Profitability with only one employee?
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    Default Profitability with only one employee?

    Small shop, me and 1 employee. Really just brainstorming and looking for yalls thoughts.

    I am pondering whether an employee is really worth it. I love working alone, and as long as I have work, do very well. But trying to expand my customer base has convinced me to hire someone. The issue is that it takes away from my ability to run a machine. That cuts profitability, he is not as productive as I am, so thats another hit. Plus, of course, wages. The pay is not really the issue, but lost productivity is.

    The only options I see are go back solo, suck it up and deal with it, or hire another to make up for it. Really dont know which way to go. If workload was there for sure ( when is it ever for sure ) I would hire another and get off a machine. But the fact of the matter is, when I am running I make good money. Doing other stuff and supporting him, not so much.

    Its almost like I need to hire a business owner while I run a machine...

    Any ideas, input or whatever would be appreciated.

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    Check out wheelieking71. He is in a similar boat and he's not too far from you.

    Tom

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    You need to figure out if you want to be a machinist or a business owner.

    This is a difficult question to figure out when transitioning from the single employee/owner based business to that of an actual business owner.

    How do you view your business, as away for you to be employed as a machinist or is it as a business owner that happens to be a machinist for the moment until the business is large enough to allow for hiring machinists?

    I suspect that you really like being a machinist and not so much as a business owner/administrator. Part of the answer to your question lies in an honest evaluation of your strengths and your weaknesses. What things do you not excel at that the business needs now to succeed and to grow? What things can and do you do that can not be easily be done by someone else that is hired by the business?

    There is also the question of what you want the business to become. Do you envision your business as possibly consisting of 20 machines producing millions of dollars of product or do you just want to have your current job with a little more money?

    The answer to some of this lies in the question of what you want your life to be. Whatever you do needs to be a vehicle to get where you want to be.

    You also never want to transition to the place where the business owns you, at that point you have become its slave. There are many ways to be successful and to fail. The key thing is to know how you evaluate what is success and failure in your own life. There is no sense in chasing after things that are not in your success column.

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    Quote Originally Posted by TDegenhart View Post
    Check out wheelieking71. He is in a similar boat and he's not too far from you.

    Tom
    I'll just add to that. Find someone that that is a one man operation or small shop and you could cooperate with. If you got really lucky he might like doing/making what you don't and vice versa.

    Having an employee gives extra work and responsibility but with the right guy you can relax more.

    Both situations have the advantage of not just talking to your self
    Last edited by Gordon B. Clarke; 05-12-2019 at 03:18 AM.

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    Not having employees chains you to the machines and keeps you from being able to do the actual running of things

    you should be able to bill enough to pay employees and make money on them.

    You become overhead

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    "Trying to expand my customer base" Succeeding on this front would mean more work that needs to be done in a given time. If there's one thing I have learnt, then there is only so much one can get done in a day.

    What do you think needs to happen to make your employee more productive, or should I say what could be reasonably be done to cut down their excuse factor for being slower? Not trying to be a smart ass, but it sounds like something to address.

    Ok my racket is somewhat different (canvas), but in my case, adding automated cutting reduces the amount of time it takes to complete the job. Especially when it comes to producing multiples of the same article. I'm usually the one who is driving the cutter, so no excuses for employee when its handed to them cut out ready to sew.

    Of course you have more of a vested interest/ more to lose than employee, so findng one that works just as hard/fast, aint easy.

    But yeah, having a clear idea of what you want the business to become will really help.

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    Quote Originally Posted by Ziggy2 View Post
    You need to figure out if you want to be a machinist or a business owner.

    This is a difficult question to figure out when transitioning from the single employee/owner based business to that of an actual business owner.

    How do you view your business, as away for you to be employed as a machinist or is it as a business owner that happens to be a machinist for the moment until the business is large enough to allow for hiring machinists?

    I suspect that you really like being a machinist and not so much as a business owner/administrator. Part of the answer to your question lies in an honest evaluation of your strengths and your weaknesses. What things do you not excel at that the business needs now to succeed and to grow? What things can and do you do that can not be easily be done by someone else that is hired by the business?

    There is also the question of what you want the business to become. Do you envision your business as possibly consisting of 20 machines producing millions of dollars of product or do you just want to have your current job with a little more money?

    The answer to some of this lies in the question of what you want your life to be. Whatever you do needs to be a vehicle to get where you want to be.

    You also never want to transition to the place where the business owns you, at that point you have become its slave. There are many ways to be successful and to fail. The key thing is to know how you evaluate what is success and failure in your own life. There is no sense in chasing after things that are not in your success column.
    Excellent questions. The end goal has been to be business owner rather than machinist. But there is no question my strength is as machinist. I am growing ( learning ) as a business owner, and enjoy some of it, there is no better feeling than getting POs haha. But have never liked managing employees or many of the other duties. I have run a machine for all but 2 of my 25yrs in the trade ( even as supervisor etc ). There is no question that running a machine is my "safe space" That is where I am completely at home. There is no time during the day that I enjoy more than when my employee leaves and I can just do my thing. Run the machine while handling programs and paperwork etc.

