Operating your business from remote places. Pros? Cons?
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  1. #1
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    Default Operating your business from remote places. Pros? Cons?

    Hello,

    I'm a small OEM, so the only parts I'm machining are for my product.
    All my customers are big OEMs for the automotive / transportation industry. So, I don't deal with public, and I don't machine for nobody else.
    Currently I'm based in Houston suburbs, and I'm leasing a small office-warehouse. I have been living here for about 5 years, and I'm already tired of heat, traffic, growth and taxes.

    My family and I are in the process of moving back to New Mexico. I found a small lot (1 acre) very cheap, in a small town, almost in the middle of nowhere. Commute to our next home is not very bad (about 30 min). My plan is to put a metal building to operate my business. I will pay cash for everything, looking to have the less over-head possible, and be able to put all the possible profits from the business toward retirement, college fund, etc...

    Yesterday, I was speaking about my project with my landlord. He said I was completely insane doing this, and it was a waste of money.
    It didn't care me very much, but I was curious about what another owners think about operating your business in remote places:

    - Do you prefer to invest a large amount of money in a larger building, mortgage, and rent part of it? Of course, in a high traffic area, with all the associated cost.
    - Or, do you prefer to have a full-paid small building to fit your needs, no mortgage, no strategic location, and use profits for retirement?

    Thanks for sharing your opinion!

    (By the way, I'm 40. I always heard that at this age, you start thinking more weird... LOL)

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    it has always been my dream to have a small machine shop on my own little spot.
    Lifestyle wise I would say go for it!
    Business wise I'm sure it will pose some challenges.
    Zoning, power, transportation costs, employees?
    Working from home can pose its own challenges too.
    One must be extremely dilligent with time management.

    If I had the chance. I doubt I would even blink and eye.
    It's just to bad acerages are so bloody expensive in my area, imo

  3. #3
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    Quote Originally Posted by riabma77 View Post

    Yesterday, I was speaking about my project with my landlord. He said I was completely insane doing this, and it was a waste of money.
    That was your first mistake.

    Secondly, I'm pretty sure your landlord was not being very honest with you.

    You pay his mortgage, his taxes, AND you make him PROFIT.

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    There are a lot of cons to this:

    Firstly, can you get a decent amount. Of three phase power to it? If the utility has to run a line that will cost more than the property to buy.

    Can you get water and sewer? If not, will it perc for septic? How deep will you have to drill for a well? Either way it is spendy.

    If you're building anyway, why not build in the town you intend to move to? I assume that a cheap industrial acre in a small town is $5-$10 grand. An expensive industrial acre in your town would be what, $50k instead? Driving an hour total each day shaves 200 billable hours from your business per year. If you net $25 an hour, you're losing five grand a year in billables. You're driving an extra 10,000 miles a year, which at standard rates is another 5 grand a year in car expenses.

    So building remotely costs an extra $10k a year rather than building in your own town (or on the same property where you live.)

    Then here's the real kicker. There is a reason that lot is selling cheap, because it isn't desirable in some way. Could be the remoteness, could be a lack of utilities, could be anything. I don't know and it doesn't matter. Building on a desirable lot means you own a desirable building, and can sell it as such. Building on an undesirable lot means you own an undesirable building and will have to sell it as such.

    It's appealing, but it is a false economy.

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    If you need only rare face to face contact with customers text, e-mail, skype, UPS and Fed-Ex make a "strategic" location anywhere you want to be.
    One advantage of being near a big city is the labor pool but not real problem in remote areas if you need few workers and wages tend to be lower as you are not competing for talent.

    I picked to stay here once when the decision hit me.
    I was spending the first 3-4 hours of everyday in the customer's plants and felt that a move 200 miles would put me too far out of contact.
    Then... they moved to China so I certainly make the wrong call and would love the opportunity to go back and dope-slap my younger self.

    All this new communication and shipping stuff has changed the rules.
    Retail still remains location, location, location and very large manufacturing operations need a big nearby population.
    Very rural may have a shocker on running the electric you need but this is a one time shot so smart money averages this over many years or decades.
    Bob

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    I knew some folks maybe twenty years ago that did something similar and followed their dream to middle-of-nowhere Colorado. The business was manufacturing boutique knicky-knacky stuff, but there was some production work involved. Their biggest problem was when they would get busy, they couldn't hire more help. The entire labor pool available to them was the village idiot and the town drunk.

    The fact that any supplies they needed took three days to arrive also kind of sucked.

    They eventually moved back somewhat closer to civilization.

    Dennis

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    I personally do not like the idea of the 1 hr drive time per day. Sure it is not like driving in the city but that's gonna add up to a lot of miles per year. Like the other poster said some of those are billable.

    My buddy has a small shop on his property and had his own products he made and did not do outside work.
    With that said it is least 1.5 hrs round trip to go it any supplies like bolts or hardware and closer to 3hs round trip to the Steel or Aluminum yards. Their trucks will not deliver to his place. As long as he has everything planned out and makes his monthly runs it's not so bad for him but in the end, it's was the quick omg I need this now type trips that killed his motivation over the last 10 years. In all fairness, he is a little older at 55 so there is that but his travel time has caused him lots of grief over the years. Like I said he lives on site and does not have a daily commute.

