Am I crazy to consider buying a machine shop? - Page 6
Close
Login to Your Account
Page 6 of 7 FirstFirst ... 4567 LastLast
Results 101 to 120 of 125
  1. #101
    Join Date
    Jun 2019
    Country
    UNITED STATES
    State/Province
    Texas
    Posts
    397
    Post Thanks / Like
    Likes (Given)
    126
    Likes (Received)
    347

    Default

    Quote Originally Posted by as9100d View Post
    Have you give any thought to taking a class on the iso9001:2015 procedures? They made a bunch of changes in favor of small business.

    An audit for a 1-5 employee shop wouldn't cost you more than $4500 for both audits with nqa, there are other registrar's that may very well be cheaper. We just use nqa because they deal with NASA, Boeing, and more...plus the logo looks cool. Could really open up some doors and get you work you really do deserve to have.

    I can send you the quality manual with the bare bones minimum you would need to pass the audits.

    Maybe something to chew on for some years of you're bored.

    Sent from my Pixel 3 using Tapatalk
    You really come off like an evangelical Mormon.

    *Knock*Knock*

    Hello sir! Have you heard of our lord and savior ISO?

    You push it as badly as modern education pushes college degrees for anything and everything. Not everything needs it. Hell, up until the big push by colleges to make more money most places taught on their own. Really it's more of a way for bureaucrats to make more money by requiring things that weren't even around until recently. Same goes with the manufactured demand for diamonds.

    Nothing against you, but growing up with southern Baptist relatives, I've grown tired of being preached at.

  2. Likes Fish On, aarongough, Hodge, SND, neilho and 2 others liked this post
  3. #102
    Join Date
    Jan 2013
    Location
    Gilbert, AZ
    Posts
    6,199
    Post Thanks / Like
    Likes (Given)
    7892
    Likes (Received)
    7970

    Default

    Quote Originally Posted by Rob F. View Post
    Are you thinking of VWfullcup? Or someone else?
    Pure comedy gold reading fullofselfs posts
    Last I heard, Darin was in jail. Don't know if its true or not?
    Also heard his girlfriend got sick of driving him around, and split.
    Know for a fact:
    When my good friend Trace had to shut down his tool sales business a few years back, Darin was the one person who fucked him over with an unpaid outstanding balance.
    Fuck that punk kid!

  4. Likes Philabuster, TeachMePlease, SND, Rob F. liked this post
  5. #103
    Join Date
    Jan 2013
    Location
    Gilbert, AZ
    Posts
    6,199
    Post Thanks / Like
    Likes (Given)
    7892
    Likes (Received)
    7970

    Default

    Quote Originally Posted by as9100d View Post
    Have you give any thought to taking a class on the iso9001:2015 procedures?
    NOPE. I got more important shit to do with my time. Like run a well organized shop.

  6. Likes Laurentian liked this post
  7. #104
    Join Date
    Nov 2019
    Country
    UNITED STATES
    State/Province
    Pennsylvania
    Posts
    67
    Post Thanks / Like
    Likes (Given)
    29
    Likes (Received)
    46

    Default

    I was going to start a new topic, but this seems to fit here both for the OP and for the offshoot discussion about ISO. I think a good shop management software is very important for shops of all sizes that want to grow, get QMS certifications or simply make things easier for the owner. I met with ProShop ERP to discuss their software. Here is the review: Review of ProShop ERP Shop Management Software

  8. Likes as9100d, Laurentian liked this post
  9. #105
    Join Date
    Dec 2019
    Country
    UNITED STATES
    State/Province
    New York
    Posts
    1
    Post Thanks / Like
    Likes (Given)
    0
    Likes (Received)
    0

    Default

    call me after 6PM 516 635 9846 JERRY

    opportunity avail

  10. #106
    Join Date
    Jun 2010
    Country
    UNITED STATES
    State/Province
    Texas
    Posts
    436
    Post Thanks / Like
    Likes (Given)
    129
    Likes (Received)
    151

    Default

    I only know the oil related machining business. So I dont know if you are crazy or not. But I do know that there is no way I would have started my shop if I had any other option, skill or money. Absolutely no way. I know a guy that was fairly high up in management in a successful shop. He decided to start his own shop and now he deeply, sincerely regrets it.

