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Interested in acquiring a established machine shop

The other posters are wrong. You are qualified to buy and run a machine shop. So long as that shop employs about 100+ people, including a full complement of skilled salesmen and estimators. The owner of such a shop can be a businessman first, and not a machinist at all.

I would say that has a possibility of working, but even then, the new owner has to be willing to listen to his experts, and follow their recommendations. Too often the new owner will say "But can't we get by without making that investment?" And the answer is usually, "Technically yes, but it will cost more and take longer in the long run, with a greater chance of failure." Boss then often says "Well just work harder to keep the original promised date, make sure everyone does everything perfectly, and it'll be fine!" It seldom works out that way.
 
Hello there
I work in tech industry and, my background is business operations & Program/Project Management. I do have Electronics Engineering (Undergrad) and Masters in Engineering Management. I do not have experience in machining(no hands on). But I understand the business and the business model.

Does not having any machine shop experience is a risk in buying and running a machine shop business?

What advice would you have for me to mitigate or reduce the risk if no prior background ?

Thank in advance

What draws you to owning and running a machine shop? Do you have products you want to market? What value do you, as an owner, bring to the business?

These are rhetorical questions, I asked why because if it's for sentimental reasons or out of intrigue I'd probably pump the brakes and look at other avenues for investing. If you have a direction you want to take the business then maybe you could pull it off. Not having experience doesn't disqualify you by itself, but it creates a void in understanding what you don't know.

There's too many unknown variables to get specific, however your business savvy, risk tolerance, ability to manage and hire talent as well as moving on quickly from employees that don't add value is more important than machine time IMO. The caveat being there's skilled machinists under the roof you trust.

If you're really interested in pursuing this I would start having conversations with owners, visit as many shops as you can, get a feel for what the actual opportunities look like in person. Once you're dealing with real time numbers and opportunities you can start to evaluate where you fit into the mix.
 
Basically ,youd need a foreman and a manager ,who both knew machine shop,and probably someone in the office,that could be the owner ,but probably not.............................aaand,do you want to hear some horror stories about managers when the owner doesnt know the business?
 
Does not having any machine shop experience is a risk in buying and running a machine shop business?

I think you do, or should, already know the answer to that. Succeeding in any industry is like walking across a mine field, you need domain knowledge to not get killed.

If you don't have it yourself you can hire it, but its not easy. I did it. Ended up with a bunch of guys around me each with decades of experience. That back filled a lot of my lack of knowledge, but still, none were leaders so I still had to make the calls and no one you hire will care 1/10 as much as you will. You never hear about everything and never get 100% what they are really thinking. The top dog is still setting the pace and culture, bloody tough to do when you don't know business. Lots of expensive and painful mistakes made.

With your backgound, I'm kind of "whats this guying thinking"? I'd be pursuing an industry 4.0 + thing, not trying get back to industry 1.0. Something that is digital, game changing and scalable....sounds like buzzwords but that's the dynamics you need to knock it out of the park
 
I think you do, or should, already know the answer to that. Succeeding in any industry is like walking across a mine field, you need domain knowledge to not get killed.

If you don't have it yourself you can hire it, but its not easy. I did it. Ended up with a bunch of guys around me each with decades of experience. That back filled a lot of my lack of knowledge, but still, none were leaders so I still had to make the calls and no one you hire will care 1/10 as much as you will. You never hear about everything and never get 100% what they are really thinking. The top dog is still setting the pace and culture, bloody tough to do when you don't know business. Lots of expensive and painful mistakes made.

With your backgound, I'm kind of "whats this guying thinking"? I'd be pursuing an industry 4.0 + thing, not trying get back to industry 1.0. Something that is digital, game changing and scalable....sounds like buzzwords but that's the dynamics you need to knock it out of the park

What was the driving factor or motivation for jumping into the fire without prior experience? Did you buy an existing business or build from the ground up?
 
Once in a million years you will find a guy who will run the whole business,be happy for you to make money ,have no expensive habits ,and live for his work......once in a million years.....every other day you will get guys who are lazy ,dishonest ,bitter and incompetent.........this why a business has a 0ne in a million chance of being sucessful when the owner knows diddly about it.
 
What was the driving factor or motivation for jumping into the fire without prior experience? Did you buy an existing business or build from the ground up?

well...couple of thoughts. most of my life was in professional services. Eat will you kill environments that teaches sales and business acumen. The negative is it becomes essentially highly paid piece work and after time it wears on you. Every Jan 1st you're a bum and the day you take off you're self unemployed. So I wanted a business. This is my second venture since leaving professional services. The current gig is a bit like buying existing and a startup. The business was around for 50 years but had been discontinued. It was a standing start (no sales or team) but it did have a product list, brand and design library.

