Starting a new small machine shop...

Goldnstate Prec. · Mar 12, 2016

Hey guys, I know this is a common thread, but I'm starting a brand new machine shop in a fairly small building (40 x 40). For those of you who have done this in the past successfully, are there some things I should look out for? What were your biggest speed bumps? What were some things you wish you had done before starting? Pretty much just any info on things I should know before starting my journey would be great. I'll be buying a new Haas (not my absolute favorite machine but it fits my budget), surface grinder, horizontal saw, inspection equipment etc... pretty much everything I'll need to run a fully operational shop. Anything helps, thanks!

Dave K · Mar 12, 2016

Track your time on your jobs, so you know for a fact you're getting what you need to make money. Don't quote cheap, just because you don't have employees and overhead right now. It will be a bitch to try to correct that later. Also, have job routings immediately, so you have records of all the processes of each job. This will also be something you don't need right away, but it's better to have it from the beginning, rather than implement it later.

mdshunk · Mar 12, 2016

+1 on the time tracking. Historical data is the gold you need to grow. Being busy does not equate to making money unless you track your time on each type of job. Can be as simple as a sheet with start and stop times that follows each job through the process. Write tooling on that job sheet if you perish something on a particular job. Write special tooling purchased for a particular job. You can be busy as hell and still not make a nickel until you track things.

wheelieking71 · Mar 12, 2016

Be honest with your customers. Don't tell them things are going to get done quicker than they really are, just to make them happy, or get the work.
It will bite you in the ass. And when you are late. Nobody is happy. This also means being honest with yourself.
The amount of time spent doing desk-work, is waaaay more than I ever anticipated.
And, I was pretty much running a shop for the last 3 years before starting mine. So, I had a pretty good idea what was coming, or so I thought. I was wrong.

And by "desk work" I mean anything you have to do that is not running the machines. From ordering tooling and materials, to bullshit sessions with people that really can not take a hint when you are trying to get rid of them. That was a huge problem for me in the beginning. It took me a while to figure out how to politely make them go away.
Some of them, there was no polite way. And you just have to tell them "I need you to leave so I can work". Amazing how many times that resulted in hurt feelings.

Dupa3872 · Mar 13, 2016

wheelieking71 said:
Be honest with your customers. Don't tell them things are going to get done quicker than they really are, just to make them happy, or get the work.

And by "desk work" to bullshit sessions with people that really can not take a hint when you are trying to get rid of them. That was a huge problem for me in the beginning. It took me a while to figure out how to politely make them go away.
Some of them, there was no polite way. And you just have to tell them "I need you to leave so I can work". Amazing how many times that resulted in hurt feelings.

This is a huge problem for me on weekends, I have a few close friends who stop in and want to spend the day following me around while I'm trying to work. You would think they could see how busy you are but they hang around. I spend all my time here seven days a week just to stay on time and keep the parts going out and money coming in. I don't see people so they come to see me. In some ways I appreciate them for thinking about me so much that they would come to see me but it can really get in the way.

I am honest and give them a half hour then politely explain that I need to focus and they need to go. It works most of the time and people understand.

Work hard and if you are willing and able to give your life to this venture for a few tough years you will do well, and I mean give up time with family, friends, hobbies...you name it it's gone for now maybe gone for good.

If that's not you then save you money and buy a hot dog cart.

Good luck I wish you all the best !!!

Make Chips Boys !

Ron

dhoom · Mar 13, 2016

Best of Luck OP!!!

I am doing the same albeit in a different setting, surroundings and country!! I have just got one manual lathe and planning to go for VMC, Surface grinder, drilling machine in the next few days ...

Don't be afraid to go for a good deal on a used m/c if you see one for sale..

Dupa3872 · Mar 13, 2016

dhoom said:
Best of Luck OP!!!

I am doing the same albeit in a different setting, surroundings and country!! I have just got one manual lathe and planning to go for VMC, Surface grinder, drilling machine in the next few days ...

Don't be scared to go for a good deal on a used m/c if you see one for sale..

Good luck and my best to you as well. I love seeing people take charge of life and make things better for themselves and those they love.

Hit it hard and never look back !

Make Chips Boys !

Ron

Dan from Oakland · Mar 13, 2016

Make sure you have enough electrical power to run your machines. Nothing is worse than being short on electrons and having to hassle with the power company to get heavier service.

vettedude · Mar 13, 2016

Don't try to buy everything you need up front, use modern day shipping/vendors for their worth.

Companies like iscar, sandvik etc. have no problem shaping crap the moment you order it up to about 5:00 CST. Amazon as well. There are cheaper options than sandvik, but their shipping/customer service is amazing.

Don't cheap out on your horizontal saw, If there is one tool i take for granted but use every day its my band saw. Buy bigger than you think you need and more heavy duty.

Also if you don't have the sales, you are in trouble.