  11. Likes Laurentian liked this post
  12. #107
    Join Date
    Jan 2013
    Location
    Louisville, KY
    Posts
    3,089
    Post Thanks / Like
    Likes (Given)
    7303
    Likes (Received)
    2620

    Default

    Quote Originally Posted by ideadirect View Post
    After spending some time on these forums I almost feel that everyone believes Machine shops are the worst type of business and no one should get into this business. If you take a step back, you could almost apply many of the negatives to any business.

    ...snip...


    After a quick scan of this thread, I have only a couple of barely qualified points to consider before you take this plunge... Offered in random order as time is short...


    Like others have said, you're going to need to lean on the current owner and shop foreman for a lot, but you not being an "insider" may be a big asset to you. Like others have mentioned, you don't want to get mired down in the nitty gritty. Bring what you can to the table, and let your employees do what they do best.

    What that, and every other business needs is..... SALES! Can you bring that to the table?

    14 year machinist here, who did a couple years in sales, and then a very brief stint as a project manager in an aero/DOD shop, now back to quasi-engineer/machinist.

    OPINION - You seem up to the task of the financial aspect of this. Your first priority is keeping the current owner around, and shop foreman so that 1- they can keep things going, and 2- SO THEY CAN TEACH YOU what you need to know on the business admin/operations side. THEN, focus on reading drawings well, quoting, and getting materials into the shop - BECOME A DECENT PROJECT MANAGER and stop there.

    Your shop foreman can take care of ordering supplies, as you'll only screw things up if you try to take this over. Just buy for him what he says he needs, or better yet, give him the keys on purchasing supplies, and just expect supplies are costly, and just roll with it. (IE - just sell more to make up for it mentality...)

    You shouldn't need to know anything more technically. That's when you have the 5-10 minute chat with the foreman over the technical details of this job, and then chat with the owner to hammer out the bid.

    THEN GO SELL...



    Best of luck, and do hang around and let us know what/how you decide.

  13. #108
    Join Date
    Jan 2007
    Location
    Flushing/Flint, Michigan
    Posts
    8,660
    Post Thanks / Like
    Likes (Given)
    467
    Likes (Received)
    7108

    Default

    Quote Originally Posted by Jashley73 View Post
    ....

    What that, and every other business needs is..... SALES! Can you bring that to the table?

    ....
    Many have bought a machine shop based on it's profit level on sales.
    Only to find that all those sales where keyed on the current owner and his/her ability.
    The result is you hold on for a bit and then file bankruptcy on it three years out so you are clear.
    This is so very, very common. Here the employees pay the real price.
    Bob

  14. #109
    Join Date
    Jan 2010
    Location
    Gilroy CA
    Posts
    4,401
    Post Thanks / Like
    Likes (Given)
    3182
    Likes (Received)
    2472

    Default

    I have to kinda agree with AS9100d here....
    I'm still a small shop in Norcal by machine shop standards. 10k building, 16 machines (4 expensive 5 axis cells with pallet changers) , ISO/AS9100. This last year was kinda of down but between jumping on the 5 axis train in 2010 and the certifications we were able to grow our shop 5x over. Capacity for next year is around ~6 million between 14 employees (3 of us being owners (family)).

    Sooner or later the list of customers willing to look past not being certified grows smaller and smaller. It was a turning point for us and the bay area is super competitive...

    Wheelie best thing I ever did was hire these ladies out of Arizona. They fly in every year , do our external audits, help us revise our procedures / manual and hold our annual mgm review meeting. They are worth every penny to help navigate this and gain from their expertise. Best part is they are super local ...

    Business Management Systems Consulting

  15. Likes Laurentian liked this post
  16. #110
    Join Date
    Mar 2004
    Location
    Edison Washington USA
    Posts
    10,530
    Post Thanks / Like
    Likes (Given)
    1017
    Likes (Received)
    5539

    Default

    I would agree with all of the comments which say you need to know a lot more about the business- but also- where I live, nobody pays all cash for commercial real estate, unless you can tear it down and build a building in a year that will sell or rent for 4-10 times the sales price.
    There are basically no fixed interest 30 year loans for commercial property- which means the terms are what you are willing to live with.
    Dont YOU get a loan for the real estate- make the current owner carry the loan. You might pay a higher interest rate than a bank, but that, like everything in this deal, is negotiable. I have bought commercial real estate with a lower down, fixed monthly payments, and even balloon payments.
    Depends, of course, on the local market- if it was downtown Seattle or the Upper East Side, maybe- but in most places, you can offer any deal you want, and the seller will at the very least, consider it.
    Low ball em. Cant hurt. They can only say no, and counter.

