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Shop Start-up Funding

EparkBST

Plastic
Joined
Jul 23, 2022
I need advice. My goal is to open a shop of my own with the next 3 - 5 years. I currently have very limited resources to do that but plan to save as much as I can during that time. My hope is to save about $35000. I have a 600 sqft. detached garage that I can fit a small 3-axis CNC mill in, but it will need some work before it is ready to be a shop. Rough estimation on my part but, I think I will need aprox. $100k to get started. What are your opinions on raising the funds to started? Please feel free to poke holes in my assumptions. Any and all recommendations are welcome.
 
You have some time. An economic collapse is pending, so in a couple years there will be machines selling for a song. When you find a decent working one for the right price, put it in your garage. Figure on spending maybe $20k total to start. $10k machine, 5k in tooling, 5k in phase converters and workbenches and whatever you need. Then see if you can find any work for it, and if you like the process of finding/quoting/doing/shipping work. If you do, great. Do that part time for a couple years, getting better at it, then you'll know when it is time to make the jump. If you don't, you're sell it again and you should at worst break even.

Raising money means borrowing. Borrowing means you're on someone else's timeframe.
 
Sell your boat, motorcycle, snowmobile, or any other toys you have, keep you day job, and do this on the side for as long as you can. Re invest everything you make in tooling and shop supplies. Unless you have $100K in equity, don't expect someone to loan you money on a new business that has no assets.

I sold my dirtbikes and my nice old cummins swapped highboy to fund a cnc mill and lathe.

I would buy equipment after the crash happens. There will be way less work to go around, but atleast you won't be making payments on an expensive paperweight.

Can you build bigger? I know some guys do ok with tiny shops. I could never make that work. First shop I rented was 1500 sq ft and that was dysfunctionally packed.
 
Sell your boat, motorcycle, snowmobile, or any other toys you have, keep you day job, and do this on the side for as long as you can. Re invest everything you make in tooling and shop supplies. Unless you have $100K in equity, don't expect someone to loan you money on a new business that has no assets.
yep some places will loan it to you, just takes 24% interest rates or a mortgage on a house you own. risky stuff to do that without any guaranteed work.
 
I sold my dirtbikes and my nice old cummins swapped highboy to fund a cnc mill and lathe.

I would buy equipment after the crash happens. There will be way less work to go around, but atleast you won't be making payments on an expensive paperweight.

Can you build bigger? I know some guys do ok with tiny shops. I could never make that work. First shop I rented was 1500 sq ft and that was dysfunctionally packed.
I can't build any bigger. I'm already up against the property line.
 
your going to invest 100,000.00 to make what? 30.00 an hour net? if your job is good and you get benefits you are making close to that already, and can turn it off when you go home. at that investment number your competing against retired old machinists who want to make toy money, keep their minds sharp, and hide from their wives. You might make it work but it would be brutal, be better off if you love it to buy an old machine and do it as a hobby and keep your job. of course that's what I was told as a young guy buying my first 1950s drill rig though also. you can make it work but you better love it and not need the money for a few years.
 
I need advice. My goal is to open a shop of my own with the next 3 - 5 years. I currently have very limited resources to do that but plan to save as much as I can during that time. My hope is to save about $35000. I have a 600 sqft. detached garage that I can fit a small 3-axis CNC mill in, but it will need some work before it is ready to be a shop. Rough estimation on my part but, I think I will need aprox. $100k to get started. What are your opinions on raising the funds to started? Please feel free to poke holes in my assumptions. Any and all recommendations are welcome.

I guess my ? is:
"What is it that you want to doo - specifically?"

If you have $35 and think that you need to drop $100 to git started...

Not saying that you are out of bounds in any way - just depending on what market that you want to target.
600' doesn't give you much room to put many machines, so you must be looking at one or two expensive ones?

Are you thinking just basic lathe and mill?
Or "toolroom" with added WEDM, and surface grinding?

If basics, then doo you need state of the art?
Or is a 20 yr old machine good enough to make what you need?

Will you need a $20K seat of MasterCAM, or can you FingerCAM for a while?


