What Is This About?
So I decided to change it up a little and write about some of my other passions:
…business, sales, and marketing of engineering firms.
Whether you are an owner/part-owner/employee of a firm, this is something that you’ll find applicable because knowing how to market and sell your engineering service is absolutely crucial for the survival and growth of your business/career.
In fact, I believe that being good at engineering is only half of the equation of becoming an extraordinary engineer.
The other half, is knowing how to communicate to others (i.e. your clients) the value of your services.
We’ll get more into that later down the road but to start off, I am going to talk about something called the “Geometric Growth”.
What is Geometric Growth?
“Geometric growth” essentially means “exponential growth” — it’s a term coined by the legendary marketing and business strategist named Jay Abraham.
Who is Jay Abraham
I won’t go into too much detail about Jay here since I won’t be able to do him justice by just writing a simple introduction — instead, I’ll just quote an excerpt from his bio [link]:
Jay has spent his entire career solving problems and fixing businesses. He has significantly increased the bottom lines of over 10,000 clients in more than 400 industries, and over 7,200 sub industries, worldwide.
Jay has dealt with virtually every type of business. He has studied, and solved, almost every type of business question, challenge and opportunity.
Jay has an uncanny ability to increase business income, wealth and success. He uncovers hidden assets, overlooked opportunities and undervalued possibilities. This skill set has captured the attention and respect of CEOs, best-selling authors, entrepreneurs and marketing experts.
Jay’s clients range from business royalty to small business owners. But they all have one thing in common – virtually all of them have profited greatly from Jay’s expertise. Many clients acknowledge that Jay’s efforts and ideas have lead to millions of dollars of profit increase.
Alright, the point is that he knows his stuff very well — and there is a good chance that if we apply his strategies to our industry, we’ll be able to make the structural engineering profession more fun and more profitable.
Number of Ways To Grow a Business
Now, to elaborate on “Geometric Growth” (i.e. exponential growth), let me first ask you, “How many different ways do you think are there to grow a structural engineering business?”
Whether you are the owner/principals of a firm or an employee, this is something that you should think about on a periodic basis.
Because growth = more profit = more income = higher quality of service and higher quality of life.
Most people think there are countless ways to grow a business and tend to think in terms of “tactics” (For example: introducing yourself to new contacts via networking events; asking or “hoping” for referrals; distributing business cards or brochures; cold calling potential prospects; increasing your rate; reaching out to your existing clients on a weekly basis…etc).
Well, Jay was able to narrow all of these things down to just three fundamentals of growing a company. And those are:
- Increase the number of clients
- Increase the frequency that each client buys from you
- Increase the revenue per project with a client
You can essentially categorize each of the “tactics” into these three fundamentals.
Yes it seems kind of simple and that’s the beauty of it.
As you will see shortly, if you focus on all three consistently, you will be able to achieve “geometric growth” and will be able to grow exponentially rather than linearly.
So rather than arbitrary trying various “tactics”, you strategically implement your ideas based on the three fundamentals.
Let me show you what this means with some simple math.
Example of Geometric Growth
Say that you are a small-medium firm with a couple of employees and are doing about a million dollars in annual revenue ($1,000,000/year).
We’ll assume that you have about 10 clients who use your services regularly — perhaps 4 projects a year per client — and you generate on average, around $25k per project.
So [10 clients] x [4 projects/year] x [$25 k] = $1 million/year.
Scenario 1: Increase Everything by 10%
Now, if you can…
- Grow your client base by 10% (10 x 1.1 = 11 clients)
- Increase the number of times each client uses your service by 10% (4 x 1.1 = ~4.4 projects per year)
- Increase the revenue generated per project by 10% ($25 k x 1.1 = $27.5 k)
With that, your new revenue is now [11 x 4.4 x 27.5] = $1.33 million/year.
In other words, by focusing on growing each area by just 10%, your business can grow by 33% overall.
Scenario 2: Increase Everything by 30%
And what if you can improve each area by 30% instead?
- Grow your client base by 30% (10 x 1.1 = 13 clients)
- Increase the number of times each client uses your service by 30% (4 x 1.3 = ~5.2 projects per year)
- Increase the revenue generated per project by 30% ($25 k x 1.3 = $32.5 k)
You now have [13 x 5.2 x 32.5] = $2.2 million/year — which means that by growing each area by 30%, you can essentially more than double your business!
Implications
Yes I know this example is oversimplified… (e.g. some of your larger clients are likely to bring in 10x or 100x the revenue of your smaller clients) — but I hope you see that the same concept still applies.
So instead of asking yourself: “How can I double my business in the next X years?”
You can now ask the right questions:
- …“What can I do to grow my client base by 30%?”
- …“What can I do to get my existing clients to use me more often?”
- …“What can I do to increase my fees on each project?”
We'll tackle these one-by-one in the future but for now, you should see that just by focusing on the three fundamentals, you will be able to strategically grow you business instead of aimlessly applying various tactics and always chasing your tails.
Action Steps (If You Are an Owner/Co-Owner/Principal…etc)
Alright, so if you are the owner or one of the co-owners of a firm, first thing you should do is to figure out where your business stands right now.
By that I mean you should have the answers to these questions:
- How many clients have used your engineering services in the past 12 months?
- On average, how often do they use your service?
- What is your average fee per project?
Do it on paper or spreadsheet and get a really good grasp about where your business stands.
And once you know where your business is at, think about where you want it to be and in what time frame (e.g. $5 million annual revenue in 10 years…etc.).
When you have the information down, you can then sit down and brainstorm on what you can do to grow your business by improving each of the three fundamentals.
Action Steps (If You Are an Employee or If You Are “Thinking About Starting Your Own Business”)
Now, if you are working for someone else, you most likely won’t have access to all of the data like “past/current clients”, “revenue per projects”…etc.
That’s fine but you should realize that the company’s bottom line and its growth will directly affect your career and job security.
And for that reason, it is in your best interest to always think about how you can help improving the company. And one way to do that, is to simply be constantly observant.
For example,
…If the company is growing, do you know what it’s doing right?
…If it’s not, do you know why not?
Also observe other companies (e.g. competitors in engineering or companies in totally different industries) and see what you like about what they are doing.
Take notes about what you observe and think about how everything ties into the 3 fundamentals.
Then, you can come up with ideas about how you can help your company in areas other than the “technicals”. Once you refine your ideas over time, you can bring them up to the upper managements and offer to help them implement or test the ideas.
And if you ever thought about starting your own firm one day, these notes and ideas will also help you start and grow on the right track when you finally open for business.
Your Thoughts?
To sum up, there are 3 fundamentals ways to grow a structural engineering business:
- Increase the number of clients
- Increase the frequency that each client buys from you
- Increase the revenue per project with a client
If you focus on making incremental improvements to each of the fundamentals…
…instead of growing your company linearly (or worse, staying stagnant), your company will be able to grow exponentially — aka achieving a sustainable geometric growth.
Make sense?
Now your turn.
What are some things you have done for your firm (or the company you work for) that can be categorized into one of the fundamentals?
Let me know in the comments below.