Are you finding it difficult to earn a profitable business? Are your expenses devouring your revenues? Companies, including engineering firms and professional service providers, are constantly struggling to make profit. The majority of professional service company expenses are labor related. Many companies choose to focus on a few things to increase profits, increase work load or decrease staff. There are many other strategies you can use to achieve the same result.

An engineering company typically strives to make a profit of 10 to 15% after paying all expenses, including salaries. These margins can drop if the market is very competitive or there is a substantial drop in engineering services demand.

The current market has driven many companies to lower their fees significantly, but is this really the answer. Every engineering firm understands the importance of paying certain expenses. There are many expenses that must be paid, including staff salaries, business licenses and professional licenses, insurance for business, professional and office expenses, as well professional licensing and business insurance. You can make adjustments to the company budget to keep a certain percentage of the revenue.

Below is a list of the top 5 key strategies to increase your company's profits 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). You can increase your profit by 50% by increasing the fee by $50 ($50). Your clients will probably not notice the small increase in fees but it can be very noticeable on the Profit and Loss statement of your company.

Key 2 - Workload is a determinant of the company size - You should have a permanent staff and independent contractors for your engineering business. The workload will determine the number of independent contractor. Outsourcing is the term for hiring independent contractors or sub-consultants. The only permanent employees are the absolutely necessary. Outsourcing allows the company's to restructure to be able to handle large amounts of new contracts at the right time and to reduce the number to deal with less contracts during tough economic times. For example, a company might have one to two CAD designers as permanent employees and then an independent pool of CAD operators.

In recent years, the federal government has taken a hard line against independent contractors. Independent contractors run their own businesses and can get work from many sources. The government will not approve of the arrangement in which an independent contractor has an office within your company. You should discuss any questionable 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 will save a developer thousands to even millions of dollar, and that amount will almost always exceed the engineer’s fees. The expense of service fees that are not competitively charged is almost always prohibitive in certain sectors. 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. Find out what industries and services are most profitable and where your company is at break-even. Anything less can force your company to shut down.

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. It is possible that the new engineer has not treated them as well. Clients may have lost their contact information in some cases. Clients may lose your contact information in these cases.

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 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. Your clients will be your best marketer if they refer others to you. 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 existing clients are always the best source of new work.

Key 5: Deliver on your Promises – Clients expect that the engineer will deliver all the services specified in the contract. This engineering works is why a proposal is so important. It is important to clearly state the services being provided and to clarify any ambiguities. 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. If the customer believes you are to provide a service that is not in the contract, may cause serious problems later, and may cause the client to be disgruntled and not willing to do any more work with you. It doesn't matter if the economy is doing well or if the contract contains harsh language.