Another 'Opening a shop' thread

[Guest]

Yep ain't that the truth, those are the businesses that no longer exist after that downturn.
Can't make money from a pile of sand in a sandstorm.

The recession pretty much took out the limousine building industry I used to sell to and it never came back. Major boom and bust if there ever was one. I once had 23 active customers, I search them from time to time, only 2 are still in business, and one of those totally changed their business model.

 

[johfoster]

So your friend wanted someone to make him a die, but didn't want to pay what it is worth. Not sure I could find a worse single reason to go into a new trade.

It sounds like you are in the "sophomore" phase of learning something new. This is ABSOLUTELY the period when you want/need/have to be supervised. When you are new at something then you know that you suck, and once we have done something long enough we understand that we will always suck and approach everyday accordingly to not screw up. There is this spot in the middle though of extreme over confidence to be very scared of. (I have certainly been there before, and often remind myself this)

There is a saying "once your lucky twice your good". A lot of us are lucky. I would be reluctant to put strain on the good business you own now, just to support another that might fail sinking both. At least Haas machines sound like the best bet for when you need to try getting some money back if it doesn't work out.

For whatever it is worth. I will add to this that I think of myself as a good fabricator, but I am not a great business person. I would make a lot more money if the opposite were true, and I know this because I see it all the time in other shops.

 

[Bondo]

As other have stated, I will run with it as well.

1 thing I have found that after purchasing over a million dollars worth of press brakes, shears, ironworkers, forklifts, tools, plasma, welders..... I should have 6 electrical companies, 8 plumbing companies, and 3 general construction outfits with the same money.

I love my business, but sometimes it seems I spent so much money to be a fabricator when hourly rates are the same as a company that runs out of a truck and 10x10 shed.

Sent from my SM-G960U using Tapatalk

 

[DavidScott]

Your already doing daycare and good at it, how about a nursing home? Get them at both ends. I agree the job shop route sucks and getting overflow work is a bad idea. As soon as work slows a bit you will have none, zero.

 

[Silva]

I would like to thank everyone who took the time to reply to my post.

I was hesitant, at first, to create this thread as I knew I was going to get a lot of negative, don't do it, replies.

I would to clarify a few points.
- My friend needed a custom-made die which no shop would have laying somewhere in stock. I also don't recall saying that he didn't want to pay what the die was worth anywhere in my thread. He just mentioned that he had called several shops, and they were all too busy to help him.
- I was exaggerating when I said a million ideas. I have several ideas which where either a) required to much money to start. and/or b) I had zero skills, and zero interest in acquiring them.
- Our current business, which is childcare, does in fact bring a good amount of net income for us. However, it is not a line of business which I enjoy, for various reasons which I don't wish to discuss on here, and it is why I am considering entering another line of business.
- I don't know, or care to know who this Generic Default which you refer to as a "clown" is. We are not all the same, and his situation is unique.
- I don't have any interest in becoming a house painter, a drywaller, or anything that relates to construction. Just because a Doctor makes 300+ an hour, with no equipment, doesn't mean that I want to pursue a career in that field.
- I wasn't just pushing the green button lol.

With those points said, I would like to mention that the main reason I'm looking into opening a job shop is because I'm very passionate, and interested in operating a machining business. In addition, I have some cash, and eager to acquire the skills required to successfully operate this type of business.

Thank you for those business owners who gave me good pointers, such as how to acquire more customers, and that I should get more experience in the field. For those who replied to this post, and aren't shop owners, or don't have experience as business owners, I thank you for you're time but your points don't have the weight as those who are, or were business owners. Yes, you might have years of experience under your belt, and I give props to all of you, but there is more to running a business.

I have seen many people who started with nothing, and have million dollar companies. I believe success requires a set of values and positive thinking. There is a problem to every idea, but also a solution.

If anybody has more suggestions, aside from "you're an idiot", or "you have an ego the size of texas", please keep them coming.

Once again, I thank everyone and hope nobody gets offended

 

[Garwood]

As other have stated, I will run with it as well.

1 thing I have found that after purchasing over a million dollars worth of press brakes, shears, ironworkers, forklifts, tools, plasma, welders..... I should have 6 electrical companies, 8 plumbing companies, and 3 general construction outfits with the same money.

I love my business, but sometimes it seems I spent so much money to be a fabricator when hourly rates are the same as a company that runs out of a truck and 10x10 shed.

Sent from my SM-G960U using Tapatalk

When one of those pricks with some leased equipment and a new $80K truck gives you a sob story about how hard he has it, oh and he can't pay that bill for that $1500 job you did to save his ass on a Sunday 6 weeks ago it makes one question this path...

 

[Fish On]

I'm not going to jump in with the rest of them and say you shouldn't start a machine shop. If it was strictly a financial thing, chances are I wouldn't own a fabrication shop, but life isn't all about the bottom line. The fact that I do actually enjoy going to work each day is the major contributing factor.

