[cdlenterprises]

I've been in machining for about 17 years now. Over the years(more recently than ever) I've heard a number of shops owners griping about how tough it is to make money in this busineess. The standard argument being that they have to invest $200,000 into equipment to make a $2.00 part and maybe clear 10% on the job if anything at all. Factor in the Asia factor and they seem to paint a pretty bleak picture for the future of the job shop. So, the questions stands, is it worth owning a shop? Is there any money in it for the amount of labor involved in running a shop or should the investment be made elsewhere?

[ViperTX]

Well....here's how I would look at it.....take the cost of all the machinery (say you're leasing it over 7 years) and let's just guess that that is costing you $2800 per month.

You need a shop....figure $2000 per month with utilities (electricity, phone, etc.).

You'll need a machinist ($3500), a helper ($1500), and yourself figure $2500 for yourself....you have to pay everything else before you pay yourself.

So, we have roughly $12,000 per month to keep the doors open and look like a viable machine shop.

If you're making $2 widgets and the material cost is $0.20 you have a gross income of $1.80 after material cost.....so basically you have to produce 6700 of these per month to keep the doors open....you have to produce 42 of these per hour......you have a machinist, a helper and yourself....

Anyway.....you can work out all the other estimates......generally most shops would want to migrate towards higher end stuff at lower volumes and add more intellectual content....

[jackson]

well i'm not sure what part of the country you are in but im sure it is the same as my area, Macnine shops have up and downs right now its up. Your pretty much going to have to start your shop when buisness is good and make enough money to keep it going when buisness is slow, "Thats one of the tricks". Alot of guys get out on there own, and they do it when buisness is up they get to making some money so they start spending money "buying them selfs new boats and stuff" then when it slows down they have nothing to keep them afloat for a couple months till it gets better or they can find new work. Now starting a shop is real easy if you have the credit and some one that is going to give you work. But just me i would have at least four customers lined up that are willing to give me work before i started buying machines. But the money is good if you do it right

[cdlenterprises]

Yeah, getting the equipment is the easy part. I can probably have two new machines in a building next week if I wanted to. It's getting the work that's tough. It's the typical catch 22, you can't do the work unless you have the equipment, and you can't have the equipment (and keep it) unless you have the work to support it. Damned if you do damned if you don't.

[jackson]

yeah you hit that on the head i have got a few shops off the ground and running and one i paticular was a guy that wanted a couple CNC but he was a conventianal machinist("that was fun") and some one told him they would cover him up with work and they did for about a month and that was it. so then he had tw CNC sitting ther and me with nothing to do. Luckly for him i got him some work. Luckly for me i got him a diferent programer and i got out. Have you ever tried teaching CNC, buisness to a 55 yr old manual machinist.

[ZipSnipe]

Well, I own my glass business and I also work nights at a die and mold shop. I,m really impressed with the business decisions of the owner. His number one shop is located up north right in the same business park as his customers and the same goes for the number two shop down here in Florida. I think cutomers like the idea of a machine shop next door. So point is, location can be critical and valuable.

[jackson]

I have to agree location can be a key factor for larg or small shops i do mostly local work but i do some out of state custumors as well but i do verry high volume

[mog5858]

this thread is just what i need. i have bean throwing arond the idea of starting my own shop up hear in canada. it would be welding and some machine work. i would be doing repare work for the oil feld, framers as well as jo blow. just not shere if i can really make a go at it. i am working on buy tool's, machine when i have money for it. i just woring about cost of tooling up a shop cus i have non to speak of. give me your thoughts thanks

[GAWnCA]

Hey Jackson, How about teaching a 55 year old Network Engineer (job outsourced to India) how to CNC and make money?

yeah you hit that on the head i have got a few shops off the ground and running and one i paticular was a guy that wanted a couple CNC but he was a conventianal machinist("that was fun") and some one told him they would cover him up with work and they did for about a month and that was it. so then he had tw CNC sitting ther and me with nothing to do. Luckly for him i got him some work. Luckly for me i got him a diferent programer and i got out. Have you ever tried teaching CNC, buisness to a 55 yr old manual machinist.

[ViperTX]

mog5858.....well acquire your first piece of equipment....that which will let you do most of the jobs and then start moonlighting (work weekends and nights)...

I'm thinking that you'll need a mill, a lathe, a metal bandsaw, a welder, and the associated small tools (collets, indicators, etc.)....just buy what you need when you need it.