    I say find a place in town you can have your home and biz. and you will be much happier.
    At the very least do so checking on your supply chain before jumping in with both feet. YMMV

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    Quote Originally Posted by Modelman View Post

    The fact that any supplies they needed took three days to arrive also kind of sucked.

    Dennis
    Why and how do you not know you need supplies 3 days ahead? I have bearings that are 6 months.
    Lack of planning? You know how fast this stuff gets to you.
    One has on hand bolts and nuts.
    Is this hard, or just not planning and thinking more than one day out.
    Bob

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    I started in my garage in the foot hills of Mt St Helens in timber country. Then moved into a converted service station in a town of about 1200 with only two intersections that had stop signs.

    At the time, I had developed a digital center wind algorithm and was deploying machine retrofits in the paper converting industry with $250k systems going to Kimberly Clark, Georgia-Pacific, Potlatch, etc. Customers never visited my facility.

    K-C was considering doing a very large project with us and asked to come visit to discuss. They came, they drove an hour from the Portland airport into the woods and finally to the town of Yacolt, the meeting was pretty short, I could tell they were unimpressed with the country hick town and our building. We never heard from them again, ever.

    Over the next couple of years, as demand grew for our products and services - we had a hard time finding talent that wanted to commute to Yacolt and it was clear that we needed a bigger building which would require that we build. Then the dot.com bubble came and a nice new 25,000 square ft building came available for a bargain price in Vancouver Washington. We took the plunge and moved.

    The benefits of being closer to a metropolitan area are huge and we are about to move again . . . and this time we are building from scratch.

    If you aren't interested in growing beyond yourself and your customers are sold on quality rather than appearances . . . then move to the country. Otherwise, it is generally easier to grow and have access to talent and resources close to town.

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    I bought a farm with a barn and some land. That barn is nearly 6500 sq ft with a 5 ton bridge crane and 400 amps of 3 phase coming soon. I have a nice level lot and a driveway a semi with a 53' trailer can turn around in.

    I like being a good dad and that's why I work from home. My 3 kids have never seen outside child care.

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    I live out on the plains. I have to drive 25 miles just to see a traffic light. But the US Mail and all the package delivery companies know where I live and work. So do the trucking companies and go ogle. Amazon prime has made living here much less inconvenient.

    I can agree with all the above comments about pluses and minuses, and add a couple of more. Any money you spend on your building you will have to extract from the building by adding value to your product. You won't have an exit strategy other than just walk away. Competent medical care will be hours away. You may have a local doctor for a dose of antibiotics, but much more than that you better hope you can stay alive long enough to make a good hospital (which will probably require over 100,000 people in the area). The fire department will be volunteer and they could use your help. Police will be hours away, you have to be able to hold your fort until they get there (assuming the problem isn't the sheriff's nephew). Make certain you know the property tax costs before you build. You may be able to get some type of abatement as it could be the first new building in the county for years.

    On the plus side, its quiet much of the time. Many who dwell in the city have never heard quiet. Its dark at night, you can see the Milky Way. You can truly see the horizon, not silhouettes of buildings. You will get to know your neighbors, both good and bad. But you will be an outsider, so acceptance may take years to decades. Hunting will be nearby, just get permission. Traffic on roads is measured in cars per hour, not per minute.

    If you didn't grow up in a small town you may be overwhelmed by the differences.

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    Quote Originally Posted by CarbideBob View Post
    Why and how do you not know you need supplies 3 days ahead? I have bearings that are 6 months.
    Lack of planning? You know how fast this stuff gets to you.
    One has on hand bolts and nuts.
    Is this hard, or just not planning and thinking more than one day out.
    Bob
    Point taken... for production items.

    But when the town drunk breaks the broom handle, and the village idiot leaves the dustpan in the dumpster, you are without broom and dustpan for three days.

    My point being, it is just easier conducting business somewhere where every single item doesn't have to be flown "over the hump."

    Dennis

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    Things to consider, what Internet service is available? Its hard to imagine but some places still don't have good cell service so even 4G won't work as a fall back. I can't imagine having to actually call McMaster each time I needed something. Which leads me to the second item. How long does it take McMaster/MSC/Amazon etc to deliver to you? Many places WAY out in the sticks are still 3 day service for priority mail...

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    You mentioned your landlord's perspective, well, he's right....from a landlord's perspective. You likely not going to get any appreciation of the real estate or really much of an exit. Depreciate the building like you would machinery. This is different in a big market were you see guys sell the building and get more for it than the business. Of course your landlord is the real estate business not the widget business so likely isn't very knowledgeable about your business or in a position to offer good advice.

    Make up a spread sheet of every conceivable difference, assign $'s to each item - from real taxes, difficulty getting employees, cost extra inventory because there isn't a supplier down the street and so on. over sometime frame and present value it. It might make the economics of it clearer.

