Are you struggling to make a profit in your business? Are your expenses devouring your revenues? Many companies, even professional service firms like engineering, struggle to make a profit. A majority of professional service firms' expenses are labor-related. Many companies have chosen to do one or more things to increase their profits: increase work load or reduce staff. But there are many other strategies that can have a similar effect.

A typical engineering firm strives to achieve a profit of 10% to 15% after deducting all costs, salaries included. Margins can be reduced due to a competitive market or a decline in market demand for engineering products and services.

Many companies have reduced their fees in response to the current market. But is this really the right solution? Ever engineering firm knows that there are certain expenses that they can not escape. This includes staff salaries, professional licenses for employees, business insurance, professional liability insurance, and office expenses. You can make adjustments to the company budget to keep a certain percentage of the revenue.

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

Key 1: Increase Service Fees - This may sound a little counter intuitive right now during a recession, but a small increase can have a significant impact on your profits. Your firm offers a $1000 service with a 10% profit margin ($100). Your profit would rise by 50% if you increased the fee by 5% ($50). The fee increase will not be noticed by your clients but can be very noticeable in your company's Profit And Loss Statement.

Key2: The workload determines company size. - An engineering firm should have both permanent staff as well as independent contractors. Dependent on the amount of work, the number and type of independent contractors needed can vary. Hiring independent contractors or sub-consultants were possible is also known as out-sourcing. Only those employees who are absolutely essential are permanent. Outsourcing allows the company flexibility to manage a large number new contracts, and reduce the number when it is difficult to find contractors. An example is to have one or two CAD Designers as permanent employees and then a pool of CAD Operators that are independent contractors.

The federal government has been cracking down on independent contractors in recent years. Independent contractors are in business for themselves and are able to obtain work from numerous sources. This arrangement is not considered independent contractor and will be frowned upon by the government. Talk to your tax advisor about any questions.

3: Don't Concentrate on Sectors With Very Small Profit Margins . During a hard economy companies may have to accept whatever is offered. However, you shouldn't be focusing your marketing efforts on sectors with low profit margins . The price is not the only thing that should be considered by professional service companies such as engineering firms. An engineer who is a good one can save developers thousands, if not even millions of dollars. This will often far outweigh the engineer's fees. It is usually not worth it to pay for service fees in sectors that negotiate. Don't pay the service fees. There are those clients that will expect that since times are rough you should provide even more concessions; free or drastically reduced fees to keep them as a client. It is almost never a good idea just to get work. Find out what industries and services are most profitable and where your company is at break-even. Anything less will result in your business having to close.

Key 4 - Contact Previous and Existing Clients for New Contracts. This is the best way to find new work. If you have done a great job for them in the previous, they are more likely to return your services. 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. Some clients may have lost contact information. They would be happy to hear from them again in this situation.

Client satisfaction is the best marketing tool in business. This is the best marketing tool for engineers. The loss of clients to other engineering companies results in a immediate decrease in revenue. This can only be recovered by finding new clients. In order to find new clients you will have to sit aside additional funds to market them, which will further reduce your bottom line. Your existing clients could help you find new clients, or they can award you projects.

They may be so satisfied with your performance that they may not have noticed that you need additional 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 best marketer will be your clients. When their referrals call you they are already sold on your firm's abilities and services. In some cases your clients may be so large a firm that they require the services of several engineering firms. They may offer you a larger percentage of their jobs if you impress them. Your existing clients are the best source for 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. Also a section in the proposal should include what is expected of the client. Make sure you both understand the terms of the Agreement before you sign metal fabrication malaysia 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.