I'm also not going to say you shouldn't start a machine shop with 1 year of experience. My story is similar to Garwood's - I opened up my shop pretty much straight out of high school. Clearly not a whole lot of experience there.

But, I will say you're nuts for trying to start a job shop. A year's experience isn't anywhere close to being able to handle some of the oddball stuff that may come through the door. Furthermore, job shops are really a race to the bottom. Your customer will switch to someone else who's a nickle cheaper. You're competing against people with millions of dollars of incredibly fast, efficient machines, and in house value added services (plating, etc).

Read through the Xometry thread. Most of the small shop owners are lamenting about how there's no profit in the job, or no time to send out for plating or heat treat, but then you have some of the bigger shop owners like the ISO9001 dude (assuming he's actually being honest) or 4FN27 who have bigger shops with dozens of machines, in house finishing, better deals with materials vendors, etc who can make money on the job. I'm not saying you should be searching for work through Xometry, but for generic job shop stuff, these same guys are your competition, and you can't compete with them with a couple Haas machines. Much less with a couple Haas machines and virtually no experience.



But, that's not to say machining isn't for you. Also, much like Garwood, what allowed me to survive with virtually no experience was that I found a very small untouched niche, and made some of my own products. I didn't have to have years of experience with all sorts of different things to be able to sell my own product - I only had to be good at making that one product. I also didn't have to compete with folks that had the latest and greatest equipment, so I could get by with old junk.


My advise isn't to avoid opening a machine shop, but just to approach it a different way. Create a product, or find a niche, FIRST. Only then do the machines come.


Or don't. For us to buy good condition used machines, it takes someone else to buy them new and then go under. So, you could go that route for the sake of the rest of us.

 

[johfoster]

My sarcasm got the best of me maybe which never works through writing, but to think that all the Tool & Die shops in So Cal were too busy to even take on your friends die is unlikely. In the time frame he needed without inflating the price for it maybe so.

I didn't tell you not to do it though.

I really don't know what people are even looking for when they start these threads? No one is ever going to rave about what a great idea starting any business is, because it typically is not a great idea. You really need to be delusional to do it. Most of my family probably wouldn't support me spending any amount of money to start a new business, so I surely wouldn't expect much from strangers on the internet.

 

[Mcgyver]

If machining is a passion, do it as a hobby. Business success is based on sound strategy and determined execution toward making money. I haven't seen either with this one. Not trying to rain on your parade, just trying to save you your 200M....which is not a small bit of savings. Use it more wisely than a job shop, i,e, I've bought business full of IP for a lot less.

 

[g-coder05]

Here's a scenario for the O.P.


I was brought in to Alt machine in Santee CA because they were a $50+ Million a year company with 5+% Scrap rate and they couldn't figure out why. Turned out they didn't have a shop manager and was letting QC write the travelers/routers. 100% of their work was super alloys, Haynes, Hast, Inco, Invar,,,So there was no such thing as a cheap mistake.

1st day I was there a saw guy cut (3) 12' bars 5" diameter of Hast C-276 into 2" long blanks just like the traveler said. Problem was,,,, that was the finished part length. 5" Hast 276 at the time was around $40,000.00 per bar, So basically the company lost $120K in one night. And this was a common occurrence.

So my question to the OP is what do you do in this situation as a shop owner?

A: Fire the saw guy?
Nope, He did what he was told. Fire him and get sued because California labor laws suck for employers!

B: Fire the QC guy
Nope, Unless he has been written up for the same mistakes (3) times. California labor laws suck for employers!

C: Order new material and start over?
Probably the best thing to do , Providing you can get replacement material and make the parts before the due date.

D: Call the customer and ask if there can be an an engineering change?
This is a good option, Unlikely that they would change a design, but possible. But now your customer knows you cant even read a tape measure.

E: Take the material to the scrap yard and recoup what you can and write the rest off as a loss so Joe taxpayer can help you eat it?
If this is going to be a real hit to you financially and you have no other way around it.

F: Keep the slugs hoping in the future a job may come that they can be used for?
Fairy Tail dream, Those things will lay around the shop for years, probably winding up in a cheap stainless bin fo $.30 cent a pound.

Unfortunately this is the reality of owning a machine shop. Maybe not on that big of a scale, But it does happen and can be devastating. If you are sitting there thinking "Pfft, I'm not that stupid" Think again because we all are. Have you had to deal with a drawing that the datum is not on a corner and have to figure incrementally to get an overall length? Let me tell you,,,, That will bite in the ass more often than you think.


