Give away my machine shop for return of becomming 5% comissioned salesman
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  1. #1
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    Default Give away my machine shop for return of becomming 5% comissioned salesman

    I want to give away my ISO 9001:2008 certified machine shop www.teachingfactory.org TFI to somebody who can prove his/her capability to manage it for fast growth and profitability.

    I will add to it one year of free rent and my willingness to arrange lease of additional equipment if the new owner can make a good business case for it.

    The reason for giving it away is that it has become apparent that I am much better at selling than managing production.

    Therefore the condition for no cost takeover is that the new owner will contract me as a commissioned salesman for 5% commission and pay all reasonable selling and marketing expenses, such as the cost of advertising.

    The new owner will decide what orders to accept and at what price.

    At this moment TFI has neither sales nor cash flow because I closed the shop due to loss of the shop supervisor and to get ready for the eminent domain caused forced to move to a new location.

    The new owner must be self-supporting until cash flow begins. My estimate is that it will take about three to four month because TFI has good customer base and reputation that I can resurrect.

    Also, I own the patent on TV camera in tool holder with its cross hairs aligned with the center of the
    Spindle rotation. Click here to see it in in action CNC Setup Helper

    TFI has all machinery to produce it, but I have to do a little bit more engineering to get it ready for production. I sold three of them for $3000 ea. just from a desktop display at a trade show.

    That implies good market potential and profitability for the new owner of TFI.

    [email protected]

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    What about doing outside sales for me?
    www.creationsultd.com

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    Quote Originally Posted by ilmarluik View Post
    Click here to see it in in action CNC Setup Helper
    Video doesn't work.

    Also could you explain how your mill has "zero overhang", as stated on your web site?

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    Nothing is free.

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    Quote Originally Posted by Garwood View Post
    Nothing is free.
    except for advise, and it's usually worth what you paid for it.

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    Quote Originally Posted by dstryr View Post
    What about doing outside sales for me?
    www.creationsultd.com
    I like the way you think!! LOL

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    Quote Originally Posted by Toolroomguy View Post
    Video doesn't work.

    Also could you explain how your mill has "zero overhang", as stated on your web site?
    Please try again CNC Setup Helper I just tested it two videos work very well.

    I don't know where the "zero overhang" came from. It is a possibility that long time ago I was granted two patents (now expired) for a machine tool that has no speed limit.

    One feature of the machine tool is that it is based on polar coordinate system and therefore the machine table has no overhang.

    To see full description of it google Ilmar Luik Patents. Two of the 11 patents describe the concept quite well.

    Thanks for your interest.

    Ilmar Luik. CEO Teaching Factory, Inc.

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    They both worked for me.

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    I am extremely aware that you don't get anything for nothing. And the person who is going to take over may shop is not going to get anything for nothing. I will tie him up with a contract that requires him/her to manage the machine shop for fast growth and profitability, or he/she will not get it.

    Now, who is going to go for it?

    Most likely one of the 100,000 foreign students who graduates with Industrial or Mechanical Engineering degree from a US University hereafter referred to as F1 student. According to the current US immigration laws F1 students (with few exceptions) must return to their home countries upon graduation.

    About half of them don't want to go back.

    My machine shop Teaching Factory, Inc. provides them Optional Practical Training OPT that provides F1 students legal stay in the US for 2-1/2 years after graduation and permanent stay in the US if at the end of 2-1/2 years they have created additional net worth of 1/2 million dollars or have created 10 jobs.

    A person who is capable and extremely motivated can do it and many F1 students are motivated.

    My post attempts find out if any legal US resident is equally motivated.

    If it pans out, I will benefit from earning sales commissions, renting space and possibly leasing additional equipment. Whereas, if I just sell my machinery, I will get far less than if it keeps going as a business and I earn 5% commission on every sale.

    Ilmar Luik CEO Teaching Factory. Inc.

