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  1. #1
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    Default looking for help with business plan

    I currently work in a job shop, I discovered there is government contracts set aside for veteran entrepreneurs I figure if the work is there, I should be trying to get it.


    I am banging my head trying too come up with a sound business plan and not go off on this idea half cocked and unprepared.

    Would any of you share your business plan geared toward manufacturing for the government so I can get an idea of what I need to consider? I am paid well enough with my current job so I really don't need to draw any paycheck till I have a healthy, sound business running.

    Thoughts and advice would be helpful as well.


    Thank you for reading.

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    I'd say the first step is figuring out what that work/contracts are, what it takes to do it(equipment, certifications,etc), if there's any services that they can't find and why, and if there's any money left in the end.
    It'll give most of the info to start a business plan, if there's a need for another business playing in it.

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    I did government contract work for two years. Even spending countless hours learning the ropes, trying to gain an edge I threw in the towel. After becoming extremely efficient I would say doing the jobs that paid the best per hour for me government jobs similar to the private sector took twice as long. As example I make 50 firing pins for a .50 cal rifle for a private customer, they go for $8 each. For simplicity material and tooling cost $50. I found the job here on PM and took 15 minutes to quote it. Took 15 minutes to pack, bill and ship.
    Job took 1 hour to program, 1 hour to set-up, job then takes 2 1/2 hours to run out, rinse them off so they are ready to pack. 5 hrs for $350 or so gross profit or whatever you call it.

    When I threw in the towel in 2011 you could tell by reading the procurement history the lowest bid was steadily dropping since 2005. The lowest bidder always wins these jobs, every time the job repeats you must be low bidder to get the work. Some people will just undercut the last price paid by 5% and bid. (I did occasional sub contract work for a guy who did this). Repeats are very rare which are a job shops bread and butter. For arguments sake this is also an $8 part to Uncle Sam for 50 pieces Government and private sector prices were about the same but with the government making the $350 went like this.

    The 4 1/2 hours to program, set-up, and run are of course identical. Not so for the other 30 minutes. For bidding you hunt through categories by number on the front page you see PIN a part number and quantity of 50. You have to go through up to 10 layers of BS to get to the print. Until you see the print you have no idea
    whether this pin is the size of a grain of rice or as big as a telephone pole. You may discover the material and plating requirements are obsolete and the government either never answers the questions or is slow to respond. If you don't know Dupont black #32 (made up example) from 1943 is now 2" round black acetal it is best to close everything out and look at the next one. A lot of prints are photocopies of WWII documents and aren't very legible. For all the reasons above and then some I found myself making a bid for every two hours and I had 4 different CNC machines and 3 manuals.

    Now on to packing a lot of overkill here. Each part requires an individual bag and tag, this can really get fun when you make 2,000 screws and they want then individually bagged and labeled. Sometimes they tell you in the instructions what size bag to use, each order has different packing codes. Of course you also know that 50 pieces goes to 3 different installations so we need 3 different boxes, 2 labels outside each (The Fedex or UPS label plus the government one. Also be warned most shipments required RFID tags which take a $2500 printer to produce. All this garbage adds another hour and 15 minutes.

    So in summation 15 minutes of quoting averages 2 hours and a 15 minute pack job takes 1 hr 15 minutes. So a 5 hour job takes 7:45 for the same money. A lot of them doubled the time for the same money. The only good thing they paid on time and if you offered them a discount like 2% 10 net 30, they always paid in 10.

    When I was doing the government contracting (2009-2011) I always offered to help people get started when I saw people mention wanting to do it. Out of about 10 people who started the process only one finished signing up and he gave up when he saw the quoting process hassles.

    Government work probably is only gravy for the big boys with the huge billion dollar contracts, there aren't any $600 toilet seats or $200 hammers where I was at. That and the hourly rates you could bid would drop significantly as quantities increased. If the order for the same part spent only 4 hours on the machine you could get it for a $75 an hour shop rate. If it would run for a week it would go for $30 an hour, you could see this on the procurement history they would show the per piece price by quantity. On most items I was only bidding against US and Canada shops.

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    Dualkit said a mouthful. I would ask myself if the gov't contract avenue is something I view as easy money or extra security. In other words am I motivated enough and confident enough in my abilities to jump into business without the perceived gov't safety net. If not I probably wouldn't do it.

    Stumbling across an opportunity is not quite the same as having a burning passion to do something.

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    As long as I am ranting the set asides for Vets, Minorities, Hub Zones and Women are such a small percentage they don't amount to much. Also anyone can look at them, they just can't bid. Looking over the procurement history the parts were going for basically the same prices. The low bidder on Albacore tuna was $1.69 a can whether they were buying it from a middle aged white man, or a disabled vet black woman who lived in the projects.

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    There's no way I'd get involved in bidding Govt work. I've sold stuff to them, but only because I'm the sole source.

