never really leave the office,” Mitchelmore cautions. “You’re always working.” In fact, our brief discussion triggers two or three “must-remember to do” tasks for Mitchelmore when he returns to his office.
The freedom to choose your own hours isn’t the only reason many engineers decide to become entrepreneurs. Saretsky and his partners decided to go out on their own so that they could have more control
over the kind of work they do and how they do it. As an unforeseen benefit of this decision, Saretsky feels that their careers have progressed at a faster rate since they went out on their own.
The Big Future of small
All the engineers I spoke with agreed that despite the industry trend towards amalgamation, there will always be room for micro-engineering firms. As for the future, Mitchelmore projects that as more baby boom engineers enter retirement, it’s likely many will turn to moonlighting — which may make it difficult for younger engineers wanting to launch out on their own. On the plus side, however, Saretsky has noticed that engineers are getting called out more often to do jobs that would have previously been considered too small to warrant professional assessment. As people grow more concerned about liability, he says, the number of these smaller jobs may grow, which may mean more work for flexible micro-firms.
While no one can accurately predict the future of micro-firms in consulting engineering, there is no doubt that running one is not for the faint of heart. Mitchelmore pretty well sums up his risk-taking, run-it lean-and-mean mentality as a micro-firm owner when he tells me one of his and his wife’s favourite sayings: if you’re not living on the edge, you’re taking up too much space.
So if you’re considering hanging up your own shingle, remember that this is where most micro-firms must be willing to operate, at the edge, where the freedom can be exhilarating, but where the fall can also be steep, and the cost margins lean. The edge is also where another old saying comes to mind: look before you leap.
Nerys Parry is a freelance writer, and former environmental consultant who now works as a manager of property at a government research campus in Ottawa.
Clients identified knowing that the person they talk to about the projects will be the one coming to site and actually doing the work as one of the primary benefits.