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Minimizing shop overhead as a business strategy?

JH-Q

Aluminum
Joined
Mar 17, 2008
Location
Tampere, Finland
Some years ago i used to run a modern day cnc job shop in the city and made some fair money, but the overhead (rent & machine payments) were taking their toll on me. I couldn't get any time off the shop and was always worried about finding enough work to pay the next months bills. I bet most of you know the feeling, especially with the rising costs. Ended up selling my shop in 2014 after six years. Tried it again in 2015-2019 with a bit different recipe, less overhead but still wasn't content with all the stress.

Don't get me wrong, i love making parts and machining in my own shop is still the thing i want to do as a career. Now i've had a four years off the trade and finally figured out how to put the parts together. Nothing new under the sun, but i don't see many people in this trade going this direction..?

So i have fount myself in a fairly rural place, with a nice plot of debt-free land under my feet. Then i built a small (but nevertheless insulated and well-built) shop for myself. Here's the fun thing. I have no electric grid connection, so partly for challenge i've been building the shop to run on an 1930's stationary hot bulb engine and lineshaft. Maybe i should write more about it on the antique machinery subforum later on. However, it's not a museum i'm building, this stuff is for making profit! I don't frown on modern technology either, i do have a solar panel&battery setup as well.
So i'm starting with bunch of (antique, some call it obsolete?) machinery. Mostly because it was very affordable to buy and when overhauled, they should be good enough for the parts i'm aiming to make.
This far i have;
-18"x50" cone head lathe, ca 1915
-20" shaper, early 1900's
-Camelback drill press, 1910's
-Sturdy, soviet-made pantograph copy miller, from the 1970's, NOS (haven't made a single chip since new)
-Power hacksaw, stick welder and a small tool grinding machine for support equipment, also some miniature (quality) machines for making tiny, precise parts.

Obviously, these cannot compete spitting out VMC-style parts, i know how darn fast they can be, and i used to run older 90's japanese cnc's, which were slower than machines nowadays.

How it's possible to make profit with century old machines you might ask?
I figured out it's easy to find modern day country "blacksmith" work over here, which seems to consist of making parts for obsolete equipment. Most of the old-timers are gone and rest are retiring fast! They knew how to make it do. Farm stuff and forestry machine parts, which i used to make but having a cnc shop meant the machines were a bit clumsy and overhead too big to compete on that kind of stuff. There's also some small industry around, which certainly needs all kind of tooling and short run stuff to keep their production running.

The aim is not to be a cheapskate and race to the bottom, but rather offer a friendly, local machining service, while putting emphasis on life quality. If there is no work at fair terms, i close the shop door and go fishing instead as there is no overhead. The shop can be heated with firewood from my own woodlot and everything is paid for.

This far the biggest drawback i've encountered is that rebuilding old machines and building a shop with own hands means a lot of non-paying work when beginning, it doesn't bother me since i like saving old machines. But it's not like buying used VMC, plug it in a wall socket, buy a computer and a dozen of BT40 holders and and start making chips.

TLDR;
Would be nice to hear if others have been succesful in small, work-at-home machining craftsman business, trying to minimize overhead and the costs they cannot control themselves. How did it work out?
 
I like this post, especially coming from a guy who has run shops with modern equipment. You're aware of how efficient cnc is and also how much labor it takes to run manual machinery.

Self-employment is often more about lifestyle and aesthetics than money. Choosing to live debt-free in a rural area says something about what you value. So does this picture of running a "friendly" machine shop. Generally, you'll have little to regret in life by remaining true to your instincts.

If you get the word out, there is always demand for reasonably profitable repair work and custom fabrication. Without CNC, you're at a permanent disadvantage if you're doing any job-shop work for outsiders--even the simplest geometry in 6061 goes 10x faster on a vmc. While one-off work is often challenging and rewarding, it's difficult to make it consistently pay well if it's the only thing you're focused on.

What you might consider is looking for something that pays the bills and makes it easy to say "yes" to the interesting things that roll along from time to time. In this regard, automation is your friend. Even if you want to keep things low-tech and paid-for, you still can automate: punch presses and screw machines have been cranking out parts by the thousands for a long, long time. Building your own dies, fixtures, and other tooling is at least as enjoyable as making repair parts for your local industry. With some up-front work and the right feeders, you can have these kinds of machines automatically making parts all day...a post-modern form of cottage industry. Knowing your experience and attitudes, you're likely the sort of resourceful person who could pull this off. Because punch presses are identical to finger-removal machines, one-man shops avoid a good deal of regulation when it comes to safety equipment, too. Plenty of shops that used to make parts from sheet goods can't get rid of their old OBI presses fast enough, which means they're cheap for you. Even if you profit just EUR0.01 per second per press, you can do the math.

