I Buy The Machine, Run It In My Boss's Shop

[dertsap]

Originally Posted by little bubba When my boss found out that I was out buying machines with the guy that used to run the shop(the guy who had my job before me, good friend from way back in college and my business partner), my boss was not happy. .

ive seen guys tossed out the door for just that type of thing ,and with just cause they were trying to steal work from the company ,which they were successfull doing

[little bubba]

Originally Posted by dertsap ive seen guys tossed out the door for just that type of thing ,and with just cause they were trying to steal work from the company ,which they were successfull doing

If the boss wasn't a useless sack, me and my partner would still be working for him and we would all be millionaires. However the boss's biggest priority was to screw over as many people as possible, which in the end, and now is he screwed himself.

My partner was screwed out of about $40,000 in bonuses. I lost about $18,000 on pay cuts and about $50,000 on bonuses.

I wasn't trying to steal anything, I originally bought a manual lathe and kept it in my back shed to do some simple stuff that we didn't have the equipment to do(or it tied up the high dollar stuff). We did have the equipment, it was sold when we moved, then it was replaced and the owner never paid for that so the guy who owned the equipment came and took it away.

I ran a lot of stuff at home, backside chamfers, quick face, stupid stuff, then I realized why the hell did I lay out my money to make this a@@hole money.

How is this. The a@@hole owner cut my pay back to $13.50 an hour. I was running the entire shop, hiring, firing, responsible for two shifts and on average 7-8 employees, up to 14 at one point. Quoting, ordering material(outside customers), setup, programming, billing, paperwork everything you do to run a shop. His response was when I did finally quit and chewed him real hard "you should have worked more hours to make up the money".

Well, I have no problem leaving him, I didn't go after his customers, my partner didn't go after them, they came to us. They knew who was getting the work out, on time and with good quality, it wasn't the owner. I kept to my promise not to talk to a customer for a year, is it my fault that they followed?

Actually, my old boss had a big giant contract. And I promised him I would get him through it before I left. I had it scheduled and planned to be done IN HOUSE by end of Sept to on the bad side Nov 2007(they are still working on it and sending most of it out, maybe he shouldn't have cut my pay). I didn't keep that promise then again, I was getting chewed for all kinds of stupid stuff, like working on that big job because we weren't getting paid for it right away, or the time about 2 days before I quit, I got chewed because I couldn't make 72 feet of parts out of 6 foot of material. Or the job that was 3 parts 12.38" long and he ordered 2 pieces of material one inch long, then told me to rub them to make them grow, he probably wanted me to f#$k them so they reproduce and give me enough material to make the 3rd part.

So, I don't feel bad about taking his work, I was the one that brought it in. I kept sort of to my promise(as much as I could without ending up in psych hospital, or dangling on the end of a rope).

WOW, that was a rambling ranting rave, bad memories.

[dertsap]

hope i didn t come across as implying anything , but i remember the boss freaked when he found out they were buying machines .

glad to see youve moved on to better , its tough to keep the chin up and be loyal and honourable to some miserable sob , ive dealt with my share of idiots , it just eats at the soul especially when ive had some goof yelling in my face and i stood there thinking how much more can i take before he's picking himself up off the ground , some people are just outright ignorant

[WA Toolman]

Be careful who you deal with. I have seen a lot of strange things happen on these deals: One guy had several machines in a guys shop. The other guy didn't keep up on his quarterlies. One morning he comes in and there are Federal Agents all around the place. They not only seized his equipment for the taxes, he even lost his personal toolbox out of that deal. Another case: A guy had a space rental deal with his machines in there. Guy sells the business, "loses" all the paperwork showing who owns the machines in the shop. New owners not only did not recognize any agreements, they wouldn't even hire the poor soul that lost the machines because of his "poor attitude."

[skullworks]

I tried something like this.

I rented open time in 2 day blocks. I had to provide all my own tooling & fixtures and did all my own setup & programming. I would go in Saturday night and start the setup, then be back early Sunday morning to start my runs. I also would have Monday "officially" off and continue the run until 6pm when I started teardown to give the machine back.

Problem was regular customers that show up un announced with walk in jobs... Or customer calls. See since I actually am there the Boss assumed it was rude for me to not want to take calls or handle such walk-ins.

This got so bad that one day he ask I do a hot walk in job from one of our best customers. The job took nearly 7 hrs and he billed 8hrs (included time to go fetch tooling we didn't have on hand). After it was done and he had written up the invoice, he ask me to deliver it to the customer. Then he ask if I would have the mill torn down before morning. I said No. I worked today so I guess my day off and machine rental work will be done tomorrow. This caused all sorts of domino effect for his schedule and he was far from happy.

Lets just say there wasn't much open time available in the future.

[ssrmr2]

this is a good discussion. I was looking to do something similar with my friends. My friends own a custom race car shop, and I have been designing things for them. Now they, and I are getting more business, and I was thinking about buying a machine, and storing it at their shop. In the beginning all profits go right into the machient pay it off, once that is paid, then we split the profits. the only bad thing is that this is friends, and friends and money never mix.