[mog5858]

thanks viper the only thing is that where i am ( i live in the boonezs) if i need a tool i might take a week to get it. ya frist thing i am buying is a keen mill. than a lath

[dertsap]

this thread is just what i need. i have bean throwing arond the idea of starting my own shop up hear in canada. it would be welding and some machine work. i would be doing repare work for the oil feld, framers as well as jo blow. just not shere if i can really make a go at it. i am working on buy tool's, machine when i have money for it. i just woring about cost of tooling up a shop cus i have non to speak of. give me your thoughts thanks

mobile repair shop
if your near the oil fields go mobile ,get a big truck bolt down a mill ,lathe ,and a welder in the back , most always theres going to be power around to plug into, ive heard of that being fairly successfull,
got a friend in northern ALB. with a 1ton and a deisel welder doin the oil feilds ,dudes making the big bucks

[mog5858]

ya i thoght about that but how would the machine like the flexing that the truck does down the road, leas road( if u can call leas road a road). would that reck the frams of my machine. makeing bedway worp

i have heard that the U.S army has 2 1/5 ton trucks that got compleat truck on the back. has any one sean these for sale

[DLMACHINE]

Before starting your own shop I recommend looking seriously at what contacts you already have. If you don't know several people in buying positions of several companies, then don't start. Make the contacts first, build the network. Getting the machines,building,knowledge,personal is all straight forward. Getting a foot in the door for work is the hard part.Making the parts is the easy part, most people really don't understand how to run a business.

Never assume work will come to you because you hang an open sign on the door. With owning your own shop you will have no life for the first 5 years of being full time. The rewards match the level of "yourself" you are willing to sacrifice.

Don't misunderstand me please, being the owner and your own boss can be rewarding. Stay focused and you'll be ok. Keep your emotions in check, it's business not personal. When first starting capital is limited so try to specialize in 1 type of work. Finding the niche is very tough.

[cdlenterprises]

I agree with DLMACHINE. The contacts are the most important part of starting a shop. Everyone here knows how to make a part assuming that we have parts to make. I guess that's the big hurdle for most would be shop owners. How to get their foot in the door with clients and prove their abilities. How to make those contacts. I've heard that some places hire technical or sales reps to float the shop's name around and sell the business for them. Are these guys worth the money and are they a viable way to gain business?

[AlexChuang]

I agree with DLMACHINE. The contacts are the most important part of starting a shop. Everyone here knows how to make a part assuming that we have parts to make. I guess that's the big hurdle for most would be shop owners. How to get their foot in the door with clients and prove their abilities. How to make those contacts. I've heard that some places hire technical or sales reps to float the shop's name around and sell the business for them. Are these guys worth the money and are they a viable way to gain business?

no... i know i am new here and that this is my first post but to be honest with you... it is not the contracts in place that are important... it is the machines... if you get a contract typical lead time to make a part is 4 weeks at a good machine shop... getting machines takes about 2-4 weeks... so your reputation is ruined right as you get out the door... your lead time is 6-8 weeks when your competitors are at 4 weeks or better

it is better to just start a small operation in your own garage producing small production runs... the big companies wont even touch small jobs... that will be your niche market... then you build your reputation as a machinist/machine shop... then you grow from there

[GAWnCA]

..... it is better to just start a small operation in your own garage producing small production runs... the big companies wont even touch small jobs... that will be your niche market... then you build your reputation as a machinist/machine shop... then you grow from there

Alex, This is probably the best niche to fill any way. Not many shops want those one-of-a-kind jobs. Look at all the car, motorcycle, etc restorers who need to have a part reproduced that is no longer available. They will pay big bucks to have it made up. You have just filled a void in the production world.

Greg

[Dugg]

I too agree with DL and cdl.

I would make phone calls to potential customers. Be straight forward, tell them what you are thinking about doing. Ask them what they want and expect from a vendor - that's you. And, what they might suggest that would help you in making your decision.

One thing to keep in mind is that the majority of the your potential customers are already getting items made by an existing machine shop. In order to lure a customer from another shop, you'll have to have something to offer the customer.

Ask them about the service they're getting from their current shop and what you might do to capture their business. If the first thing they want is a cheaper price, you may not want them for a customer.

Make notes of your calls to see if some sort of pattern emerges - like the potential need for a specialized piece of equipment, like EDM work, etc.

Be sure to leave the doors open to allow you to call these people again as you formulate your plan.

Write a business plan! It is Imperative. Writing a biz plan is a pain in the neck, but it's a tremendous resource. These phone calls are part of the plan research. Include summary notes from your calls in your plan, possibly as an exhibit.There are any number of web sites that offer biz plan help. You don't have to buy biz plan software.

Be brutally honest with yourself and especially so when it comes to the biz plan section where you write about; Threats to the Success of My Plan.

I once spent three months (evenings, free time) reseaching an idea for a business and wrote tons of information gathered from my reseach as part of my biz plan. And then, scrapped the whole idea when I discovered a company in the business was pursuing the same idea.

I'm not sure they ever followed through...... hmmmmm where is that research?

[cdlenterprises]

Just thought I'd refresh this old thread and see if there are any new thoughts...

[jackson]

Just thought I'd refresh this old thread and see if there are any new thoughts...

yeah i think i need a drink!!!!!!!!!!!