Peoples Business plans.

[William Payne]

I have been a long time reader on here but only recently signed up. I am very curious about peoples business plans when they start out.

I have no criticism just curiosity.

Going through the searches on here I notice people starting a business, some big some small.

What interests me is the mindsets. Some buy a lathe or mill with the idea to make parts to sell on ebay or some kind of niche market.

Others, have more grand plans and buy specific machines doing specialized low or high volume work whether with manual machines or CNC.

What I am getting at is everyone starts small but some start small and then progress into larger companies and invest in gear and machines and eventually end up a big company.

Others stay small continuing to make parts on their lathe or mill in their garage or small shop.

My big question is more what are peoples plans and reasoning when they start out?

I myself work for a company that has 10 employees. We do mostly manual machine work but have cnc capabilities also. I am a do whatever my boss asks me employee so some days ill be on a lathe others a mill, or drill press, surface grinder, welders, maybe running parts on the cnc. Basically what ever is required. However our work is almost all for large companies.

The environment I work in has influenced my own ideas for when I one day start my own shop and my ideas lean more towards modern, specialized capabilities with an emphasis on high efficiency.

 

[adama]

IMHO it pays not to over think it, a buisness plans great if you want to setup a very specific thing, say a pizza shop. IMHO its not so great if your not so sure what direction to head in. Personally my plan was simple, had enough being a grunt, decided to give it a try, over the years the main income stream of work i do has gradually shifted and evolved. I very much have changed direction work wise to follow the money.

Looking back i praphs would have made different choices, but its hard to know if they would have had a better outcome. Business is not a yes - no thing, there’s a lot of in the middle choices to be made based on experience and what risks your willing to take.

Like growth, IMHO its a pain in the ass, every time i significantly expand it means new process to master, new skills to develop. Also it always takes a big bite out of cash flow. That said, you have to kinda expand grow at some rate to make up for the natural drop of of customers and work in other sectors. But all out growth is costly, current invoices im waiting on account for most of this years profit. On the pluss side as they get paid i will be rich relatively speaking, but it sucks the lag period between buying materials and actually being paid for finished goods. Its kinda akin to rolling a snow ball, the bigger it gets the harder you have to push!

At the end of the day if you want a family theres a lot to be said for running a small profitable shop than trying to grow it into a mega corp. You really don't need much equipment or floor space to turn a good profit in this game if you know what your doing :-)

 

[SBAER]

I had no plan either when I started out at 23 years old. I used the student machine shop at the university to make the first few fixtures I sold. Living at my parents house I had no overhead which means you can work for $6 an hour which is probably what it worked out to at the beginning. Looking back it would have been much smarter to keep working for other for a few more years so that I could learn from others instead of making one mistake after the other. I took on pretty much any job people were willing to pay me for, steel railings, designing drywall manufacturing equipment, collecting up scrape metal. One of the ventures I got into was rental housing and though I ended up hating the work it was a more efficient way to make money.

 

[Heavey Metal]

Too much planning makes for too little doing.

You are either in business or you will never be.

 

[WILLEO6709]

most of us guys with our own shop started fast and loose with not much more logical decision making skills than it takes to order at subway......Most of us its something we enjoy doing ( or did at one time ) and threw all our savings ( and then some sometimes ) into a machine or 2 to get started. Don't figure on making a killing with just one machine - that just shows you what else you need. By the time you are a well rounded shop you are too deep to quit.

welcome to our obsession, to quote the song " hotel california" : you can check out any time you like but you can never leave if you own the place...... meaning you can't punch out and not be at least thinking about something at work most times compared to as an employee you punch out and turn it off.

The biggest thing that kills most startups is not having enough contacts to keep steady work in the shop.

 

[xa-mont]

I started because I wanted a CNC... something and the place I was working just started outsourcing some turning. I was guaranteed the work so I got a little loan from the mum in law and bought a CNC lathe. I didn't end up getting much work from them but got enough to pay off the lathe and also got myself a different day job in the mean time.

I'm still at that "day job" (2 days 2 nights 4 off 12 hour shifts maintenance fitting) and now have 2 lathes and a vmc. All older machines but I keep myself busy on my 4 off (work nearly all the time basically) and have just bought myself a factory.

My plan is to keep growing my production capacity (more work/money in the same amount of time) until it becomes a reliable enough source of income to justify me leaving my day job.

So basically I'm going the very safe but very hard work method. It might pay off in the end it might not. It doesn't really matter either way. If it doesn't work out I'll have cool toys, if it does I'll have a well founded secure business.

Sent from my HTC One using Tapatalk

 

[Mcgyver]

What interests me is the mindsets. .

.

My big question is more what are peoples plans and reasoning when they start out?
.

