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

[recordist]

With a few like-minded friends at work - we have been tossing around the idea of starting our own shop.

Getting a few new cnc machines looks like it's within reach (without TOO much trouble), but of course, once we start calculating in overhead (rental/electric etc) and odds'n'ends (tooling/toolholders/vises/inspection etc), it sure seems to be an UNGODLY amount of money.

So I've been thinking about somehow leasing the space from my current boss.

Currently we have a permanent bottleneck in the mill department, which seems obvious is because we don't have enough mills. My boss would like to get a new mill, but (you knew the answer already, right?) "just doesn't have the money right now". We JUST bought a new lathe, anyway.

I was thinking of possibly being subcontracted by him for doing jobs in MY machine in HIS shop, charging him a "dirt-cheap" rate. Soon he would see how much more money the machine would make him (fewer bottlenecks), and then hire more hours from me, and so on.

I could pay off the machine with a scant 4 - 6 hours a week (!), any more hours worked would just be an earlier payoff. Meanwhile I would get to use the shop's building / electric / vises / tools and so on.

Once I pay the machine off, it will be much easier to start a shop, and buy all of that supporting stuff.

My boss had already done something similar to this in the past, I think that he'd be open to it now. It's a relatively small shop, so it may be a bit more legally accessible than some larger shops would be.

Is this feasible or just insane? Just a pipe dream?

Any advise? Has anyone else tried this? What pitfalls may be ahead (for me, or for my boss?)?

[Geof]

Originally Posted by recordist ....Is this feasible or just insane? Just a pipe dream?....

Hoo boy.

I have a bit of a reputation for being negative; I look at things and try to figure out why they might not work.

Let us say 'your' machine is being run by another employee and this person crashes it. Who is responsible for repairing the machine.

Let us say that for some reason 'your' machine malfunctions, a Parameter is wrong, an encoder is reading wrong, whatever, and the machine turns out a whole bunch of junk parts. Who covers the cost of re-doing the order?


EDIT: 'sued'? It doesn't look correct b ut I can't think of anything different.
Even worse; let us say your machine malfunctions and somehow contrives to chop somebody's hand off. Who gets sued?

I am a 'Boss'.

I would not touch this kind of proposal with a ten foot pole.

Actually I would not touch it at all.

I did warn you I have a reputaion for being negative so if other people think this is a great idea just ignore me.

[recordist]

Geof - this is exactly the type of reply that I need. Good and bad - hopefully some of both... ;^)

I don't think that I would let anyone run my machine but me, so there won't be anyone else crashing it (wait - I mean there won't be ANYONE crashing it!). Of course, my machine, my responsibility for any repair.

And if I'm the employee already, in my boss's shop, running jobs for him, wouldn't any accidents be covered (eh - generally that's when you're clocked in, right? hmmm)? I'm sure that any other work for other customers would NOT be covered...maybe I would have to wait until that "second phase" of having our own shop until running jobs for any other customers.

Maybe a nice little legal disclaimer, releasing my boss's company from any liability for any work done "after hours" - I've had to sign these before at another job, when doing personal work.

Maybe just the idea of my purchasing the machine, and leasing it to my boss? No huge outlay or no big commitment for him. Of course, then ANY SCHMUCK will be able to go over and crash it (there are several schmucks at work already).

And, my boss has done something very similar already. I am not privy to the specifics of the deal, but I could certainly ask, when it's time.

I like to try and think outside of the box - and work around what might be "standard" obstacles. Half the time, when I'm cracking jokes about things, somebody says: "That's a good idea - they should have that!"...Hopefully my spitballing here can help form the concept better: make it less a joke than a good idea.

[ViperTX]

Well, make sure you get everything written down in some sort of contract. Verbal agreements just won't do...the boss could easily lock you out or be closed by some government agency (taxes, etc.) and you won't have access to anything...unless you have a contract and a decent attorney.

Good Luck.

[Switcher]

I don't want to sound negative, but this sounds like a bad idea.

So many things could go wrong, in a deal like this.


.

[Geof]

For a pessimistic type like me, who has had contracts broken, even a contract is not much help unless you have the financial resources to get a good lawyer. And even then it is probably going to cost more than the machine is worth.

The most secure situation is to have your machine in premises you control; it does cost more but you need to look at the extra cost as being a kind of insurance premium against things going sour.

[dertsap]

one simple arguement and you could have a heck of a time getting back into the building to remove your machine , it would be months before most lawyers would even find time to begin talking about a resolution

even if you are sincerly a respectable man with good intentions , why would your boss want to have future competition right under his nose , you and your machine can walk out of the shop along with the work your boss has sub contracted to you . its a cut throat business and if your boss has been doing this long enough he has either been cutting throats or has been getting his cut , he would be a fool to go for it , and i believe you would be making a big mistake by doing it as well , as the law dictates posession is 99% of the law , if you get locked out it will cost you a small fortune to get it out of his posession
also the fact he can t afford to buy another machine and the machines have been overloaded with work would throw up a huge red flag for me , the banks like to see good numbers so why can t he get another machine , is he running beyond his financial capacity and in for a crash if it slows down

you mentioned about how fast you can pay off a running machine so rent some small warehouse space and count it as the cost of doing business