People were automating long before computers. If you value that aesthetic, it's not difficult to replicate in your own shop.
 
I don't know if this will help, but it is an interesting story anyway.

I was at a auction talking to a couple of Mennonite machinists about their work. They make production quantities of simple lathe parts on a manual turret lathe and say they make good money. I asked how they could compete with a CNC machine and their trick was the use of hot rolled stock rather than cold rolled. They bought short ends, bent bars, odd lots, etc. They claimed that the lower cost of the hot rolled allowed them to profitably make finished goods at the price of the raw stock that was necessary to successfully run in a CNC or screw machine. Based on what they bought at the auction, they were making money.
 
I run a low overhead in my garage shop.
I’d say it balanced between a lifestyle-real business. Pays the bills and I enjoy the flexibility
CNC lathe and mill making primarily my own products. Just keep inventory in the shelf and let it trickle out.

Overhead is super low but inventory costs are fairly high as I choose to make larger runs than I need, preferably 1-2 years supply on the shelf. Replenish when it hits 6 months. It’s about the flexibility for me.

I would like to ramp up sales now tho and have a part time - full time staff member. 2 max.
But that’s gonna take some serious more sales.

super cool your stunning all old school. I expect a Video tour when your “all setup”
Repair and one off is always a good field to be in. Big in my area and It would be more profitable for me. But slave to the phone and overnight turn arounds. Did it for many years and enjoyed it as an employee.
 
As someone who is also working towards starting his own business but having never done it before I read these examples and other examples I see of small shops say on youtube. Many have older manual machines which is completely fine there is nothing wrong with that. What I often scratch my head about though is how much money are the businesses actually making? Is there enough profit coming in to grow and upgrade/update equipment as needed? Or is it purely lifestyle never get any bigger kind of thing?
 
I couldn't take a guy seriously if he had a conehead lathe and a shaper.

You can make a little money with no overhead way out in the sticks, but you'll have a lot of days to go fishing.

My stuff is all paid for and doesn't bother me if it sits. But when a breakdown $$$$ job comes in I'm glad I have decent, heavy, powerful machines and 20 years of tooling collected. I couldn't imagine standing in front of a conehead lathe for days to turn a sleeve from solid or trying to cut induction hardened chrome cylinder stem in one.

There's an engine builder out by me who has his dad's 1950's Era equipment. He's not a bad guy and his prices are low, but his work is shit by today's standards. He probably does $1000/mo in work, but most people don't go back.

I don't get why you wouldn't buy better machines. Nice manual machines are not very expensive.
 
I don't get why you wouldn't buy better machines. Nice manual machines are not very expensive.

If the OP is trying to do what is essentially "line shaft" work, his emphasis on controlling costs make sense in his context. That can make newer, better manual machines less attractive.

Me? I need CNC, I'd be miserable without that extra capacity and flexibility. So I'd have to have a sizable solar array and battery storage, which pushes costs up a lot.
 
What I often scratch my head about though is how much money are the businesses actually making? Is there enough profit coming in to grow and upgrade/update equipment as needed? Or is it purely lifestyle never get any bigger kind of thing?

In California at least, and probably similar in other places, the problem for growing is the regulations. One or two people is easy, it's you and the wife or kid. The step of adding one more person is economically impossible. With all the additional costs, you'll go backwards by adding another person. Ten or twenty is fine, but one will barely pay for all the additional government crap.

I don't think we should go back to 1890's robber baron days but there should be a way that that first step out of the garage is a lot easier. That's one reason a lot of people will stay small, it's a negative to actually grow.


For myself, after about ten years I figured out that a lot of what Modern Machine Shop was peddling maybe was in their best interest, not mine. Some people buy into the "Buy the best you can get, over time it will pay off !" which unfortunately does not take into account that a job shop will not necessarily have the fifty years of use out of some tools that this requires. If you're only making one part, the $50 Chinese cutter that will last for three is a better deal than the $12,000 tool from zee olde country that will last for six thousand. Make your purchasing decisions based on what the task is, not some ironclad rule.

Sometimes it's easier to not spend money than to make a lot being really efficient, which you just turn around and give to Sandvik.
 
If the OP is trying to do what is essentially "line shaft" work, his emphasis on controlling costs make sense in his context. That can make newer, better manual machines less attractive.

Me? I need CNC, I'd be miserable without that extra capacity and flexibility. So I'd have to have a sizable solar array and battery storage, which pushes costs up a lot.

An engine running a lineshaft is going to cost a lot to fuel. Terribly inefficient.

