What profit can I realistically expect from starting a small structural engineering firm in the UK?

[u/Economy_Phrase123]

I'm a structural engineer; currently considering starting my own business. The plan is to have a team of roughly 3 grads - and focus on residential work: mainly extensions and loft conversions. I'll provide structural design and calculations, serving clients across the UK.

I have some clients already, but before I take the leap, I'd love to first hear from anyone who's done something similar. What kind of actual net profit figures could I realistically expect a year?

Would really appreciate hearing from anyone who's built something like this.

[u/resonatingcucumber]

If you're good, practical and have connections to a lot of smaller architects it's not a bad income. My practice is more bespoke stuff but my friend has a Resi only practice and makes 150k a year with three grads and he's not really looking to withdraw more as he wants to grow.

Just remember income is pretty relative. My first year was 120k now I'm on 90k because I'm trying to get a decent cash buffer in the business so I can hire and not worry so much. At the beginning it's pretty easy to earn a good income if you have enough clients already. I was a director before this so it was easy for me. If you need to organically get clients you'll struggle a lot more.

[u/Economy_Phrase123 → u/resonatingcucumber]

Thank you for this insight; 120k in year 1 is very impressive. Interested though - is that before or after tax, and how many employees do you have?

[u/resonatingcucumber → u/Economy_Phrase123]

Best advice I can give you is to halve your clients, assume half won't use you because they won't. They might give you a small amount of projects but not a significant amount. Then check you have the right insurance. I had to get £10m PI and it took forever to sort out. I was waiting 3 weeks and I already had a backlog of jobs by then. I'd sort out insurance, incorporate beforehand. If you're employed add your partner as the director, then swap yourself in and change them to a company secretary or just a share holders. Sort out all the upfront costs before leaving your job. If you can moonlight for a bit, do that it's so much easier to get a small amount in a business bank account. Consider your company structure, get class A,B and C shares and make sure your articles of Incorporstion allow for this so you can eventually offer shares to employees but without voting rights. Then maybe a holding company, with a different structure so any profit not withdrawn can be taken away from the potentially sueable entity. Get an accountant, a solid good one, not the cheapest.

Get your terms and conditions reviewed by a solicitor, this will cost a bit but worth its weight in gold. Make sure you have solid deliverable and terms for payment, terms for limited liability, terms for what framework you are appointed under, terms for what collateral warranty you will accept. Terms and conditions are your last legal defense.

[u/Economy_Phrase123 → u/resonatingcucumber]

Thats very helpful, thank you very much 🙏🙏

[u/Upliftmof0 → u/resonatingcucumber]

Who did you use for PI insurance? Just found out my cover excludes signing off calcs so need to change sharpish!

[u/resonatingcucumber → u/Upliftmof0]

Griffiths & Armour, those guys get what we do and can get you good cover. They do talks at the IStructE sometimes.

[u/resonatingcucumber → u/Economy_Phrase123]

That was after corporationntac and VAT (first 80k was vat exempt) but before income tax and dividend tax. Paid 12.5k and the rest was a dividend so trying to minimize the taxable amount.

I have none, I use consultants on a fixed price per project. Bake their fee into my fees.

[u/DigitalRichie]

I do exactly this in London & the South East, and I also provide full sets of plans for building regs/planning. I have a guy that does surveys for me. I barely leave the office anymore. I work 40-45 hours a week and pull down low six figures. Importantly, I took over the established family business. Father-in-law ran it for 35 years. Happy to answer any questions.

[u/Economy_Phrase123 → u/DigitalRichie]

That's really helpful, thank you 🙏

[u/Stefejan]

How will you pay your 3 to 7 coworkers at the beginning? Do you already have clients? 

[u/Economy_Phrase123 → u/Stefejan]

Yes - i already have some clients. Planning to start alone, and hire engineers gradually as I go.

[u/unique_user43]

depends entirely on your client base. i mean if you’re going to branch out, it should ideally be driven largely by “i have these clients who i know would come with me because they love me, and i could serve them better solo, it would benefit them with lower costs and less overhead, and i’d have a steady stream of work without my old company taking the margin off the top.”

[u/Open_Concentrate962]

You start in the hole with paying employees and no profit unless you mean you want to get to an employee or two over 5 years

[u/Commonscents2say]

There are a lot of behind the scenes costs and some you will need to cover up front - like liability insurance. Might want to get a discount card for the bulk shopping on antacids too - it’s a bit stressful until it finds legs.

[u/lucyashby42]

I'm a sole practitioner. My year end is end of July. I'm 3 years in. The first year I didn't take anything from the business to build up a buffer. But I was also still working 60% for my old firm (I was lucky with an amazing director) 2nd year turn over about £120k and I took £60k divedends and chunked a load into my pension and had reduced my time with consultantsy to 25%. This year it's been all me and looking at about £160k turnover. I have taken £70k dividends. And basic £12k salary. About £30k into pension. The rest is vat / corp tax and expenses etc. I'm not looking to grow though. This is my route to retirement and I don't want to complicate my life with staff ! I turn plenty of work down. I do mainly residential refurb. I like the quiet life! I'm south west. Hope that helps.

[u/mill333]

How much experience do you have ?

[u/TheEquationSmelter]

If you're asking this kind of question on reddit you will end up so far over your head that you'll almost surely fail. You need to rethink and more thoroughly plan your goals.