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Re: General business questions

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Kathleen A. O'Brien wrote:
I would like to get feedback on some or all of the following issues:

The Problem:  I am a civil/structural engineer and the sole proprietor of a
home-based business. I showed a tiny profit last year (yea!), am getting
steady work and know my limits. One of my limits is that I have no clue how
to run a business.

So:  What do other people (sole proprietors in particular but I would like
to hear from others, too) do about the following issues:

What to charge for time picking up blueprints, photos, going to Kinko's
etc?. if I had an assistant, I might be able to charge for their time, but
I can't bill my standard rate for errand running. What about time traveling
to and from a jobsite?

This one I feel depends on where you put your hourly rate. If you can establish a fair rate with clients then it should be "fair enough" to cover overhead stuff like this. If you need to establish a "bare bones" hourly rate for competitive reasons, then let your clients know up front that it doesn't include "premium" service.
How to charge for getting on the Net for information/advice about a
particular problem for a particular job? How do other people bill that
time? Do they bill that time at all?
Others may differ on this, but I feel a good percentage of your professional development and research should be absorbed into your overhead (and consequently planned for when you establish your overhead)
Could someone tell me a range of hourly rates for a home-based sole
proprieter who mostly does residences? Is it fair to charge more for
commercial work? What about clients who are EXTREMELY (i.e           6
months) slow to pay but give you lots of work? Should you charge them more?
Start with determining the average hourly charge for professionals in your area. Call local architects, they generally are only to happy to tell you what they expect/desire. Also speak with your competitors. Perhaps you would like to align your level or quality of service with another professional in the area, or maybe you are wishing to distinguish yourself from "the pack".

I try to establish rates based on how much beyond wl2/8 I need to go. Obviously, the more involved you are in determining the cost of a project, the more highly regarded you'll be :-).

Slow pays should be alerted to your need to borrow money to cover costs and therefore should understand the concept of interest charges. I'd hesitate surcharging slow pays because I think uniformity of treatment of your clients is important. If you think the standard of "what the market will bear" is appropriate, adjust you thoughts accordingly.

It can be said that home based businesses "appear" to have lower overhead (rent) costs. My feeling is that all the computers and printers and letterhead I buy cost the same as if I had an office downtown. Clients do sometimes have requirements for meetings at your office, and unless they require fancy office surroundings, arrangements can be made. The hinge in setting a professional hourly rate in my mind is establishing the quality of your service however, not necessarily the office environment. That said, I still haven't given you a number right? If I do, don't let anyone else know what it is OK, this is just between you and me right?  I'd use $65/hr.

What about a cap/not to exceed figure? I don't usually eat time on the
simple jobs any more, but the complex (i.e. fun) ones I REALLY do.
 
No comment at this time.
Is there a rule of thumb for how much time to charge when the technical
aspects of the project are brand new and you are learning as you do it
(because the deadline is tight and there is no time to do it any other
way)? When I'm learning something new I will not usually charge more than
half the time to the job, sometimes, less (depending).
 
No rule of thumbs that I am aware of. You see, business has its rules but they are somewhat different than what you may have learned in engineering. It is said that business is risk. This is what making these decisions is all about. Sure there are guidelines, but ultimately you need to know as much about the making those guidelines in order to choose where to fall in the range. That said... good luck.

How do you know when it's time to hire someone? And how do you know whether
that Someone should be an errand runner or a Jr. Engineer? Is there some
benchmark? How do you know when you need a Partner? How do you pick a
Partner?
 

If you're looking to hire someone, you're growing into the management of people. I'll leave this for another time

I have been developing good habits; ie. run all errands at one time, don't
go answer the home phone during business hours, etc., but I still feel
overwhelmed and inefficient.

Any advice will be very appreciated!

Kate O'Brien, P.E.
Simi Valley, CA

If this subject becomes tiresome on the list serv, feel free to contact me via e-mail.

Barry H. Welliver
wellive(--nospam--at)ibm.net

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