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JOB SHOP -- if you had to do it all again??

markwiggs

Plastic
Joined
May 10, 2021
Hey Guys I can't fathom the depth of combined experience on this forum, and I can't help but think for those that have had Job shop businesses or worked in them in a management position, and also those running the machines where the carbide meets the stock… if you had to do it all over again what would you do differently, what have been the biggest lesson learnt over time..? Lets loosely contain this around the Job Shop model as that's the space we are in.. thanks in advance..
 
I would not allow anyone to owe me any money....When times hit a bit of a downturn and you need payments on time ,all your customers treat you as lender of last resort.....With electronic payment now it would be ridiculously easy to have all payment on a up to the minute basis......nothing else I would do differently,but in that case I would be ridiculously out of date now.
 
I wouldn't trade my job shop experience, I learned a lot in a short amount of time. It was one of the stepping stones that got me to where I am.
 
The smartest thing I did was buying land ,and then doing something with it.....not building hirise,or factories but doing something that paid the taxes at least.....To do that now Id have to move a long way away,but thats what Id do.....the old adage is rent money is dead money never more true than with todays high rents...Own your own shop before anything else.
 
My biggest lesson was don't bid work too cheap.
When I first started I didn't have a real good handle on what it truly cost to run a profitable machine shop. Needless to say, it took years before I finally got my prices up to where they needed to be.
 
I was listening to Jay Pierson from Pierson workholding yesterday and he said "Don't buy the machines for where you are at, buy the machines for where you are going"

One of the biggest issues you have is buying your capital equipment. If you have a job that comes along that you really want to take on but you don't have large enough machines, or the parts require 5 axis, or a 4ax horizontal, you can't take that job! And if that job will be a repeat order from a large company that could theoretically take you to the "next level" well you won't get to that next level.

You want to forecast out 3-5 years and buy your machines for that purpose. You may not have the work right now to justify a larger VMC or whatever it is, but with that extra capability you not only increase your edge over competitors, you increase your capacity. Maybe that big VMC table can run palletized work that basically prints money.

Similarly, I would not buy a 2 axis lathe again (same thing Pierson said)...why buy a 2ax lathe when you can get a Y axis lathe with twin spindles? You massively increase your thruput. Add a bar feeder and you have a fully automated cell that prints money.

And don't rely on one client to feed your business. I've seen it time and time again, company has a big contract with a Prime manufacturer or whoever, contract runs out or the deal falls through, company is shit outta luck. Diversifying is good. My first boss has been hanging on by a thread for this reason for many years.

+1 on not bidding too cheap. You can leave dollars on the table that way. Profits are already thin enough, don't do yourself the disservice!

Another thing would be tooling. Investing in tooling is good. Your return on investment is seen very quickly. So you want to buy good tooling.

One last thing...it may have worked in the past with bidding and quoting, but don't just estimate or guess. Run your bids through quotation or ERP software to generate real, accurate quotes. Your profit margin will be much more consistent in this way.
 
My business is only about 30% job shop, but the comments above about owning the building/land, not being the bank for your customers and buying the capital equipment for your future needs, are all valid important points.
Being able to to do prototype work from start to finish can be very rewarding both financially and personally.

Working a job shop is like swimming with sharks. Chances of survival are slim, but if you know where to punch it in the nose, you'll make it another day
 
Other thing I would add is be careful of being taken by con artists.....Very often these guys make a business model of having work done by small shops and never paying for it......One older guy I knew had a manufacturing business said once"I spend an hour each night reading the latest commercial law and taxation information"
 
Similarly, I would not buy a 2 axis lathe again (same thing Pierson said)...why buy a 2ax lathe when you can get a Y axis lathe with twin spindles? You massively increase your thruput. Add a bar feeder and you have a fully automated cell that prints money.

I definitely agree with this! Unless you know for sure what you need the lathe for (internal stuff maybe that is set in stone?). POP for at least live tooling!
I've turned away, and/or lost out on, so much work simply because I couldn't compete on turned parts that would have also needed to go to the mill for very simple features that could have easily been done in a live tooled lathe.
 
