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Thinking about starting a shop...

EndlessWaltz

Cast Iron
Joined
Jun 18, 2016
Location
Midwest
Like others said: form a co-op or ESOP
The four of you sound like you actually have enough experience to pull it off. Biggest thing is advertising and word of mouth through reps
When you listen to podcasts etc and guys somehow form functioning businesses without any business knowledge or machining knowledge you scratch your head. Most however...have a product.

Best of luck.
 

Job Shopper TN

Cast Iron
Joined
May 17, 2015
Location
Southeast TN
Here’s a thought. Mind you, you know your area better than any random fella on the internet. But, machine shops are quite prevalent. Sometimes I think too prevalent. It can be such a tight, competitive business that there isn’t much room for error unless uou magically find that one niche market/sector/product.

But coatings. Plating. Anodizing. Even heat treating. In the 50-mile-radius local area there may be 50 machine shops, but maybe 4 places for anodize. And they all suck! Or at least, are quite hit or miss. I know of two places that offer heat treating services. 2-3 companies that black oxide/nickel plate/chrome. And they suck!

So I don’t know that it wouldn’t be a better use of capital to go at that angle. There’s plenty of folks out there trying to be the best machine shop in town. If these outside services like coatings and treatments are trying to be the best in town, they are doing a crap job of it!

Which means, for job shops like us, we just sign up for a 50/50 chance of being satisfied or having to do rework when we bid on a job that requires coating etc.. If you came in and said hey, we’ll anodize your parts and they will look GOOD and be RIGHT… You got our business.

This may be a local problem, but I read folks griping about outside processing quite a bit.

Just a thought!
 

triumph406

Titanium
Joined
Sep 14, 2008
Location
ca
Here’s a thought. Mind you, you know your area better than any random fella on the internet. But, machine shops are quite prevalent. Sometimes I think too prevalent. It can be such a tight, competitive business that there isn’t much room for error unless uou magically find that one niche market/sector/product.

But coatings. Plating. Anodizing. Even heat treating. In the 50-mile-radius local area there may be 50 machine shops, but maybe 4 places for anodize. And they all suck! Or at least, are quite hit or miss. I know of two places that offer heat treating services. 2-3 companies that black oxide/nickel plate/chrome. And they suck!

So I don’t know that it wouldn’t be a better use of capital to go at that angle. There’s plenty of folks out there trying to be the best machine shop in town. If these outside services like coatings and treatments are trying to be the best in town, they are doing a crap job of it!

Which means, for job shops like us, we just sign up for a 50/50 chance of being satisfied or having to do rework when we bid on a job that requires coating etc.. If you came in and said hey, we’ll anodize your parts and they will look GOOD and be RIGHT… You got our business.

This may be a local problem, but I read folks griping about outside processing quite a bit.

Just a thought!

What do you think the chances are of a company being able to start an anodizing line or plating line in this day and age?

And if they've never run either before, what are the chances that they can do it better then established companies, consistently for every batch.
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
If they started a plating/anodising shop and said ... "If we dont perform to your satisfaction,we will give you TWICE the cost of your work back to you"......then they might get a lot of business.
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
Only if they got bushy beards and man buns......and repeat themselves enough to pad out 10 minutes into 1/2 hour.............if the shop video channel doesnt pan out,then it ll be shooting guns ,or finding old tractors to start.
 
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jccaclimber

Stainless
Joined
Nov 22, 2015
Location
San Francisco
If they started a plating/anodising shop and said ... "If we dont perform to your satisfaction,we will give you TWICE the cost of your work back to you"......then they might get a lot of business.
Or they’d end up broke three times as fast. At least around where I was in Texas, land of low regulation, the platers and anodizers had a ton of environmental rules to follow, and the local authorities actually cared.
I’d like to think anodizing isn’t that hard to get right, but there must be some reason there are so few decent anodizers and platers in the world. Some days I wonder if saying plating is easy is the same as saying “CNC is easy, you just tell the computer what to do and good parts rain from the sky.”
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
Years ago,I bought a warehous full of plating chemicals from the Air Force when they closed down their plating shop......anyhoo,had to sell door to door to all these small platers .......some had green moss (chrome or nickle or copper)) growing in the street outside of the old sheds and houses they used ......no one sane would let platers into a metal building,they would dissolve it with fumes............one plater swapped me a chrome Harley motorbike for some bags of Nickle sulfate and chloride..........and chromic oxide .......I was watching one guy doing hardchrome ,and the bath started to bubble with dark brown fumes ..........thats beautiful he says.......I got out of there.quick..
 

Garwood

Diamond
Joined
Oct 10, 2009
Location
Oregon
Here’s a thought. Mind you, you know your area better than any random fella on the internet. But, machine shops are quite prevalent. Sometimes I think too prevalent. It can be such a tight, competitive business that there isn’t much room for error unless uou magically find that one niche market/sector/product.

But coatings. Plating. Anodizing. Even heat treating. In the 50-mile-radius local area there may be 50 machine shops, but maybe 4 places for anodize. And they all suck! Or at least, are quite hit or miss. I know of two places that offer heat treating services. 2-3 companies that black oxide/nickel plate/chrome. And they suck!

So I don’t know that it wouldn’t be a better use of capital to go at that angle. There’s plenty of folks out there trying to be the best machine shop in town. If these outside services like coatings and treatments are trying to be the best in town, they are doing a crap job of it!

Which means, for job shops like us, we just sign up for a 50/50 chance of being satisfied or having to do rework when we bid on a job that requires coating etc.. If you came in and said hey, we’ll anodize your parts and they will look GOOD and be RIGHT… You got our business.

