Entrepreneurship in engineering

In an increasingly service-orientated world of work, it is easy to miss the vital role engineers play in transforming our lives. Engineering is the crucible in which scientific, mathematic and design skills come together. The engineering industry makes up nearly one-fifth of the UK economy and employs over 4.5 million people. The UK is still the world’s seventh biggest manufacturer. Engineering is a key part of a range of industries including music, TV and film, construction, transport, cosmetics, medicine, food and fashion.

Britain has been a leader in engineering for over 300 years. British engineers transformed modern transport by designing and building some of the first railway engines (Thomas Stevenson), ships (Isambard Kingdom Brunel), aeroplanes (Geoffrey de Havilland) and motor cars (Rolls-Royce). They also developed new road-building techniques, bridges and viaducts.

New technologies

More recently engineers have embraced new technologies and materials to create alternative energy sources, such as, wave power (from the sea) and credit card-sized computers that plug straight into your TV (Raspberry Pi). They have designed high tech, energy-efficient buildings such as the new Olympic Park for the London 2012 Games. It was a British engineer and entrepreneur, Tim-Berners Lee, who first developed the World Wide Web on which the internet runs. For more information and insight into the impacts on our lives of engineering.

To be at the leading edge of engineering development, it is important for engineers to share their ideas. This is where the Institution of Engineering and Technology (IET) plays a vital role. The IET is a world-leading professional organisation with the vision to share and advance knowledge, promoting science, engineering and technology across the world. Through professional development, partnerships and networking the IET offers a professional home for life. It is a trusted source of essential engineering intelligence to over 150,000 members across 127 countries. Anyone with an interest in engineering can join the IET (www.theiet.org) to network with people with similar interests.

The IET has developed close partnerships with businesses and is licensed to award a range of engineering qualifications such as CEng, IEng, Eng Tech and ICT Tech. Businesses have a massive demand for more engineers and technicians. The IET is heavily involved with running activities for students and developing resources for science, maths and technology teachers to enable students to see the relevance of their learning to the engineering sector.

Engineering skills are particularly effective when combined with the enterprise. This case study examines the relationship between engineering and enterprise and the role that the IET has played in developing engineer entrepreneurs.

Why people become entrepreneurs

An entrepreneur is someone who is prepared to sacrifice their own time, effort and money to turn a good idea into a marketable product. For example, Charles Rolls and Frederick Royce were motor engineers. They showed enterprise by setting up the Rolls-Royce car manufacturing company. James Dyson is an example of a modern engineer entrepreneur. He invented the ball wheelbarrow and the Dyson Dual Cyclone Vacuum cleaner. His Dual Cyclone idea involves filtering dust in a funnel of air that spins at up to one thousand miles per hour with 100% efficiency. Dyson’s enterprise has created a global brand, employing workers in many countries and selling across the world.

Entrepreneurialism is not for everyone because it requires hard work, long hours and the ability to keep going in difficult times. It is not sufficient to just have a good idea. The entrepreneur needs to conduct market research to find out if it is a product that consumers will be willing to buy at a price that yields an acceptable profit.

When Dyson built the Dual Cyclone it took thousands of hours of experimentation with over 5,000 prototypes (trial models) to iron out weaknesses. The process of testing and market research costs money. Entrepreneurs are not guaranteed a pay-off at the end of their hard work – more new enterprises fail than succeed. However, the rewards for a successful enterprise are considerable.

Characteristics of an entrepreneur

There is no such thing as a typical entrepreneur. Some entrepreneurs are quiet and hard-working, while others are more outgoing and flamboyant. The key to being a successful entrepreneur lies in the ability to take an idea and then, through the process of innovation, develop it in such a way that it becomes a marketable product or service. Research indicates that there are a number of characteristics that are quite likely to be present in high-achieving entrepreneurs:

• The ability to learn from others – entrepreneurs tend to be good at networking. They benefit from being members of organisations like the IET where they can learn best practice ideas from others.
• Self-confidence – a belief in their own abilities and ideas.
• Being innovative/inventive – being able to generate ideas, either for new products/services or new ways of applying them.
• Self-motivation and determination – the drive to keep going and see things through.
• Showing initiative – it is necessary to have not only ideas for the business, but also detailed plans to achieve objectives (both thinking and doing).
• Analytical abilities – capable of researching and evaluating each aspect of the business, from development, through finance, and production, to marketing and sales.
• The ability to make decisions and to take (considered) risks.
• A focus on results ensures products are sold for a profit.

The combination of many of these skills and qualities, with the right support, ensures ideas do not just remain as dreams but become real, viable businesses.

Starting up a business

There are a number of legal requirements that must be met to form a business. A new business will adopt one of a number of possible structures. Many very small start-up businesses are in the form of a sole trader (one owner) or a partnership (two or more owners). These forms of business give the owner/s more freedom to make decisions themselves and to keep the profits their hard work has earned.

A business can also take the form of a limited company. A limited company is owned by shareholders who share the profits the business makes. The company is run by directors. However, limited companies tend to be more expensive to run and administer than sole traders or partnerships. They need to be registered with the Registrar of Companies and have to produce complicated paperwork.

Steps to starting a business

Starting up a business involves a number of steps:
Step 1: Generating good business ideas. These might be, for example, based on the skills of the owners, or spotting a gap in the market or extend an existing idea.

Step 2: Market research in order to find out information such as whether potential customers like the product or service, how they would use it, how often they would use it and how much they would be willing to pay. For example, in creating the hybrid car, the developers needed to check that customers would be prepared to pay for the extra engineering that went into the new designs.

Step 3: Identifying the target audience and the characteristics of the typical customer for the new product. This allows the business to create the right sort of advertising and promotion to reach them. For example, competitive long-distance runners make up a distinct segment of customers for SatNav-directed watches as they show distance travelled.

Step 4: Identifying suitable sources of finance. These may come from personal funds, bank loans or special grants from trust funds for new enterprises such as the Prince’s Trust and Shell Livewire.

Finally, all start-up businesses need a well-worked business plan. The plan should set out the objectives of the business, sales targets, marketing details, the main costs and the resources needed, including equipment, accommodation and people. The plan can be used to demonstrate to a potential lender or investor that the business idea is well thought out and likely to generate a return on investment.

A young entrepreneur’s story

Matt Wilson is an engineer, and entrepreneur and regards himself as a pioneer in cloud-based communications. His tale is one of the rags to riches. At sixteen years old he had no job and £100 in his pocket. Today at 34, he is a chartered engineer, an IET Fellow and Chief Executive of his own highly successful business: Crosby Communications PLC. Matt started a disco agency at the age of twelve. He funded it by washing cars in his neighbourhood. It was a real success and at fifteen he was interviewed on local BBC radio as a ‘budding entrepreneur that would go places’.

He had a keen interest in electronics and the entrepreneur in him enjoyed hunting out and fixing old TVs and radios which he sold through his local newspaper. After finishing school Matt became unemployed. His dad convinced him to use his interest in electronics to take an apprenticeship in electrical engineering. At the same time, Matt set up a small company that was to become Crosby Communications PLC.

‘I started the business whilst doing an apprenticeship, doing odd