And I'm with you too. I prefer to make stuff on the cnc's. But I don't have a CNC HBM or a CNC lathe with a 4 jaw or with 120" centers (yet).
 
Some years ago i used to run a modern day cnc job shop in the city and made some fair money, but the overhead (rent & machine payments) were taking their toll on me. I couldn't get any time off the shop and was always worried about finding enough work to pay the next months bills. I bet most of you know the feeling, especially with the rising costs. Ended up selling my shop in 2014 after six years. Tried it again in 2015-2019 with a bit different recipe, less overhead but still wasn't content with all the stress.

Don't get me wrong, i love making parts and machining in my own shop is still the thing i want to do as a career. Now i've had a four years off the trade and finally figured out how to put the parts together. Nothing new under the sun, but i don't see many people in this trade going this direction..?

So i have fount myself in a fairly rural place, with a nice plot of debt-free land under my feet. Then i built a small (but nevertheless insulated and well-built) shop for myself. Here's the fun thing. I have no electric grid connection, so partly for challenge i've been building the shop to run on an 1930's stationary hot bulb engine and lineshaft. Maybe i should write more about it on the antique machinery subforum later on. However, it's not a museum i'm building, this stuff is for making profit! I don't frown on modern technology either, i do have a solar panel&battery setup as well.
So i'm starting with bunch of (antique, some call it obsolete?) machinery. Mostly because it was very affordable to buy and when overhauled, they should be good enough for the parts i'm aiming to make.
This far i have;
-18"x50" cone head lathe, ca 1915
-20" shaper, early 1900's
-Camelback drill press, 1910's
-Sturdy, soviet-made pantograph copy miller, from the 1970's, NOS (haven't made a single chip since new)
-Power hacksaw, stick welder and a small tool grinding machine for support equipment, also some miniature (quality) machines for making tiny, precise parts.

Obviously, these cannot compete spitting out VMC-style parts, i know how darn fast they can be, and i used to run older 90's japanese cnc's, which were slower than machines nowadays.

How it's possible to make profit with century old machines you might ask?
I figured out it's easy to find modern day country "blacksmith" work over here, which seems to consist of making parts for obsolete equipment. Most of the old-timers are gone and rest are retiring fast! They knew how to make it do. Farm stuff and forestry machine parts, which i used to make but having a cnc shop meant the machines were a bit clumsy and overhead too big to compete on that kind of stuff. There's also some small industry around, which certainly needs all kind of tooling and short run stuff to keep their production running.

The aim is not to be a cheapskate and race to the bottom, but rather offer a friendly, local machining service, while putting emphasis on life quality. If there is no work at fair terms, i close the shop door and go fishing instead as there is no overhead. The shop can be heated with firewood from my own woodlot and everything is paid for.

This far the biggest drawback i've encountered is that rebuilding old machines and building a shop with own hands means a lot of non-paying work when beginning, it doesn't bother me since i like saving old machines. But it's not like buying used VMC, plug it in a wall socket, buy a computer and a dozen of BT40 holders and and start making chips.

TLDR;
Would be nice to hear if others have been succesful in small, work-at-home machining craftsman business, trying to minimize overhead and the costs they cannot control themselves. How did it work out?

Very similar to what I am in the process of doing. Will greatly depend on what’s in your area, but you will likely need some more modern machines to make any money, unless you stick to work that they would work with. Could fabricate custom iron work for people… use the equipment to make bushings and hinges etc That you would need.

On that note though I did 8 years making forged ironwork, power hammers, it was hard work making a living when I was manually doing every part of the job by myself on old equipment. I loved it but I was definitely a starving artist.

So this time around I got the Fadal I had been running for the last 12 years for the family business and making my own stuff out of their shop. I also have a 2018 cnc lathe and am keeping my overhead as low as I can.

Best part is the mill is running right now while I am in the house.
 
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In California at least, and probably similar in other places, the problem for growing is the regulations. One or two people is easy, it's you and the wife or kid. The step of adding one more person is economically impossible. With all the additional costs, you'll go backwards by adding another person. Ten or twenty is fine, but one will barely pay for all the additional government crap.

I don't think we should go back to 1890's robber baron days but there should be a way that that first step out of the garage is a lot easier. That's one reason a lot of people will stay small, it's a negative to actually grow.


For myself, after about ten years I figured out that a lot of what Modern Machine Shop was peddling maybe was in their best interest, not mine. Some people buy into the "Buy the best you can get, over time it will pay off !" which unfortunately does not take into account that a job shop will not necessarily have the fifty years of use out of some tools that this requires. If you're only making one part, the $50 Chinese cutter that will last for three is a better deal than the $12,000 tool from zee olde country that will last for six thousand. Make your purchasing decisions based on what the task is, not some ironclad rule.

