Tips for new machine shop owner

Hello guys,

My name is Andrey,

I'm 29 years old, and leave in Spokane, WA
I would like to start my own machine shop,I know that this topic is created almost every week.
Have 2 questions: shop plan, and machine advise.

I have CNC machining degree, currently working as CNC machinist and not planing to leave work after opening my own shop, few years of experience, first customers would be Xometry, and Maketime.io, so I would machine mostly parts from aluminium, and it would not be production. I know that both of them would not make me ton of money but enough to keep spindles turning, when I would grew up a bit, I would look for overflow jobs from local companies.

I'm single, so would not have family problems.
I would rent a space since 1500-2000 sf2 costs here about 700-$1K a month, and it's easier than wire the 3 car garage, disassembly part of machine to fit it in garage, buy phase perfect converter, watch for neighbors to not rat you out, show potential customers your shop.

My first plan was to finance a new HAAS VF2SS but after calculating all costs it would cost me about $1300 a month for 4 years. I decided to buy used machine.
I want to know yours advise if is it worth to buy new HAAS TM-1P or buy old used with unknown condition and how it was used HAAS VF-2 (2004-2008) since price is almost the same?
I know that VF-2 has ton's of advantages, more rigid, more tools, more travel, but how to check used machine if it's working properly, not crashed, can hold tolerances, how many hours on machine is a limit?

Would appreciate any comment about my plan and which machine to buy.

Thanks.

Andrey

My 2 cents

OMOH said:

I would rent a space since 1500-2000 sf2 costs here about 700-$1K a month, and it's easier than wire the 3 car garage, disassembly part of machine to fit it in garage, buy phase perfect converter, watch for neighbors to not rat you out, show potential customers your shop.
Andrey

Click to expand...

Having tried (and failed) at the same thing, I would strongly recommend not renting space to start. The rent cost is only the first part. There are insurance requirements, other bills like internet, another electric bill, etc, all add up quicker than you might think. Also, the travel time to and from adds up quickly. If you are working a regular job while doing this (which is what I was doing), you will find that your shop time will be very precious. Being able to just go in the garage to work any time you want/need is very helpful. My recommendation (and my plan when I give it another go), would be to always be smaller than you think you need to be, and more frugal.

Anyway, that's just my opinion. That and 2 bucks will get you a cup of coffee these days! Good luck!

I see CNC machines selling pretty cheap (compared to new) at bankruptcy auctions pretty much every day of the week. You could buy one of those, but it clearly looks like a pretty brutal market, gotta wonder what those companies did wrong.....

I would also suggest using a secondhand machine to start. There are some threads about common issues or "items to inspect" when it comes to a used CNC. However, the problem is you're at the mercy of the used market so it might take a while before the best deal to pop up. The market goes up and down from the buyer's standpoint, sometimes there's terrific deals but other times there's a wasteland. If you start looking and have cash in hand (or revolving credit that could turn into cash quickly) you might be able to snag a deal as soon as it pops up.

The only way I would recommend a new machine would be if you had a TON of liquid cash ready to dump into the venture, and/or if you already have established sales that can justify it. A business plan is good but there's a lot of picking numbers out of the air, nothing beats having the security of backing up the numbers with your own sales. Even if it's not profit because of limitations, it's still sales that can be used to show how things are working. You can get big loans ($xxx,xxx) without established profit but that doesn't necessarily mean it's the smart move. That's why I always point toward used machines first in order to get things rolling.

If you're in the position where you absolutely need to use a fast and modern machine to make the parts quick enough to profit from them, well that's a real tricky spot. Hopefully nobody reading will find themselves there

keep your overhead at a minimum when things are slow or no work coming in its a hells a lot easier on the bank account vs borrowing to the hilt on a new spindle. I've got 3 spindles on my floor on a beer budget...if I would have went knew or high dollar used I would have went under. this is a stupid expensive game make smart moves with what limited capital funding you have. there are some nice used machines out there I was just looking at a few 20-30k for a good used has would be a good backbone to a start up. skip the toolroom machines i'd love to have one but a VF is the way to go for your first machine. good luck

I had negotiated twice on local, used machines. I knew the companies, their kind of work, and their attitude about the care of their machines. I felt we had arrived at a fair deal on both occasions. However, the sellers then called the local dealer to get calibrated on the selling price. On both occasions, the dealer told them they were nuts and that the dealer could get them a much higher price. Of course, I lost both deals and the dealer got a trade-in and sold a new machine with a better margin! It is tough to find a fairly priced used machine because the machine’s company is usually the first to know what will be coming on the used market and they have so many ways to manipulate or incentivize a turn-key new sale. It also keeps the low-hanging fruit out of the used market place and it artificially raises those prices. You can’t compete in that market. If you have a way to circumvent that process, either through school contacts or even your current boss, you will save significantly.

