A different sort of temp service for shops...

I've got an idea for the esteemed (and the not so esteemed) members of this forum to criticize.

I'm a machinist who wanted to start a business but didn't want to run a machine shop. So, I help new companies understand the effects of their designs on cost (DFM) and the different processes available to them (machining, stamping, molding, powdered metals).

The other customers I want to serve are machine shop owners. The best value I can think to provide is my services as a machinist. But why not just be an employee then? Frankly, because I'd mostly have to stop doing the other work, which I enjoy and profit from. I have a better idea that I think can fit the needs of both.

I'd like to offer my services as a temporary machinist. Someone you call when you get a rush job in, or someone quits, or for whatever reason... you've got a productivity crunch. I know other folks run temp services, and I've seen a few problems with them. There's a learning curve, so it's not reasonable to call someone in for a day or two. You also don't know if you'll actually get someone in that has the right skills. The temp firms don't seem good at screening that.

What do I offer as an alternative? Myself. A relationship. I come out and get to know your shop and your process. When you need another hand, I come out and help you get parts out the door. Then I go away. When you need help again, I come back out. You get the same guy every time, who understands how you like to run your shop, and you get a chance to get comfortable with my skills. I can come out an relieve your top guys from doing the routine jobs so they can push the rush jobs or the difficult jobs out the door.

So that's it... it's a temp machinist, but since it's the same guy everytime, you know my skills and I know your process. I have liability insurance, I pay my own taxes, I worry about my own health insurance, etc. What do ya'll think?

I do that as a welder at a local boat builder here. I worked there for years built a lot of boats before I went full time at my own machining business. They like it. It gives them a way to give their full time guys the holidays they want without sacrificing production. To make it work though you need to know the systems in place. If they have to train you every time you come in your not going to be worth the premium wage you should be earning. Maybe try offering a deep discount on your wages and get them to bring you in for a couple weeks solid to get you trained. Then you should be able to step into the simple jobs without any trouble.
Another option ,assuming you're really good, could be to sell the potential client on bringing you in for the difficult stuff. That might be a hard sell though.

Jordy

Jorgo said:

I do that as a welder at a local boat builder here. I worked there for years built a lot of boats before I went full time at my own machining business. They like it. It gives them a way to give their full time guys the holidays they want without sacrificing production. To make it work though you need to know the systems in place. If they have to train you every time you come in your not going to be worth the premium wage you should be earning. Maybe try offering a deep discount on your wages and get them to bring you in for a couple weeks solid to get you trained. Then you should be able to step into the simple jobs without any trouble.
Another option ,assuming you're really good, could be to sell the potential client on bringing you in for the difficult stuff. That might be a hard sell though.

Jordy

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Jordy, I'm glad to hear that something similar has worked for you. My thought was that I would offer to do the training on my own time / dime to make it an easy sell. In my mind that was more of reviewing the quality system, how they track time, etc. However, I like your idea of a discount for a training period if it involves actually running some jobs. That could be an interesting sell... bring me in to run a couple jobs just for the sake of training at a discounted training rate.

I agree that selling doing the difficult stuff could be a hard sell. I think it'd make more sense to offer to do the simpler stuff to free their top guys to do the hard stuff. I think it'd be easier to trust someone to get that done.

How far can you travel, what can and can't you do, how good are you and what do your services cost?

If you're looking for a couple month post and can make it as far as Akron I'd be veeeeeeery interested.

Comatose said:

How far can you travel, what can and can't you do, how good are you and what do your services cost?

If you're looking for a couple month post and can make it as far as Akron I'd be veeeeeeery interested.

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I'd describe myself as a machining generalist. I've done manual and CNC turning and milling, some surface grinding, I can program with software (I teach HSMWorks), and program by hand. I also have some shop management experience, if that's useful to you. I can do estimating and planning. I ran a 2.5 man prototyping shop for four years. I'd say if you have a reasonably common VMC, manual mill or manual lathe that you need work done on, I'd jump right on it with no problem and hold good tolerances.

I wouldn't be concerned about starting my own shop... I just don't want to.

Akron is a two hour drive for me. I think there's something in there that we could reasonably work out to both of our benefits. If you don't mind my asking, what's stopping you from subbing some of the work out?

If you email me at [email protected] we can get in to specifics of how we can make something happen.

What's stopping me from subbing the work out is that fairly soon the work will be automated, but I need to be producing now and the automation side of this particular project is lagging.

So I have the machines, and I have the products, and in various pieces and parts I have the automation, but I haven't got the time this month to drag it all together myself and my most recent engineering hire is... slower... than I'd hoped he would be.

Subbing the work while my own machines sit idle seems like a poor value, but I'd hate to hire a guy to stare down the barrel of an automated gun.

FYI over here in the uk doing this kinda stuff is tricky from the records point of view. Its very much a situation that blurrs the line between a employee and being self employed. Most places have tax advantages to one or the other. Hence its something the tax office likes nice and clear cut, but in reality is generally anything but clear cut.

Limited - random holiday covers about the limit before it gets a lot trickier if you get investigated regarding it.

You need to understand the rules were you are and make sure your firmly sat on the right side of them, if not both you - the employer could have a lot of additional tax charges coming there way.

Wow, think about all the things you could learn, by hopping from shop to shop.

What a great idea. I like it. wish I'd thought of that myself, a few years ago.

Regards,
Stan-

Comatose said:

What's stopping me from subbing the work out is that fairly soon the work will be automated, but I need to be producing now and the automation side of this particular project is lagging.

