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Thread: Starting a Shop

  1. #41
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    Quote Originally Posted by rokstarr999 View Post
    Hope this is the right place for this thread. I'll try not drag it out.

    I work for a manufacturing facility that decided to outsource all their machine shop work so I just got laid off after 12 years.

    The twist is that because the machines are old and run down and because the company is moving to AZ in a couple years, they have no plans to get rid of them. They will just be sitting there.

    So...after we were laid off, my coworkers and I were presented with the option to possibly lease the space and buy the equipment on a payment plan. We would bid jobs like every other vendor, but I think we could get the work because they are always running behind and we would be in the same building.

    I can run parts start to finish...Manual work, cnc lathe, mill, programming and I've taken a couple crash courses on how to start a business, but I'm terrified at the idea of taking this on and am not really sure if its a good idea. I'm assuming it's a huge leg up though because the equipment is there ready to go.

    Downside is the Haas VF6 needs an $8K gearbox and the turret on the HL-4 is rusty inside and needs to be rebuilt and we would be responsible for all that. They run at the moment, but who knows for how much longer.

    Any advice on how to get this off the ground would be appreciated.

    I guess that this part is to be noted fully.

    The thought of them spinning off the shop is just an early move of yet to come.

    You would need to be targeting other work soon or you would possibly be left out in the cold soon enough.


    Most here prolly started while working elsewhere.


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  3. #42
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    I don't understand why you would even trust them enough to think about getting in bed with the old company, they already let you go. If they really cared about you or thought it would be a good idea to sell it to you, then they would have had a talk with you guys before they gave you the boot.

    If you don't have any money in hand to buy at least some of the stuff you want, then that means you will be begging to get it from someone else. If you don't realize it now, you get another business partner with a loan, they get to dictate some terms that are going to be in their best interest that will cost you. I got a loan for my machine and I have to have insurance on the collateral which is more than the loan payment, plus interest on the loan, my machine is costing me over double the purchase price because I had to borrow the money. I started my business after I was laid off and asking someone for a loan when unemployed is an exercise in learning to hear No.

    If you are going to borrow money, do it for something of value, not an old machine that you happen to have ran before. Why pay many times market value for a machine or three that need work? If you are going to pay too much, at least get some that are in good shape and will make you money. Side note - since they are old Haas', can you pony up the big money to replace the control if/when the processor dies? What is the actual value of an old Haas that may need a control upgrade?

    I think it would have been better for me to have went with a leasing company that only wants the machine as collateral, it would be cheaper and less stress knowing that the machine was the only thing on the note and I wouldn't have the bank to keep happy with their policies etc.

    I would only be willing to rent from them if I was willing to walk away from the whole thing and let them have it all when I was done in a few months. If you get behind on rent, how do you expect to catch up and pay it? It is bad enough with a regular land lord, but one that has more than usual hanging over your head would be too much. With the option there to have deferred payments, it makes it easier to get deeper in the hole.
    Another thought,if they are willing to defer taking payments, what makes you think they will pay you on time? You will have many other bills than just theirs and will need cash flow to pay them.

    What is the plan on utilities? Assuming the shop is part of the old co's grid how would they break that out? If separate, you realize that as a new entity you will have to pay deposits on all the utilities etc. Commercial deposits are many times higher than residential. Here my electric deposit was 5 times the one at the house and it was instated for 3 years, not 1. So if you bail or move to another power co before that, you forfeit it. It was the same st up with the gas co, water wasn't as bad.

    Oh, to answer one question, yes it would be easier and better to start in an already running shop, BUT, you have to weigh ALL the pros and cons as to whether it will actually be better than starting in a different location. As Ox said, in 2 years or less you may have to move anyway, so you will have to think that you can get a handle on it and be profitable before then, otherwise, you might as well start in your own place.

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    Id be negotiating for a much better deal,no rent or machine repayment ,in return for a set number of hours per week work for the company....on a take or forefit basis.........its pretty obvious the company is wanting to save overhead by eliminating three wages......which will include oncost of close to 50% depending on benefit and state payroll taxes.......if you cant negotiate,dont go into business,youll get wiped out.

