I am new to the new business world. How would someone start a new Business? Getting the Money/Loan, Buying the right machine, finding the customers, and so on?
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For my money I say getting into the job shop business is a business of hyper competitive margin control. If you can instead get started as a product buissnsss where you can have higher margins which can fund your equipment and get you started then fill your empty spindly time up the rest of the time with job shop work you will be miles ahead of anyone who just decides to open a job shop.
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I would start with a market search and see what is the need in your area. Then try to taller to there needs. A shop with out work is harder to managed than a shop full of work.
Contact you local SBA.org to assets you with doing the right paperwork.
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David,
I am in process of activating Academy Small Group #99 in Meridianville AL.
especially for the purpose to help young people, with no financial resources, to become machine shop owners. Maybe some of the ideas that proved to work will also help you.
It all begun about six years ago when I asked a machine tool distributor (now Morris South an OKUMA dealer) in Huntsville Al. " Are you willing to lease to a young kid with no financial resources a $200,000 machine if I guarantee that I have trained him to be a competent and responsible CNC machinist and the leased machine will be in a secure location and well maintained."
To my great surprise Morris South agreed and we got 5 axis CNC VMC.
That was the beginning of the Teaching Factory, Inc.
Fast Forward; Expansion of the adjacent airport forced me to locate Teaching Factory to a new location. Government paid for the move but it took over a year and in process I lost all my employees and customers.
Therefore I have to start all over. This time is easier, because I have two CNC machine all support equipment, ISO certification and building but no employees.
My idea for the new startup is to make SMALL GROUP #99 attractive to the young people and veterans who want to start their own machine shop by providing Titans of CNC style training, teach machine shop management skills, provide space and use of my machines tools, including 5 axis OKUMA as if they were his/her own machines.
It provides young people the opportunity to test if they really want to become shop owners and those who succeed are likely to get leased machines to get start their own shop.
All of it with very little up front risk.
All of the above trigger two obvious questions:
-
Where are the sales coming from? -
What assurance is there for profitability?
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Hi, everybody I am Ilmar Luik Owner of Teaching Factory and Host for Small Group #99
I would like to organize the Group for the purpose to help others to start their machine shop with minimum up front cost. I have proved that the proposed idea does work on small scale but I am not too sure that it work again as proposed in the following post.
I would like you the readers tell me if the idea is good or bad or how should it improved.
Or what more information you need to decide.
HERE IS THE PROPOSED IDEA.
About eight years ago I asked sales manager of the OKUMA machine tool distributor “Are you willing to lease a $200,000 machine tool to a 20-year-old kid with no financial resources if I guarantee that he is a competent CNC program /machinist, the machine will be well maintained at a secure location?”
He agreed, and we got 5 axis OKUMA VMC. That was the beginning of the Teaching Factory, Inc.
Fast forward:
Due to the nearby airport, expansion Government forced Teaching Factory to move to a new location. Getting paid for the move took over a year, and during that time I lost all employees and customers.
Now I start again, but this time it is easy because Teaching Factory is ISO certified and I have 5 axis CNC with all its support equipment. But no employees nor students.
Based on the above experience on how easy It is to help a young person to start his/ her own machine shop with leased machines I would like to do it again.
Before doing it again, I would like to get advice and opinions from the readers of this post just how to do it?
One option is to make Teaching Factory hosted Academy Small Group #99 attractive to millennials and recent veterans who are committed to starting their own machine shop but don’t know how and don’t have the resources do it.
For them, Small Group #99 will establish a teaching program that is structured as follows:
- Learn CNC programming and machining using Academy provided teaching guides and programs.
At completion, the student is capable of producing aerospace quality parts for sale,
not necessarily most efficiently and quickly but show promise that he/she is capable
becoming a skilled CNC programmer machinist with additional experience. - Simultaneously with (1) students are taught all necessary machine shop management skills.
