Team with other small firm or not?

[HVACctrl]

I have been considering going out on my own. I just sat for and hope I have passed my PE exam. If so, this will give me more clout to enable starting up an engineering company.

I am an mechanical engineer with experince mostly in control systems relating to the copmmercial building HVAC market. I would like to solicite small mechanical and controls projects.

I have a college buddy who, along with a partner, has established an engineering company that mainly centers on the refinery and petrochemical industry. I have approcahed him several times and he seems to be interested in diversifying and getting into the commercial building industry as well. I think I can find some in-routes. We talked about me finding the work, running it through his company and him giving me as much as I can handle while he bills a small premium for his administrative costs, insurance, etc...

It seems this might be a spring-board to get me going with a little more clout and a little more technical backing in my pocket. But I also think this could overshadow getting my own thing going. It may undemine any possibility of getting my business going if I act as an agent of his company in soliciting and carrying out work. But it could also save me some insurance expenses right off the bat, etc...

Any thoughts on the right approach? Maybe start off running my work through him, then, eventually get my business going at which time I could sub any overloads through his company?

Thanks for your thoughts.

Ed

 

[bvanhiel]

Make it clear that you will continue to "own" the clients, so that there is no confusion when you spin off on your own. Get it in writing.

-b

 

[HVACctrl]

Thanks bvanhiel.
Great idea. I'll definitely work that in now that you mention it.

Ed

 

[Ashereng]

You may also want to think about "shared" clients. A refiner needs to upgrade the HVAC for the office annex. Who gets this client when you spin off?

Also, often times, despite the written agreement of which client belongs to who, the client ultimately decides who he wants to deal with.

"Do not worry about your problems with mathematics, I assure you mine are far greater."
Albert Einstein
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[arunmrao]

It is best to go solo for small companies. there will be a lot of issues arising which would lead to unpleasantness. also you will miss the joy of forming own company and seeing it evolve.

In a joint program you will be overshadowed . If you insist on going together then heed to bvanheil's advice. Even if you lose all the tangibles,but retain your clients,you can rebuild a better company.
GoodLuck!!

 

[HVACctrl]

Thanks, everyone, for the good advice.

Ed

 

[solid7]

Actually, I think you've been given terrible advice, thusfar.

If you want to get a springboard start in business, it's a foolish idea to partner with an established business, and demand that you take the customers you've brought in under their umbrella to your own enterprise. You should also avoid asking customers (behind the scenes) to come over to you when you make it on your own.

An established firm is taking a big risk taking you on - in fact, they are training their competition. Take the lessons that you learn, and apply them well - but cut your losses and make a clean start when you go out on your own. That is the professional way.

The only reason that I made it in the early days, was because someone agreed to let me work for them, under their business name. We always had an understanding, however, that business done through his company, constituted HIS customer base, and no mention would ever be made of mine/yours. And you know, I'm OK with that, because I'm not sure I'd want some of his customers, after being biased by listening to the problems some of them caused. (which weren't necessarily problems at all) Funny enough - some of those customers found their way to me, just by accident, when they didn't like the way he handled things. That will speak volumes to how well you learn to progress in other areas of business, such as marketing and customer relations.

If you want to partner for awhile with an established firm, I say you are wise. But think of it as an internship, and leave ONLY when you are prepared to shed your blood, sweat, tears, and most important - MONEY - on your own venture. It's a big deal, and you shouldn't treat your partner company in any way that you couldn't handle. Ask yourself if you would be OK with the idea of someone taking a significant percentage of your business, once you've locked down a good cash flow model...

Of course, the other side of the coin is, you cannot speak for the client. Nothing says that they will come over to you, anyway, so be double careful in that regard.

---
CAD design engineering services - Catia V4, Catia V5, and CAD Translation. Catia V5 resources - CATBlog.

 

[HVACctrl]

Thanks solid7!
Good advice.

In any regard, the owner of the company and I are somewhat friends. We don't really get together at one another's house or anytning, but we went to college together. I wouldn't do anything that would be against his will. I would be sure that everything was above board.

I'm not sure even how this whole thing might work out. It may be that, if things go well enough, they take me on as a partner in charge of the commercial building division, who knows? That would be fine with me as well.

I'll certainly take your thoughts into consideration.

Ed