There are as many different answers to that as there are minds.

artsians practicing their craft or one man shops doing service work don't need much of plane, could have been as simple as wanting to do their own thing or not having a boss. The other extreme is wanting to take over the world, some more business oriented that wants to grow, build etc which takes more planning - you need more people capital and means of production and way to scale it. Then there's those fortunate souls who stumble into something the world wants they get a ride on the big boy coaster....and all points in between. The common thread I would say is the identification of a need and the entrepreneurial desire.

It might more meaningful to describe what sort of business you're thinking of, like where you work? still everyone is different - what need do they fill is good starting question

 

[Bondo]

I started my business with the plan of doing what I wanted which was doing fancy wrought iron railing. Turns out, that sucks. 2 years into it I realized that residential work is crap.

But doing special stainless railings got me work in the food industry and it has been steady ever since. More headaches but more work.

There are only 2 business plans at the current market. Make a certain part and mass produce or be an open shop and be ready for what walks through the door.

 

[Mcgyver]

There are only 2 business plans at the current market. Make a certain part and mass produce or be an open shop and be ready for what walks through the door.

more than that...I have 5 on the go. Best by far are my own products, but demand is lumpy enough I need an array of other stuff to carry the overhead

 

[Toolbert]

No matter what your situation, it helps to think clearly about WTF your purpose and plan is, and write it down, if only as a reference point.

My objective at the start was ... I needed a job but I'm too much of an egotistical asshole to work for anyone on their terms, QED had to start my own. Eight years in and now with 5 of us full time, I still figure formal business plans i.e. with hard numbers, budgets, growth projections, are for borrowing money and for outside investors, and don't serve much purpose here. Am I out of my mind? Spreadsheets with convincing but imaginary budgets and growth projections are dangerous. I prefer to look backwards at hard data and plan in the short term based on that.

Most books and other advice about business plans are more oriented toward speculative ventures - gambling with other peoples' money. If your intent is to bootstrap your own shop, playing it conservative, making sure the worst case scenario doesn't ruin your life -- there aren't a whole lot of helpful books out there. Esp. in the manufacturing world. Let me know if you find one. 99% of advice out there is for softer stuff like professional and other specialized services, web and bricks & mortar retail. High margin, non-capital-intensive businesses.

I sometimes think the attitude of folks who write these books is the smart money looks at an actual high capital, high risk, low margin manufacturing biz and runs in the other direction as fast as they can. They'd rather write about how to sell something you have made for you in China, how to sell bon-bons on the internet, etc.

 

[pgmrmike]

most of us guys with our own shop started fast and loose with not much more logical decision making skills than it takes to order at subway......Most of us its something we enjoy doing ( or did at one time ) and threw all our savings ( and then some sometimes ) into a machine or 2 to get started. Don't figure on making a killing with just one machine - that just shows you what else you need. By the time you are a well rounded shop you are too deep to quit.

welcome to our obsession, to quote the song " hotel california" : you can check out any time you like but you can never leave if you own the place...... meaning you can't punch out and not be at least thinking about something at work most times compared to as an employee you punch out and turn it off.

The biggest thing that kills most startups is not having enough contacts to keep steady work in the shop.

Yep. There it is. I started in 2013 doing overflow work for a couple of shops and all was well. Oil crashed and everyone has either cut hours or layed off half the shop. Clearly, there is no overflow. Havent had work in months and have exhausted my meager contacts long ago. Its all about who you know, if you are quiet and not real outgoing you are likely to be screwed, like me.

 

[alliancefab]

Well I lost my job at the age of 23 6 years ago. the shop I worked at went south with the economy in 2009 and it closed the january of 2010 (almost 5 years to the day today). I had bought 2 vmc's a month before losing my job thinking I would have a year to get going wrong... I had 1 month. I couldn't find a job so I said screw this I would rather put the time and energy into finding work for my two mills than finding a job. So I managed to find work to pay my bills in one of the worst years in manufacturing (around here it was pretty bad).

I was fortunate though even as young as I was, I was in charge of the shop floor there for the most part did 90% of the programing, Helped with quoting occasionally, and talked with many of the customers.

So I had my feet in the business side a little. I had a good mentor in the trade he was a owner of a very successful shop around here that he started when he was 17 and grew it to a 75 man shop mostly medical and defense work. He took me under his wing and gave me good advice.

Since then the shop has stayed the same size just me, When I have production work my father comes down to push a button. I have added equipment over the past few years. I don't really have plans to get big but if it happens I am ok with that too.

I started my shop to pay bills simple as that and it has worked some slow times here and there but pretty good.

Jason,

 

[doug925]

Like others, I did not really have a business plan. I worked for my Father's company off an on when I was a teen, and into my early 20's.
We bumped heads a lot!
I was a stubborn kid, with just a tad bit of arrogance. After a particularly stressful project (1996 Olympic games) my Father and I once again were at an impasse as to the direction of his company.
He challenged me to "Run my own shop, if it is THAT easy!"
So I did.

