Recommended reading material for someone interested in opening a shop.

Hello everyone,

I have always pondered the idea of opening a small job-shop machine shop. In the past it has been mere musings without any regard to the actual nuts and bolts , i.e. a business plan, equipment, space, cash flows, financing, marketing, etc. etc. These are the things that have to be considered before one dives in. The numbers must work for it to be a profitable venture, and even than there are many unforeseeables which can derail something which looked good on paper.

The employment game in the in this country sucks and the trend is only getting worse. These days its work longer and harder for less in return. Not too mention the fact that in order to succeed in today's modern company one must be able to navigate the ever changing kaleidoscope of peoples egos and emotions and their ever shifting alliances and priorities. I'm an engineer and a machinist, not a psychologist and politician.

I have my designs on opening a small shop and eventually transitioning over to a niche product once things get rolling. I have money stuffed away that will help in securing machinery or a loan. Also I have no dependents. The manufacturing marketplace is brutal, however I have worked enough places to see what works and what doesn't. The winners I have worked for all had a lot in common in terms of company culture and the mechanics of how they operated. My goal would be to emulate these things that worked.

I have a general understanding of finance, accounting, and business management however those are not my strong points. I would be interested in hearing some recommendations for reading material for the little guy.

I am not looking to get fabulously rich although that would be sweet, rather I want to be able to live comfortably and be able to grow my business in a healthy manner.

zberto said:

The employment game in the in this country sucks and the trend is only getting worse. These days its work longer and harder for less in return. Not too mention the fact that in order to succeed in today's modern company one must be able to navigate the ever changing kaleidoscope of peoples egos and emotions and their ever shifting alliances and priorities. I'm an engineer and a machinist, not a psychologist and politician.


I am not looking to get fabulously rich

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Those things won't get any better by becoming self employed. They're much worse. You still have to deal with people. You are still going to be asked to work harder for less in return. To be a business owner, especially with employees, you need to be a psychologist.

In order to start a business, you have to do all the work of the startup, plus all the work of the actual work. Machines don't find themselves. They don't wire themselves or fix themselves. You'll need business cards and licenses and permits and tax ID numbers and tons and tons of credit applications filled out.

For the first 2-3 years, it will be like you have two jobs, except you won't make any money. If you can make it past 3 years, you might be able to pull in a small profit. If you want to grow, you won't make money.

Being self employed is not for everyone. In fact, it's not for 99.9999999999% of people.

I don't know anything you can read that is better than this forum.

You are absolutely correct. When you are self employed you're customer is the boss. Having people skills is a major plus, because well ultimately you are dealing with people from all walks of life with different personalities, attitudes, expectations blah blah blah.

The only appeal with self employment is that I can apply all of my skills and have a certain degree of control over my destiny. Being employed one is at the whim of his or her superiors. Master and the slave.

Never said it was easy, I have seen the stress that shop owners have to go through, but I have also seen the rewards that they were able to reap as well.

Employees have the luxury if clocking out and going home, as an owner you are clocked in 24/7 whether or not you like it.

There have been some very valuable nuggets of information I have picked up over the years on this forum. I am sure there is some valuable wisdom or practical advice locked up in books as well.

http://www.practicalmachinist.com/vb/member-and-shop-photos/b-precision-260814/

Get reading.

It all starts with a customer.

Knowing how to attract, work with and build goodwill with customers and employees is a lot less common a skill than engineering and machining and every bit as important to success as making good parts. You kind of have to know how to do everything, sales, marketing, ops, accounting, finance IT and so forth but bright people who don't already think they know everything are capable of figuring it out on fly and have been doing it since the first business. Key though is.....it starts with a customer.

The shops that I have seen do well have always been good at satisfying their customers needs. I have always witnessed a tug of war over things like prices, delivery, quality, and payment terms. But in the end things reach some sort of equilibrium.

A good business relationship is one in which both parties come out a winner. Things inevitably go South when one side gets too greedy either the shop or the entity purchasing the goods and services.

Reputation is paramount. I have seen / worked in shops that did shoddy work and they always get the lousiest jobs and customers. Both parties come out losers, the parts suck and the customer is unhappy, the shop knows it isn't making money and puts very little effort into the finished product. i have seen this many of time. This is the downward spiral that one must avoid at all costs.

As one person said on this forum "why work so hard to not make money".

If you are not good at relating to people dont open a business. The key to running a business is selling your services. Most business owners are really good with people, if you are not you wont be in business long. The build and they will come model is a lie, you need to sell it and get them to pay before you build it. Most people think they are smart and can run a business. It is not too hard to feed yourself but to run a business and employ people to do the work so you can grow the business that takes skill. Making a job for yourself is pretty easy.

The many months leading up to buying my machine and building I read every post in this section of PM going back as far as I could. If you go to the bottom, you can select to show threads from the beginning of time vs a month or year. There have been so many threads of "I want to open a shop, what advice can you give me?" that any question you can think of has already been asked. What helped me doing this was to unearth topics that weren't even on my radar, some don't apply to my situation, but most do and the more you are aware of that you need to know about the better off you are.

