Are you struggling to make a profit in your business? Are your expenses devouring your revenues? Most companies, including professional service firms, like engineering, are always struggling to make a profit. Most professional service companies' expenses are related to labor. Many companies have chosen to do one or more things to increase their profits: increase work load or reduce staff. There are other strategies that can achieve the same effect.

A typical engineering firm strives to achieve a profit of 10% to 15% after deducting all costs, salaries included. A very competitive market or a significant drop in the market demand for engineering services can drive these margins even lower.

While many companies are trying to reduce their fees due to the current market, is this really the best solution? Every engineering company knows there are some expenses they cannot avoid. These expenses include staff salaries and professional licenses. A good understanding of the company budget can allow for adjustments that will help retain some revenues.

Here is a list highlighting the top five strategies to increase your company’s profit without cutting staff.

1: Increase Service Fees This might seem counterintuitive during a recession but it can have a significant effect on your profits. One example: A service you offer costs $1000 and has a profit margin 10% (100). The fee could be increased by 5% ($50), which would result in a 50% increase in profit ($150). Although your clients won't notice the slight increase in fees, it could be noticeable on your Profit and Loss Statement.

2: The Workload Determines the Company Size Your engineering company should have both permanent staff and independent contractors. The number of independent contractors can vary depending on the workload. It is possible to hire independent contractors and sub-consultants. This is called out-sourcing. Only permanent employees should be those who are absolutely required. Outsourcing allows the company to restructure to handle a large number of new contracts when the times are good and then reduce the number of contractors when there are fewer contracts during poor economic conditions. A good example of this is to have CAD Designers on staff and then a pool CAD Operators who are freelance contractors.

In recent years, the federal government really cracked down on independent contractors. Independent contractors are independent contractors who are self-employed and can obtain work from multiple sources. A contractor who is independent from your business but has a contract with your firm will probably be considered an independent contractor. Discuss any unsavory agreement with your tax advisor.

Key 3 - Don't Focus on Small Profit Margin Sectors - While companies might have to do more in a difficult economy, don't focus your marketing efforts only on the sectors that are most likely to contract with the company with the lowest price. Engineers and other professional services firms should not compete on price alone. A good engineer can save a developer thousands if not millions of dollars which will usually far exceed the engineer's fees. Sectors that haggles the service fees are usually not worth the expense. Do not pay for the job. You may be expected to offer more concessions in difficult times. For example, a reduction in fees or a free service. It is not a good idea to buy a project simply to get work. It is important to know where your company breaks even and what services and sectors make the most profit. Any less than that will cause your business to close.

Keyword 4: Get in touch with previous clients and metal fabrication malaysia existing clients to get new contracts. These are the best sources of new work. If you did a good job for them in the past, they will be more than willing to use your services again. They may be willing to contract with you again, even if they've used another engineer. They may not have been treated as well by the new engineer. In some cases, clients may have lost your contact information. In such cases, they will be delighted to hear from again.

Satisfied clients are the best thing for business. This is the main marketing tool in engineering. It is difficult to regain lost clients if you lose them to other engineering firms. To find new clients, you will need to set aside additional funds for marketing them. This will further lower your bottom line. Your existing clients can either help you to find new clients or give you new projects.

You may think they are so happy with your performance, that they don't realize you need more work. They may know people in the industry who are unhappy with their professional designers. Your clients are your best marketer. Referring clients to you will already be convinced of your company's capabilities and services. Sometimes, clients are so large that they need multiple engineering firms. If they really like your performance, they might just give you a larger share of their available jobs. Your current clients are your best source of work.

Key 5 - Deliver on Your Promises Clients expect the engineer to provide the services stated in the contract. It is important to have a proposal. The services to be provided should be as explicit as possible, and every attempt should be made to restate any vague language. A section of the proposal should also include the expectations for the client. Make sure you both understand the terms of the Agreement before you sign it. The customer may believe that you are obligated to provide a service they have not agreed to. This can lead to serious problems in the future and could cause discontentment among the client. It does not matter whether the economy is doing well.