Goldnstate Prec. · Mar 13, 2016

This is all awesome advice! Thank you guys, I'm passionate about this and it's been in the works for a couple years and it's about to take launch. I'm not worried about the actual machining part, I'm a well qualified machinist with great experience in all aspects with years of multi-axis programming, this business is my dream and I've put a lot of work into it, saved money for months and just really put my heart into it. It's not the money that drives me, I honestly just don't like working for someone else, it's a pride thing... I always feel like I'm making other people money, and I'm always getting the same paychecks every Friday. It's what America is all about, thanks again for all the advice boys!!

dmcnally · Mar 13, 2016

Good luck to the OP. Don't spend all your savings. You should probably have 6-12 months of operating cash in the bank to cover expenses (business and personal) as the business gets going... after that, keep 6-12 months in the bank to cover slow periods.

Dave

litlerob1 · Mar 13, 2016

Cheaper tool/equipment does not equal more cash in pocket. Other words don't trip over dollars to pick up pennies. Cheap is fine IF you know exactly what you're getting, making cheap purchases and ending up with garbage is something everyone has been guilty of, just be aware of it and swallow the pill if you need too. On the other hand, good salesmen are that for a reason; they're good!! Don't buy shit you don't need. It is really exciting to watch simul5 axe Milling, full B axis turning, Swiss style machining but you have to ask if you can use all that in your line.

R

wheelieking71 · Mar 13, 2016

dmcnally said:
Good luck to the OP. Don't spend all your savings. You should probably have 6-12 months of operating cash in the bank to cover expenses (business and personal) as the business gets going... after that, keep 6-12 months in the bank to cover slow periods.

Dave

So, your basically saying keep 6-12 months worth in the bank at all times? LOL

litlerob1 · Mar 13, 2016

wheelieking71 said:
So, your basically saying keep 6-12 months worth in the bank at all times? LOL

I think it's great advice.

R

SND · Mar 13, 2016

I kinda doubt there's many shops/businesses in general with 6-12months cash in the bank...

More like, get a big low interest credit line, find work, get it done, get paid, repeat until you either finally have money in the bank or died trying.

Keep things organized, track materials and such right from the start.

Bobw · Mar 13, 2016

dmcnally said:
Good luck to the OP. Don't spend all your savings. You should probably have 6-12 months of operating cash in the bank to cover expenses (business and personal) as the business gets going... after that, keep 6-12 months in the bank to cover slow periods.

If you have 6-12 months of capital sitting in YOUR OWN ACCOUNT!! WHILE... you are starting a business... You don't need to start a F'n business.

I'm not supposed to start trying to make money, until I have enough money to not need to make money?? Sound financial advice.

Are you a trust fund baby??? Because I've never had the luxury of security before sticking my neck out.

litlerob1 · Mar 13, 2016

Bobw said:
If you have 6-12 months of capital sitting in YOUR OWN ACCOUNT!! WHILE... you are starting a business... You don't need to start a F'n business.

Yeah especially if "Haas" is your budget and you just bought a saw, inspection and a surface grinder. IMO

Robert

Goldnstate Prec. · Mar 14, 2016

I already own the building, the equipment that I'm getting doesn't cost a ton of money, there's little risk involved if you ask me. I believe if I work hard and do things the right away, the business will grow itself. My initial costs and overhead are extremely low, with great potential revenue. Everybodys gotta start somewhere, and running to the bank, getting a giant business loan, buying all top of the line equipment seems too risky for me, but I could be wrong, I'd rather cut my losses, especially when I have a family to support...
It's still a better plan than trying to open a shop with only a Bridgeport and a manual lathe, those days are long gone.

garyhlucas · Mar 14, 2016

Start out with bookkeeping software too, like Quickbooks and learn how to use the cash flow projection feature. Companies don't die from lack of profit, most die from cash flow problems. I'd also add a seat of AllOrders right up front. I've implemented this program and others like it several times and it is a game changer to capture everything you buy, everyone you buy from and automate the purchasing process. It also allows you to do quotes, work orders and such. Like others here mentioned the office work that produces no income is much more effort than you realize. Automation here is huge.

broke · Mar 14, 2016

Know your worth, don't leave too much money on the table just to stay busy. Too many small guys are being raped by their own doing. The value you add to your customer is not that you will do it for pennies, it's that you'll be the guy they can trust when they get into a sticky situation. Your reputation is everything, be honest about when work will be done and honest with yourself about how long it'll take

Learn when to say no. Find your niche and build a network there. Most jobs that have bitten us in the butt have been work we don't normally do.

Also, when you are responsible for bringing work in and doing it you can be tempted to live in the shop. Some of that is necessary but don't let it ruin personal relationships. I know a lot of self employed folks and the ones who are happy keep a sane balance.

Starting a new small machine shop...

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