So I have the machines, and I have the products, and in various pieces and parts I have the automation, but I haven't got the time this month to drag it all together myself and my most recent engineering hire is... slower... than I'd hoped he would be.

Subbing the work while my own machines sit idle seems like a poor value, but I'd hate to hire a guy to stare down the barrel of an automated gun.

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This makes a bunch of sense to me. Would doing it in 2-3 day stretches with 2-3 days in between work for you, or do you need someone that will be there 5-6 days a week? What machines do you need attended to and what level of work do you need?

Metalcutter said:

Wow, think about all the things you could learn, by hopping from shop to shop.

What a great idea. I like it. wish I'd thought of that myself, a few years ago.

Regards,
Stan-

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Do you mean like... a journeyman?

Thanks for the compliment.

adama said:

FYI over here in the uk doing this kinda stuff is tricky from the records point of view. Its very much a situation that blurrs the line between a employee and being self employed. Most places have tax advantages to one or the other. Hence its something the tax office likes nice and clear cut, but in reality is generally anything but clear cut.

Limited - random holiday covers about the limit before it gets a lot trickier if you get investigated regarding it.

You need to understand the rules were you are and make sure your firmly sat on the right side of them, if not both you - the employer could have a lot of additional tax charges coming there way.

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Good points. There is the chance of that here. I think the main concern is a "statutory employee" for the purposes of taxation with the IRS. There is a three prong test, and my sense is that this situation fails on two of them, if done right.

As you said Jared, you may want to read this link below and talk to a CPA to get the requirements right then set it up per his recommendations.

Independent Contractor (Self-Employed) or Employee?

Just like to IRS to make things so vague to be impossible to understand.

Adama, the UK Tax man sounds like he took a page out of the State's IRS...or vica versa.

Hey, pretty soon the whole tax thing will be automated (like they're starting to do in the UK as I understand); at least for individuals/couples.

I think the primary sticking point in regards to the whole tax thing is how long your term of employment is. A large local firm that I used to work at uses "contractors" and they are forced to take a sabbatical every 18 months for 6 months (or roughly something like that). If you have several engagements going on at once, I don't think you'll have much trouble but....(disclaimer coming)...consult with your accountant!

Good luck,
The Dude

if your contracting or generating other income besides working at only one shop, then that shop 1099s you and your all set clearly your a contractor. but if you only work there and part time only, that's when It gets sticky. you can probably get by for about 3 years before anyone would notice but it would be up to you to ensure that your actually trying to run a business doing this.

also in terms of this what kind of hourly rate will you charge? are you going to maintain your own liability insurance? what happens when you crash some ones machine? as a business owner you need to charge about 55-75/hr. a lot of shops maybe turned away at your cost because its a high rate. however, you have expenses that need to be paid as well.

You will have to have some kind of liability insurance and, many places, workman's comp insurance on yourself. Also, I think you would need a really big assortment of your own tools to bring with you. Machine shops are often disorganized and woefully understocked on the tools you actually need.

I think it is a good idea, and can certainly be done properly with respect to the IRS. As others have said, having your own liability insurance will help in that respect; having multiple customers that you serve in this way will help even more.

One possibility to look at: In the software world, at least as of a few years ago, there are/were companies that contracted out services to others. Someone was an employee of the contract company -- taxes, workman's comp, etc. handled through them -- and the company then rented out services to other companies. Might be worth asking a CPA / lawyer whether that model could work for you.

For a company I worked for in Louisiana, a coworker was doing some shop management while the boss was tending to other affairs. He was on a short term as-needed contract, more or less. He has had an LLC set up for himself for just such jobs. The company contracted services at a monthly rate. He was an employee of his company/LLC. He collected a check written to his LLC. I don't know about whatever insurances he covered himself with though, but that seemed to be the easiest way for him to set things up. He was hooked up with a CPA at the time and she did all the legwork on it.

Local old folks home is often short on help so they get in agency help. Of course its understood they get paid more and regular employees probably don't necessarily like to work with them but they also understand the situation of being short on help. I would think if you are running behind your guys CD understand either they step up the pace or see someone get paid more to do what they couldn't! I agree if I had my own shop I WD rather sub out the work than mess with explaining to a temp how to do it.

You have to be really careful with the 1099 thing. To be an "independent contractor", you should be able to take work at will, and set your own hours.

For example, a company says we need X parts made by Wednesday. They can't say "come in at 7:00 and get these parts done before 5:00". If the IRS says you are an employee, someone has to provide workmans comp and income tax withholding for you you.

There are other rules too. Generally, an independent contractor has to provide his own tools. He is also responsible for the results of his work.

Anyone providing a service is supposed to get a 1099 unless you are incorporated.

You can not be a 1099 contractor and run my machines.
No gray area here, only hoping you don't get caught.
You would have to rent the machine from me. Proof would be needed that you paid to use my equipment.
You could set up your own temp house with you as the guy out there. Your company would be on the hook for the matching taxes and carrying the insurance.

Many barbers are independent contractors. Ask them how much they pay in booth or chair rent to the shop owner.
This fine line is how it works with IRS rules.
My cnc cell might carry a bit higher value to the IRS than a barber chair.

There is a lot you can get away with and hope they don't find you until 7 years later so you will find lots of people whom have played the odds and had no problems.
I know of guys that have worked their whole lives and never paid any taxes on their income.
Bob