There is nothing wrong with a “good” used machine if you have a pre-purchase inspection. And before you spend money on inspections you should have a written, fixed price, purchase contract based on a successful inspection(s). Because, once others find out about your “good deal” they will offer the seller a higher price! Any dealer can do a ball-bar test to prove out the orthogonally (or axis cross-over) of the machine and you can probably pull up registers of the spindle on-time vs. cut-time yourself. The machine’s serial number is in the local dealer’s data base and they can give you a repair/maintenance history (for a price, and the seller’s permission) as well as send out a tech to do an inspection, again for a price. Any trustworthy seller, proud of their machine, will support or even encourage inspections.

Not sure of the work your planning to do...but the machine is the easy part of your equation.

Buy machine.
Rigging of machine
Electrical hookup

Need air compressor, air line. One machine so it's not so bad.

Material... are you buying cut to size? A saw helps otherwise.

Need to turn a diameter for something...lathe comes in real handy.


So now you have machine and material... now need a way to hold.

Vise
Clamping studs...toe clamps etc

Hmm parallels help...

Odd part to hold angle plate..

Ok...all done ready to cut...

OOops need cutting tools...maybe tool holders would be helpful.


Buy some 3/8 endmillsx 1" Loc and we are ready...right.


Nope, gotta get vise running true...indicator...might as well buy an edge finder too.

More the one part,,,maybe pickup some work stops too.


Ok... now we are set...oops just realized we need to machine down 1-1/4" gotta order longer 3/8 em. Maybe go up a size to 1/2"...toss in a new tool holder too.

Maybe pickup some spot drills as that tapped hole needs to be located pretty close...hmmm add some drills and taps too..,guess an Er collet holder and some collets too...might as well get a few taps...tap handle, tapping fluid.


Hmmm need coolant too.


Parts finally done...just check and make sure all I'd right.

Caliper, micrometer, inside mic or tube mic would be nice. Check thread with screw...or maybe pickup a thread gage.

So the hole isn't quite round....interpolating is not working as hoped...time to get a boring head...boring bars.

So how much are we getting for this job we are doing anyway?

The machine is the easy part.

I would avoid new unless you absolutely know you have work for it, the same goes for renting a space.

I run a garage based shop, the haas tool room series has been my backbone machines. Ease of entry and low payments help with the startup stress levels!
Single phase power and low air consumption greatly help with that cost of entry, as stated above you need A LOT of other things besides the machine.
They have helped establish my customer base. Now I'm moving to larger machines, but I have proven income now without sticking my neck on the line.
Once you prove financial viability, turn around and sell the used machines at the same price if you can. Nothing to loose unless you got the inside scoop on some high production work!

Vf vs tm. No comparison machine wise.
Price wise.....
so is business. It's a balancing act, way more to think about than making parts.

Re-calibrate your budget.
It costs about 20k low end to start a *profitable* bare bones machine shop without machines.

And typically 10-20k+ more, low end, to start the shop in terms of facilities.
Air lines, oil, traps on drains, high power lines, electrical, legal washrooms, safety stuff, inspections, insurance, etc.
That 40k$ low end gets you a bare minimum shop with legal ability to do work.
Now add machines as necessary.


And that 20k$ in stuff is 1/3 of what you want, using old second hand stuff for everything and low grade imports for everything else.

You need racks, lifting, washing, packing, storage, finishing, logistics, sw, billing, accounting insurance etc.
Metrology.
Tooling.
A stacker at least to move/lift heavy/large items like 3m long beams/bars/billets- so your raw material is cheap vs expensive when ordered cut to size.
Washing equipment, mandatory filtering and cleaning and stuff for epa, industrial drains, permits, industrial compressor, etc.

What You need to do is define your business.
Exactly what will you make for whom, in what qty, at what margin ?
What do you need to accomplish this, efficiently enough so that You make a sufficient gross margin ?

It is very easy to make beer money of 1000$ or so, per month ..
but you are operating at a significant loss then, while not paying your salary, insurances, amortisation etc.

Anyone can make 50 widgets per month for 40$ each, .. pocketing 20$ each in "margin" in terms of material vs sales.