And along the lines of what lots of guys have already said (I'm not going to quote them all).
You are a machine shop, not a bank!!!! This can not be stressed enough! NET30 MAX! With zero tolerance!
Don't do business with anybody that can not afford to do business!
I am super strict about this. Especially with start-ups and/or inventor types. COD! They pay me no later than when they pick up their parts.
Most of them I will make either supply the material. Or pay for the material up front so they have some skin in the game.
Most of the ones worth having as a customer will not have a problem with this. These arrangements can always be modified as the relationship matures.
And finally, never, ever, not ever! give a good price based on a promise of future work! Again, that can also all be worked out as the relationship matures.
90% of the time it is bullshit!
 
Never, ever hire employees that are related by marriage, cousins, brothers, sisters etc..
When one of these goes sour and they are released from your employ you will get the
stink eye from then on from their significant other, cousin, whatever.
 
A lot of good info has been shared.

Here is what I can say as a fabrication shop

-dont mix family/friends and business, it's not just to keep it separated and argument free, but if your wife does stuff, you can never have time away from the business. Your vacations will turn into business discussions.

- trust is earned, not given

- cheaper rates are given when the orders show, not because you say they will come "after this prototype "

- doing too much for any customer will always lead to a bad road. Too much by saying you can fix their sink because you are standing here.

- rent if you cant buy, buy for the future, make friends with other shops

- building and land is hard to find in areas you want. Buy now and sit on it if you can.

- A job lost is better then a job that looses.



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Dont hire family. Children and wife are ok.
Dont buy land or property. Rent. Are you a machinist or realtor, make up your mind. When you got "fuck you" money thats a different story.

Reinvest in tooling, machinery, things that make you more efficient than your competitor.
Don't let a single customer be responsible for too much of your gross sales (easier said than done).
Don't fall for your customers bullshit, " yea after this prototype we gonna order 2000/month". I've heard it all.
Try to stay organized from the beginning, once you get too big then it's too late.
Have a good relationship with an accounting service that knows about manufacturing, equipment depreciation, research tax credit, etc, etc.
Have a good coffee maker.
First 4 years say goodbye to your friends, family, sports car, free time.
 
Network, network, network. There is always work out there looking for a job shop. Back in the day, it was passing out business cards. Still not a bad idea to drop off a card at every welding, maintenance, manufacturing shop you pass.

Today, it's using the internet, joining local groups, using facebook, craigslist, et al. Yes, the computer is a time suck, but it gives a small shop a giant reach.

jack vines
 
I used to (still do) hate asking people for work......you are immediately weak and pathetic at the same time......if you have the gear ,and can do the job,work will find you out.,and you will be the dog sat on the tucker box.
 
What I was trying to say is don't tie up your money in real state if you are opening up a job shop. Unless you have an abundance of seed money investing in a building is going to reduce how much money you can invest in machinery and tooling. Often people don't talk about the drawbacks of owning your own building.

I feel that when you are at the point where you own all your machines and you can buy cnc's cash then you can explore purchasing your own building.

Another tip, dont factor your invoices. Once you do you will never get out of it. And most of the time your customers will see this.
 
What I was trying to say is don't tie up your money in real state if you are opening up a job shop. Unless you have an abundance of seed money investing in a building is going to reduce how much money you can invest in machinery and tooling. Often people don't talk about the drawbacks of owning your own building.

I feel that when you are at the point where you own all your machines and you can buy cnc's cash then you can explore purchasing your own building.

Another tip, dont factor your invoices. Once you do you will never get out of it. And most of the time your customers will see this.

Well, Frank, that "fuck you" money wasn't near as exciting as I was hoping it would be. When we bought our home there was a rundown 1 bedroom house on the same property, we chased out the rats and birds then started putting machines in it, for us renting a shop would have been another expense and besides I like to walk to work, over 30 years of it now and the only traffic jams we ever saw was when the 40 goats camped out on the driveway. Later we built a propper machine shop. In the end we made almost as much on the real estate as we did working there so I think it made a good diversification of investment.
 








 
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