From your post wording Im pretty sure your not retired military, Just disabled Veteran? Ok, D.A.V.'s E-6 get up to $3400 for 100% disability. (I'm surrounded by retired disabled vets all day everyday since my office is on the base). In CA it would be hard pressed to save up $200k on veterans benefits. So, this brings to question, Is your daycare generating that kind of revenue that you put back that kind of money? If so, What the heck are you thinking? Why are you in a shop as an operator in the first place when apparently you could have a chain of daycare centers?

Or:

Are you planning on trying to get a loan and speculating you will get $200K? Most banks (Unless your FICO is 720+) wouldn't consider giving someone on VAB's a business loan more than $20k without a crap load of collateral. VA benefits are not like SSI benefits and can't be garnished if you go into default, thus meaning bankers will not want to give a business loan.

Or: And I find this case to be the worst....

Are you going to borrow money from friends and family? Don't, I have seen this too many times to count. You may get up and going then hit a slow spell. Now, your backers have confidence in you and will give you more to weather the storm. This may go on and on as you will think "Just a little bit longer and things will turn around". All this does is drag everyone down and create a financial burden.

 

[jobshopblog.com]

If anybody has more suggestions, aside from "you're an idiot", or "you have an ego the size of texas", please keep them coming.

There is a great deal to be cautious about. I think there were a lot of good comments so far. Rather than the relative lack of machining experience, I’m more concerned about the wisdom of going into it as a start-up. The reason is that by starting from scratch, you forfeit your biggest strengths – your experience running a business and your cash on hand.

Starting as a one-man show, you’ll need to spend every waking hour either knocking on doors for business or making chips and you’ll have exhausted your financial resources to get a couple of pieces of equipment with little or nothing left over to finance the operation through the start-up phase. (You can get your wife to email you selfies she takes with the kids so you remember what they look like if you run into them).

Here is a link for some businesses for sale in the San Diego area Machine Shop For Sale in California, CA. Machine Shop Franchises and Opportunities Businesses For Sale | BizBen. Picking up a small shop for under $500K with a Customer base, some equipment, some staff and all the little things that add up to a big thing (computers and software, office furniture, phone system, internet service, business insurance, small tools, air compressors, collets and extensions, vises, etc, etc) will allow you to maintain your cash reserve, have an immediate revenue stream (even if it needs to be grown) and allow you to manage cash rather than simply hand it over in the beginning.

You will likely have staff with hands-on experience you can learn from and you will be in a position to do that learning as time allows while you do what you already have experience with – running a business.

The skills required to successfully run a CNC machining business are extensive and some of the issues you’ll face are unique to the industry. I won’t go in to them here. I’ll simply suggest that you look in to buying (or buying in to) an existing business as an alternative to starting from scratch.

 

[LOTT]

Fish On nailed it. I started with some manual machining and welding knowledge but almost no CNC experience, and it was the niche products that got us going. Several years on with better machines and a lot more experience, and I still wouldn't be comfortable jumping into the job shop world.

You have one year of experience and $200k. Your competitors will have ten years and $2M or forty year and $20M worth. Good luck with that.

Can you look around your current child care business and see product opportunities? That's where I would start, be your own user so to speak.

 

[Silva]

Great replies coming in!

@g-coder, I actually got the job as a CNC operator to gain the experience and start learning the trade with the sole purpose of opening a job shop later in the future. Funny you mention that mistake. Where I'm working right now (also to get more experience), there was a guy who had been there for 18 years. He was one of the shop leads , and he made a huge mistake. He had some copper stock cut to the exact dimensions of the finished part which basically cost the company over 80k in material. I believe those types of mistakes are unavoidable, even for people who have been in the industry for decades and its part of the business. I am a disable veteran, and I am getting disability, and you're right there is no way I could've that much money from my disability alone. I made a couple good investments when the house market crashed after 2008 and I'm now liquefying those investments. 200k would be enough to open another childcare facility, however as I mention before, its something I want to move away.

 

[Guest]

I have been machining since 1979 and worked in some large places before self employment. I have never cut any material short nor see anyone else do it. I would not consider scrapping stock from cutting operations "unavoidable." I have had people cut blanks too long using a manual horizontal and a stop. That was caused by slamming the material too hard against the stop, making the parts longer and longer, that just added more time for another operation to shorten the blanks and wasted a little material. I guess those that miss cut stock if the traveler was correct forgot the old saying, "measure twice, cut once."

 

[Mike1974]

I have been machining since 1979 and worked in some large places before self employment. I have never cut any material short nor see anyone else do it. I would not consider scrapping stock from cutting operations "unavoidable." I have had people cut blanks too long using a manual horizontal and a stop. That was caused by slamming the material too hard against the stop, making the parts longer and longer, that just added more time for another operation to shorten the blanks and wasted a little material. I guess those that miss cut stock if the traveler was correct forgot the old saying, "measure twice, cut once."