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    Quote Originally Posted by john.k View Post
    Id be negotiating for a much better deal,no rent or machine repayment ,in return for a set number of hours per week work for the company....on a take or forefit basis.........its pretty obvious the company is wanting to save overhead by eliminating three wages......which will include oncost of close to 50% depending on benefit and state payroll taxes.......if you cant negotiate,dont go into business,youll get wiped out.
    Im already feeling like they should just hand over the CNCs in exchange for moving them to another location being that they need 20k in repairs. Although an equipment dealer would probably give them at least 10k each and pick them up...(Im assuming) They would be my first initial customer so Not sure I could trade hours for equipment repayment as Id have to have something keeping the doors open.
    I would also need to figure out how to round up some capital for operating expenses via a business loan or cash in my 401k or something to that effect.
    After speaking with them, its my understanding that it will cost me 10-15k just to get the business name, tax ID possibly insurance and all that set up. Then money for operating expenses (tooling, coolant, electricity, misc).
    The machines could run for 6 days to 6 years in the condition theyre in (according to Selway). The VF-6 has had some work done to it already. We replaced the z axis, x axis bearings, shot pin assembly, orientation ring and had the spindle reground last year. The y axis was replaced 10 years ago but were a one off shop so the machine does not run 24/7.

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    The simple fact that they are not helping you to start up in any way, including making you
    "stand in line with everyone else" as far a winning the jobs....
    Should tell you something about your former employer.

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    Quote Originally Posted by digger doug View Post
    The simple fact that they are not helping you to start up in any way, including making you
    "stand in line with everyone else" as far a winning the jobs....
    Should tell you something about your former employer.
    They made it sound like theyd give me work but yes Id have to compete with other vendors. I do have some advantages though. They like my quality of work, I know their jobs inside and out, I would be more local than their other sources and I could probably provide better lead times as theyd be my only customer. I just dont know the process. Im trying to connect with some people here like the small business development center and a buddy that started a business and has been successful. I plan to go by the local bank and look into what it takes for a business loan.

    My biggest dilemma right now is the phone interview I have at 1:30 for a job I just applied for..lol

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    If anyone has any time to possibly speak on the phone or is willing to be a mentor in any way feel free to DM me.

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    I see an opportunity here - but I don't think I would go about quite the way you are currently thinking.

    If you have a garage - or have a parent with a garage or pole building - I would set up shop there as a one man band and go to town. It's kinda scary the first time you go out and buy used machinery but after a while you just figure it's part of doing business. Buy used and get used to fixing things. As a one man band you keep your overhead low while you get some cash flowing.

    One offs can be lucrative in the right situation. You have to go in every day armed with the mentality that you have to make "x" amount of dollars before you call it quits for the day. You can never go in lazy and screw around on the computer for four hours and think that you are gonna make it - it ain't gonna happen. But if you make good use of every hour of the day you can make out pretty good - as long as the work-flow is steady.

    Best wishes. If you get the job this afternoon I would take that job and work out of my garage for the other place at night. That's how many of us got started.

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    Quote Originally Posted by rokstarr999 View Post
    I plan to go by the local bank and look into what it takes for a business loan.

    My biggest dilemma right now is the phone interview I have at 1:30 for a job I just applied for..lol
    Don't be surprised when the bank will only lend you what you can secure with cash, or possibly home equity.

    Good luck with the interview. Outside looking in, it is probably pretty important to you. Maybe not what you want?

    I would say: if you want to be your own boss? Do it, on your terms. Don't get "in bed" with anybody.

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    Quote Originally Posted by wheelieking71 View Post
    Don't be surprised when the bank will only lend you what you can secure with cash, or possibly home equity.

    Good luck with the interview. Outside looking in, it is probably pretty important to you. Maybe not what you want?

    I would say: if you want to be your own boss? Do it, on your terms. Don't get "in bed" with anybody.
    THIS so much...

    If you have to bust your ass for some time to make it happen then do it.. i was close to teaming up with someone when i started but i quit in the last minute and did it all alone.. i can see back and how happy i am with it..

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    If the company is moving to Arizona (a smart move) why are you setting up in Kalifornia ?

    Set up in Arizona, and send the parts over the border for the time being.

    Get good machines, and building on your terms, without the pressure & drama from the only customer you have. Get other customers, as fast as possible.

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    Quote Originally Posted by rokstarr999 View Post
    I would also need to figure out how to round up some capital for operating expenses via a business loan or cash in my 401k or something to that effect.
    Careful on touching retirement accounts, you can get hammered by taxes. The person you should probably be getting advice from is an accountant.

    "After speaking with them, it’s my understanding that it will cost me 10-15k just to get the business name, tax ID possibly insurance and all that set up."

    Those first two were free or very low cost here in NC, is that really what it costs?

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    Quote Originally Posted by LOTT View Post
    Careful on touching retirement accounts, you can get hammered by taxes. The person you should probably be getting advice from is an accountant.

    "After speaking with them, it’s my understanding that it will cost me 10-15k just to get the business name, tax ID possibly insurance and all that set up."

    Those first two were free or very low cost here in NC, is that really what it costs?

    I can assure you that I didn't have any $ like that invested that way when I started out!

    Also note that (at least here in Ohio) that you don't need a vendors license unless you are retailing - like lawn mower repairs and whatnot.



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    Yep, vendors liscence is so you can collect sales tax. If you’re doing business with other companies they should give you a tax exempt form.
    You should also give one to your suppliers.

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    I can already see the whole deal has fallen over......you are applying for jobs,that makes the other guy think you have no committment,so he ll be applying too....always been my opinion guys who work for wages cant start machine shops,their thought processes are all wrong.

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    Quote Originally Posted by john.k View Post
    always been my opinion guys who work for wages cant start machine shops,their thought processes are all wrong.

    Really? I would think the vast majority of us, myself included, have worked for wages in the past. Doesn't mean we liked it, but if you're not financing everything right from the start (or coming into money from birth) how do you even get started? I worked for a wage, saved money, bought machines, and then started.

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    I see this post is five years old. What direction did you take? One option is to from a worker cooperative. Everyone can contribute tool pool the resources, make decisions together democratically, distribute responsibilities among the group,or hire the expertise you need such as a business manager, fire the business manager if needed, share the profited. You all get to decide what to produce, what kind of hours you operate, benefits, and your workplace atmosphere.

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    Quote Originally Posted by Baruch77 View Post
    I see this post is five years old. What direction did you take? One option is to from a worker cooperative. Everyone can contribute tool pool the resources, make decisions together democratically, distribute responsibilities among the group,or hire the expertise you need such as a business manager, fire the business manager if needed, share the profited. You all get to decide what to produce, what kind of hours you operate, benefits, and your workplace atmosphere.
    Quote Originally Posted by Baruch77 View Post
    I see this post is five years old....
    ?? The OP was on October 25, 2019 - only 9 days old.

    Sent from my Lenovo TB-8504F using Tapatalk

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    Quote Originally Posted by Baruch77 View Post
    I see this post is five years old. What direction did you take? One option is to from a worker cooperative. Everyone can contribute tool pool the resources, make decisions together democratically, distribute responsibilities among the group,or hire the expertise you need such as a business manager, fire the business manager if needed, share the profited. You all get to decide what to produce, what kind of hours you operate, benefits, and your workplace atmosphere.

    Are you being facetious? That's been tried once or twice. It usually ends in famine.

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    Quote Originally Posted by Baruch77 View Post
    I see this post is five years old. What direction did you take? One option is to from a worker cooperative. Everyone can contribute tool pool the resources, make decisions together democratically, distribute responsibilities among the group,or hire the expertise you need such as a business manager, fire the business manager if needed, share the profited. You all get to decide what to produce, what kind of hours you operate, benefits, and your workplace atmosphere.
    I already do all that. Even then it's rare that my other personalities agree with me, so it still ends in tears.

    We've had a lot of examples of your approach. 99% of them fail. I had the dubious pleasure of being part of an experiment like that once, and learned that the loudest & most persistent person usually caused everyone else to give up out of sheer boredom/frustration and the results weren't great.

    I'd never willingly participate in such a setup unless I was getting a *big* hourly wage as a contractor/consultant - and probably not even then.

    PDW

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