In both cases I made sure there was lots of deep industry knowledge around me. Next best thing to first hand.

I've also been welding, machining, making and designing since high school 40 years ago....that doesn't qualify me on the shop floor (fabrication) but it does mean there isn't much going on I can't come up the curve on quickly. I am the best machinist in the place lol. As well with corp finance experience, sales credentials and business leadership experience and education 'getting' the business side wasn't a big issue.
 
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And ,L Keith R......as promised a bedtime horror story.....from the distant past ?...No ,Wednesday ,this week.....manager sentenced to 7 yrs jail for giving away $12 million of company money ....yep ,giving away.
 
well...couple of thoughts. most of my life was in professional services. Eat will you kill environments that teaches sales and business acumen. The negative is it becomes essentially highly paid piece work and after time it wears on you. Every Jan 1st you're a bum and the day you take off you're self unemployed. So I wanted a business. This is my second venture since leaving professional services. The current gig is a bit like buying existing and a startup. The business was around for 50 years but had been discontinued. It was a standing start (no sales or team) but it did have a product list, brand and design library.

In both cases I made sure there was lots of deep industry knowledge around me. Next best thing to first hand.

I've also been welding, machining, making and designing since high school 40 years ago....that doesn't qualify me on the shop floor (fabrication) but it does mean there isn't much going on I can't come up the curve on quickly. I am the best machinist in the place lol. As well with corp finance experience, sales credentials and business leadership experience and education 'getting' the business side wasn't a big issue.

That's quite a shift in professional landscapes! My origins go back to sculpture where I was drawn to the freedom to create things and work with all kinds of materials except I had no interest in the business entity that is the art world. I had to find other means for work so I remodeled houses for years before getting burned out and wanted to start down a new path.

I've always been interested in business, marketing/branding and product design so I made plans to focus on launching a furniture line working with wood and metal. It's comical how naive I was when I started! I thought I had a decent platform to spring from with a huge range of construction skills from foundation work to architectural design and high end hardwood finish work yet I was utterly clueless about every aspect of the new venture I was jumping into.

I had to start at the entry gates learning about industrial machinery, production methods and skills, and how to design which was almost impossible without a strong knowledge of the materials and processes involved. All the pieces I worked on initially were too complicated to produce efficiently and were littered with technical flaws because I didn't understand the characteristics of the materials. Needless to say it was quite a shit show at the beginning and I often wondered wtf I had gotten myself into.

After years of learning the hard way I felt ready to launch the business and had contracts in place for a new shop which of course would have been too easy so...the pandemic started a couple months after I signed the contracts which pretty much left me no options except cancel my plans and take what work I could get. Most of the work I've gotten since has been metal fabrication for marine contractors I know and I've got a few other products I've been working on and a new batch of furniture designs to roll out. I'm looking forward to seeing where things go, but damn it's been a trial by fire learning everything on my own and a rough few years blindly navigating through the shit storm of my own making because I was too naive to know what I didn't know when I started.
 
I read a thing recently that suggested entrepreneur success involves a lot of "enlightened trial and error". I thought hmmm....maybe how I'm doing things isn't as wacko as it sometimes seems.

That's very different than a corporate environment and really, its is our edge.....while we don't have the resources to spend a year with committees studying something, conducting marketing focus groups, hiring consultants and so on, being wrong and having an idea fail isn't the careering ending event it can be at a big firm. Makes it a lot easier to innovate.
 
I read a thing recently that suggested entrepreneur success involves a lot of "enlightened trial and error". I thought hmmm....maybe how I'm doing things isn't as wacko as it sometimes seems.

That's very different than a corporate environment and really, its is our edge.....while we don't have the resources to spend a year with committees studying something, conducting marketing focus groups, hiring consultants and so on, being wrong and having an idea fail isn't the careering ending event it can be at a big firm. Makes it a lot easier to innovate.

I definitely agree with that, small shops are agile and have more fluidity to experiment without having to work within the layers of the corporate structure. Every entrepreneur has their own path with unique circumstances so it's less formulaic and hard to replicate. That's why I enjoy reading about different owners experiences, the good and the bad. Some hit it out of the park on the first swing, others slowly grind it out not knowing if or when they'll take flight.
 