This may be a local problem, but I read folks griping about outside processing quite a bit.

Just a thought!

There's a guy in my area that is a serial entrepreneur starting, building, then selling anodizing businesses. He does not have a manufacturing background. He's a chemist. He actually understands what's going on and how to keep it running. Trade secrets you could say. He gets a big ano shop going, steels everyone's customer base, then he sells out to some other big company. He waits for his 2 year non-compete to run out then he starts another shop with all new cutting edge stuff, rinse and repeat.

But you are right. As soon as word gets around there's a new ass-kicking anodizer in town everyone sends their work over to him.
 

MwTech Inc

Titanium
Joined
Feb 6, 2005
Location
Fishersville VA
"in the aerospace and defense industries"

never did any work for either but thinking the only way to get work is knowing someone inside....... maybe I'm wrong??
 

Laurentian

Stainless
Joined
Mar 2, 2008
Location
Canada
OP : Why not find a business broker and buy out an existing shop with customers, staff and machinery. Upgrade equipment and hire fire staff as needed. Expensive yes but you have a working shop on the get go. Lots of boomers looking to retire that might not have an exit strategy put together yet, you could use this you your advantage.
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
Back in the day...60s actually, Thomson gave away 2/3rds of their corporation to two guys who had a pipeline inside NASAs rivers of gold......Ramo and Wooldridge .....Thomson ,Ramo ,Wooldridge ...TRW Inc .........there was a young guy there doing contract program debugging.....you ve heard the name ...Bill Gates.
 

jscpm

Titanium
Joined
May 4, 2010
Location
Cambridge, MA
Spinning your wheels without real customers is not a good idea. Get customer first, then start investing in equipment. All the big companies have reliable shops that they already do business with. I do not see any indication whatsoever that you have some special quality that would induce them to switch to you. You better figure out what that quality is before doing stuff.
 

jscpm

Titanium
Joined
May 4, 2010
Location
Cambridge, MA
I guess I will give some more advice against my better judgement.

Since you don't have any real customers, you would be far better off doing manufacturing than job shop work. One of the huge advantages small companies have over big ones is that a small company can be profitable manufacturing small numbers of parts, something big companies can't do.

For example, one place a small company can easily make a profit is in manufacturing replacement parts for cars. There are literally millions of different parts wanted for cars ranging from modern vehicles going back to vehicles made in the 1920s. The older the car, the more likely it is the people who collect it or own it need parts for it. The sales volume is smaller the farther back you go, but also the less competition you will have. It is as simple as finding critical part needed by an old car and selling it on ebay, it's braindead simple. If you can't make money doing this, your prospects in the job shop market will be even worse.
 

Ox

Diamond
Joined
Aug 27, 2002
Location
West Unity, Ohio
LOL!

You want something to make - try parts for about anything right now!

Briggs/Simple City is out of stock on a steering gear that also fits a cpl other brands as well.
They are telling us "Dec 18th".

It's a $35 stamping that I am sure that you could sell on ebay today for $100 if you had it.

The supply end of this equazsion isn't likely to git much better soon...


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

Think Snow Eh!
Ox
 

Comatose

Titanium
Joined
Feb 25, 2005
Location
Akron, OH
If your experience is in aerospace, don't make car parts. Go to mooneyspace or beechtalk or whatever the equivalent piper and cessna and cirrus forums are. Spend a week searching the forums for posts like "$2,000 for one goddamn spring."

Now, there's some FAA paperwork potentially involved, but the GA fleet is old, parts-hungry and the owners have some money. Beechcraft OEM parts might as well be made out of gold, and Mooney is perpetually going out of business, so often as not you can't get parts at all, but both have large active fleets.
 

john.k

Diamond
Joined
Dec 21, 2012
Location
Brisbane Qld Australia
I did some work and made some parts for jet planes once.......asked the guy who paid for the work,and he said all the guys with these planes are really old ,like 80 years,and if they get killed they cant sue you for very much.
 

hanermo

Titanium
Joined
Sep 28, 2009
Location
barcelona, spain
Lots of good posts.

But 4 or 8 partners can bring in 8 times more skills, contacts, and work hours.
I would prefer 8 partners to 2 -- given the skills and experience the OP posted.

And would make a very simple term sheet for future equity, based on work brought in or executed, and profits.
8 partners are potentially 8 great salesmen, or 8 great executors.

The term sheet must be done up front.
Otherwise, everyone will always fight about everything.

Someone bringing in cash may be more valuable, in the beginning, and may later choose to do nothing.
So what ?
The cash allowed the expansion and the profits.
Same applies to sales and execution.

E. If someone brings in a client with 60% of the sales, say 4M$ per year at 40%, and that is most of the initial sales, that person is the senior partner no matter what happens later.
E. If someone brings in 100k cash that allows hiring 2 salesmen, or buying a needed piece of equipment, that lead to 4M$ in sales at 40%, that person is the senior partner.
If You don´t like 1. or 2. bring in Your own deals and Your own cash.

If You don´t have the cash, but someone else does, and this makes Your NewCompany successful, be grateful, even if they get 4x more than You.

For 8 people, something like a matrix and timeline with everyone getting an initial 6% stake, and 2-3% stakes being awarded to anyone else on a rolling scale based on results might/would be a good idea.
Many will complain, especially married guys, and say thats a race for the gold.
Yes. It is. Thats what a company is.
You want everyone to benefit the company, as much as possible.


More partners is better than few partners.
Think like a venture capitalist.
I don´t care what the other guy makes, I want ME (US) to make bank.
 








 
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