[dertsap]

something like that could easily work but the first thing to do is look at these guys and ask yourself what kind of friends they are , are they the " hey lets get hammered " friends or are they the guys you know will bail you out of a pinch when you need help .

friends and money do mix well together as long as they are true friends

[harryn]

What ever path you pick, you need to set up the arrangment as a "real" business with real contracts, including how it will "end". Pretty much all businesses will end one day, and planning for that is just as important as everything else.

When I say "real business", I am talking about officially incorporating it, issuing ownership stock, and everyone putting money in up front along with their ownership. (C corp, not an S or partnership) Everyone has a task / position in it, and a method of taking payment in "stock" or "money" is defined.

The method of valuing the stock should be set up at the beginning. A good "first approximation" is to add up:
- The depreciated value of assets (equipment, tooling)
- Cash and equivalent
- Outstanding payments due (good ones, not the junk)
- Debt you owe
- 1 X your annual sales
- 5 x your annual profit (some people use 10 x, but I would not in a machine shop type environment)

The value of customer relationships, etc (good will) is part of the 5 x profit.

Add this all up and this is your "equity". Divide by the number of shares, and that is the "value per share". It is not magic, this is done every day in the stock market.

Profits - If there are any excess profits, you distribute them to the share holders as "dividends".

If someone pays for something from their own pocket, you expense it to the company. The company re - pays you for your cost in cash, or if it is pre-arranged, in stock. If it is not pre-arranged that they will re-pay you in cash and you accept stock, it is common to accept the stock as being worth 50 cents value per dollar of debt. You can also do this with pay, but it gets a bit complicated to do that, as the IRS will view this as income, and you will still owe taxes on it.

Most states allow very simple incorporation arrangements, and it provides a lot of benefits. In CA where we are incorporated, it can all be done by mail, and the forms are virtually pre-printed. No need for a lawyer at all, of course, the lawyers will tell you that you need to pay them a couple grand, but you don't. OTOH, it does take time to get a business set up. Fed tax id, state incorporation filings, county, city, permits, license, sales tax ID, checking account, PO box, etc. It all takes time.

There is another benefit - taxes. It is MUCH easier to find a good tax specialist for a corporation, then to find one that really understands personal taxes and all of the interesting things you can do with a stand along company. I have my company's financial year end in the summer, so I can keep those taxes and aspects separate from my own fiscal year. It is a lot easier to get the attention of an accountant in July / August then in the normal tax season rush.

I always suggest that people authorize 1 million shares, and then issue (sell them) to the share holders as needed.

The first 50,000 - 100,000 shares sell to the "founders" for 10 cents / share. This ensures that the founders retain control of the company as time goes on.

The next 100,000 shares usually sell for $ 1 / share, also to the founders. This lets people "buy in more ownership" as their money allows or does not allow. It also allows people to put their "pay" back into the company for more ownership if they desire.

If someone wants to "sell out" then it is easy to value their ownership (number of shares x agreed upon pricing method). The other share holders can either buy them out in a chunk, a little at a time, or the company itself can buy the shares back if it make sense. If the share holder wants his cash "fast", then he / she might agree to a lower price per share, just like in the real world of finance.

Grandma's fruit farm with ma and pa owners almost never became a multi million dollar business, and there is a reason for this - it is hard to expand ownership and the whole company is dependent on 2 people's lives. Standard Oil, Chevron, and GE are big - there are many reasons, but one of them, is that they are C corps that act like professional businesses.

BTW, I am not trying to drum up business here, but I do this sort of advising for a living. This is the same advice I give to my paying clients.

[ironDigit]

run Forrest !! RUN !

[wmbeau]

Why do you want to own this Mill??
Something to prove to your boss??
What to be your own boss/slave??
You will find far more satisfaction under your own roof, making your own decisions, finding your own customers, sending work out with YOUR name on it.
My shop is in a 2 car garage, 1 employee and I'm the happiest I've ever been!

[NC Cams]

Talk about deja vu

NC Cams started out by renting space in another shop. Every time I came in to use the machine, it was a freaking mess due to shop owner's guerillas using the machine. Spent half the day fixing it so I could use it only to find it tore up the next time.

DItto the deal with the Feds only I was able to get equipment out of shop just ahead of the Federales. HOwever, I spent New Years Eve paying off a bank loan in return for buying out the machine's partnership agreement to keep the shop owner out of slammer on fraud/embezzlement charges. Seems he sold some collateralized equipment to pay tax bill and the lein holder found out.

Expect to encounter each and every bad deal that you read about above. IF you're that set on the deal, find your own building, buy the machine ands set up shop. YOu can have a partner shop for business from your boss and do it cleanly. Partner does sales, you run machine.

Bosses want employees that they can CONTROL. They don't want subcontractors in their own shop. Why? It is easier to screw subs if they are not in-house to really see what's going on.

DON"T DO IT!!!!!!!!!!!!!!!!!!!!!!!!!!!