Are you having trouble making a profit? Are your expenses devouring your revenues? Many companies, even professional service firms like engineering, struggle to make a profit. Most professional service companies' expenses are related to labor. Many companies choose to focus on a few things to increase profits, increase work load or decrease staff. But there are many other strategies that can have a similar effect.

A typical engineering company strives for a profit of between 10 and 15% after expenses include salaries. These margins can drop if the market is very competitive or there is a substantial drop in engineering services demand.

Many companies have reduced their fees in response to the current market. But is this really the right solution? Every engineering company knows there are some expenses they cannot avoid. These expenses include staff salaries and professional licenses. With a good handle on the company budget various adjustments can be done to retain a portion of the revenues.

Here's a list with the top 5 strategies that will increase your company’s profits without reducing staff.

Key 1. Increase Service Fees. This may sound counterintuitive right now in a recession. However, a small increase can have significant impacts on your profits. One example: A service you offer costs $1000 and has a profit margin 10% (100). Your profit would rise by 50% if you increased the fee by 5% ($50). While your clients may not notice an increase in fees, it can make a big difference on your company's Profit & 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. Hiring independent contractors or sub-consultants were possible is also known as out-sourcing. The only permanent employees are the absolutely necessary. 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. As an example, one or two CAD Developers could be hired as permanent employees. Then there would be a pool of independent contractors who can assemble CAD Operators.

In recent years, the federal government really cracked down on independent contractors. Independent contractors run their own businesses and can get work from many sources. Having an independent contractor sit-up an office within your business and only contract with your firm is probably not an independent contractor, and the government will seriously frown on this arrangement. Discuss any unsavory agreement with your tax advisor.

Key 3: Do not Focus on Sectors with Very Small Profit Margins - Although during a tough economy companies may be forced to take on what ever comes along, do not focus your marketing efforts on those sectors that constantly contract with the firm with the cheapest offer. Engineering firms and professional services firms shouldn't compete solely on price. A good engineer can save a developer thousands or even millions of money, which will usually be far more than the fees. Sectors that try to negotiate their service fees are often not worth the cost. Do not pay for the job. Clients may expect that, because times are tough, you will make even more concessions. You can offer them free or significantly reduced fees to keep their business. It is almost never a good idea just to get work. Determine your company's break-even point and the sectors and services that make the biggest profit. Anything less will force your business to possibly close.

Key 4 - Contact Previous and Existing Clients for New Contracts. This is the best way to find new work. If you did a good job for them in the past, they will be more than willing to use your services again. Even if their previous engineer was less than satisfactory, they may choose to contract with your services again. They might not be treated the same by the new engineer. Sometimes clients might have lost their contact information. In such cases, they will be delighted to hear from again.

Nothing is better than happy clients. This is the foremost marketing tool used in the engineering profession. 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. You can increase your revenue by having existing clients help you find new clients or award you new projects.

You may think they are so happy with your performance, that they don't realize you need more work. You may be able to refer clients to other professionals in the same field who might also be dissatisfied with your professional designers. Your clients will be your best marketer. Referring clients to you will already be convinced of your company's capabilities and services. Some clients might require multiple engineering firms to assist them. They may offer you a larger percentage of their jobs if you impress them. Your existing clients can be the best source to find new 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 proposed services should be as clear as possible. It should also be clear and concise. In the proposal, a section should outline what is expected from the client. Before signing an Agreement, ensure that you and the client fully understand each other's expectations. It can cause problems for the customer if they believe you are required to perform a metal fabrication malaysia service not specified in the agreement. This could lead to dissatisfaction and make the client unwilling to work with you again. It doesn't really matter if there is good economic news or harsh explicit language in your contract.