3 Student starts producing expensive 5 axis aerospace parts for sale. Proceeds from the sale pay
Small Group #99 expenses. Students pay no tuition, they may even get paid if the sales produce enough profit. In any case Group #99 will continually invest in most modern machinery and manufacturing technologies to provide its students the opportunity to keep up with the advancing manufacturing technologies. No government supported trade school can do it. - After satisfactory completion of (1) to (3) students are given an option to lease floor space and machines from Group#99 and operate these machines as subcontractors to Group #99.
- Performance of (4) is well documented to serve as a proof to the machine tool leasing companies that the student is qualified for the lease contract. If additional assurance is needed Group #99 will guarantee that during the lease period machines be well maintained at a safe location.
- When ready, the student will be free to move out of the Small Group #99 facility with the leased machines and start his/her own shop. However, there is a possibility that many students want to remain subcontractors to Small Group #99.
-
A direct result of (6) is that Small Group #99 will grow as a profitable machine shop because it has the best trained and dedicated workforce in the industry. That is important because it is the only way to finance (1). Which help teaches CNC programming/ machining without charging tuition and help young people to start their own machine shop. - Many students after completing (1) decide not to start their own machine shop but go to work for large aerospace companies. In that capacity, they become the best salespersons for the Small Group 99. (over half of Teaching Factory sales came from leads that were provided by its students who went to work for other companies).
Where do sales come from?
Small Group #99 starts begins with a solid customer base because of its location in a suburb of Huntsville AL.
It is within a short driving distance of over a hundred medium to large size aerospace manufacturing companies, and more are coming every day.
All of these companies buy millions of dollars worth of small precision aerospace quality parts for building missiles, space vehicles, and other defense hardware. Also, automobile assembly and engine building plants in Huntsville are expanding.
All of them need lots of precision machined parts. Teaching Factory had no problem of getting sales, and that is likely to carry over to the Small Group #99.
Assurance for profitability.
Small Group #99 will not long survive nor will it be able to help anybody unless it produces a profit. To assure profitability requires good management. I need all the help that I can get to advise me how to assure profitability.
THAT IS THE MAIN REASON FOR THIS POSTING
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@IlmarLuik
Theoretically your proposal sounds like it should work. You managed to accomplish the same results previously. There shouldn’t be any issue with accomplishing it again. You should still have all the contacts from your previous business venture. Possibly you could contact them about putting your machine to work. Put out some flyers an ad in the newspaper and see what interest is in your area not only for students but also impossible partners willing to invest their projects into your business.
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Yes, I have maintained all contacts and most important reputation for quality work and on time deliveries. I hope to have all machines connected by the end of Sept. for the first meeting of the Small Group #99.
I am open for all suggestions on how organize the group activities for maximum benefit of its members, for example provide the members the opportunity to use Teaching Factory machines to earn some income.
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@Warren_Bullock may give you some ideas and tips.
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I am all open for suggestions. What should I do next?
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You have not got that 5 axis spinning? I am choking on work .
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Hi everyone,
My name is Rostislav Slavov and I start my company with starting capital of 2 dollars just one year ago and now I have a HAAS Minimill and most likely I’ll paid it off by the end of this year. I’d like to share my experience to all of you and I’d like hear your experience too.
So, I have some advices for you.
First, It is absolutely normal for a starting CNC shop to have no work at the first year. Probably you have just one machine, very few can afford 5 axis, so most of the entrepreneurs will have very limited capabilities for machining different parts. And you know that most of the time you need several different machines to do the job. A starting entrepreneur will have very limited capacity managing orders too. It could easily overheat when big orders are in place and just sit and wait for long time when the job is done looking for the next one. This wave pattern is very frustrating and could sunk you down. And smaller you are, bigger the waves are for you. You are just like a little fish in the ocean.
So mentioning all the above I want to make some suggestions.
- Keep your expences low as possible!
Leasing a machine for 200,000 dollars starting your business is not a good idea! Start small! You need time, be patient! You may think you have connections and the market is open for you and soon as you get your machine you’ll start making chips right away?! But in most cases that is not going to happen!
Find Dan Lok in YouTube. I love this guy! In one of his videos he told a story about the most important quality entrepreneur must have. And do you know what it is? It is: THE CAPABILITY TO ENDURE PAIN FOR LONG TIME!!! And I’m completely agree with that!
Ok, let’s give you an example from my experience:
My machine is just 35,000 USD and my payments are 1,130 USD per month! So, I have no trouble paying that machine even if the machine is not running! And in fact the machine was not running for more that six months! So how I am doing it? How I pay my bills?
Well, I start my company as an engineering services provider. I start design machines in the packaging industry for big company. Now I’m working on my second contract with them. So I backed up with different activity that is not requiring machine spinning. Further more, I start machining parts for the machine form the previouce contract. So I have now work for my Minimill for few months ahead!
It is important not to rely on the income from your machine only! I know how it sounds but is true! Even if you have to work on salary somewhere else paying your machine, not working on it, so be it! You have to pay off your first machine! That’s your goal!
The facility for your CNC shop is another problem. Where should it be? In your garage? May be. I’m living in apartment and I don’t have a garage, I don’t have my own facility but I’m not paying any rent too. I partnered with a tool maker that has only manual machines and need faster execution on his tools he makes. So, I cut huge expences for my company that way. If I have to rent a facility for my machine it will be like paying one more machine just for the rent! Be clever! Always there is possibility! - Know your market!
If you are going for every job out there you will be in bad position trying to compete companies that are much longer in the business and are specialized in the job you are trying to do! No matter for what we are talking about, hydraulics, optics, medical devices, anything! You have to compete these companies based only on price! And you have to conform with their prices and you can’t beat their prices. So you allways will be in position to strugle to survive.
Think where is your leverage! And how you could take most out of it!
Example:
I’m specializing my company machining aluminium and copper alloys. Adding plating services. Orienting my company into electronics market, machining housings for electronic devices.
I’m still doing components for machine building industry wich is my background I came from, but I’m specializing. I’m entering a market. I hunt down the customers I want to work with! And I don’t care about anything else that is around me! For me it is much more rational not to work at the machine at all, rather than machining some cheap parts all day long that have low added value to me. Instead I’ll put my work on marketing! Building a succsefull business model! That’s the most improtant thing for me in business!
3. Secure your cash flow!
It is expensive business and you need working capital. And sometimes you may screw up some job loosing all the money you put in material. Some times you need more capital for bigger project. And if you loose all of your capital you are not going anywhere. You stuck! You need money to make money. So you have to prearange a line of credit with your bank and is not advisable to mortgage your house. The statistics show that is 9 times more likely not to succeed in your adventure. So once again, paying your first machine off is your highest priority!
Now Luik,
You have been thru all of this and you have your machine already. You want to build an academy for machinist/entrepreneurs. That’s great! You could help many people greatly because all of the written above! I address not only you on this. Theese three advices are address to anyone! But you have to be aware that partnerships are not always with happy ending. And the way you describe your idea shows me you are looking for long-term partnerships with other entrepreneurs like you! Be sure you have working business, you are fulling your capacity, making money, securing yourself before leasing shop floor to other people.
I think your idea is great! I wish you luck!
I hope I helped!
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Thank you for sharing and welcome to the farm. You can find most folks information under the introductions tab . Here is a link to mine.Hello and Salutations
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Hello everyone, I’m studying machinery, I’m a senior student, I’m living in Turkey, I’m thinking of going to America after graduation, I wonder if it’s easy to find a job or in which ways can I find a job?
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Depending where you live, it can either be impossible or very easy to find a job. I lived in western washington. I applied at several places and only got interest from one. Moved to kansas city and I get my choice of were to work. Now the hard part is finding an employer who will pay you what you are worth.
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