Well, I can see cutting the first piece wrong for some reason - a dull blade that walks, fence not square, BUT it should be 1 piece only because you checked it after you cut it! It's like jumping on a Bridgeport and finding out (after you start machining) the guy before you hadn't trammed the head or vise or something...

But 80k in materiel, ya that is a big fuck up!!

 

[Guest]

Well, I can see cutting the first piece wrong for some reason - a dull blade that walks, fence not square, BUT it should be 1 piece only because you checked it after you cut it! It's like jumping on a Bridgeport and finding out (after you start machining) the guy before you hadn't trammed the head or vise or something...

But 80k in materiel, ya that is a big fuck up!!

I probably should have qualified that and said I have never seen more than one part cut short. Never any production quantities.

 

[pgmrmike]

All I know is knowing the trade inside and out, being fully and completely competent doesnt mean a damn thing. ( at least down here )

It is nearly impossible to get new customers unless you pay people off or take them hunting, or fishing, or strip club. There is almost no way in for ethical business, quality work and on time delivery. Means nothing.

Only way in otherwise is during a boom when they are desperate. Get in the door and do good work, on time and then when it slows down let the others fall away.

 

[Guest]

All I know is knowing the trade inside and out, being fully and completely competent doesnt mean a damn thing. ( at least down here )

It is nearly impossible to get new customers unless you pay people off or take them hunting, or fishing, or strip club. There is almost no way in for ethical business, quality work and on time delivery. Means nothing.

Only way in otherwise is during a boom when they are desperate. Get in the door and do good work, on time and then when it slows down let the others fall away.

I have only run across that trying to do business with very large companies who I never approached myself, but had a salesman who did back when I was selling dual alternator kits. At the time he was trying to get his foot in the door with the largest coach builder and I am glad he didn't as they were one of the first ones to die because of the great recession. Just to get a meeting with a purchasing agent an assistant wanted $500 cash, I could imagine what the purchasing agent would have wanted.

The last job working for the man we had a customer who was huge in the medical device field. One of the purchasing agents would often make after hour visits to the owner showing up empty handed but leaving with a large brown envelope. He also drove a high end Porsche that at the time 25 years ago cost well north of $100k. I wonder what business purchasing agents needed to conduct at 8PM? I thought those guys worked banker's hours. I was kind of blown away by some of the simple jobs we would get from them for ridiculous prices. We had a 4 hour minimum and did not do any manual work. There were also a minimum material charge, an across the board mark up and administration charges. We did complicated high end work, but it you wanted something small and simple it was way expensive.

I used to laugh at the prices I quoted using the system for simple jobs, of course the only place that ever ordered those parts were Mr brown envelops company. Seriously, 4 simple spacers that many would make manually out of a bar end from the scrap can in 10 minutes for $50, we would quote at $400-$500.

 

[Mike1974]

I have only run across that trying to do business with very large companies who I never approached myself, but had a salesman who did back when I was selling dual alternator kits. At the time he was trying to get his foot in the door with the largest coach builder and I am glad he didn't as they were one of the first ones to die because of the great recession. Just to get a meeting with a purchasing agent an assistant wanted $500 cash, I could imagine what the purchasing agent would have wanted.

The last job working for the man we had a customer who was huge in the medical device field. One of the purchasing agents would often make after hour visits to the owner showing up empty handed but leaving with a large brown envelope. He also drove a high end Porsche that at the time 25 years ago cost well north of $100k. I wonder what business purchasing agents needed to conduct at 8PM? I thought those guys worked banker's hours. I was kind of blown away by some of the simple jobs we would get from them for ridiculous prices. We had a 4 hour minimum and did not do any manual work. There were also a minimum material charge, an across the board mark up and administration charges. We did complicated high end work, but it you wanted something small and simple it was way expensive.

I used to laugh at the prices I quoted using the system for simple jobs, of course the only place that ever ordered those parts were Mr brown envelops company. Seriously, 4 simple spacers that many would make manually out of a bar end from the scrap can in 10 minutes for $50, we would quote at $400-$500.

I remember running a job that we (a couple jobs ago) used to buy for $80 and change each. It was a stiffener piece that mounted to larger circuit boards, most people here have probably seen them, or a version of them. It was a piece of 6061 about 8-9" long, around 3/16" square with 5 or 6 4-40 sti threads. 2 ops, profile, drill, tap, flip and deck off remainder of material. Think it ran 2 or 3 minutes or so.

 

[Mcgyver]

All I know is knowing the trade inside and out, being fully and completely competent

That qualifies you for a job as a machinist.

To be in business, you also need competence in sales & marketing and a hundred other things. I think idea that just being really good at something is but a small part of business success. Not meaning to be glib, its a daily battle for me as well. its not easy, neither is staying in business.

PS, all my business is ethical. Competent pros working for professional companies don't want even the hint of a bribe and have no time for drinking, fishing or strip clubs. That's the olden days. Move up the food chain if that's what you've found.