[Dr Pete]

What dertsap said,
You have too much to loose and he has everything to gain.
Get a small space & machine.
Work nights on his jobs (you can charge him more) I don't believe in giving stuff away.
It will set your prices too low, your not his friend he is your boss.
Your talking BUSINESS here not a hobby.
And it's easier to just start out and NOT take the work from him.
As already stated, if he is that busy and can't afford another machine something is wrong and you could be setting yourself up to get screwed.
I don't want to come off as negative but I have set up business with a few people and companies before and they always look at me stupid when I say the following:
While we are still friends here and talking let's sit down and put in writing how we get a divorce. aka. exit strategy.
Good luck with what you decide.

[recordist]

"why would your boss want to have future competition right under his nose , you and your machine can walk out of the shop along with the work your boss has sub contracted to you"

My boss is planning on retiring in 5 or 6 years (one more reason for him to hold back on purchasing new equipment, I guess). He's talked about selling the business to the employees, but when I look around the shop...it's (SERIOUSLY!) like time-traveling to 1985.

When it gets to that sell point, I know that I don't want to purchase 30+ year old machines, and loads of worn-out support equipment that constantly need repair and replacement. Plus, I don't plan on just being an employee for 5 or 6 more years until this might happen. Life's too short to coast! I'm old enough to have plenty of good credit, and young enough to take few chances.

I realize that when you buy a business, you're also buying the customers, so that's worth something, of course. Although I figure that several of those customers would get pretty upset with the instant price hikes that would probably ensue: like it or not, it can't stay 1985 forever.

"its a cut throat business and if your boss has been doing this long enough he has either been cutting throats or has been getting his cut"

...well, let's say he hasn't been cutting any throats. The shop has been...surviving...but certainly not thriving.

[automizer]

I know where you are coming from here. I was offered at one point to "rent" time on a machine from my boss for my own personal work; but never took the offer as I wanted nothing to do with my bosses equipment after hours. I am now a contract worker for a past boss and my current boss. But all work is done on my equipment in my own shop. It is much harder to work around but the end result is far more rewarding. If you do end up with some or all of your bosses business at that point bring your machine in to the family.
my 2 cents in the jar.
good luck, any endeavor like this is always hard.

[ImanCarrot]

Perhaps another workaround- you buy the machine, use it in the boss' shop and he gives you a small share in the company or first refusal to buy a percentage when he does retire?

He gets a free machine you get a share in the company.

Not sure if this would be attractive to him- I only know machining, not business- no doubt others could comment better.

[little bubba]

RUN AWAY, Recordist, you are just setting yourself up to get screwed.

I've also heard the "I want to get out in two years and sell to you guys schtick" Its usually just a lie to make you hump even harder to build up his business. If that was honestly his intention, you would already own some of the business.

What happens when you are doing your own work for a non-related customer and the boss is mad because you are using his electricity to not do his work?

What happens when a customer realizes they can go straight to you, and eliminate the middle man?

So say you do put a machine in his building, you give him a cut rate, he certainly is not going to like writing an employee a 5 digit check. A lot of nasty stuff will happen then, especially since you plan on using his tooling.

What happens when you realize you can make more money and be happier out on your own? Are you going to swipe his customers? Where are your customers going to come from if you don't, it'll be a real touchy situation if you steal his customers and stay in his building.

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.

He told me I was going to steal all of his customers, funny thing is in the shop he hated it when I took on outside work and actually made him money, the only reason the reason the outside work came in was because I made a deal with a few buyers, if they didn't have to talk to the owner, I would get the work.

I gave him a one year notice, and a promise that I would not even talk to any existing customers for a year after I left. I made it 4 months before it became unbearable. I did keep to my promise of not talking to a customer for a year, (they called my partner). I just made it over the year mark and called a buyer to ***** about some welded assemlies that are late, (machine, passivate, bond-lube, assemble, get$$$, assemble into final assembly, get more $$$$). He was mad as hell at me because I hadn't/didn't/wouldn't talk(ed) to him in over a year.

Two of our best customers also cancelled POs and actually went and got material and castings from my old job, one even went so far as to buy the fixturing for a particular job I had made from my old boss to avoid a setup fee. The scary thing is that all prices have increased, some substantially, some by a small bit.

The old boss still won't talk to me, but he will talk to my partner. I wasn't gone 2 weeks and the old boss was asking my partner to have me go over to the shop and help out. There are still calls to come help fix a machine, apparently they need a tech in there often, lots of crashes($75 an hour for a 6 hour round trip plus $95 an hour working time). I did all the machine repairs, I only had a tech in there once and that was to maintain a warranty on a spindle. He also keeps

'nuf of my story, if you think you can do it, do it. You don't need to be tied to somebody, or have your moneymaker in somebody else's building(that big thumb crushing down on your head). Stuff a machine in a garage. If you are in an industrial area, go looking for some space to rent from non-related businesses.

Run away, your boss has no interest in you actually succeeding, he just wants a free mill and extra capacity for no money.