Starting A Shop

[387designs]

After years of waiting for the correct opportunity the stars have finally aligned and I will be opening a shop with one other person. I am seeking some advice from others who have opened their own shops.

Background: I am an experienced programmer and have worked in many machining environments, but specialize in high speed tighter tolerance aluminum and steel jobs. We have a private investor, and may look into bank loans as well.

Plan: After weighing options in terms of machines, we settled on a SMINIMILL2. The machine has a 10k spindle and a work envelope close to the size of a VF1. We are going to be producing our own products for a niche market and be operating as a job shop. the split will be approximately 50/50.

You: How do you(other small shop owners) get your initial contracts? I would like to have potential customers lined up previous to spending the money on the machine if possible. Also, I have made countless excel file calculators to try and predict monthly costs and monthly incomes. Does anyone have advice on this topic?

Add an advice you wish, anything is helpful.

[holbieone]

you can not count on any contract to pull the weight , they can be canceled at any time , even rite after you Purchase a new machine

never grow bigger then you need to be ,( i little tight fitting is even better ) , let the work pay for the overhead

when buying equipment , new or used , your damned if you do and your damned if you don't
only buy what you need and weigh it out carefully , new equipment needs to be paid for and used equipment needs to be maintained

never buy a new piece of cnc equipment without the tapping options

never go into business with a close friend and expect to remain friends , it very rarely works out

incorporate as soon as possible

[txcncman]

There is no such thing as lining up work before you have equipment on the floor. Attempting to do so is a disaster (bankruptcy) waiting to happen. Job shop customers usually expect delivery within days, not the weeks or months it takes to get financing and order a new machine and have it delivered and installed. Job shop customers typically do not order or contract weeks and months out. They typically work on a JIT (Just In Time) basis. Watch out when buyers issue purchase orders with same day delivery dates (or delivery dates that are otherwise unobtainable or do not match your quoted delivery lead time). Most small businesses fail for lack of money. Be prepared to not make a dime of profit for 12 months. If you do not have pockets deep enough to make it that long, do not attempt to start a new business.

[387designs]

Going into business with a close friend: My business partner is a close friend, but we have had a professional relationship for years. The reason I do not think it will be a problem is that, he knows nothing about manufacturing and will be in charge of the marketing/sales, which I know nothing about. Sound reasonable?

I figured as much with the contracts, I am just having a hard time completing the business plan with predictions of how many contracts, where they will come from and all of that nonesense.

[holbieone]

Going into business with a close friend: My business partner is a close friend, but we have had a professional relationship for years. The reason I do not think it will be a problem is that, he knows nothing about manufacturing and will be in charge of the marketing/sales, which I know nothing about. Sound reasonable?

I figured as much with the contracts, I am just having a hard time completing the business plan with predictions of how many contracts, where they will come from and all of that nonesense.

"contracts, where they will come from"

make a list of your companies abilities and equipment and start knocking on doors

the paying jobs don't come to you ,it's your job to seek them out, build a network

[Joe S.]

"the paying jobs don't come to you ,it's your job to seek them out"

But The other kind will ! So don't price yourself so low that you get all the jobs everyone else has walked away from, unless you enjoy doing the impossible, for too little compensation, and in a serious rush, for some dummy who doesn't even know why his job is a nightmare.

[Geof]

...The reason I do not think it will be a problem is that, he knows nothing about manufacturing and will be in charge of the marketing/sales, which I know nothing about. Sound reasonable?....

No!

If he knows nothing about manufacturing how is he going to figure out how much to quote for a job?

When he underquotes for something you are going to be the one who has to put in all the effort to minimize your loss.

When he agrees to a ridiculous delivery schedule you are going to be the one who has to work evenings and weekends to meet it.

[387designs]

For the products we produce, not the job shop side of things. He is well respected in the industry we are making parts for.

No!

If he knows nothing about manufacturing how is he going to figure out how much to quote for a job?

When he underquotes for something you are going to be the one who has to put in all the effort to minimize your loss.

When he agrees to a ridiculous delivery schedule you are going to be the one who has to work evenings and weekends to meet it.