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IME, you are the wrong person to own a machine shop. If you don't understand machining, you will make the wrong decisions and lose your investment, dragging a bunch of others down with you. I've seen it happen far too may times. Machining is not like any other projects you might have managed; it is bound strictly by the laws of physics, and cannot be swayed or faked by manager willpower, as I've seen lots of MBAs attempt. Every MBA that I've witnessed in charge of machining has attempted to take shortcuts and get by without making the proper investments in equipment, tooling, software, and skilled manpower, despite usually paying lipservice to the contrary. This ALWAYS comes back to bite, making things take significantly longer and cost significantly more than if those investments were made initially, or outright fail.

If you want to mitigate that risk and press forward, spend a decade or three learning machining first.

I disagree with this, and with barbter who indicated "Everyone thinks machining is easy . .". No, "everyone" doesn't think that, only the clueless do, meaning, you don't take as example the ding-a-lings who have it wrong as the measure of why you shouldn't do it.

In my experience the thing that causes a business to fail, or be an unmitigated pain in the butt, is PEOPLE, and Leadership/Management (or lack of).

That's it, that's all, and I'm guessing everyone here with more than a year of work experience has come to understand that hard core. Do you need competent people machining? Of course. Should Leadership/Management have some kind of background in the industry? Of course. Would it be super-duper, extra-special nice if you had a top notch Machinist + Degreed Engineer who's also great at leading people with 30 years of experience running a place. You bet, but Pink Elephants are remarkably rare so that's the wrong benchmark to hold up as a Rule.

If you have the drive and the passion, it is my opinion you should, without fail, explore that. You should ignore advice that, without actually knowing anything about you suggests you need to forget it and park for some undefined period of time until you reach some kind of undefined goal post.

Be practical and well thought out about it. The spirit of much of the advice in this thread is good. Don't underestimate the deep . . . and broad . . . hands-on knowledge and skill sets that come from being a long time machinist actually making parts from chunks of steel (or whatever).

The Boss, IMO, doesn't have to be the best machinist in the shop that knows everything better than everyone else, and, in point of fact, it's going to be highly likely that won't be the case anyway, and does not equate to a bad thing.

A Leader, a good, responsible, trustworthy Leader / Manager can run a shop of Machinists without having the same level of Machining knowledge and skills as his People. The key here is "responsible and trustworthy", which is implying that this person will know his/her limits, and work with his People in practical fashion to get the job done, to ID where additional technical training may or may not be needed, or to assign the qualified person responsibilities as appropriate, etc.

Leaders who do it wrong putz stuff up. That's not the measure. Who takes the fail examples as the benchmark for it not being workable? That's backwards.

A Machinist who is super good at Machining can be the worst person to place in charge of other People and an organization if they don't understand how to Lead.

Machinists who do it (Leadership/Management) wrong putz stuff up. That's not the measure. Who takes the fail examplss as the benchmark for it not being workable? That's backwards.

The point: Machinist or Not Experience Machinist doesn't really matter. Leading and running a machining company can be done by someone from either side of the equation if, and only if, you FOCUS on the idea you are the Boss now, not one of "the guys", and you seriously educate yourself on the disciplines of people & project management.

Because it is much easier to teach people how to use a Micrometer or machinery than it is to actually care about their jobs and co-workers. Even in cases where someone is proving themselves not capable technically (e.g. fails math issues), that's objectively easier to discern and deal with even if it means firing. People stuff? Leadership stuff? Attitudes that are either contribution to good stuff on the floor vs causing problems? Hiring practices bringing in the right talent versus bringing in the wrong people who disrupt your core employees?

PEOPLE, every time, are the challenge for Leaders. It's on the Leader, it's their responsibility.
 
I think that was a long way about saying something that was already said. Hypothetically, if the company is already successful, and of a sufficient size to have enough experienced people under the new boss, and the new boss listens to his experts, it can work. (In those cases, the boss is only there to sign the checks.) That's just very unlikely. In the vast majority of cases, if one is buying a shop, it's a small shop with a retiring owner / lead machinist, or one that's beginning to fail due to some internal problem (bad managers, not enough talent, not enough investment in new capital equipment, etc.) Few big, successful shops go up for sale. To hope to take a company that's on the market because it's going south, and turn it around into something successful, is, while not impossible, extremely difficult.
 
I think that was a long way about saying something that was already said. Hypothetically, if the company is already successful, and of a sufficient size to have enough experienced people under the new boss, and the new boss listens to his experts, it can work. (In those cases, the boss is only there to sign the checks.) That's just very unlikely. In the vast majority of cases, if one is buying a shop, it's a small shop with a retiring owner / lead machinist, or one that's beginning to fail due to some internal problem (bad managers, not enough talent, not enough investment in new capital equipment, etc.) Few big, successful shops go up for sale. To hope to take a company that's on the market because it's going south, and turn it around into something successful, is, while not impossible, extremely difficult.

I agree with what you are saying, except (IMO) two distinct points:

" . . of sufficient size to have enough experienced people under the new Boss, and the new Boss listens to his experts, it can work. (In those cases, the boss is only there to sign the checks.)"

It has been my experience that a Boss leading a successful machine shop, and who recognizes the wisdom of "listening to his experts", isn't just a pen signing payroll clerk.

It has always been my experience that lousy, or even destructive "Bosses" where authority driven tyrants looking out for themselves first, and/or the people in the clique they developed, who played people off against each other, and who flipped on a "professional face with lots of "plausible" eplanations" to their Boss (if they had one) when problems occurred.

"To hope to take a company that's on the market because it's going south, and turn it around into something successful, is, while not impossible, extremely difficult."

Yes, and nothing in my post suggested otherwise.

What I was reacting to was a different take on advice in this forum to someone asking a question, and I don't agree with advice that says "You aren't the guy for that kind of job, don't bother until you get decades worth of machining experience under your belt." (paraphrased)

Without knowing someone personally and having a first hand read on THEIR personality and capabilities this is highly suspect advice in my opinion. It assigns to the listener all the limitations of the advisor, when that may not be the case. I think the fairer, more objective approach is to call out the challenges, call out the risks based on your experience, push those up front for consideration instead of flat out telling someone "You shouldn't try, you shouldn't do it, because you aren't the person for the job".

Real Life Example:

I've worked in places where there were some super machinists. They knew exactly what to do at a machining position, knew how to setup their position for a job, participated in estimating for quotes for their portions of job production, and had 20 to 30+ years experience doing so. Cornerstones of production, valued employees, experienced.

And what some of those people had absolutely no awareness of was the fact that while they earned their stripes by being good at what they did, that all occurred in a provisioned environment. The Owner/Boss bought or built the building, did the footwork, did the planning and investment, identified the customers, did the contacts for work. Identified what kinds of machining positions were needed, and did everything they could to keep employees provisioned with what they needed to be successful, instead of ignoring them, etc.

Good bosses - Leaders - the successful ones, don't have to be down on the floor competing with lead machinists. A good Boss will in fact be listening to his/her key people who demonstrate good judgment.

To the OP: If you have the drive and the passion to be an entrepreneur, you should explore that. Non-entrepreneurs rarely grasp what it means to take some risks, and snow plow your way to a successful business. Not because they are less intelligent than you, but because they are experts in what they do: Heads down, focused work (tasks) that have to be done correctly.

Just go into it with your head up, and compile a list of the Risks and Challenges and Difficulties, many of which have been mentioned in this thread, and think those through.

Because GOOD Bosses and Leaders are exceedingly rare, and we need as many of those as we can get. And if you happen to be one of those, you are needed. The trick is, how do you figure out if you are one of those or not? Like anything else that comes from trying.

Sorry for the TLDR, but I'm big on how Leadership is a critical function thing for any business, manufacturing included. Mostly because, like some of you I'm sure, I've had the misfortune to be under the thumb of people who ruined the workplace for everyone around them, and they had the authority and position to do so unchecked. And they were experienced machinists.
 
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Because GOOD Bosses and Leaders are exceedingly rare, and we need as many of those as we can get.

This is true. And a good boss knows his industry, otherwise their chance of making the correct choices is vanishingly small. I've seen far too many bosses, whose primary qualification was an MBA, completely destroy companies from the inside out, because they trusted what they were taught in school, which was completely backwards. In my opinion, having an MBA makes one unqualified to run a business in the machining industry, unless perhaps one also has decades of experience in the industry to counteract it.
 
This is true. And a good boss knows his industry, otherwise their chance of making the correct choices is vanishingly small. I've seen far too many bosses, whose primary qualification was an MBA, completely destroy companies from the inside out, because they trusted what they were taught in school, which was completely backwards. In my opinion, having an MBA makes one unqualified to run a business in the machining industry, unless perhaps one also has decades of experience in the industry to counteract it.

Well, we are in agreement actually. The point here is NOT that anyone is promoting the idea just because you have some schooling automatically = a "good boss", because, in similar fashion, because you are a highly experienced Machinist is not automatically equal to a "good boss" as well. It's the same face, with two cheeks.

I'm going to leave the Life Decisions of the OP . . . to the OP. None of us here are qualified to judge that otherwise. That's what I am focused on.

It seems a good thing to point out to the OP the challenges and considerations, and leave the life decisions of the OP to the OP. Because, for all we know, the OP might have very good Leadership and Management skills.

I've personally lived through the destruction of a successful CNC machining operations . . . "by highly qualified machinist-trained doods with experience". This coming on the heels of upper management NOT listening to a proven CNC Operations Manager (e.g. not listening to your key people with good judgement) who simply stuck to the facts. They pushed him out because they thought they knew better. They dropped in a series of fellows with all kinds of "relevant experience", and each one was worst than the last. But, they did have CNC programming, machining, and "industry experience". On the floor however, the reality was: Changing speeds & feeds on the fly with no discrimination/follow up, drilling holes into and altering Chrysler owned and contract controlled fixtures (contract violation and screw up of the fixtures), yanking countersink drills out of one machine without saying anything and moving those to another machine because he hadn't ordered replacements and the machine he took that from was still running a job, etc., etc.

Again, my point here: Of course it makes sense to have some grounding / education in the industry if you are going to try and run a shop. But, "that's exceedingly complicated to quantify", because I've readily seen shops bitched up . . . by "highly qualified" and "experienced" machinist types who have a hard core grasp on the machining aspects, but very little in the common sense department, the management department, the planning and assessment department.

Don't discount that new machinist hire that needs some additional training or experience . . . if they are the right person for the job.

That goes for Leaders too. More power to the OP if he has the drive to step outside his personal box. But in doing so it would be smart to comb through the advice in this thread and consider everything being said.
 
I am thinking of starting a business towards machine building (mechatronics) and I'm experienced with machining and welding. However, I'm also tempted to buy an existing business. It is (considered) much less risky than starting a company from scratch. I will share my doubts here, maybe it helps you.

1) Here (Netherlands) it is currently very hard to get anything machined. There is just so much work and barely enough machining capacity. While that is good now, the world economy will for sure be tempered someday. This makes the valuation of existing companies quite high, because currently the order books are full and turnover is huge. But this may change within weeks, months or years... This is a reason for me to rather start a company now, or wait with acquiring one.
2) Many small companies have some machines and people, and bluntly speaking it is just that. You buy the machines and the staff MAY stay. Every village has a small machining shop like that. Look at least for a place with something more in store, like a quality system that stands out, customers with long-lasting contracts or experience with automation.
3) The biggest (invisible) cost to a business are its misstakes. Look at how often a product (even a first article) is produced first-time-right. I ditch my suppliers that make too many misstakes, because communicating about repairs take 10x more time than the ordering process. And I cannot imagine my suppliers making any profit on those misstakes, because the repairs and related communication take at least 3x more time than making the part.

If item 2) and 3) are missing you may be able to find a bargain, but be sure to invest in 2) and 3) right in the start!
 
Hello there
I work in tech industry and, my background is business operations & Program/Project Management. I do have Electronics Engineering (Undergrad) and Masters in Engineering Management. I do not have experience in machining(no hands on). But I understand the business and the business model.

Does not having any machine shop experience is a risk in buying and running a machine shop business?

What advice would you have for me to mitigate or reduce the risk if no prior background ?

Thank in advance
I feel if you go for good condition used machines , there is no or minimum risk. I am into used machines business. Thanks.
 
When you think about it, what is a machine shop selling? It's the skill and effort of the machinists multiplied by the access to (the right) capital equipment. You can buy the latter, (though supplies are tight at the moment), but getting the former is much harder. Right now any skilled machinist that wants to be employed is employed, and if you're buying a small shop from a guy that wants to retire, much of the skill in the shop will retire with him. You'll have to search long and hard to find good machinists, and make them an offer they can't refuse to get them to switch to a new, uncertain company. Better have something shiny to inspire them, like some marvelous new technology they'd be helping to develop.

Then there's the client side. For the easy work you'll be competing with China and every guy with a 1993 Fadal in their garage. But you have to get good at the easy work before you can take on the hard work that pays; that's a hard hurdle if you have to be profitable in the first few years. So if you could wave a magic wand and have a few good 30 year experience machinists, some well paying high challenge jobs lined up, and the right machines for those jobs, all at once, then you could maybe have a go at it. Otherwise, how most shops start in my experience is one expert machinist with a machine in his garage. No MBA needed, he gets the work, he does the work, he bills for the work. Then he buys a second machine, and hires someone part time to help out, and it grows organically from there.

Reputation is huge as well; few companies will place orders for anything important with a brand new company, unless maybe they know the people personally, and know them to be capable. So you could have the perfect company presto poof into existence, and still fail.
I got 5 of them Fadals.... Making them dance and feeding them... That's a different story.
 








 
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