Need advice on starting my own machine shop.

Hi all,
I have 6 years experience using CNC and manual machines and am looking to start my own precision engineering sub-contracting company and eventually produces my own product. I will be working on my own to start with.

I have a workshop sorted the size of a double garage complete with 3 phase and roller door.

I have formulated a list of local competitors and customers with a plan to send a package including covering letter, pamphlet, and a machined sample of something useful with my company name (e.g pen pot). I also have a contact to do a decent website.

I have allowed £13,000 to start up a used plant list:
Manual mill = 3000
Manual lathe = 2000
Pedestal drill = 300
Tapping machine = 350
Linisher = 150
Bandsaw = 130
Surface Table = 50
Bench grinder = 150
Misc. tools = 200
Compressor = 700
Enco mini CNC mill = 1500
CNC turret mill = 4500

I will be doing this on the side whilst doing my current job in order to build up a big enough customer base before going full time.

Does anyone have any advice on things I have missed please?
Thanks

Cold cut chop saw maybe for cutting up some stock before machining. You would also need a good selection of drill/taps, dies and cutting tools/tips for your machines.
Also have you allowed cash for a basic stock of materials? What about CAD and a pc? Are you going to do any CAD work before machining or are you going to program everything of the machines?

Ian

Formulate all of the above into a business plan, you can download these off the net. Take your figures then double it, give yourself targets to be done by.

Ok, thanks guys. I'll be doing manual programming to begin but hopefully as my customer base grows and I can leave my full time job I'll go for a Haas Super Mini Mill 2 with OneCNC CAD/CAM. I'll download the business plan template too. Thanks again!

I am not sure the £200 you have allowed is going to be anywhere near enough for small tools eg. Mics, slips, cutters and even coolant(we pay £60 for a 25 litre barrel). Indexable tip tools for turning/milling are a small fortune on their own. I'm not trying to put a downer on your efforts, but just trying to pass on some experience in these matters.

most important NO TEA OR COFFEE

heating
utility bills
accountant

best advice is get your self a plan,set goals, advertise, and you do know the first 2 years or so no to little income for your efforts


I wish you all the luck in the world but please walk into this with your eye's wide open

James

do you have a rent to pay or are you working from home

EDITED: Sorry, just reread the original post - I thought you meant your workshop was your double-garage. I'll leave the first few questions in place in case it's useful for someone else but I appreciate they may not exactly apply to you :redface::redface::redface:

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So you'll be using part of your property for business purposes?

Have you checked that there are no restrictions on the property? A search on the land registry costs a few pound and should warn you about any restrictive covenants affecting the property (ie not to be used for business purposes)

Have you considered that part of your property may now attract business tax rather than council tax?

Have you discussed it with the insurance company assuming you have house insurance? You may need to alter the insurance as it would probably be invalidated by running that kind of business from home, especially considering the value of the equipment bought.
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Is there the potential that business customers will visit the location or that you will visit theirs? If so, have you considered Public Liability Insurance? As a subcontractor are you prepared (ie insured) to deal with claims that the component you made was somehow incorrect, causing damage to the customer's equipment/loss of profit etc?

I'd recommend a meeting with a decent accountant (who will be your new greatest love when they help you and your new greatest hate when you get the bill), and check if your bank has any advisors for small businesses.

There are a million questions you need to ask (and answer) that will apply to any start-up. Hopefully the answers aren't going to stop you proceeding, but you really need to make sure you've asked them.

The biggest problem with a business is rarely the actual business itself, it's all the paperwork and hoop-jumping that goes around keeping it legal.

All that being said and done, best of luck with the venture, I hope it works out well for you :tup:

Thanks for your advice guys, the workshop will be the unused downstairs section of a family members industrial unit so I wont have rent to pay until i start making some money. Also, my mums fiance happens to be an accountant, and my brother is an expert in web design so everything is falling into place :-)
Thank you Rogue, i will look into public and product liability insurance too. Purchased my first lathe today - Harrison M300. Lovely machine!

You can start selling as a "sole trader", no paperwork required. If you want to limit your liability just tell an accountant, they can set up a new company in their sleep. Best thing about that is you pay 20% corporation tax on your profits and take your money tax free as a dividend.

Insurance is easy if your business is on the list, employing people is a nightmare. When you form a company you get all the paperwork for that, but if you ring them and promise never to employ anyone they excuse you. Arrange to pay your NI stamp by direct debit, about £12 a month.