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    Quote Originally Posted by Garwood View Post
    Nothing is free.
    If it SEEMS too good to be true....

    There's usually a giant hidden catch somewhere in the
    fine print.


    But it does have "full cup" potential...

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    Quote Originally Posted by ilmarluik View Post
    I am extremely aware that you don't get anything for nothing. And the person who is going to take over may shop is not going to get anything for nothing. I will tie him up with a contract that requires him/her to manage the machine shop for fast growth and profitability, or he/she will not get it.

    Now, who is going to go for it? .
    1) you haven't said what its worth. Could have a net value of $1 - who are you expecting to relocate there based on that?

    2) you haven't detailed how the deal takes place. The above suggests they don't get ownership day 1, in which case its another sucker story of come work for me and one day all this will be yours. Good deal or waste of time....all a matter of the details

    3) if you really are good at selling and like it, don't squander than on machining AND building a business you no longer own. Sell stuff with lots of zeros and lots of commission - commercial jets, high rise elevator systems, portfolios of industrial buildings to pension funds (haha what did before the retarded part of brain took over and I got into manufacturing)

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    describe what you feel is an ideal candidate that would work best with your situation? Also what do you feel is the ideal location for this to have the best chance at success? What size building? What electrical capacity as a minimum to get started?
    So you have a building with equipment in it that is sitting, you want to find a partner to get the equipment in a building and operational, ready to make parts you will find to make? Already have PO for parts to be made?

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    Re post #9......

    If you expect a freshly gradumicated engineer to be able to manage the shop you have farther to go than I expected.

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    Garwood Hi,

    There is a catch, the deal is good only entrepreneurial types who can exist without guaranteed pay until the shop under his/her management starts producing income.

    Second requirement is that the contract requires managerial performance which produces fast and profitable growth. Furthermore, I have to be convinced that the person who takes it over will not just comply with the legalities of the contract but also with the spirit of honest and fair dealings.

    I am in process of working out the details of the contract and much of it depends on the advice that I get from the responses to this post.

    The problem is triggered by the location of my shop in Huntsville Alabama, It is within half hour drive from the second largest (after Silicone Valley) Research and Development Park, except this park is focused on Defense and Space industries. For more information google You Tube Huntsville the smart place.

    All major Aerospace companies such as: Boeing, Martin Lockheed, General dynamics have very large facilities within half hour drive from my place. In addition The US Army Material Command have purchasing offices here that buy tens a billions dollars per year. In addition NASA is building lots of stuff here.

    The result is that the small machine shops cannot keep qualified employees. he best of them get hired away by NASA and other local and large Aerospace Companies.

    What to do about it?

    Successful machine shop start up requires two assets (1) Founder must be a good machinist / cnc programmer and business manager with entrepreneurial mindset. (2)Lots of capital, cheap machine do not produce enough profit to finance growth and machine shops that don't grow will die.

    Now I got the machines all paid and my key person left therefore the machine shop as shown on Default Parallels Plesk Panel Page is idle but otherwise ready for somebody who knows machining and machine shop managing to take over. That solves at least part of the need for large startup capital for the potential takeover person.

    I am likely to get more income by becoming 5% business developer for him/her and make even more money if the takeover person starts producing my invention CNC Setup Helper. then by just auctioning off the machines.

    That invention kept my shop profitable without it I would have been out of business long time ago.

    [email protected]

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    Repost #9

    You are right on freshly graduate engineer's questionable ability to take over management of a machine shop.

    Local University of Alabama Huntsville UAH Department of Business Administration raised the same concern and after some talking they asked me to prepare a description of the business model that their MBA students could use study and possibly translate it into a traditional Business Plan.

    I responded 6 page description of it that is reproduced below if it fits into the size of this box.

    Here it is. IT DID NOT GO I will try it again if it does no go I will find some other way to post it.

    IT DID GO

    ************************ HERE IT BEGINNS ***************************


    REAL WORLD BUSINESS CASE

    WRITE A BUSINESS PLAN FOR A PRIVATELY OWNED CORPORATION THAT IS BASED ON A UNIQUE
    BUSINESS MODEL AND AIMS TO GO PUBLIC.



    PREPARED FOR:
    UAH STUDENTS PROJECT OPPORTUNITY





    BY:
    ILMAR LUIK
    CEO TEACHING FACTORY, Inc.
    MERIDIANVILLE AL
    256 828 5789
    [email protected].
    Dec. 19 2016.



    INTRODUCTION TO THE PROPOSED BUSINESS MODEL

    TO MAKE AMERICA GREAT AGAIN REQUIRES TO FIND YOUNG PEOPLE WHO CAN AND WANT TO DO IT.
    No problem, we have lots of them. For proof ask the US Army, Navy, and Air Force.
    The average age of the recruits in the US military technical schools is less than 20, and upon graduation, they are trusted with life critical maintenance of $25 million airplanes. A few years later many of them become excellent managers of equipment maintenance crews with far greater personnel and property management responsibilities that are faced by most of the small business owners.

    Why not develop a commercial version of the military selection and training programs for 20-year-old kids and provide the graduates with sufficient startup capital to enable them to become owners of new and most modern/automated US manufacturing plants that will be capable of beating the Chines imports?
    The answer: We are already doing it but for the benefit of the Chinese government.
    Each year US Immigration and Naturalization laws forces 119,077 foreign Science, Technology, Engineering, and Mathematics) graduates from the US universities to return to home country upon graduation, most of them to China.
    Upon return to China, they are offered top level management positions or given enough money to start their own manufacturing companies. The concept works. China is now on the trajectory to become a world leader in technology and manufacturing on the expense of the United States.
    In this country, to start a viable manufacturing company requires at least $500,000. No banker will lend that much money to a twenty-year-old kid no matter how well he or she is prepared to manage a startup business because he does not have the necessary collateral and most likely not even excellent credit rating.
    But few, less than 3% of the University STEM graduates have the maturity and sense of responsibility combined with the entrepreneurial drive and ability to succeed in extremely competitive and stressful startup environment and therefore deserve to get startup financing.
    The challenge is to find the few 3% and give them a chance to become business owners.
    This document describes a partially tested innovative and profit making a business model that has the potential to find the few three percent and enable them to start their own manufacturing business





    HISTORY.
    Teaching Factory, Inc. (TFI) was founded in 2007 to provide Optional Practical Training, (OPT) for foreign Industrial Engineering graduates from UAH.
    OPT provided them legal stay in the US for 30 months after graduation and permanent visa if they create $500,000 worth of assets while in OPT, Mortgaged real estate does not qualify.
    TFI business model created a fast growth intensely entrepreneurial environment for OPT students to earn $500,000 worth of assets in two and half years and thereby qualify for a permanent stay in the US.

    Two Industrial Engineering graduates from UAH entered OPT at TFI. Within few months it became apparent that the TFI business model will work, but shortly after that both OPT students got married and left.
    Hard work as a startup entrepreneur lost its value for obtaining a permanent stay in the US.
    After that, TFI gave up OPT and continued just as another small machine shop that specializes in producing precision machined parts for electronics, microwave and defense industries.
    December 2016 Madison County Executive Airport Commission acquired the land and building that housed TFi forcing it to move to a new location tentatively in North Huntsville Industrial Park by May 2017.
    After moving into its new building, TFI intends to return to its original mission to earn a good return on investment to its shareholders from enabling industrial and mechanical engineering graduates from US universities to become owners of their own manufacturing firms.
    DESCRIPTION OF THE CURRENT TFI MANAGEMENT STRUCTURE AND NEAR TERM OBJECTIVE.
    New building and land for TFI will remain the personal property of Vivi Luik and leased to TFI.
    TFI owns enough production machines to produce annual sales of $1 million.
    Vivi Luik owns 100% of TFI stock and is the chairperson of the TFI board of directors.
    Ilmar Luik is CEO in charge TFI daily operations.
    The near-term business objective is to attract world-class management and the best-skilled employees to put TFI on the trajectory for fast growth, profitability and to make it attractive for investors. In essence, make it into a public corporation by Vivi Luik selling some of her stock.
    SUMMARY OF THE PROPOSED BUSINESS MODEL
    TFI rents for one year to the five uniquely selected Industrial and Mechanical Engineering graduates from US Universities hereafter referred to as founders a machine shop with enough equipment to produce annual sales of one million dollars.

    The challenge for founders is to form a corporation that manages the leased machine shop as a TFI sponsored startup to produce one million in sales by the end of the year and is on track for even greater sales and profits.
    For a reward, they will become 90% owners of the startup and TFI will retain 10% to benefit from its appreciation in addition to earning income from renting space and providing various services such as machine tool leasing.
    During the first year, the founders operate in a typical startup environment. They have no guaranteed income, and on the first day, they have no sales. They have to be self-supporting until the shop starts producing positive cash flow. To get over the initial startup difficulties, TFI will provide consulting, coaching and arrange necessary business and sales contacts.
    On the first day, the five founders are required to select a name for their corporation and appoint themselves to its the board of directors, elect a chairperson and accept TFI dictated bylaws for one year.
    The thrust of the bylaws is to enforce strict compliance with the ISO 9001:2008 and when needed to comply with the rulings of TFI appointed a referee to resolve personality conflicts and other issues that may jeopardize TFI’s financial interest in the startup’s success.
    The first TFI sponsored startup is a machine shop, but only because TFI can provide the founders fully functional ISO 9001:2008 certified machine shop that has easy to resurrect customer base and enough machinery to produce annual sales of $1 million. Followup TFI sponsored startups are not limited to Machine shops.
    The major challenge for the founders is to show that they have the ability and knowledge to upgrade the startup machine shop to the highest industry standards and organize its operations for least waste and maximum possible profitability. To do it requires a degree in Industrial Engineering and support personnel in sales/marketing, finances, quality control, and government contracts administrator and the ability to negotiate with vendors, shareholders, and financiers.

    Predictably before the end of the first year, the founders need to acquire additional and very expensive equipment. Machine Tool Leasing Companies are ready to provide leased equipment on very favorable terms if the founders make a good business case for it and TFI guarantees that it will be in a secure place and well maintained. TFI assumes no other liabilities for the leased machine tools.
    After showing success with the first startup, TFI will start growing by sponsoring more high technology startups including the development of proprietary products and R&D services for the US military.

    SELECTION OF THE FOUNDERS.
    The success of the TFI business model depends on attracting founders who have demonstrated commitment and ability to succeed as entrepreneurs.
    The requirement to demonstrate ability reduces the primary target for the first recruiting efforts to about 200,000 senior students of the Industrial and Mechanical Engineers in the US universities.
    About 6% of the population shows some inclination to becomentrepreneurs therefore about 12,000 are likely to respond to the recruiting effort which is comprised mostly of web advertising and Emails.
    The necessary mailing lists are readily available. The cost of the publicity is very unlikely to exceed $10,000 (subject to confirmation).

    The 12,000 who respond will receive a form letter from TFI which stresses that their success depends on the survival and excelling for a year in a harsh environment of a typical startup that is a stressful, success is uncertain, long hours of work at no guaranteed pay and possibility of assuming some personal financial liabilities. The letter includes legal clauses that absolve TFI from any future accusations of having made false promises.
    Receipt of the above letter reduces the number of serious applicants to few hundred. This few hundred will receive a written test that is designed to predict the applicant's motivation and commitment and abilities to become successful entrepreneurs. The test to be used is in prosses of being developed.
    Five top achievers accepted as founders into the TFI startup program if they pass the final personal interview.
    Followup contestants remain on call to replace any of the first five founders if needed.
    The above-described selection process will become a permanent feature of the TFI if it evolves into a serial sponsor of startups.
    OPERATING ENVIRONMENT FOR THE FIRST YEAR.
    The five accepted founders will take over daily management of an ISO 9001:2008 certified machine shop that has a good customer base, excellent credit rating and enough equipment to produce annual sales of one million dollars, but on day one has neither sales and nor cash flow.
    The founder's task is to generate sales and start production as quickly as possible. That requires fast learning of many skills and long hours of work and agreement how to distribute the startup earnings among themselves.
    Also, the founders sign a contract with TFI which defines the sales and profitability numbers that the startup is expected to reach by the end of the year. Within reason and for agreed upon fees, TFI will help the startup to perform as expected.
    To help get started TFI acts as a bank for small short term loans that will contribute to the startup of positive cash flow and to reach the expected sales and profitability numbers.
    During the first year, TFI will monitor the performance of the founders and take corrective actions if needed. The corrective actions may include replacing some of the founders or closing the operation.
    At the end of the year, the founders will divide 90% of the startup stock among themselves according to the agreed upon earnings distribution agreement.
    The balance of 10% constitutes earnings for the TFI in addition to rental income, sale or leasing of the equipment and other services rendered. Additional earning may accrue from the appreciation of the retained stock.
    To meet the very aggressive sales and profitability targets within one year after founding the startup will need to lease from the local machine tool distributors at least $500,000 worth of additional equipment.
    This is very doable based on TFI guarantee that the equipment will be in a secure location and well maintained. TFI will assume no other liabilities for the equipment.
    At the end of the year, the startup becomes independent from TFI and will have the option to continue leasing space from TFI and rent to own the equipment that TFI provided at the startup.

    REASONS WHY THE FIRST MACHINE SHOP BASED STARTUP IS LIKELY TO SUCCEED.
    All financial and economic predictions for 2017 indicate rising demand for precision machined parts that are typically produced by small machine shops. However, the profitability of the machines shops is totally dependant on having the most modern and automated equipment and very competent management.
    This is the reason why TFI recruits startup management from University graduates of Industrial and Mechanical Engineering. They are most current with the latest production management practices but are likely deficient in its practical applications.
    To make up for this deficiency TFI will provide experienced manufacturing professional to help founders over the practical hurdles.
    The combination of the most current production methodologies as taught in Universities combined with the decades of practical experiences of the production / business management professionals and the skilled craftsmen on the factory floor gives TFI supported startup very significant advantage over all its competitors.



    Ilmar.

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  23. #16
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    Okay so you aren't giving away a machine shop, you're leasing access to three machines and leasing an industrial building, in the hopes that people will work for free for a year while paying you rent.

    You're also taking 10% of their new business for your troubles? And a 5% sales commission on top of that?

    But despite your lessees taking 100% of the risks for 90% of the rewards, you still feel like you should have the right to scold them or change the deal in the first year if you don't like how they're doing?

    Also you expect the "founders" to lease $500,000 worth of additional equipment, at their own risk, in the first year. At least you're guaranteeing a "safe location."

    Gosh, where do I sign up?

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    and from the first post, its been mothballed so no cash flow, and the lucky candidate has to provide all working capital.

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    is this real life?

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    Should you not get any takers, I might be interested in the Okuma.

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    Ok, I'll bite a bit.

    What exactly (in a few words) are you selling(or giving away)?
    Why are you selling it?
    Why would i want it, if you don't want it?
    What are the terms of sale?
    Why do these terms favor me?
    If they do not, why do these terms not favor me?
    Whatever it is you are doing, why can i not do it myself and cut you completely out? (whats your competitive advantage)
    Why should i believe a word you say? (credentials,history, track record)

    Sell it to me

    -adam


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