    Gut reaction is if you don't need the big market for labour or customers or the airport, yeah the world has changed so getting out of Dodge might be good.....if it all adds up.

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    Quote Originally Posted by Ohio Mike View Post
    ..... I can't imagine having to actually call McMaster each time I needed something. ..
    I actually call on every order. 2-8 times a week. Have never used the net/web/computer
    Me: Speed dial, "This is xxx-xxxxxxx and I need to place an order, 5 of this, 2 of that, 1 of this in gold and 18 of that".
    Them: "yes sir, all in stock and we will be shipping today to xxxx yyyy in Flushing Michigan., do you want to reference a purchase order number"
    Me: "no, a verbal to Bob xxx".
    Them: "Thank you"
    Me: "Thank you" hang up the phone.
    I know it is a low paid clerk on the other end but they can type or lookup the stuff for me. Not My Job and they become my unpaid office help.

    On each item I get a instant check of inventory, know my place in the queue, and get to talk to a human.
    They are very efficient and it's faster than going to the net and pointing and clicking or entering information.
    To each his own but I like calling them and with a cell it can be done while you are roaming the floor and realize that you need something.
    Perhaps I'm just old school having been a customer before there was a Internet.
    Bob

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    Quote Originally Posted by riabma77 View Post
    Hello,

    I'm a small OEM, so the only parts I'm machining are for my product.
    All my customers are big OEMs for the automotive / transportation industry. So, I don't deal with public, and I don't machine for nobody else.
    Currently I'm based in Houston suburbs, and I'm leasing a small office-warehouse. I have been living here for about 5 years, and I'm already tired of heat, traffic, growth and taxes.

    My family and I are in the process of moving back to New Mexico. I found a small lot (1 acre) very cheap, in a small town, almost in the middle of nowhere. Commute to our next home is not very bad (about 30 min). My plan is to put a metal building to operate my business. I will pay cash for everything, looking to have the less over-head possible, and be able to put all the possible profits from the business toward retirement, college fund, etc...

    Yesterday, I was speaking about my project with my landlord. He said I was completely insane doing this, and it was a waste of money.
    It didn't care me very much, but I was curious about what another owners think about operating your business in remote places:

    - Do you prefer to invest a large amount of money in a larger building, mortgage, and rent part of it? Of course, in a high traffic area, with all the associated cost.
    - Or, do you prefer to have a full-paid small building to fit your needs, no mortgage, no strategic location, and use profits for retirement?

    Thanks for sharing your opinion!

    (By the way, I'm 40. I always heard that at this age, you start thinking more weird... LOL)

    Moving, and having all the cards in your hand - just seems like you could find a vacant building a wee bit closer to a vacant house eh?

    I just can't imagine having all the world as an option, and driving 1/2 hour each direction. Is there lots of turns between these two places? And doo you ride a bike?


    ---------------------

    Think Snow Eh!
    Ox

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    Sorry for the late answer, but I have been really busy...
    I appreciate all the comments, and I will share soon some updates!

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    Will your customers be just as happy, no matter where you are? Can you keep your production/ship rate at current levels?

    I find that living in a remote area, it is necessary to become my own store, for what I need to stay operational. Extra stock and tooling on hand, just in case. Fix my own shit mostly. And, no grinding or edm'ing service available at the drop of a hat

    Need a full bar length of something? No problem order it in and it's dropped on the doorstep for $200. freight charges.

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    Remote area sounds nice provided you have all you need.

    Power
    Help

    Material

    That last one is killing me more and more these days and I am not in a remote area. Try to get materials these days is getting tougher and tougher..sure a few small pieces can be UPS'ed or larger lots trucked. But for a couple bars of this and a few bars of that at a competitive price its getting tougher and tougher to find dependable suppliers with truck service.
    Its your product...so I guess you know what you need and can buy it right, stock some so you have...But for me its a mix and match based on customers needs.
    Something to keep in mind if you move outside the normal job.

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    Quote Originally Posted by CarbideBob View Post
    I actually call on every order. 2-8 times a week. Have never used the net/web/computer
    Me: Speed dial, "This is xxx-xxxxxxx and I need to place an order, 5 of this, 2 of that, 1 of this in gold and 18 of that".
    Them: "yes sir, all in stock and we will be shipping today to xxxx yyyy in Flushing Michigan., do you want to reference a purchase order number"
    Me: "no, a verbal to Bob xxx".
    Them: "Thank you"
    Me: "Thank you" hang up the phone.
    I know it is a low paid clerk on the other end but they can type or lookup the stuff for me. Not My Job and they become my unpaid office help.

    On each item I get a instant check of inventory, know my place in the queue, and get to talk to a human.
    They are very efficient and it's faster than going to the net and pointing and clicking or entering information.
    To each his own but I like calling them and with a cell it can be done while you are roaming the floor and realize that you need something.
    Perhaps I'm just old school having been a customer before there was a Internet.
    Bob
    Just for fun, Bob--try M'Carr's site--it's wholly easy to use, gives your order history going back years, gives in stock status, and is a time saver over the phone order stuff. Plus one can get invoicing and do payment quickly on the
    site.

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