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

Think Snow Eh!
Ox
 
What do you hope to make? A customer need has to exist first. If you hope to make 2 lb parts 500 at a run you're in for a mean learning curve as tens of thousands of garages across the US are occupied by small part time machine shops bidding on those jobs and doing it at prices that compete with third world country prices (plus duties, shipping etc.) If you already know of a need that exists, buy a cheaper machine and start making parts, ( before somebody beats you to it) slowly working your way to newer machines that require less personal time.

If a job shop is your goal, which is much easier to get in to, than plan on a slow ( 5-6 year) growth into full profitable business. But job shops require long hours, low labor return at least during the early years, ability to do almost any repairs that metal can possibly need ( welding, cutting, bending, straightening, machining, etc etc etc...)

A million dollar machine won't automatically get you customers even if it's the only one in the country. Customers are the hard part, and inherently afraid of any new machine shop.

Best advice I can give is avoid debt at all cost!

Second, decide what type work you hope to do and research the profit margin.

You can likely get into business for yourself, how much you make or spend keeping it afloat depends on your research before hand and work ethics after.

Machines are no trouble and plentiful if you have a good job lined up to justify the cost.
 
your going to invest 100,000.00 to make what? 30.00 an hour net? if your job is good and you get benefits you are making close to that already, and can turn it off when you go home. at that investment number your competing against retired old machinists who want to make toy money, keep their minds sharp, and hide from their wives. You might make it work but it would be brutal, be better off if you love it to buy an old machine and do it as a hobby and keep your job. of course that's what I was told as a young guy buying my first 1950s drill rig though also. you can make it work but you better love it and not need the money for a few years.

THIS. A million times this.

I started with about 150k of personal money to invest. I'm about 6 years deep. 3 yrs full time. 6 employees. 3 five axis machines, and one vertical. If I sold the business tomorrow, I wouldn't get much more than my 150k back after the bank was paid off. The grind to get here was insane; it's still completely all-consuming, and my highest paid employee will out earn me this quarter.

It can be done, but it is getting harder to compete every year. You better have a niche, set low expectations, or REALLY like it. I know of folks that have more success with more speed, but if you just want to make products for other companies, it's HARD. Takes a combination of luck, skill, hard work, and timing. Being smart and good at what you do is only about 1/4 of the puzzle.

I do believe that my company has a lot of equity being built into the brand, and it does get a little stronger every year. It's probably not going to fail or anything. BUT, I'd have an awful lot more money if I had spent the last 6 years working at Apple or Google while investing in stocks instead of my business, and even though those places can demand a lot, nothing can consume your time as much as self employment!
 
I can't build any bigger. I'm already up against the property line.

Lot line adjustment? Convert part of your house? Shipping containers?

"I can't" is not a fantastic mindset if you desire to be self employed.

Not enough room can/will totally cripple you.

A little secret- You will not be doing what you think you will be doing in 5 years if you are successful. You will follow and adapt to opportunities. If you have a 600 sq ft shop with a Haas mini you will find it very very hard to match many of those opportunities to your space and equipment.
 
I have great customers and it's still damn hard. If all you see from the shop floor is what the parts cost to the customer you would think it's a gold mine. It's not.

This week I worked 50 hours Mon-Wed because the work isn't finished until it's finished. I will not take a week day off for the rest of the year. It's ok with me right now because these are big lucrative jobs that very few machine shops could take on serving industries I care about.

If I respawned right now with the knowledge I have I would not start another shop. It is stressful without having machine payments hanging over my head while turning a profit. I can't imagine doing this if the bank owned my machines and I was one canceled job from being broke, which is how most shops start out. If you have the skills to make it on your own you are pretty damn valuable to a shop like me, all without investing a dime of your own. Look around until you find a good one.

I agree there will be a lot of equipment for sale for pennies on the dollar in the coming years.
 
I guess my ? is:
"What is it that you want to doo - specifically?"

If you have $35 and think that you need to drop $100 to git started...

Not saying that you are out of bounds in any way - just depending on what market that you want to target.
600' doesn't give you much room to put many machines, so you must be looking at one or two expensive ones?

Are you thinking just basic lathe and mill?
Or "toolroom" with added WEDM, and surface grinding?

If basics, then doo you need state of the art?
Or is a 20 yr old machine good enough to make what you need?