But to make a "shop" it needs to be 500 widgets plus .. for 20k$ / month gross sales ..
and now you cannot do it without bars/lifters/stackers/logistics/industrial stuff .. that all needs to be amortised, maintained, insured, consumables, etc.
And at that volume you cannot pour used goop down the drain (1M$ fine + years in jail), need proper logistics, clients will want to see your metrology reports to make sure it´s right etc..

And now the widgets cost 35$ each to make, since you are paying for all the stuff you needed.
So its a bigger loss.
Unless you get good and fast stuff, and now they cost 200k$ instead of 20k, for the small shop.

Andrey. I bought a VF-2SSYT last year and put in a 640sq ft garage shop. I was fortunate enough to get a decent amount of work for it, but if I was renting a shop as well as making machining payments my whisky consumption would probably be excessive. Machine payments will end, rent will not and if things go sour you at least you own the machine to sell. I would definitely stay in a garage if it's just a tool room or mini mill. My experience has shown me high end companies netting millions a year still use one man garage shops for a lot of their work, because they want a local vendor who will do small runs cheaply. I have never had a customer enter my shop, everything is just shipped directly to them and they really don't care as long as the parts are good and cheap. As for the machine, a VF SS machine can be sketchy as far as peak power and flickering lights, but after investing in all the supporting equipment for the the machine the difference in cost feels minimal and resale value on VF machines are much better.

The mill well be the cheapest part of starting a new shop ... but its whats expected to pay all the bills... Only spend what you have in your pocket and start small tell you can pay out of pocket to get bigger ,,, If I had to do it all over I would do it just like I did the first time ... Eat top roman and drink water and save up tell you can pay cash for your equipment. It takes time but when you pay cash it makes you stop and think about your choices and its really hard to get in trouble if you own everything outright.

I have seen a lot of shops come and go in my area and they all got in over there head and went under fast and hard.

SIM said:

Not sure of the work your planning to do...but the machine is the easy part of your equation.

Buy machine.
Rigging of machine
Electrical hookup

Need air compressor, air line. One machine so it's not so bad.

Material... are you buying cut to size? A saw helps otherwise.

Need to turn a diameter for something...lathe comes in real handy.


So now you have machine and material... now need a way to hold.

Vise
Clamping studs...toe clamps etc

Hmm parallels help...

Odd part to hold angle plate..

Ok...all done ready to cut...

OOops need cutting tools...maybe tool holders would be helpful.


Buy some 3/8 endmillsx 1" Loc and we are ready...right.


Nope, gotta get vise running true...indicator...might as well buy an edge finder too.

More the one part,,,maybe pickup some work stops too.


Ok... now we are set...oops just realized we need to machine down 1-1/4" gotta order longer 3/8 em. Maybe go up a size to 1/2"...toss in a new tool holder too.

Maybe pickup some spot drills as that tapped hole needs to be located pretty close...hmmm add some drills and taps too..,guess an Er collet holder and some collets too...might as well get a few taps...tap handle, tapping fluid.


Hmmm need coolant too.


Parts finally done...just check and make sure all I'd right.

Caliper, micrometer, inside mic or tube mic would be nice. Check thread with screw...or maybe pickup a thread gage.

So the hole isn't quite round....interpolating is not working as hoped...time to get a boring head...boring bars.

So how much are we getting for this job we are doing anyway?

The machine is the easy part.

Click to expand...

He doesn't need to buy any tooling.
What the heck do you think that day job is for...

Here a bargain machine but who knows if it is good or not.
And you need tooling...and work...
CNC LATHE - heavy equipment - by owner - sale
Used HAAS perhaps $20K
HAAS VF-4 CNC VMC - Milling Machine - Machining Center - tools - by owner - sale

Agree I have no idea what is out in your area..

QT: first customers would be Xometry, and .. You need to bid very tight to compete with everybody out there…Some guys are bidding near cost just to keep their door open till things get better..Might make better money/have more chance finding a local job/work..likely your current job won't like the idea of you stating a shop..Get caught stealing stuff and likely you will be black-balled and have great difficulty getting started..Most/many shop owners talk to each other..

*Need to get a up and running machine (s) even if you have to pay someone to check it/them out…Good to go around and talk to at least a few possible customers to feel out the market. Many customers like to know the new guy so not just taking quotes from everybody/anybody..

I dont think you will be doing much with xometry just starting out. Best i can tell you need to have an overage of available stock as well as a good selection of QC tools to do work with them. I agree with the stay in garage no rent. My first mill was a Fadal vmc20. That thing cost me 7k. Great little mill. Good luck