Are you having trouble making a profit? Are your expenses devouring your revenues? Most companies, including professional service firms, like engineering, are always struggling to make a profit. Most professional service companies' expenses are related to labor. This is why so many companies decide to do just one or two things to increase profit, work load, and/or reduce 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. Margins can be reduced due to a competitive market or a decline in market demand for engineering products and services.

The current market has driven many companies to lower their fees significantly, but is this really the answer. 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.

Below is a list of the top 5 key strategies to increase your company's profits without cutting staff.

1: Increase Service Fees This might seem counterintuitive during a recession but it can have a significant effect on your profits. One example: A service you offer costs $1000 and has a profit margin 10% (100). The fee could be increased by 5% ($50), which would result in a 50% increase in profit ($150). Although your clients won't notice the slight increase in fees, it could be noticeable on your Profit and 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. It is possible to hire independent contractors and sub-consultants. This is called out-sourcing. Only permanent employees should be those who are absolutely required. 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. A good example of this is to have CAD Designers on staff and then a pool CAD Operators who are freelance contractors.

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. 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. Engineers and other professional services firms should not compete on price alone. A good engineer will save a developer thousands to even millions of dollar, and that amount will almost always exceed the engineer’s fees. Sectors that haggles the service fees are usually not worth the expense. The job is not yours. 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 not a good idea to buy a project simply to get work. Know were your company's break even point, and what sectors and services make the most profit. Any less than that will cause your business to close.

Keyword 4: Get in touch with previous clients and existing clients to get new contracts. These are the best sources of new work. They will likely return to you if they have done a good job in the past. Even if they have previously contracted with another engineer they might be interested in contracting with you again. They may not have been treated as well by the new engineer. In some cases, clients may have lost your contact information. In these instances, clients would be pleased to hear back from you.

Nothing is better than happy clients. This is the foremost marketing tool used in the engineering profession. In order to recover lost revenues, you must find new clients. Your bottom line will be further affected if you don't have the funds necessary to market new clients. You can increase your revenue by having existing clients help you find new clients or award you new projects.

They might be so pleased with your performance they do not realize that you require additional work. Your engineering company in Malaysia clients may know others who work in the same industry and are also unhappy with their professional designer. Your best marketer is your clients. Their referrals will have already heard about your company and are ready to recommend you. Some clients might require multiple engineering firms to assist them. They might give you more jobs if they like your performance. Your existing clients can be the best source to find new work.

Key 5: Deliver on your Promises – Clients expect that the engineer will deliver all the services specified in the contract. This is why a proposal is so important. It is important to clearly state the services being provided and to clarify any ambiguities. The proposal should contain what the client is to expect. Before signing an Agreement, ensure that you and the client fully understand each other's expectations. A customer who believes that you are obliged to provide a certain service is likely to cause major problems and cause client dissatisfaction. It doesn't matter whether the economy has been in good times or not.