Even taking the replies to these threads with a grain of salt and reading between the lines is still better than anything you will hear anywhere else.

kpotter said:

If you are not good at relating to people dont open a business. The key to running a business is selling your services. Most business owners are really good with people, if you are not you wont be in business long. The build and they will come model is a lie, you need to sell it and get them to pay before you build it. Most people think they are smart and can run a business. It is not too hard to feed yourself but to run a business and employ people to do the work so you can grow the business that takes skill. Making a job for yourself is pretty easy.

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i'm not known to be a people person however i'm 37 years self employed. i've made some money but probably not what i could have had i been better with the social skills. being straight up, thorough and capable have been what's got me by. it did take a while to deal with employees. some training from a business management co taught me about "temperament typing" which helped immensely.

Endless Novelty (Phillip Scranton)

Looks like a good read. I wish it wasn't 60 bucks on Amazon.

If you're worried about spending sixty bucks on anything, you shouldn't be thinking for a second as to opening up a business. Most guys I know who have small shops (6k square ft, like myself) are 250-350k into it, and barely paying bills. Sound like fun? Come on in, the water's warm. As above: read bills shop thread as a bare minimum. Business books are complete horseshit: they are in the business of people buying their books, not helping them.

zberto said:

...I have my designs on opening a small shop and eventually transitioning over to a niche product once things get rolling.

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Start working on that product first. Study how similar products are made. Buying machines to make that product would be a more efficient use of your money than an array of general purpose equipment to do an unknown variety of other people's stuff.

You can also get a lot of parts made by a shop for your product for the price of just a VMC with none of the associated tool/cam/cad/rigging/wiring...

Oldwrench said:

Start working on that product first. Study how similar products are made. Buying machines to make that product would be a more efficient use of your money than an array of general purpose equipment to do an unknown variety of other people's stuff.

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Further more in that direction, you probably have more time now to work out the design than you would have if you were operating a general purpose job shop. As Ewlsey says, once you open a shop you will be working two jobs, and they will be 1) working in the shop making stuff 2) doing the administrative side of the business. If you want to develop products, that will be the third job.

ewlsey said:

Being self employed is not for everyone. In fact, it's not for 99.9999999999% of people.

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Not even a single person? That's unfortunate.

Here's some random thoughts, just looking back at the last decade of machinist, who thought about his own shop, turned sales guy, etc...

How big of a network do you have? As in, real people you can pick up the phone, and they answer your phone call? (Or at least call you back that same day.)

Now - here's a fun exercise - Try to sell them something...

Can you walk up to a complete stranger and start a conversation?

Can you answer the phone, take a complete earful from someone upset with you, and not blow a gasket?

Then go into a customer and ask for an opportunity to....

How will you deal with the person you're trying to help, when you know that you're 100% correct in helping them solve their problems they don't even know they have, yet they're too stubborn to listen to you?

zberto said:

Looks like a good read. I wish it wasn't 60 bucks on Amazon.

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I was going to recommend a few books, but what's the point? If $60 bucks is going to be a turn-off, then why should we bother? That $60 bucks won't last long at McDonalds, Starbucks, or anywhere else, but the info inside a book can be recalled countless times over...

Some things in life - some things yet unknown, and seemingly expensive - are worth paying for... If you don't understand that yourself, then how on earth are you going to convince your customers of that?



My advise - Try a sales or customer service job where you have to deal with people more. It will be good experience & education...

Not too much to add but I didn't see anyone else say it ; if you just want to be a small and independent shop, don't get a lathe or a vmc or a surface grinder or whatever as your main equipment. Everyone has those. Find an area where there are not 50,000 people competing against each other. 49,000 of them will have more experience than you.

And don't fall for the media schtick, "buy the best fastest newest equipment you can, it will actually make more money and be cheaper." What they don't say is, that stuff is true but when you start out there will be months when you make zero. If you have payments and thinsg don't go as fast as you hoped, you'll be up a creek without a paddle. Stick to what you can afford to lose, at least in the beginning.

If I had followed those two rules I would have had a lot less pressure. But having a shop is fun and satisfying, go for it if you can.

I remember there was a reading material thread a while back and some of the books were:

-Traction: Get a Grip on Your Business
-The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results
-The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It

I saved them in my Amazon cart but never checked out...

Searching "E-Myth" I found these threads:

http://www.practicalmachinist.com/v...mmended-reading-list-255921/?highlight=e-myth

http://www.practicalmachinist.com/v...you-may-find-helpful-310670/?highlight=e-myth

http://www.practicalmachinist.com/v...would-help-line-work-271435/?highlight=e-myth

Hope this helps.

zberto said:

Looks like a good read. I wish it wasn't 60 bucks on Amazon.

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PM me. I have two copies (long shipping story). Far less than $60 including shipping

Bob

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