Building your business


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For most folks, the desire to own and operate their own business is spurred by a desire for independence. With hard work and a bit of luck that goal may be realized. But then what? With the fulfillment of the main objective come questions of what constitutes success.

A lot has been written about the fundamental role of vision in running a business. This is as true for contract engineers as it is for anyone. Vision can be thought of as a desired or idealized outcome - in short, a future outcome that is exactly as you wish it to be. Now, before you write off the "vision thing" as motivational mumbo-jumbo, consider that it is ultimately necessary as a fixed point to steer toward - without it, you're lost.

The best it can be

Consider your business for a moment. Is it really what you want it to be? Are you even in touch with what you want it to be? If the answer to either (or both) of these questions is no, it's time to start thinking and doing. Vision provides a sense of current reality and ultimate goal. Achieving the goal becomes a matter of mapping the terrain between those two points.

The first thing to consider is just how big you ultimately want to grow your company. Do you aspire to a large firm with a commensurate number of employees? Or do you prefer to remain a partnership or one-person operation? Whatever your answer, chancesare that you will opt for growth. Expansion comes in two basic forms: Horizontal expansion occurs as a person maintains a range of goods and services offered, while taking a larger share of the available market for them. Vertical expansion occurs when you extend that range.



Horizontal and vertical growth can be built on an existing set of tools and expertise.

Let's see how this translates for a typical contract-engineering firm in an average radio market. Begin by defining the geographic boundaries of your desired area of operation. Use this information, combined with research on how many potential clients (all those who currently use services like yours) exist within that area, to establish the overall market size. Now, evaluate what percentage of those accounts you are currently servicing. This is your current market share. If you find your market share is below the 50 percent mark, there is clearly an opportunity to expand horizontally.

This touches on a sensitive area among some engineers — competing with local brethren for those existing accounts. The best advice is to remember that you are in business, and any good businessperson must compete to succeed. If you do so ethically, emphasizing the value of your services, you will have nothing to feel guilty about. In fact, competition should be embraced, because it provides the impetus to improve service and increase efficiency. In the end, everyone benefits.

If, on the other hand, you find your market share is already close to the top, you may want to consider expanding vertically. For example, you might consider offering remote broadcast rentals and services. You could also become a local distributor for broadcast equipment and supplies, or provide broadcast-specific computer networking services.



Additional sources of contract revenue can come from offering remote broadcast services and equipment rentals.

These decisions will be based on your own expertise, market holes and strategic partnerships. Such partnerships can be versatile — one entrepreneur I know has seven separate limited partnership agreements with other specialty businesses, allowing him to offer a broad range of services while maintaining low overhead. Tower services, consulting engineers, architects, cabinetmakers and industrial electricians are just a few of the possibilities that come to mind in the contract-engineering context.

Which way to go?

Regardless of the direction in which you decide to expand, you'll need to evaluate whether your current manpower and capital/equipment resources are sufficient, and, if not, how you will expand them. Don't overlook the financial revision of your business plan. Of all these fundamental resource issues, manpower is the most perplexing. Adding employees is a major step that adds a considerable overhead burden. Some experts say that an employee's true total cost is at least double whatever wages you pay them. One way of dealing with this and the other legal encumbrances that come with being an employer is to use subcontractors. This is a flexible arrangement that will allow you to accommodate short-term expansions and contractions in business volume. One cautionary note, however: The reliability of your subcontractors is something your business will live and die by, so choose them as carefully as you would a full-time employee. When you find that you and your subcontractors are working at full capacity for a prolonged period (six months or more) it's probably time to add your first part or full-time employee.

Once a realistic expansion plan is in place, it's time to turn on the marketing campaign. Advertising opportunities include trade publications (BE Radio is a prime example), along with trade associations, such as the NAB, SBE and state broadcast associations. Incidentally, many state broadcast associations hold annual conferences and periodic seminars, providing you a unique opportunity to volunteer to hold engineering workshops for radio owners and managers. This can be productive in building name recognition and a personal rapport with potential clients.

A presence on the Web is also important. A website should be well organized and information-driven, with a well maintained links section offering incentives for visiting. Include a list of client referrals and pictures of major projects, such as transmitter installations and studio build-outs. Add value by including radio-oriented shareware and a message board for local broadcasters.

Finally, don't neglect the personal touch. A visit to potential clients leaves a lasting impression that a card, letter or ad cannot. By discussing a manger's or owner's perceptions of their facility's technical strengths and shortcomings, you can lay the groundwork for a successful business relationship.

In sum, building your business is a decision-making process. Allow your vision to set the parameters, make detailed and realistic plans, and follow through with timely action.


Krieger, BE Radio's consultant on contract engineering, is based in Cleveland and can be reached at mkrieger@drfast.net.



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