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    If this is something you're still interested in pursuing (sounds like there may be valid reason not to!), look up "Small Business Assistance Center" which is part of the SBA and also "SCORE". Either of those may be helpful in developing a business plan. Often times community colleges have non-credit courses for such topics as well.

    The Dude

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    Post an add somewhere on a 'business' board that you are an investor looking for 'opportunities' in companies that are manufacturing parts for the government. Your email will overflow with proposals and plans from bright, young, MBAs ( and scheisters ).

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    Quote Originally Posted by starbolin View Post
    Post an add somewhere on a 'business' board that you are an investor looking for 'opportunities' in companies that are manufacturing parts for the government. Your email will overflow with proposals and plans from bright, young, MBAs ( and scheisters ).
    All people who do government work become public record. I was bombarded by people through e-mail, snail mail and phone calls, all people that had inside information on working with the government (all just salesman lies). Some were down right rude when I told them they could not do anything for me that I could not do myself for free.

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    Already been said, in a way... HubZone, 8A(minority), small business, woman owned.. all that crap... You really aren't going to get an advantage...
    Most of it is all cooked....

    I want to bid on HubZone set asides... Base my company in a garage in a "HubZone", hire one flunky who lives in a HubZone and have him answer the
    phone... Have my other company that actually has employees do the work...

    8A.. Same thing... They all have a "silent" partner who's picture is on the desk and happens to be a minority... The picture on the desk changes after
    4 or 8 years depending on how much your work is 8A...

    Its all crooked and I've seen some of that set aside stuff get incredibly competitive.

    As for the Government work itself... Doing basic job shop stuff, A pin here, a bushing there, a bracket etc.... Very hard to make a living...
    It all gets undercut since the history is right in front of your face. Some dumb ass in an office knocks 5% off, or 10% and that is the price it will
    go for... Rinse and repeat until the job is going for material price....

    There is good money in Government jobs... But it takes a lot of capital....

    We gave up going direct a while ago... Just too many head aches...

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    I don't know anything about doing gov work, but a business plan should not be impossible for you to write up. Are you wanting to get a loan to start this up? If so you will want to translate it into bank speak. Other than that, you will want to essentially write everything down what you think you want to do and how you plan to do it. This includes anything as far as machinery and property you have now to get it done, what you will need to buy in the future to do it and how you plan to keep track of it all financially. Put in a plan for QC as well. You will need to account for all the overhead stuff, utilities, trash, water, licenses, taxes, on and on and on. You will need to have a sales plan, how do you plan to get work? Then the aggravating question of 'where do you see yourself in 5 years?'

    Alot of how you write it depends on who you are writing it for, a banker, a gov agent, yourself, your family? You might have different versions for each.

    I really only wrote mine to get a loan for my machine, otherwise I probably would have put it off. It wasn't bad, much easier than research papers in college since I had an interest in the topic and results of doing it.

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    Do you own the shop? 51%? Otherwise you cannot use the 'vet' thing.

    What is the business plan need for?

    We do defense contractor work (2nd, 3rd, and 4th tier down)and it is a paperwork nightmare at times. However, once you learn the rules and cost structure, the work is challenging and available. Note that the stress level can be a little high at times. FWIW - I tracked the time I've spent to acquire and create the necessary paperwork to pass an audit from one of the big ten defense companies...So far, I've spent a little over 250 hours for the first audit and see at least another 40 hours for the follow up final audit in two weeks.

    I doubt if we would do much bidding on direct government work, maybe if we were 'sole source' or 'secondary source' or they were complex part assemblies that were beyond most of the smaller shops. To many outfits out there trying to get in to it by low bidding.

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    Excellent advice so far. Like everything else.

    Are you efficient ?
    Sure ?

    You need to have your niche, and be efficient at it.

    Another "me too" may work, as well. This is an encouragement ! But..
    This means you need to be the best at quoting, sourcing, logistics and selling.
    It has zero to do with machine shops or job shops.

  19. #14
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    Quote Originally Posted by alonzo83 View Post
    I currently work in a job shop, I discovered there is government contracts set aside for veteran entrepreneurs I figure if the work is there, I should be trying to get it.


    I am banging my head trying too come up with a sound business plan and not go off on this idea half cocked and unprepared.

    Would any of you share your business plan geared toward manufacturing for the government so I can get an idea of what I need to consider? I am paid well enough with my current job so I really don't need to draw any paycheck till I have a healthy, sound business running.

    Thoughts and advice would be helpful as well.


    Thank you for reading.
    Probably would be far less stressful to work a few extra hours part time rather than try to start your own shop.

    Tim

  20. #15
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    Thank you for all the replies and advice.

    I have been sifting through all the stuff they have set aside for small business vetrans. It looks like a bunch of oddball stuff for a handy man. I haven't found one contract that would actually be in my wheelhouse.


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