Hello everyone and thank you for taking the time to look at my post. I am new to this forum, and am here seeking advice from any and all available minds.
To start off, I'll give a brief introduction. I am a CNC programmer, currently working for a small business in a particularly niche sector of the manufacturing industry. There have been an increasing number of "red flags" appearing in this shop over the past few years. It has reached a point, that myself and a coworker have found ourselves having many off-the-clock chats about things that need to change. Without going into too much detail, the company I work for has lost a lot of respect with our current customer base, which has resulted in the growth of our main competition, and the slowest "busy season" of my tenure. My prospective partner and I have decided it is time to branch out.
Between the two of us, we have just over 20 years of experience in our current sector, and nearly 40 years of total manufacturing experience. We are not "green" when it comes to our business plan. We also have two key employees that will join our team from day one. As individuals, we each have good name recognition with the customer base, as well as connections to other types of machine work. I myself am the type of person, that I will put a cot in the office and sleep there to ensure that machines are running as much as possible to push parts out the door. I have gotten up at 2 AM to come to the shop, just to rotate a part and start the next long running program.
This leads me to why I'm here. Neither of us have experience setting up a business. So my thought is, rather than blindly trudging through the mud alone, why not reach out to people who have "been there done that" for advice?
So here is the good stuff:
I am in the process of developing our business plan. I am pricing every item needed at startup --from desk chairs, to toilet paper, to 3-axis VMCs-- at new, knowing that the used machine market will be available when we reach that point. Currently, my total cost, minus building and overheard, sits at $240,000. This includes two HAAS VF4's, which together total approximately $150,000. Due to the type of parts we make, 2 machines of that size are required.
Question 1) What are the recommendations on seeking a larger loan ($200,00 - $250,000+) to pay for all costs, vs a smaller loan ($100,000) and then financing/leasing new equipment? Or seek a loan in the $150,000 range to buy all used equipment?
Question 2) Business type. Right now I'm leaning towards LLC. We will be 50/50 partners. I'm a little fuzzy on tax law and would love to hear pros and cons on LLC/partnership/S-corp or other.
Question 3) What is the correct path to take as far as establishing the business itself? Specifically I'm referring to registering the business, tax ID, all of the intricacies that go along with the formation of the company name.
Question 4) Buy land and build a new building, buy an existing building, or lease an existing space?
Question 5) Are there small business grants or programs that I'm unaware of that I should look into, to assist in financing?
Bottom line is, I'm looking for knowledge. Any advice or suggestions are absolutely welcome, and again, I appreciate the time to read and hopefully respond to this post!
To start off, I'll give a brief introduction. I am a CNC programmer, currently working for a small business in a particularly niche sector of the manufacturing industry. There have been an increasing number of "red flags" appearing in this shop over the past few years. It has reached a point, that myself and a coworker have found ourselves having many off-the-clock chats about things that need to change. Without going into too much detail, the company I work for has lost a lot of respect with our current customer base, which has resulted in the growth of our main competition, and the slowest "busy season" of my tenure. My prospective partner and I have decided it is time to branch out.
Between the two of us, we have just over 20 years of experience in our current sector, and nearly 40 years of total manufacturing experience. We are not "green" when it comes to our business plan. We also have two key employees that will join our team from day one. As individuals, we each have good name recognition with the customer base, as well as connections to other types of machine work. I myself am the type of person, that I will put a cot in the office and sleep there to ensure that machines are running as much as possible to push parts out the door. I have gotten up at 2 AM to come to the shop, just to rotate a part and start the next long running program.
This leads me to why I'm here. Neither of us have experience setting up a business. So my thought is, rather than blindly trudging through the mud alone, why not reach out to people who have "been there done that" for advice?
So here is the good stuff:
I am in the process of developing our business plan. I am pricing every item needed at startup --from desk chairs, to toilet paper, to 3-axis VMCs-- at new, knowing that the used machine market will be available when we reach that point. Currently, my total cost, minus building and overheard, sits at $240,000. This includes two HAAS VF4's, which together total approximately $150,000. Due to the type of parts we make, 2 machines of that size are required.
Question 1) What are the recommendations on seeking a larger loan ($200,00 - $250,000+) to pay for all costs, vs a smaller loan ($100,000) and then financing/leasing new equipment? Or seek a loan in the $150,000 range to buy all used equipment?
Question 2) Business type. Right now I'm leaning towards LLC. We will be 50/50 partners. I'm a little fuzzy on tax law and would love to hear pros and cons on LLC/partnership/S-corp or other.
Question 3) What is the correct path to take as far as establishing the business itself? Specifically I'm referring to registering the business, tax ID, all of the intricacies that go along with the formation of the company name.
Question 4) Buy land and build a new building, buy an existing building, or lease an existing space?
Question 5) Are there small business grants or programs that I'm unaware of that I should look into, to assist in financing?
Bottom line is, I'm looking for knowledge. Any advice or suggestions are absolutely welcome, and again, I appreciate the time to read and hopefully respond to this post!