I did it, after years of living in fear of "da boss" I don't have one. Sometimes I work all hours, but I don't have to, it's a liberation :smile:

You've got to remember to pay yourself the minimum wage though.
I know a local guy who's company got fined because he wasn't paying himself the minimum wage for the number of hours he was doing!

Quote:

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Originally Posted by newtoid1986

...my mums fiance happens to be an accountant...

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He's about to become your new best friend :lol:

It's great to see someone taking off on their own. I really wish you all the best. I believe the general rule is that if you're making a profit in your first two years then you're doing it wrong!

I've looked at the HM site previously, and tax isn't too bad to deal with (hardest part is keeping on top of all the invoices/bills so you have all the figures needed to fill in your tax return), however a good acountant should save you more than what they cost.
Other option is one of the many online accountants that cater to small buisnesses/sole traders.

Only reason I've been looking, is I should really be doing a tax return for the mountainbike guiding/coaching I do :whistling:

Mmmm, how beefy is the bandsaw? Need one that cuts straight and if your on your own, unattended + suds pump. Can't beat a really big recipricating hacksaw with lub pump. Then just leave it to do what it does. I have a Sealy, saves me no end of time. Like this http://bandsaws.co.uk/Product/Power_...ealey_Hacksaws , second hand mine was free, broken gear, fixed = £12.
Tom

Quote:

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Originally Posted by m_c

You've got to remember to pay yourself the minimum wage though.

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Hmm, that rules me out then...I probably hardly ever get more than that for the things I make, but it's fun so meh.

Quote:

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Originally Posted by black5f

Mmmm, how beefy is the bandsaw? Need one that cuts straight and if your on your own, unattended + suds pump. Can't beat a really big recipricating hacksaw with lub pump. Then just leave it to do what it does. I have a Sealy, saves me no end of time. Like this http://bandsaws.co.uk/Product/Power_...ealey_Hacksaws , second hand mine was free, broken gear, fixed = £12.
Tom

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Putting 'bandsaw' and 'cuts straight' in the same sentence is very risky!
I have this one, and I think Jazz has it too. It now seems good and cuts pretty square:

http://www.axminster.co.uk/axminster...aw-prod719253/
(The best thing is I won it, so it cost me nothing!)

There's a quite big reciprocating one at school... it takes longer than the bandsaw, but it cuts nicely and seems reliable.

Quote:

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Originally Posted by Jonathan

Hmm, that rules me out then...I probably hardly ever get more than that for the things I make, but it's fun so meh.



Putting 'bandsaw' and 'cuts straight' in the same sentence is very risky!
I have this one, and I think Jazz has it too. It now seems good and cuts pretty square:

http://www.axminster.co.uk/axminster...aw-prod719253/
(The best thing is I won it, so it cost me nothing!)

There's a quite big reciprocating one at school... it takes longer than the bandsaw, but it cuts nicely and seems reliable.

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They are slow but I can just leave it and get on with fun stuff. We have a good band saw at work, god knows what it cost! The axminster one looks good, and free, even cheaper than mine!
Tom

Setting up a new business: you say you've budgeted £13k for plant, but £200 for misc tools - have you considered your measuring gear (micrometers, slip gauges etc)? These can cost a small fortune on their own. Have you considered the likely largest sizes of gauges you'll need? Bear in mind some customers may ask for evidence of calibrations etc, ie ££. Have you considered the rest of your start up costs? Rent (if applicable), business rates, material stock (bear in mind you'll likely have to pay for it possibly weeks before you see a penny), energy? What about transport? Have you a plan (and a budget) to deliver finished items? And a reserve to cover cashflow while things are lean? Have you budgeted the installation cost of machines eg upgrading / relocation of electrical systems (and pipework if need be)? Accountancy fees? Legal fees? Have you neighbours near your workshop who might object to factors like noise or traffic? Is there a possibility that you may need planning permission etc? What about lifting / moving equipment (pallet truck, forklift, overhead crane)? Have you set a budget for these thing if you need them? This might seem like a silly question, but have you a sub-contractor that can do work for you that you can't handle yourself?

It might seem like a long list (and possibly off-point), but the more factors you're aware of, the more thought you can give it, and the less likely you'll run into hiccups later on.

Another thing came to mind recently, ISO registration many companys will not give work to unregistered subcontractors. As Adie said in the last post the more you are aware of the less pitfalls you will encounter along the way.:tup: