What does a $10 Million job shop look like? What departments, people? - Page 3
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  1. #41
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    If your machines are running 10% efficiency now, HERE is your problem.
    Your structure/Engineering is not working.

    What machines are they (I'm assuming VMCs)?

    Do some quick figures of what your profit will be when your machines are running 50% efficient.
    Does this make you enough money?
    Or you still gotta drive to 10mill, to be bigger than Freds shop up the road?

    All these posts in and folks itching to help, and we still know hardy anything about your business because you don't answer.
    I'm assuming your reading the answers?

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    Quote Originally Posted by gbent View Post
    That is going backwards. Each additional person should add to the efficiency, not subtract. If 18 make 4.5, then 36 should make 10.
    I doubt. With sub 10 people you can be the most profitable. Once you have lets say 20 or more you need more management, human resources, accounting, payroll, billing etc. 2-3 man shops dont need any of that.

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    Shop I worked at 10 people was our sweet spot. The extremely good ones could cover for the not so good ones. Wasn't fair to some, but their bonuses made up for it. We actually got to 13 one time and took a loss in profitability. More gross, but less profit.

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  6. #44
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    Im not sure what is so hard for some to answer. Im not looking for how to grow my business to $10million dollars. Im asking what people are needed for a $10million dollar machine shop.
    Im not looking for a machine list to get me there, not looking for what the roi of a miller spot welder might be. Only looking for in your experience which from reading the posts very little have experience working around a $10 million dollar annual revenue shop, who was there to make it possible?
    Someone says no CFO and gave a great reasoning why. That is what Im looking for. Seems everyone is hung up on $10 million dollars and what can you make to get that money. We make parts, thats the secret sauce, now eeveryone knows

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    Quote Originally Posted by gbent View Post
    I think this is quoting Sami "Cash flow is vanity, profit is sanity".

    My own thought on looking at your numbers is you have to quit renting out the upstairs to the brothel.



    That is going backwards. Each additional person should add to the efficiency, not subtract. If 18 make 4.5, then 36 should make 10.
    That is not even close. You cannot add double the people and get double the income. When a guy goes from a one man band to hiring his first employee its pretty rare to double his revenue, when you go from 10 to 20 revenue does not automatically double. There have to be redundancies, then HR, more accounting and accountability, and so on just to watch the people and make sure the people are doing their thing what ever that might be

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    Sounds like you already know it all, so how bout telling us? Seems to me all you really need is a real good "Sales Girl" (nudge nudge, know what I mean) to keep a smile on your customers faces and keep that $10m rolling in.

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    I have been to Proto Labs in MN... they do way more than that, good luck replicating that business. Your question just kinda sucks, or at least it doesn't get to the real point. I'm sure there are lights out fully automated places doing well over 10m with very few operators. I'm sure there are shops that greased the right palms and have the best of the best guberment contracts that are doing wild numbers in fantasy land. I'm sure there are internal shops that make very high tech finicky high margin shit that can do 10m with a lot less than any job shop could ever dream of.

    There are no hard and fast rules, and in the year 2019 the rules are getting less hard as automation is going in every direction now. Mclean distribution has eliminated all but ONE labor job in their facilities....

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    Quote Originally Posted by kustomizingkid View Post
    Mclean distribution has eliminated all but ONE labor job in their facilities....
    Toilet scrubber?

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    Sorry I can’t be of any help, but your posts read like you’re not anywhere near the top of the organization chart in a multimillion dollar company.

    More like a squirrel with ADHD.

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    Quote Originally Posted by Larry Dickman View Post
    Toilet scrubber?
    The guy that picks the items from one automated pallet and puts them in a delivery tote. The range of sizes of products is too large for one robot gripper to be used. That said they just filed a patent on a new robo gripper so...

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    Quote Originally Posted by nitrousmudbogger View Post
    Im asking what people are needed for a $10million dollar machine shop.
    Because you've ignored many a request for information, lets simplify it for you.

    Do you make commercial penny washers where you have 500 cnc lathes beating them out with no need for any QA personnel at all?
    Or do you make aerospace VERY high value components where each one costs 1mill, and you make 4 of them per year to AS9100 requirements?

    Now do you understand the stupidity of the question you keep asking us?


    Edit: - and without sounding crass, one previous life was Tech/Eng Manager for a Tier 1 Aerospace and Computers industry. 90 people/$12.5mill P/A.
    It taught me how NOT to run a business...

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    Quote Originally Posted by barbter View Post

    Now do you understand the stupidity of the question you keep asking us?
    No, I don't think he ever will. Judging by his user name, I'm guessing he works in a race shop making "High Performance" garbage. Just a guess on my part.

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    I'm going to colonize mars. Don't pester me with BS questions about how I'm going to get there or survive, I want to know how to layout the store room.

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    Quote Originally Posted by Mcgyver View Post
    I'm going to colonize mars. Don't pester me with BS questions about how I'm going to get there or survive, I want to know how to layout the store room.
    Funny you draw that comparison... Think of Elon Musk, do you think he went around and asked anyone how to start a space company

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    Quote Originally Posted by nitrousmudbogger View Post
    Only looking for in your experience which from reading the posts very little have experience working around a $10 million dollar annual revenue shop, who was there to make it possible?
    We did over 30 million last year.
    this one is looking better.