Will you need a $20K seat of MasterCAM, or can you FingerCAM for a while?


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

Think Snow Eh!
Ox

So long term plan, in my mind is start off as a small job shop while working at my day job to get cash flow. Reinvest every dollar into the business I can. The 600' is where I want to start because there is no overhead, but I completely understand that unless thing go poorly for me, I will outgrow it very quickly. As far as a market to target I'm not really sure. I live near St. Louis so there is a lot of aerospace and medical work in the area, but I don't know how much of it would require certification.

Now it seems I have significantly overestimated the cost of starting a one-man shop. Many people in this thread seem to think that I could start up for 20k -30k but I don't really see how that's possible. Maybe I just need to adjust some of my expectations of what is necessary but even then, the used mills I've seen recently, like a used Haas VF 2 SS, sell for near 40k.

The dream is a moderate sized shop specializing in multi-axis and additive manufacturing as well as a design consultation firm that helps with DfAM conversions of assemblies. I know that it will be a lot of work and that the dream might change between now and then but that is the target I'm shooting for now.
 
Lot line adjustment? Convert part of your house? Shipping containers?

"I can't" is not a fantastic mindset if you desire to be self employed.

Not enough room can/will totally cripple you.

A little secret- You will not be doing what you think you will be doing in 5 years if you are successful. You will follow and adapt to opportunities. If you have a 600 sq ft shop with a Haas mini you will find it very very hard to match many of those opportunities to your space and equipment.
I live in a sub-division there is a house on the other side of the property line. So, when I said I can't, I meant I can't at that location. I know that if things go well that I will outgrow my space but for now it's a place for me to get started with very little overhead.
 
Have a market or product? Job shop is a route to poverty to many.
And the opportunities and products that you can manufacture in a 600 sq ft shop are disappearing fast. I've done it a few times. Went from making good money, to "I'm going to run out of my garage". The first time I had a product. I did fairly well and did it until I was bored. The second time I had customers. I quickly found that I didn't have enough space, and what I was able to do with occasional access $350k in equipment got a lot harder with my meager machine shop. Still doable, but not nearly as lucrative.

I guess technically I'm on run three, but doing things a lot differently.

The worst part is, once you go it alone, you've ruined yourself for ever working for someone else again. You have zero willingness to put up with asshole bosses, as you've already experienced the worst boss you'll ever have (yourself). You also have a work ethic that they go gaga over, but you will still earn the same as Earl, who drinks a six pack on lunch.

Finally, dont take this the wrong way, but if you've only got $3500 in the bank, you have to learn to manage your finances before you try to live off self employment. When it's good, and I'm preparing for other work, I hemorrhage money, but it seems to come back in greater quantity. When it's slow and I get frugal, and the earning capacity seems to diminish.
 
So long term plan, in my mind is start off as a small job shop while working at my day job to get cash flow. Reinvest every dollar into the business I can. The 600' is where I want to start because there is no overhead, but I completely understand that unless thing go poorly for me, I will outgrow it very quickly. As far as a market to target I'm not really sure. I live near St. Louis so there is a lot of aerospace and medical work in the area, but I don't know how much of it would require certification.

Now it seems I have significantly overestimated the cost of starting a one-man shop. Many people in this thread seem to think that I could start up for 20k -30k but I don't really see how that's possible. Maybe I just need to adjust some of my expectations of what is necessary but even then, the used mills I've seen recently, like a used Haas VF 2 SS, sell for near 40k.

The dream is a moderate sized shop specializing in multi-axis and additive manufacturing as well as a design consultation firm that helps with DfAM conversions of assemblies. I know that it will be a lot of work and that the dream might change between now and then but that is the target I'm shooting for now.
Simple, start a "Go Flock Me" page with this management speak, and sit back and watch the money come rolling in.
 
I live in a sub-division there is a house on the other side of the property line. So, when I said I can't, I meant I can't at that location. I know that if things go well that I will outgrow my space but for now it's a place for me to get started with very little overhead.

Moving sounds smarter than not moving.

I don't recommend attempting a real for profit machine shop in suburbia with an HOA in a Tuffshed.
 








 
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