    But I know there is no real future in that. I dont want to be 65yrs old running a machine.

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    Often one can find a retired high skill guy to test the idea. You need a person you can trust to not break machines, not make scrap or be a law suite potential.

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    Quote Originally Posted by Gordon B. Clarke View Post
    I'll just add to that. Find someone that that is a one man operation or small shop and you could cooperate with. If you got really lucky he might like doing/making what you don't and vice versa.

    Having an employee gives extra work and responsibility but with the right guy you can relax more.

    Both situations have the advantage of not just talking to your self
    Quote Originally Posted by gustafson View Post
    Not having employees chains you to the machines and keeps you from being able to do the actual running of things

    you should be able to bill enough to pay employees and make money on them.

    You become overhead
    Quote Originally Posted by jatt View Post
    "Trying to expand my customer base" Succeeding on this front would mean more work that needs to be done in a given time. If there's one thing I have learnt, then there is only so much one can get done in a day.

    What do you think needs to happen to make your employee more productive, or should I say what could be reasonably be done to cut down their excuse factor for being slower? Not trying to be a smart ass, but it sounds like something to address.

    Ok my racket is somewhat different (canvas), but in my case, adding automated cutting reduces the amount of time it takes to complete the job. Especially when it comes to producing multiples of the same article. I'm usually the one who is driving the cutter, so no excuses for employee when its handed to them cut out ready to sew.

    Of course you have more of a vested interest/ more to lose than employee, so findng one that works just as hard/fast, aint easy.

    But yeah, having a clear idea of what you want the business to become will really help.
    More good points. I have been wondering about the suitability of this employee and these comments hit home. I do think I need someone that is more hands off. More independent. This one is a good cnc operator but maybe I really need a cnc machinist. It has only been a couple of months and I have been hoping he will settle in and hit his stride.

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    Its more a matter of finding the right person......and they aint easy to find...........I knew a business where the two employees kept the business going and profitable while the decd owners son and daughter had a 10 year hate fest of childish squabbling.

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    Might have missed it above, but consider having an employee to do things other than machining. Bookkeeping, ordering/receiving/stocking supplies, cleaning, accounting/billing (short leash here) etc.

    Re this: "But I know there is no real future in that. I dont want to be 65yrs old running a machine."

    The goal should be to make enough money by 65 to be running on a beach instead of running a machine...

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    Seems best if your goal is to grow and increase profit to bring your employees skillset up to a high or equal level as yourself at least to a sustainable level. You have changes to make to move forward and you are at the point of increasing your work. That requires time and effort which the employee helps to deliver for you.

    It is a transition thing.

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    In addition to Wheelieking, you might search for posts from Kevin Potter - as I recall, he was wrestling with expanding his business a couple of years ago, and wound up finding the solution to be hiring administrative help rather than a machinist.

    With respect to your current employee, I would suggest looking into something like the One Minute Manager. There are a number of things I dislike about this approach (and the Management by Objectives approach of which it is a part), but if done well it can be very useful. The key is setting "SMART" goals - specific, measurable, attainable, relevant, trackable - and regularly tracking / evaluating / adjusting them. The problem with MBO is that too often the goal setting and assessment is done annually, and winds up being a meaningless exercise. You need to set small steps as goals, and assess regularly (at least once per month, or even once per week).

    So the way this would work would be to sit down and develop your own targets and goals for the business, and then sit down with the employee and develop his/her goals and targets. "By the end of August, I'd like to see you at the point where you can do XYZ. How do you feel about that goal?" Then, between now and August, do a monthly check in. "Joe, let's see where you are on achieving this goal. What is working, what isn't? Is there something you need to do different? Is there something that I need to provide or do that will better help you meet this goal?" At the end of August, the conversation could go two ways: "Joe, well done - you have been meeting the goal we set, and here is a little something to say 'attaboy'. Now let's think about the next step: here's the goal I'd like to work on between now and the end of the year." OR "Joe, it is the end of August, and I'm afraid you have not been meeting the goal we agreed on. Here's what needs to happen in order for you to continue to work here."

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    I asked this same question here years ago. I didnt think I could afford an employee then someone said employees make you money. I then realized that they are supposed to earn their wage plus make some money for you. I hired one and it worked out well then we grew. I hired another and the business grew bigger. I have 13 fulltime employees I even hired someone to do my job and run the place. I am there everyday and I pretty much only work on what I want. Unless I am being bossed around.

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    way too much bs that isn't billable time these days gotta figure out how to keep the spindles rolling....unless your margins are crazy good I don't see how 1 man band shops do it. props to them but i'm a believer in sharing the load 2 heads are better than 1 as long as you don't start paying for useless overhead which is not an easy thing these days finding a good employee. you can only do so much with the one man show....

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    This won't directly answer the question you're asking but hopefully it will let you consider it more objectively.

    First the "ideals":
    1. It's YOUR business, what's important for it to achieve (that matters to you)?
    2. Just because it is your business, doesn't mean that you have to operate it (you seem to understand that). I have seen plenty of businesses where it would be more stable and profitable (and the employees happier) if the owner just came in and did something like sweep the floor (yes, bit of sarcasm there) and a qualified individual ran it. But, ideally, do what you want to do. I've even seen some where the owner has done that (if they do anything at all) and I correlate that fairly well to successful businesses.

    Then take those above two considerations and weigh them against what the business has to or should achieve. Do you have a spouse that likes to take expensive vacations? Important to leave something for your kids? You're luckly if you don't have to consider things like that.

    Good luck!
    The Dude

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    I think its also key to realize that adding another person does not double the output of a one man shop and to a degree this carries on up as the place gets bigger and bigger, if you have 10 employees, its rare adding a 11th will add a full 1/10th more to the profit. Its a very non linear relationship and it greatly depends on what and how you do stuff. Theres more than a few employee numbered sizes along the way were more does not make more at all till you get above that level.

    Generally works even worse if the original one man band is a micro manager too, if you want to micro manage, you want robots, if you want productive employees they need to come with enough IQ to be at least semi autonomous and simply need goals set and find there own ways to meat them. Admittedly following any std procedures on rout to those task completions. Key is to realize they are not you and they will do shit there own way, sure if its slower point it out, other wise, IMHO its akin to arguing weather its best stiring paint clockwise or counterclockwise.

    Key thing i use to find was to make full use of peoples strengths, a mixed and varied team was more key to that than having just a couple of world class employees. I have had staff who could not cope with setting up a machine or the freedom to sweep up the place, stick them on a brainless fast moving boxing job at the back of a machine though and they just run and run. Pretty much every human is diffrent and has there srengths and weaknesses, your job as manager is to use those strengths.

    Good management at any level of company size really makes a big difference to this kinda stuff. My experience the Key part of that management is setting it up so your only having to worry about managing what matters. Focus on the goals and getting there not the minutia of getting there is a key first step. Realize too managing takes a while to get good at on your part!

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    Very well worded post Adam.
    When you have staff, and you're a control freak, it is VERY important to focus on the big picture.
    It is VERY difficult to do too though...

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    This should be a useful thread.

    I am in the same spot but I have the advantage of this not being my first shop. I started and ran my first shop in 1987 until it crashed and burned in 2000 I was 25 years old newly married with barley enough play money in the bank to buy a broken down Logan lathe and Bridgeport mill. The shop was in the basement of my parents home and within a year things would grow rapidly.

    No easy answers everyone's work is different everyone's life, personality and drive to succeed are different.

    I will return and write more later today it's time to get some work in the machines.

    Make Chips Boys !

    Ron

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    Lots of good posts all over, imho.

    A good employee is not all that hard to find - they are just expensive, that´s all.
    But only relatively expensive, ie high pay but much higher results.

    And almost all or many *really* good employees are quite happy to be paid on a sliding scale based on results achieved.

    MO.
    You don´t want a guy who makes you 7000$ / month marginal profit and costs you 3500$ / month, burdened.
    You actually want a guy who gets paid 70000$ with 9000$ marginal cost, and makes you 22.000$ / month, average.

    And the type of people who command 7000$ pay (with results perhaps 50% of that pay, or more), are often/sometimes quite happy to start at the 3000$ salary, given a very clear immediate path to the higher pay based on defined results.

    For small companies under 20 people a great employee can usually increase results much more than relative headcount.
    So 2 people are more efficient than 2x one person.
    Often can be much more efficient, depending.
    So 2 people can often do 3-4x the gross/net income of one person, no matter how good the 1 person is.

    Most-all people spend 30-60% of their work time on non-efficient non-productive tasks.
    These extra, often silly tasks, usually get much more efficient when shared, and some productive lucrative tasks can be partly 10x more efficient when shared.

    So just the 1% of ones really profitable work wimt with a *great* helper can make big bucks due to much higher economical throughput in that op.
    Often doubling the total monthly income, just from that 1%.

    And just one great helper can (potentially) more than double the productivity on gravy jobs, where the other can deal with mail, calls, quotes, bills, callers, clients, cleanup, or endless stuff that happens and needs real-time responsible skilled response.

    A great helper is more about smart, fast, motivated, and willing and generally competent than extreme skills as a machinist per-se.
    People paid very well can often be very motivated, smart, willing and go above-beyond typical workers hours and duties.
    E.
    A new hire, probably could not do quotes on complex jobs, no matter how (extremely) skilled.
    But even a somewhat less-skilled (but still professional) smart motivated new hire can deal with the client, get all necessary info, contact vendors for any fiddly bits, and set up the quote stuff so it takes 1/10 the time for YOU to finalise it.


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