4 ways engineering firms can grow sustainably and make more profit

Demand for engineering specialists has risen thanks to a surge in infrastructure projects across the country. However, engineering consultancy owners often lack the structure and clarity to grow profitably. 

Australian engineering firms are thriving in a booming market, but building profitability requires more than charging higher fees. Many get drawn into putting out daily fires instead of stepping back to develop a growth strategy. 

Josh Stone, a former civil engineer, engineering consultancy director and shareholder, now CEO at Ignite Coaching, said many firm owners mistakenly believe charging more or working harder will drive profitably. Firms that fail to address team performance, workflow structures, and data tracking systems may miss opportunities to successfully grow. 

A trifecta of leadership, systems, and performance, including project delivery and people management are more effective profitability levers, Stone said. 

“Engineers are great technicians and problem solvers, but when it comes to building a great business, there isn’t that much support out there,” he said.

Having worked with more than 100 engineering businesses across Australia, Stone has identified the blockers that hold companies back and the drivers that help firms successfully expand. To achieve this, he addresses three key pillars that include leadership mindset, operational structure, and financial visibility.

1. Leadership mindset

The biggest barrier to growth is psychological, not technical, according to Stone. A fear of letting go and trusting others trips up business owners because they become immersed in the daily operations instead of developing a growth strategy. Firms that grow sustainably don’t rely on the owner doing everything but instead focus on building high-performing teams.

“Business owners who want to grow typically get tripped up in the letting-go piece, because they believe no one can do it as well as they can,” he said. 

Growth can be constrained when every decision, client interaction, and technical review must be funnelled through the owner. Being stuck in day-to-day work creates workflow bottlenecks that impact profit, Stone cautioned. 

“We worked with a food and beverage engineering specialist that grew from $4 million to $6.5 million in revenue in just two years after addressing this issue,” he said.

Successful firms create a conductor business model that allows the owner to orchestrate team performance without being involved in every technical decision. Owners who attempt to be technical experts, project managers, and business builders all at once lose sight of a broader strategic path. 

2. Structural shift in profit foundations 

The second pillar focuses on diversifying operational structures so they are not heavily reliant on the owner’s input. 

Focusing on company structure helped transform the food and beverage engineering specialist by defining roles and responsibilities, and developing a proper flow chain of command. The team brought in an operations manager to manage day-to-day operations, set up clear team leaders with defined reporting lines, and allowed directors to step away and focus on the bigger picture.

Structural clarity doesn’t just unshackle business owners, but also improves staff retention.

“The only reason staff ever leave a business is if they can’t see a future for themselves,” Stone said. “If you’re constantly painting a future and up-levelling your team, that creates a compounding effect that allows directors to step away from day-to-day operations.”

3. Real-time financial visibility

Robust financial tracking systems using platforms help build sustainable profitability. Stone advises all businesses use proper project tracking software such as Total Synergy rather than spreadsheets. 

Stone said: “When businesses track their data better, their profit margins go up.” 

He said platforms like Total Synergy give engineering owners the visibility, control, and systems they need to consistently run profitable projects, tackle problems before they escalate, and identify what drives and drains the bottom line. 

“If your employees put their timesheets in on Friday, you can run all your reports on Monday and know exactly where the business is sitting,” said Stone. “It means you can get ahead of problems and have meaningful conversations with your team weekly rather than discovering cost blowouts at month-end when it’s too late.”

This oversight helps project pipeline planning to avoid the feast-and-famine cycle.

“Total Synergy allows you to see forward forecasting of all the work coming into your business based on signed fee proposals,” Stone said. “If there’s a hole in your revenue three months from now, you can start business development activities immediately rather than waiting until you’re in trouble.”

4. The power of specialisation 

Specialisation helps firms to maximise margins. Businesses that develop niche areas perform better than companies that are very generalist, trying to be all things to all people. 

Stone said environmental engineering has emerged as a strong niche market driven by government demand for green projects. Micro-niching also allows companies to  perform well, such as the food and beverage facilities engineering firm he coached, seeing significant growth returns. 

“They’re incredibly good at it, they build systems and processes that allow them to deliver that work really well, and their profit margins go up because they can charge more as specialists,” Stone said. “Clients keep coming back because they get great results.”

He advises businesses to ask whether they are spending time on high-value activities that provide the biggest return or are constantly putting out fires. This will determine whether a firm remains stagnant or is poised for expansion.