  17. Likes Laurentian liked this post
  18. #111
    Join Date
    Aug 2012
    Location
    California, Central Coast
    Posts
    4,260
    Post Thanks / Like
    Likes (Given)
    2256
    Likes (Received)
    1684

    Default

    Quote Originally Posted by Ries View Post
    Low ball em. Cant hurt. They can only say no, and counter.
    In this case I would not try to lowball the seller. The OP will NEED the help of the owner and the foreman/workers to have any real hope of keeping the shop running. Lowball will just make them not want to help him. Needs to be a deal that everyone is happy with.
    If it was just an empty building then for sure - go as low as you can go - like the limbo.
    Last edited by Rob F.; 12-21-2019 at 01:34 AM. Reason: clarity

  19. Likes Mcgyver, eaglemike, Jashley73 liked this post
  20. #112
    Join Date
    Nov 2014
    Country
    UNITED STATES
    State/Province
    Florida
    Posts
    4,363
    Post Thanks / Like
    Likes (Given)
    1693
    Likes (Received)
    2073

    Default

    Quote Originally Posted by Jashley73 View Post
    After a quick scan of this thread, I have only a couple of barely qualified points to consider before you take this plunge... Offered in random order as time is short...


    Like others have said, you're going to need to lean on the current owner and shop foreman for a lot, but you not being an "insider" may be a big asset to you. Like others have mentioned, you don't want to get mired down in the nitty gritty. Bring what you can to the table, and let your employees do what they do best.

    What that, and every other business needs is..... SALES! Can you bring that to the table?

    14 year machinist here, who did a couple years in sales, and then a very brief stint as a project manager in an aero/DOD shop, now back to quasi-engineer/machinist.

    OPINION - You seem up to the task of the financial aspect of this. Your first priority is keeping the current owner around, and shop foreman so that 1- they can keep things going, and 2- SO THEY CAN TEACH YOU what you need to know on the business admin/operations side. THEN, focus on reading drawings well, quoting, and getting materials into the shop - BECOME A DECENT PROJECT MANAGER and stop there.

    Your shop foreman can take care of ordering supplies, as you'll only screw things up if you try to take this over. Just buy for him what he says he needs, or better yet, give him the keys on purchasing supplies, and just expect supplies are costly, and just roll with it. (IE - just sell more to make up for it mentality...)

    You shouldn't need to know anything more technically. That's when you have the 5-10 minute chat with the foreman over the technical details of this job, and then chat with the owner to hammer out the bid.

    THEN GO SELL...



    Best of luck, and do hang around and let us know what/how you decide.
    That ^ will do rwo things for you-

    1) give you time for what you need to do
    2) Instill confidence and ownership for the foreman

    I asked one time about getting something like $100/month discretionary (back in early 200's, but still "chum change" IMO) when I was running the shop. The plan was to have that so when we needed a tap, or a drill, or little things I could just order it and get on with my day without getting 3 people to look at it... The owner brow beat me down so bad I was like fu*k you then! We need something and you are gone and we have to wait 3 days to order it, too bad, the job sits.

  21. Likes Jashley73 liked this post
  22. #113
    Join Date
    Mar 2006
    Location
    Vershire, Vermont
    Posts
    2,221
    Post Thanks / Like
    Likes (Given)
    1486
    Likes (Received)
    722

    Default

    Quote Originally Posted by wheelieking71 View Post
    No, it was a day or two after Christmas. And, they wanted a ridiculous part, that would take most any shop two weeks minimum, by the 29th.
    And, he literally said "Your just a little guy. You can't be busy". One of the least professional phone calls I have ever taken really.
    Buyers. Sheesh. Avoid 'em like the plague.

  23. Likes Laurentian liked this post
  24. #114
    Join Date
    Dec 2019
    Country
    UNITED STATES
    State/Province
    Texas
    Posts
    2
    Post Thanks / Like
    Likes (Given)
    0
    Likes (Received)
    2

    Default Having been there:

    Quote Originally Posted by ideadirect View Post
    After spending some time on these forums I almost feel that everyone believes Machine shops are the worst type of business and no one should get into this business. If you take a step back, you could almost apply many of the negatives to any business.