Twenty years later, I am still in business. I found out really quickly that it was nowhere as easy as I thought it would be. (As so often happens, Parents really DO know what they are talking about. Ha!)

I have made some great decisions, and some not-so-great.
An old boss told me that "If 51% of the decisions you make are good, you will be a success."

My business plan was to "not starve" as others have said. For the first 3-4 years, I lost some weight.
After that, I became better at quoting, and picking the parts/jobs that I felt had the best chance to make a decent margin.

I have never wanted to run a 100 man company, nor even a 50 man shop., I just want to live a comfortable and rewarding life.
I love what I do, and hopefully that will never change.
If it does....... Landscaping business, here I come!
LOL

Doug.

 

[William Payne]

Thanks for your replies everybody.

Someone asked what kind of shop I work in. I work for a precision engineering company that does Mold tool and die, custom machining and fabrication. Half our work is mold tool and die and the other half is custom machinery and replacement parts manufacturing for manufacturing companies (parts for production line machines). We also do the odd production job. My boss started the company 19 years ago and I have been working there for 5 years.

 

[powerglider]

If you are curious about "mind set" then for US based businesses you can have some indication from a really good book I read a few years ago:
The Stuff Americans Are Made of: The Seven Cultural Forces That Define Americans-A New Framework for Quality, Productivity and Profitability: Joshua Hammond, James Morrison: 9788297: Amazon.com: Books
I thought it was very accurate in the mindset that exists here in the US. The book explains how most of us here just jump into things and then figure out how to make them work for us instead of perhaps more planning and analysis that are present in other countries. Then again we can't be the only ones, I'm sure in some countries they jump into stuff with less hesitation than we do.

 

[wheelieking71]

I started simply because my job at the time was going away. And, I didn't want to work for somebody else, ever again.
I knew this was not a "get rich quick" scheme. I knew the pay would suck. I knew the hours would suck.
And, I was well aware how much work it would be. But, a plan? Not really. Hustle, and stay busy. That was the plan. Still is.
There have been many surprises! Like: employees suck! (even one that has been "under your wing" for 8 years already)
Doubling your capacity does NOT! double your throughput. Even though it certainly DOES double your overhead.
Running the business takes far longer than you would think. Sometimes longer than getting the work done!

Stay fluid, know your strengths, and even more importantly, know your weaknesses.

I still have LOTS of learning to do! But, my "plan" evolves daily. Roll with the punches. Bob and weave. Sometimes duck and run!

 

[doug925]

There have been many surprises! Like: employees suck!

This is very true! You would think I run a strip club, for all the drama that a group of guys can cause!

Doubling your capacity does NOT! double your throughput. Even though it certainly DOES double your overhead.

BINGO!

Running the business takes far longer than you would think. Sometimes longer than getting the work done!

The paperwork, taxes, ordering, managing, sales, etc take WAY more time than I ever anticipated.

Stay fluid, know your strengths, and even more importantly, know your weaknesses.

True for all aspects of life; however, doubly true for running a business!

Doug.

 

[alliancefab]

I started simply because my job at the time was going away. And, I didn't want to work for somebody else, ever again.
I knew this was not a "get rich quick" scheme. I knew the pay would suck. I knew the hours would suck.
And, I was well aware how much work it would be. But, a plan? Not really. Hustle, and stay busy. That was the plan. Still is.
There have been many surprises! Like: employees suck! (even one that has been "under your wing" for 8 years already)
Doubling your capacity does NOT! double your throughput. Even though it certainly DOES double your overhead.
Running the business takes far longer than you would think. Sometimes longer than getting the work done!

Stay fluid, know your strengths, and even more importantly, know your weaknesses.

I still have LOTS of learning to do! But, my "plan" evolves daily. Roll with the punches. Bob and weave. Sometimes duck and run!

just as Doug said, this is the truth. The business side takes so much more time when you are busy than actually making chips especially when you are a one man band....

Jason

 

[Fadriver]

just as Doug said, this is the truth. The business side takes so much more time when you are busy than actually making chips especially when you are a one man band....

Jason

I went my myself because always dreamed of
breaking the family mold of being followers
want it to be a leader, and machine shop is probably the
easiest way,anybody can do it, with limited capital.
later found out that is not a business but just a job,
where you a lucky guy if sometimes make minimum wages, but have
managed stay open for 16 yrs, but challenging due to trade in-balance (china)
I do custom auto parts, where they bring and sell cheaper than the cost of aluminum.

 

[Mcgyver]

This is very true! You would think I run a strip club, for all the drama that a group of guys can cause!
.

your shop has a time of the month as well?