Thinking of starting a new business

[Hack]

An associate and I are considering starting a new business together. Products will include cnc machines for the home hobbiest and small shop. These are to include scratch built and retrofitted routers / mills / plasmas, etc.

We feel the knowledge between us is solid, and have a good business plan in place. Simply, we are looking at the market right now to see if it will support it. One problem we have is that both of us work real jobs and connot commit to making this our soul income earner at this time, and hope this will not be to much of a problem. Technical support if needed can still be provided by email or a previously agreed upon time for a phone call. This we hope would be satisfactory.

We have the facilities, decent cash flow and tooling. All expenses would be out of pocket with no debt to the company. To us this is the best way to go at least until the market has been established.

Our first product would be a CNC Router built with linear guides, rack and pinion on x & y, screws on Z, servos etc. A 4' x 8' machine to start around 10k. Our market for this product would be direct compitition with Shop Bot, Ez Router and the likes. We also feel we would have better pricing as well as a better product due to better components.

We would provide an ala carte type product allowing you to build / buy what you want from just a plans set up to and including a fully assembled and tested machine.

Thoughts and input are appreciated.

Thank you

[ViperTX]

Well....I would first off take a look at the low end competitors....check out the K2 machines.....

Also....I would have to question how you plan to offer less expensive and higher quality parts then a manufacturer (ShopBot, etc.) who has the economies of scale working in their favor?

[lwalker]

Perhaps instead of trying to be competitive with a general-purpose manufacturer, you could focus on a specific aspect of CNC. e.g., CNC routers optimized for milling doors, or for nameplates or plaques. That way, you don't have to worry so much about keeping your prices lower than the "big guys," instead you can dominate your little niche by being known for high quality

That's the approach I take in my little circuit design business: instead of competing on price with the outsourcers in India or Eastern Europe, I concentrate on the small shops that don't know much about getting speciality electronics custom designed. I try to hold their hand through the whole process and educate them and they find that's worth paying a little more for.

[Hack]

Thanks for the responses, it has given us other "angles" to think about.

[biomed_eng]

Whatever you do...always keep fixed overhead to as low as possible. Your full time jobs are essentially a fixed negative overhead, so that is a GREAT ADVANTAGE.

Work out of your homes for as long as possible (keeping overhead low). Keeping overhead low will allow you to offer products at low prices while still making a profit.