    I've been in the corporate world for about 20 years, mostly in marketing and looking to move to a different state. A machine shop became available that I am intrigued with and happens to be where our family wants to move to.

    It's about 30 years old and real estate is available as well. They focus on more higher end machining.
    I have zero machining experience but have always been fascinated by the industry. I am the type that would immerse myself and learn a lot... learn CAD software, equipment, techniques, etc. I would focus on business operations, marketing (they don't even have a website), building up sales capabilities and possibly expanding into new industries. They have a highly skilled foreman and 3 operators/fabricators that would stay on.

    Here is a basic annual financial profile (consistent last 4 years based on tax returns):
    Revenue = $1 million
    Owner cash flow (net income + owner salary) = $250k
    Asking price $750k (3x cash flow)

    Top customer is 20% of revenue. Top 10 customers are 65% of revenue. Concentration is a bit high but not horrible.

    What I like:
    - long history of operations and reputation
    - lack of sales & marketing (I feel I can really add value here)
    - good team in place
    - location

    Concerns:
    - I know nothing about machining or even the industry.
    - Industry seems somewhat a commodity business (but so are restaurants, retail stores, etc.)

    Am I crazy even thinking about this business? I love the idea of machining and turning ideas into physical goods and making something tangible. I would never consider starting this from scratch but a stable 30 year business with good operators that would benefit from my marketing background might make sense.

    Thoughts? Any advice on what to look out for?

    Thanks.

    Billings in progress: any to speak of?
    What value can you add in the costing/bidding process?
    Do you have processes in place for managing a job? Managing people? Reliable pipeline for new labor? Etc etc etc.

    Lots of ways to slice it.

    Do your deep dive and make a decision with clear eyes. Good luck!

  25. Likes Laurentian liked this post
  26. #115
    Join Date
    Apr 2019
    Country
    UNITED STATES
    State/Province
    Arkansas
    Posts
    1,258
    Post Thanks / Like
    Likes (Given)
    531
    Likes (Received)
    466

    Default

    Quote Originally Posted by dstryr View Post
    I have to kinda agree with AS9100d here....
    I'm still a small shop in Norcal by machine shop standards. 10k building, 16 machines (4 expensive 5 axis cells with pallet changers) , ISO/AS9100. This last year was kinda of down but between jumping on the 5 axis train in 2010 and the certifications we were able to grow our shop 5x over. Capacity for next year is around ~6 million between 14 employees (3 of us being owners (family)).

    Sooner or later the list of customers willing to look past not being certified grows smaller and smaller. It was a turning point for us and the bay area is super competitive...

    Wheelie best thing I ever did was hire these ladies out of Arizona. They fly in every year , do our external audits, help us revise our procedures / manual and hold our annual mgm review meeting. They are worth every penny to help navigate this and gain from their expertise. Best part is they are super local ...

    Business Management Systems Consulting
    Isn't it crazy what iso/as9100 can do for your business just by the organization and having the cert to get more work? It literally breaks down all barriers for better paying work.

    We have a similar company that does that for us and we pay them to babysit the nqa auditor when the come out. We always have the right answer to questions they ask.


    Not to mention, 6 mil and 14 employees is killing it for non iso shops, for iso shops it's doing well but not killing it.

    Looks like we have close to the same $ per employee, further proof that 1 million with 4 guys is totally possible.

  27. Likes Laurentian liked this post
  28. #116
    Join Date
    Mar 2011
    Location
    Geneva Illinois USA
    Posts
    6,431
    Post Thanks / Like
    Likes (Given)
    2810
    Likes (Received)
    2512

    Default

    Quote Originally Posted by as9100d View Post
    Isn't it crazy what iso/as9100 can do for your business just by the organization and having the cert to get more work? It literally breaks down all barriers for better paying work.

    We have a similar company that does that for us and we pay them to babysit the nqa auditor when the come out. We always have the right answer to questions they ask.


    Not to mention, 6 mil and 14 employees is killing it for non iso shops, for iso shops it's doing well but not killing it.

