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Contract Engineers: Pain and Gain

Many broadcast engineers who are employed full-time by a single station or group have entertained the notion of leaving the security of a regular paycheck for the world of contract engineering. Radio World talked to five such entrepreneurs to learn more about the pitfalls and rewards of taking that risk

Many broadcast engineers who are employed full-time by a single station or group have entertained the notion of leaving the security of a regular paycheck for the world of contract engineering. Radio World talked to five such entrepreneurs to learn more about the pitfalls and rewards of taking that risk.

“Actually, the days of retiring with a gold watch after 40 years are gone; there is no real security,” said Jim Stitt, president of Cincinnati-based JMS & Associates.

“As with any startup business, you face some uncertainty but I would rather be in control of my own destiny than leave it in the hands of someone else.”

Retainer advantages

Stitt described two basic types of client relationships into which a contract engineer may wish to enter: the on-going retainer and the per-project model. In the former, the engineer generally is obligated through an agreement to a certain number of station visits per month and generally “24/7” on-call availability.

Routine duties are spelled out on paper and usually include transmitter and studio maintenance. The upside of the retainer agreement for the station is that the management gets many of the advantages of a full-time engineer without paying benefits or worrying about holiday relief or additional overhead.

Contracting engineers who work alone typically arrange with associates in the area to cover for them during vacations and illnesses. A contract engineering firm doesn’t have this worry because it maintains adequate staffing.

“The retainer is more cost-effective because the station has the expertise available without paying someone to sit at a desk from 9 to 5,” said Stitt. “And if the station is working with a contract engineering firm, management has access to expertise it wouldn’t necessarily be able to afford with a solo engineer.”

Stitt advised, however, that contract engineers should avoid entering into a relationship with a station that wants that 24/7 availability but doesn’t want to pay a retainer.

The project basis

Stitt said most of his business is conducted on a project basis and he is often called to consult on acoustic and specialized electrical specifications during the early stages of new construction.

Mark Persons operates his own contract engineering firm, Radio Broadcast Technical Consulting and Sales, based in Brainerd, Minn. Persons doesn’t believe in retainers; he feels they are a crutch.

“I work with about 40 stations on a regular basis, but I do not have a contract,” said Persons. “If you have a retainer, someone is going to win and someone is going to lose.”

Persons is a believer in the project-based relationship, partly because it allows him to retain the option of saying “no” to any potential client.

Any aspiring contract engineer must realize that he or she now must wear two hats: engineer and business manager. There’s many a slip ’twixt sending out those invoices and getting the checks back in the mail.

“I learned that you have to go out and do the collecting yourself, or you just won’t survive,” said Al Fromm, owner of Jalco Communications, based in Bartlesville, Okla.

Jack Layton, owner of Layton Technical Services in McMurray, Pa., stressed the need to be organized and set rates that are competitive. He also noted that it is vital to keep equipment purchase receipts for later reimbursement.

“I use Quicken as our accounting software and I always keep the original invoices and receipts and attach copies with the bills,” said Layton. “I charge by the project plus expenses, or occasionally I quote a job on a per-day basis.”

Layton doesn’t use a rate card, but his long-time clients are given preferential rate treatment. Even though many of his stations have a good payment record, collecting from slow-payers is always a concern.

“I have been very careful, and in nine years I haven’t gotten stuck,” said Layton. “But I start calling the clients every other day when they’re over 60 days.”

Layton said late payments are caused by bureaucracy more frequently than by malice. Even so, he tells his clients that their accounts must be current before he is willing to do additional work for them. He is also careful when he structures the payment schedule for each job.

“If it’s someone I haven’t worked with before, I will get at least half of the projected budget before I start. Then I bill as the project proceeds,” said Layton. “I think it’s much better for the client to see smaller invoices as we go along than one huge bill at the end.”

The rules that apply in any business relationship apply here. These include timely and helpful communication with the client, solving little problems before they become huge problems and providing a good value for the dollar.

Layton said that he bends over backwards for his clients and tries to accommodate them in every way.

Spousal support

Anyone who runs a one-person shop out of the home is aware of the importance of including the spouse in the business.

In the case of Layton Technical Services, Layton counts on his wife to proofread the engineering books he writes and publishes. Fromm’s wife holds an amateur radio license and accompanies him as a safety person on some service calls.

Persons said that when the home phone is used as the business phone, it is vital that a client never hear the words “I don’t know where he is or when he’ll be back” from the person taking the call. In his case, clients call the office number and his wife is the only one who is able to reach him by cell phone and communicate messages back to the client. She always knows his whereabouts.

And then there’s the issue of – gulp – sales.

Consider. A station engineer finally decides to leave that big broadcast group and go forth into the world as a contract engineer. The shingle is hung, business cards are printed. But the phone isn’t ringing on its own. The engineer has to face the fact that he or she must now become a salesperson.

There are good and bad ways to present oneself to a potential client.

Persons suggested that an aspiring contract engineer dress neatly and avoid facial hair. He said employers want to see someone who represents the establishment sitting across the desk from them.

“It’s a case of perception,” said Persons. “If you can’t look like a business person, you won’t get the kind of money you want.”

Persons also suggested that contract engineers set an appointment by phone with a potential client. And while references are not usually required at the resulting meeting, a specific hourly rate will be requested.

“The truth is that anyone can get a job in engineering, and it’s unfortunate because some stations have to put up with less than great talent,” said Persons. “The job you get hired for will probably take a couple of hours, and you’ll either get asked back or you won’t. Your job is on the line every time you work for someone.”

Stu Albert of Albert Broadcast Services recommends that the contract engineer always have a good insurance policy in place. Engineers may work late at night when they are tired or do something experimental on a test or repair, and liability could become an issue.

“It’s common sense in this litigious society,” said Albert. “You have to make sure you’re not the reason the station loses advertising revenue, because they will try to get you to pay for that.”

Our expert contract engineers had a number of other helpful suggestions. Persons cautioned engineers to deal only with the individuals at the station who make the decisions. He said that if another station employee, lower down the totem pole, requests a service or a piece of equipment, the general manager may not necessarily feel obligated to pay for it when the invoice arrives.

Stu Albert suggested that engineers learn as much as they can from their peers, who are almost always willing to share experiences and knowledge.

“And be willing to make a modest investment in specialized test equipment,” said Albert. “A well-stocked toolbox, multimeter and oscilloscope are only the beginning.”

Albert said a little money for the right tools can help keep troubleshooting time to a minimum. He mentioned his spectrum analyzer, which he uses to find harmonic energy content problems, to diagnose poor or water-damaged STL microwave antennas, and for making NRSC-2 compliance measurements. Albert said that the instrument paid for itself quickly.

Layton said that his clients don’t like to hear an answering machine when they call, so he makes it a point to use “call anywhere” service through his cell phone so that callers hear a real voice on the other end.

Keeping it legal

And there are tax and legal aspects to any business.

The Society of Broadcast Engineers offers members a free sample agreement between the contract engineer and client station. It’s available from Angel Bates at SBE ([email protected]) and covers topics such as independent contractor status, indemnification, purchasing power, non-disclosure and additional tricky items the new entrepreneur might not discover until too late. Several sources recommended that engineers join SBE and continue their education.

Albert said his business is set up as a “sub S” corporation. Layton Technical Services is a sole proprietorship. Depending on the number of employees, the method of billing and other factors, there are a number of ways to set up a contract engineering business. A good CPA and attorney will come in handy.

Stitt said the proprietor of such an enterprise must be both a good engineer and a good businessperson.

“Unfortunately, some stations view engineering as a necessary evil rather than an asset,” said Stitt. “But ironically, it’s the really successful stations that believe engineering is important. They know that if the station is off the air or the signal sounds crappy, their success disappears.”

Got a tip for would-be contract engineers? Drop us a note to [email protected].