Sometimes it's easier to not spend money than to make a lot being really efficient, which you just turn around and give to Sandvik.

My last boss I had when I was still doing full time electrical told me that you never made any money with one employee, you spent half your time looking for work for him to do so only got 1.5 billable hours and basically up until you had 6 or more and became a full time work hunter and paperwork pushing you won’t make any money having employees
 
While thinking about it, it sounds a bit ridiculous choosing this old machinery instead of getting a knee mill and a decent geared head lathe with quick change threading gearbox.

Not sure how i ended up with this old machinery, partly probably because i was really attracted about them and partly about the price (€350 for a lathe with all change gears and big chucks) and ease to connect them to the lineshaft. How do you connect a Bridgeport to lineshaft and still retain all the head movements..?
The pantograph was a barter to a 1899 german J.G.Weisser treadle lathe which i restored and shipped to a local museum. The museum owner thought a pantograph is too modern for his shop, so he was happy about the deal. at 1300kgs and full 3D copying capacity with an automatic feed unit, it should offer some features which the shaper is unable to do and stepping into cnc work a little.

There's a lot of old tech production equipment around, i do like the idea of a punch press or a screw machine chugging away in the corner. A turret lathe might be worth it's space as well. I have to see what kind of work cathes on and evolve towards it.

I'll be installing the fuel tank to the workshop today and filling it up the next few days so i probably can't reply until wed or thursday since i don't have internet at home, but at my girl's place some distance away.
Speaking of running the workshop with oil, it costs around
2€/liter over here. Many are giving up oil heat and emptying their tanks and selling them, so this is where i'm getting it. There is a construction guy who empties the tank and i can get a bit dirty (water, rust) oil from him for free. I'm trying to remove the water by letting the barrels freeze and then pumping oil from top of it. Maybe use different metal meshes to filter the particles out. However that old engine isn't very picky about the oil, it is able to run on crude oil or probably even melted margarine...
 
However that old engine isn't very picky about the oil, it is able to run on crude oil or probably even melted margarine...

When you run out of engine drippings, see if you can set up a deal with McDonald's, KFC, other restaurants that do a lot of deep-fat frying to take away their waste oil. That was the in thing for guys running older diesels for a while. The newer ones don't like that stuff, have to process it thoroughly, make biodiesel out of it but old clunkers don't care.
 
I don't know if this will help, but it is an interesting story anyway.

I was at a auction talking to a couple of Mennonite machinists about their work. They make production quantities of simple lathe parts on a manual turret lathe and say they make good money. I asked how they could compete with a CNC machine and their trick was the use of hot rolled stock rather than cold rolled. They bought short ends, bent bars, odd lots, etc. They claimed that the lower cost of the hot rolled allowed them to profitably make finished goods at the price of the raw stock that was necessary to successfully run in a CNC or screw machine. Based on what they bought at the auction, they were making money.


I run a fair amount of HR material here in fixed headstock CNC lathes.

I have heard of a heavy spring (referred to as a Compensator) used on the chucking on Acme's to account for varying size.
I have never seen these personally, but apparently they are available.

So that covers high and low volumes....

HR may not go so well in a Swiss lathe with common collets and bushings, but you could tool one up with newer style collets to accommodate this issue. I know of a company that makes guide bushings that will comp a full mm with a unit like Star's Magic Guide Bushing. That was an option from Tornos as far back as 1990 that I know of.


Point being that there is no reason that running HR is an advantage that only they can take.


--------------------------

Think Snow Eh!
Ox
 
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I run a fair amount of HR material here in fixed headstock CNC lathes.

Nasty :(

Point being that there is no reason that running HR is an advantage that only they can take.

I tried that trick once or twice ... ended up not saving anything. If they charge you by the pound, cf is more per lb but hr is larger and weighs more so it's a tossup. The stuff is a lot nastier to work with, rusty flaky stuff all over the machine and your hands and the shop (altho cf is greasy slimy sometimes) ... I don't think it makes a nickel's worth of difference, depends more on what's available quick. If I'm making something right on the size, I'll probaly get hr because it gives you a little more leeway on the o.d. but otherwise cf is nicer to work with.

The difference isn't going to make anyone wealthy either way, I don't think.
 
We run parts that easily saves $1 per or more.
I don't see much noticeable difference in the machines, but then I don't spit and polish the inside of mine.

I run rusty material tho too.
No prima donna's here....


-----------------

Think Snow Eh!
Ox
 








 
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