    Looks like we have close to the same $ per employee, further proof that 1 million with 4 guys is totally possible.
    When you figure so much income per employee, do you set a base dollar per employee and give them a bonus if they exceed that?

    Tom

  29. #117
    Join Date
    Apr 2019
    Country
    UNITED STATES
    State/Province
    Arkansas
    Posts
    1,258
    Post Thanks / Like
    Likes (Given)
    531
    Likes (Received)
    466

    Default

    Quote Originally Posted by TDegenhart View Post
    When you figure so much income per employee, do you set a base dollar per employee and give them a bonus if they exceed that?

    Tom
    We have a formula based on performance. It's fairly complicated but the general idea is once we hit a target profit margin, less scrap, less overtime pay, i split the profit overage 70% employees and 30% company and give it out based on two things, department performance less scrap rate and total hours worked.

    It encourages folks to be on time, work more because the more they work the bigger the bonus, reduce scrap rates. Scrap and overtime are the biggest killers of the bonus. Getting work done on time without overtime is obviously the way to go. That said every employee is given unlimited overtime, we have close to a year of backlog work so it doesn't matter.

    To answer you're question, it's not based on dollar per employee but rather profit % as a whole. And bonus split between departments with least scrap rates and overtime however the overtime differential is made up by bonuses being paid out to higher hours worked.

    Like I said, it's complicated.



    Sent from my Pixel 3 using Tapatalk

  30. Likes Laurentian liked this post
  31. #118
    Join Date
    Apr 2019
    Country
    UNITED STATES
    State/Province
    Oregon
    Posts
    49
    Post Thanks / Like
    Likes (Given)
    0
    Likes (Received)
    33

    Default

    You are not buying a machine shop. You are buying a business. All you need to ask is can you make money. Do you know how to run a business? Do you know machining. Personally, I would not buy a machine shop unless it came with its own products. Otherwise, you are just buying equipment and you will be responsible for maintaining and creating your own customers.

  32. Likes wheelieking71, Jashley73, Laurentian liked this post
  33. #119
    Join Date
    Apr 2018
    Country
    UNITED STATES MINOR OUTLYING ISLANDS
    Posts
    3,973
    Post Thanks / Like
    Likes (Given)
    0
    Likes (Received)
    1794

    Default

    Quote Originally Posted by as9100d View Post
    Not to mention, 6 mil and 14 employees is killing it for non iso shops, for iso shops it's doing well but not killing it.

    Looks like we have close to the same $ per employee, further proof that 1 million with 4 guys is totally possible.
    Ouch. Two people, just sales, monthly nut is about $2500, we've averaged over a million in sales for the past ten years.

    That's not bragging in any way, we are both lazy, I just wanted to point out that comparatively speaking, you can see what a rotten deal machine shops are as a business.

  34. Likes Laurentian liked this post
  35. #120
    Join Date
    Jul 2019
    Country
    UNITED STATES
    State/Province
    California
    Posts
    4
    Post Thanks / Like
    Likes (Given)
    5
    Likes (Received)
    0

    Default

    This is not a fair fight. Its two (owner and broker) against one (you) and to expect a fair outcome is ludicrous. At the very least you need an industry expert on your side. I think your family history has given you the love and enthusiasm for entrepreneurship but you can’t build on that in a high risk environment without skill and experience. Buying a ready made product and selling it retail is far removed from the pitfalls of manufacturing a product profitably. Coming to this forum proves that you know what you don’t know and are a smart man. But it takes more . . .

    I read the whole thread and there has never been mention of co-ownership or partnership. Since you have zero knowledge of the industry the foreman is one of the keys to your survival. There is no better way to incentivize someone than with an equity position since the owner can’t be counted on for a long-term solution. While you may be tremendous in sales you won’t be able to deliver a service or product.

    Imagine you want to start an aircraft charter service by buying a used TBM 700 for $750,000. You are not a pilot or an aircraft mechanic. You have no idea what a pre-purchase inspection is and you do not have the time or will to develop the skills necessary to fly such a complex aircraft. The aircraft broker says he knows a “fantastic” (broker-speak) pilot and the aircraft is old but in “perfect” condition! Unknown to you, the pilot is the broker’s unemployed relative, and the aircraft’s maintenance logbooks are imperfect and suspect but you don’t know what to look for. Good luck!


Tags for this Thread

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •