How to expand machine shop

[Granary]

A friend and I started a small machine shop 21/2 years ago with only one client and one machine. We reinvested every dollar and now have 6 machines and still this one client. We also want to stop working with this guy because it's more like we're working for him. He dictates the price and some of his prices are unreasonably low. In the beginning we were desperate and needed anything we could get, things have changed. The reason the shop got started in the first place was because this guy came to my buddy and told him that if he started his own shop he'd send him work. My buddy came to me and we went into business. We have no experience in finding companies to work with because we've never had to do it from the get go. Any help and advice would be greatly appreciated. We don't know what to look for as far as what types of businesses may need machining. Do we look to manufacturers only, what type of manufacturers and how do we find them?

[Mcgyver]

you have 1 client? first off, you can't afford to get rid of him just yet and you are right, you are working for him. It’s are in a tough spot as you can't risk loosing him until you've reduced him to say 20-40% of your business from 100%. The unanswered question, that defines how tough that spot really is how easy is to replace that business? i.e. if he fired you (or vise versa) tomorrow, how readily could you fill the pipeline?

I guess your question is how to go about attracting that new business to fill the pipeline, in other words sales & marketing 101. It doesn't have to be complex; figure out what's called your value proposition (accurate work, great service, down the street, quick work, low prices, special materials, special machines, whatever) and start approaching business close to you. Don’t worry about not having a super slick sales force or marketing material, it doesn't matter. The basic sales edict is that making the worst, bumbling, awkward cold call is infinitely more productive at bringing in business than sitting on your hands.

figure out who the buyer is (purchasing agent, MRO guy, whatever) and call him up, say you're just down the street, state the value proposition, and most importantly, (ask for the order) ask him if he has a job that he can try you out on. Step 2, repeat as necessary

Apologies if I’ve undershot the mark, sales and marketing knowledge fills both careers and books, but it’s really nothing more than making contact with someone is qualified to buy your product/service, making them aware of your product/service and then FOLLOW UP. That basic act of making the cold call and then the discipline of following up is what allows top sales to make millions – it’s that simple, but most people won’t do it.

[Ken_Shea]

You are smart to think toward expanding and the sooner the better, having all your eggs in one basket is very, very dangerous financially. If this relationship is starting to go down hill you can be sure he is moving on this as well.

You could try going to all the machine shops in the surrounding area and ask them for any work that they may not want or not having the time to fulfill order obligations. Take samples of your best work.

Don't wear baggy jeans and a dirty t-shirt, even if they do

Ken

[InspirationTool]

A portfolio of your work or even better yet, physical samples is a really good idea!

Being available for rush jobs could help get the interest of local customers as well.

-Jeff

[imwllc]

i was in a similar spot when i started also, i bought a book called the manufactuers register, on the book it has www.mninfo.com, i got a list of people near me made calls and introduced myself. then shaved and put on some nice clothes and went knockin on doors with a briefcase full of parts. i spent a day each week on the road for about two months. i bet i stopped at at least 30-40 places and i ended up getting jobs out of 8 or 9, but that was plenty. and dont think i got prints right away i kept notes of what i talked about and to who i talked to and some of the places it took a month or two of followup calls to get in the door. i try to be persistent with out being annoying. the more contacts you make the easier it comes. i try to not be all business either got to do some talkin about the weather and other events going on- some b.s. is good

[Geof]

Granary:

All the advice so far is really good; I have been through all this having been in business for 25 years. imwllc's advice is particularly good; look like a businesman and behave like a businessman.

But all this is strategy and you need to consider tactics and the first is c.y.a. If I was your only customer and I found out you where trying to become less dependent on me I might decide to whup you back into line by threatening to take my stuff away. So my suggestion is be very, very, very,.... discreet!

You say in 2-1/2 years you have expanded from 1 to 6 machines. Are they paid for? Do you have bank loans or lease commitments? If the answer to either is yes then add a few hundred verys to my three above. Actually in this case I would suggest duck your head back down out of sight and wait until you don't have any financial obligations over you.

Before you do anything I think you need to have your finances arranged so you can survive for several months without business; then start looking. If your current only customer gets upset and starts trying to apply any sort of pressure you are in a position to survive it.

[little bubba]

Originally Posted by Granary We don't know what to look for as far as what types of businesses may need machining. Do we look to manufacturers only, what type of manufacturers and how do we find them?

One place you might want to look, is for companies that deal with Department of Defense contracts. Most of them that I've dealt with do none of their own manufacturing, have nothing in the yellow pages and completely discreet and hidden. I'm in the only city in a county of 200,000 people that is 2 times the size of Rhode Island, and there are 5 of these companies that I know of. I'm sure the UPS guys know where they are.

How about going for directly to the Gov contracts. I know its a ***** to get all the numbers in place, but the amount of solicitations issued each day is amazing. There is also the paperwork, packaging and all that crap, but it can be really really profitable, and its all in your hands.

From what your saying, I'm guessing that you don't know a lot of other people at other shops in your area, otherwise you would know who they are getting work from. I would suggest getting to know them, maybe even sub a few jobs out yourselves just to get the mouth rolling.

Once you find somebody, as someone else has said, the "HOT" 'I need this by tomorrow morning" type of stuff can put you in very good favor, just don't do it for free, that puts you in the "we'll only go to this guy when we don't want to pay much" category.

[Granary]

Thank you for the website,www.mninfo.com, what do I look under? I don't know the catagory for manufacturers who use machanists, is there one? This is what I have been stuck on, I know what I can do, but I don't know who to look for.

[anoel]

Well, I did a yellow page search on Manufacturing from Yahoo... And there's a ton of places around Monroe, MI that you can look too... Caterpillar Engines (Caterpillar keeps the machine shops busy around the Peoria area here in IL.), There are a bunch of Compressor manufacturers. Any of the businesses that manufacture a product needs machine work as a general rule. As they often have custom handling equipment and are always designing new conveyor systems, widget assembling machines, assembly stations... need replacement parts for one of a kind machinery etc... Don't always look to make parts for a product that someone makes. They often need parts for the machines that make their products...

[Granary]

Thank you everyone for your time and advice! It's been very helpful.