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  23. #56
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    Quote Originally Posted by kustomizingkid View Post
    Funny you draw that comparison... Think of Elon Musk, do you think he went around and asked anyone how to start a space company
    No doubt after nailing the org chart the rest just fell into place

    i'm all for big bodacious goals. The irritant is questions key to what the organization needs to evolve into receive snotty answers like "we make parts, there, now you know". Just my opinion, but when asking for free consulting, well, I'd take a different tact.

    He's read The Emyth Revisited which is a good book and lays out a path to bringing some structure to an floundering org. I've a new copy on my desk right now to give to a friend so - 100% support what it says. Its great if you're a one or two man band that is a bit lost however he's already doing 4.5MM in sales. A more meaningful discussion imo on growing to $10MM is not an imaginary org chart but what do you have now, whats not working about it, where do see the challenges in scaling it and so on.

    There are too many conflicting parts and questions..... Either its BS or a waste of time without a more forthcoming attitude. Really, its a big stinking pile of a thread in expecting advice on an org chart when questions about the business model are rebuked.

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    Quote Originally Posted by nitrousmudbogger View Post
    Im not sure what is so hard for some to answer. Im not looking for how to grow my business to $10million dollars. Im asking what people are needed for a $10million dollar machine shop.
    Im not looking for a machine list to get me there, not looking for what the roi of a miller spot welder might be. Only looking for in your experience which from reading the posts very little have experience working around a $10 million dollar annual revenue shop, who was there to make it possible?
    Someone says no CFO and gave a great reasoning why. That is what Im looking for. Seems everyone is hung up on $10 million dollars and what can you make to get that money. We make parts, thats the secret sauce, now eeveryone knows
    Necessity is the mother of invention.

    10 mil org does not need a CFO. Just a smart CEO/President with a sharp MFG person underneath.

    Why? Money intimidates people, but its no different than a box of carbide inserts.

    Profit = Assets - Liabilities.

    That simple. Especially for a domestic 10 mil organization that does not engage in complicated buisiness models which machine shops are not.

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    I ran a $10M/yr shop and haven't a clue as to what you'd need. It's a dumb thread, every case and industry is different. Are you going to be making 10 pcs at $1M ea or 10M pieces at $1 ea? I do know that in our business there was no way in hell that'd I'd have half the number of employees on your list.
    Out of curiosity have you ever run a guesstimation on what the payroll would be for the employees on your list?

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    Quote Originally Posted by nitrousmudbogger View Post
    The key to getting to $10 million is sales which everyone knows. We are our biggest customer now. The sales in our experience at this point are easy as we are turning work away outside of ourselves. What is not easy is getting the work done to take on more. We have standing equipment and our productivity with many of the machines being under 10% utilization. . . .
    OK, you're your own biggest customer and sales are easy. So, cut the proposed sales staff.

    One would assume the parent company that sends you all that work already has a CFO etc. etc. - so slash the CFO types and have them do double duty. Sounds like you're a department, maybe a profit center, hoping to add all those outside customers you've been turning away.

    You've also said you have all the "standing equipment" you needed to do $4.5 million and lots of that equipment is only 10% utilized.

    So the hazy picture you've painted for us is of over-investment in capacity looking for over-investment in job titles, with more than doubling your sales of, um, "parts" not a problem.

    Sounds like you're golden if only you could get machine utilization from 10% to a bit over 22%.

    And if you can bill for $4.5 million, should be easy enough to bill for $10 million.

    One answer is that it seems to me that the first thing the shop needs is a good shop manager and some better machinists, someone to get that utilization up from 10% to 22%? Heck, you won't even need a second or third shift to double or triple the throughput.

    Another answer is that the general history of captive operations serving outside customers to better utilize excess capacity -- across a wide range of industries -- isn't all that good. The back and forth here gives some indication of "why." It's also hard to serve two masters, both your internal customer and the impatient and exacting external customers you're sure you can get and hope to keep.

    About as often as not, companies that go down what sounds like your plan (creating an internal profit center and seeking outside business) often end up botching it up enough that they end up some years and lost dollars later outsourcing most of the captive machining capacity as well. If I owned the parent company I'd want to see the current shop running efficiently and without a glitch (it sounds like there are glitches) before adding the complexity of outside customers to the business. I'd also look at the profitability of the main business, and wonder why I'd want to add a low-margin job shop to the mix. Worst case, I screw up the main business. Best case, I dilute profit margins.

    And you can bet that there will be some efficient competitors bidding against you for that outside work. It's one thing to be asked to bid and think the Bozeman, MT area is awash in potential customers. Something else to win the 30% of bids or so most businesses will need to do well. When you're no longer building parts for a proprietary product, but selling machine cycles, efficiency and low overheads are paramount. Doesn't sound like that's in the current skill set -- and it's not a matter of deciding how many bodies to add but the quality of each and every one.

    I seem to recall you said something to the effect that right now as a department manager you have to sweep floors now and then to get through the day, but you want to think more about managing. I'd say, be careful what you wish for . . .

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    Quote Originally Posted by countryboy1966 View Post

    Profit = Assets - Liabilities.

    That simple. Especially for a domestic 10 mil organization that does not engage in complicated buisiness models which machine shops are not.
    Profit = Revenue - Expenses. Equity = Assets - Liabilities


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