Dear Colleagues,
I delight in those engineering professionals who have set up incredibly successful businesses. I believe that we need more entrepreneurs providing services and products that improve productivity (including safety) and create wealth for our economies to grow in these trying times.
And above all – focus on some of these seemingly overwhelming problems that confront us today, such as climate change, healthcare, ageing, and creating opportunities for everyone from the whole spectrum of society.
The Entrepreneurial Spin-Off
The spin-off will be the employment of more people and more opportunities for engineering professionals to extend themselves and practise their skills. Engineers, being highly creative (and making ultimately useful things), have an incredible role to play here.
As we all know – an entrepreneur is typically associated with someone setting up their own start-up business. This is true of some engineers – however, most are working within a business – a traditional one or a small start-up one.
Most young engineers work out fairly quickly that there are generally two tracks for growth in their career – either as a technical specialist or as a manager – which has too often fit within the straitjacket of an existing business. If they are like me – they are cautious about suddenly jumping out and creating a business believing the risk is too high.
It Doesn’t Suddenly Happen
Naturally, you can’t suddenly decide to become an entrepreneur. You have to have a genuine passion for a product or service and be prepared to persist. You may have such a brilliant service or product which you reckon has excellent possibilities and which tempts you to head out on your own.
Importantly, though, becoming an entrepreneur does not necessarily entail striking out solely on your own. You can often do it within your existing company structure – genuine owners of businesses delight in welcoming like-minded engineering professionals to extend their businesses with new products and services.
Be ruthless about whether it is a viable product you are proposing. Many companies have not been able to survive as their key products, whilst useful, have simply never been viable business ventures.
Some Suggestions For You
As engineering professionals, we tend to focus on the technical aspects of the product. This is what gets us excited.
However, the ‘filthy’ business case on which we need to focus is “Can this product or service be sold to make money?” – the overwhelmingly important question before launching an idea. Engineers often neglect the business factors as they are less interesting.
Sadly, the market will not beat a path to your door because ‘you have designed a better rat/mouse trap’. Ideas are a penny a dozen – it is the business strategy and plan that is critical.
1. A business plan defining your product and strategy is absolutely essential.
And it should fit on a single sheet of paper with all the fundamental thoughts worked through and built-in here. It will probably be challenging to make it work if you can’t explain what you are doing in a few words to your grandmother.
Items to be included in your business plan include;
- Those aspects of the product that are unique
- Why you will be able to sell it
- Who your competitors are
- The costs and predicted revenue
- The cash available to fund the venture
- How long it will take to develop the product
- The members of your team
- An outline of the operations and admin issues
- A simple implementation checklist with dates.
2. Initially, try to finance the product yourself and demonstrate that it is workable.
Bring in a solid profitability before going to others for funding. When the product hasn’t been proven, borrowing money from others or getting partners onboard is fraught with danger and can put you in a difficult position with a financing partner when stresses are high, and disagreements are everywhere.
3. Put overwhelming effort into your marketing and sales.
Constant communication of your idea to prospects for your products is essential. Once you have your product out in the marketplace, you have to listen carefully. You may find that you have to change your strategy considerably as the market might want something else.
Even when you have a highly successful business, seeing the first dollars come in takes aeons. Often you end up with two years of virtually no income as you build up the business. Can you cope with this, and more importantly, can your personal life cope with this? Cash flow is always a challenging animal to deal with, but it is always king in business.
And an issue I have tended to scorn in the past (to my detriment) is the operational and administrative side of running the business. You have to put in place systems to deliver your product or service quickly and effectively, with a high and continuing level of quality and profitability.
You do need passion and persistence. Persistence is critical as you will get “kicked in the teeth” at least a dozen times a day in the course of running the business.
Undoubtedly, it is enormously satisfying as an engineering professional to run one’s own business, bring new products and services to the market, and take control of one’s own destiny. I continue to see so many vibrant engineering entrepreneurs opening up their businesses and that is absolutely inspirational. These range from consulting, to software and hardware development, to electronic product development, to education, to construction and shipbuilding.
When considering entrepreneurial ventures, as the famous General Patton counselled:
‘Take calculated risks. These are quite different from being rash.’
Steve Mackay – PhD
Dean of Engineering
