to start a shop

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hello all     i have been lurking around here for some time now and do a decent amount of welding for myself and friends etc...  I dont currently run a shop persay just do stuff as it comes my way since I have numerous other commitments already.  I am looking to start my own shop and with the downfall in the economy I am in a good position to buy tools cheaper and get some low interest loans for starting a new small buisness.  I guess my question really is what kind of fears and problems did some of you all encounter when starting your shop.  I know things are slow right now but I have other work to fall back on to make money besides just the welding but i dont want to let this opportunity to get in to buisness cheaper than usuall pass me by.      I need help figuring out things like a proper labor rate  ( i know this depends on area experience and location.)  materials mark up and how to compensate for the learning curve on projects.  say something i do the first time takes me three hours and the 10th time takes you an hour.  do you bill all that time that it took you to figure it out or do you guys chalk that up to hard knocks of getting started in buisness.   any info would be appriciated it thank you.  kyle burdette  www.windyknollview.comwww.burdettenetworks.com
Reply:Start your shop in your garage or backyard workshop.   Having to pay rent on an industrial space will quickly eat up any profits your new business makes, especially if  you're only operating part-time.Buy your equipment with cash.  Save up your money and buy a bit at a time, as needed.   Look around for good deals on good used stuff.   Going into debt over your equipment is just one more nut to crack each month and with a new business in this tough economy, the less debt and monthly overhead (rent, etc) you have to overcome, the better.MM350P/Python/Q300MM175/Q300DialarcHFHTP MIG200PowCon300SMHypertherm380ThermalArc185Purox oaF350CrewCab4x4LoadNGo utilitybedBobcat250XMT304/Optima/SpoolmaticSuitcase12RC/Q300Suitcase8RC/Q400Passport/Q300Smith op
Reply:thanks for the advice desert riderwww.burdettenetworks.com
Reply:Well certainly looks like your getting a good start on all of your shop equipmentHave you ever gone to the DMRS at Mechanicsburg PA   sometime you can get some good buys on their auctions. But I recommend you go look at any item you might see online before you place that bidLast edited by specter; 02-15-2009 at 10:39 PM.Co-Own CNC shop:Miller :1251 plasma cutter, MaxStar 700 TIG/Stick, & XMT 456 Multiprocess Welder.&  2 Hypertherm HPR260's Plasma CutterSorry I had a bad stroke but now I am back.
Reply:D Rider said it all.Dont take a loan and buy new. Get deals on used stuff.You should work out all you overheads and then divide them out over how many hours you are (hope) going to work. then add profit.The initial learning curve if a tough one. Remember do a good job and some people will hear and come round. Do one bad job and EVERYONE will hear..for ever...You really have to use your conscience and "allow" for time badly spent, but tell the customer. Be honest.I try to have the invoice looked up before the customer is there, analyze it and justify it to myself or work out something that i think i can justify to the customer.Then i pretend that i just printed it out when they are there and i explain anything as i give it to them. Or say nothing depending on how the job went.Good luckG
Reply:I would highly recommend looking to see if there is a Small Business Development Center in your area:http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.htmlOur tax money pays for these services. Sometimes they charge a nominal fee for workshops, but it's mostly free services.  They offer counseling in business planning, including accounting, marketing, etc.  Also can hook you up with other types of information like govt contracting, etc.I used to work as a small business consultant (computer / accounting stuff) and the one thing I found many small businesses lacked was an understanding of basic accounting.  And not having a good system (paper or computer) in place to track where their money goes.  It's very important in my opinion, to understand this, so that you can change course quickly when something is not working out.  That is the advantage of small business, but only if armed with knowledge...and my wooo woo California New Age advice, do what you love and the money will follow :-)GOOD LUCK.-----------------------Carmen Electrodewww.CarmenElectrode.comand the boss blogs at  www.JoeWelder.comall powered by  www.Arc-Zone.com
Reply:thank you carmen electrode that is some very good buisness advice and the new age california advice aint bad either  thakswww.burdettenetworks.com
Reply:I have been running my business for years. I started out with a 280nt TB with a spool gun and a 20 gallon air compressor and a small torch set up. I took everything that came my way. I would travel long distances and tackle any job with a smile from ear to ear. Even if it kicked my ***. Now....... I have 5 full time welders with 4 full equipted trucks. Each truck has a TB with 100 foot of leads. A Torch set up with 150 of hose. A cutmaster 52 and a 12rc suitcase. Every guy has his own set of tools that i purchase for them. Tools from grinders to dewalt 18 volt kit to every measuring tool you can think of. I have 200 by 100 shop with mills and lathes. A brake and a press and a shear. I have about 30000.00 in steel on hand. To many tools to even list. It scares the **** out of me and my wife, how much money we have invested. Now the Important thing, and i have been asked many times to speak about this!!!!I did this all with no loans!!!!! What i made, i put right back into my business. I can close doors tomorrow and don't have to pay for anything. I pay everything up front. From steel to gas for my rigs to even my payroll. My thinking is, if i have to go barrow money to make my business run, then i must be doing something wrong. My advise, put your heart and soul into your work. Blood and tears go into your work. And if you go to bed at night not worrying about a job, or how you can approve, what can i do next, what ifs ands buts............Then it is not cut out for you.That is my 2 cents worth. Aaron
Reply:Originally Posted by Ag SpecialtiesI have been running my business for years. I started out with a 280nt TB with a spool gun and a 20 gallon air compressor and a small torch set up. I took everything that came my way. I would travel long distances and tackle any job with a smile from ear to ear. Even if it kicked my ***. Now....... I have 5 full time welders with 4 full equipted trucks. Each truck has a TB with 100 foot of leads. A Torch set up with 150 of hose. A cutmaster 52 and a 12rc suitcase. Every guy has his own set of tools that i purchase for them. Tools from grinders to dewalt 18 volt kit to every measuring tool you can think of. I have 200 by 100 shop with mills and lathes. A brake and a press and a shear. I have about 30000.00 in steel on hand. To many tools to even list. It scares the **** out of me and my wife, how much money we have invested. Now the Important thing, and i have been asked many times to speak about this!!!!I did this all with no loans!!!!! What i made, i put right back into my business. I can close doors tomorrow and don't have to pay for anything. I pay everything up front. From steel to gas for my rigs to even my payroll. My thinking is, if i have to go barrow money to make my business run, then i must be doing something wrong. My advise, put your heart and soul into your work. Blood and tears go into your work. And if you go to bed at night not worrying about a job, or how you can approve, what can i do next, what ifs ands buts............Then it is not cut out for you.That is my 2 cents worth. Aaron
Reply:ag specialties that is a nice name you got there.  my buisness name is going to be ag assist.  and i will be starting out doing welding remodeling and repair of ag facilities etc...   i am a do all do anything sort of guy right now i put in 80 to 100 hours a week working on farm and work reguarly for 20 to 30 days strait with no time off so the work ethic is no question for me.  I think to many people fail at running there own buisness because they have an ideal in mind for a work week and wont venture outside of it.       it sounds like you have come a long ways and to do it all with no loan is impressive.  Did you even have a cash flow line or anything like that.  I just wonder because if you get a big job say like a thousand feet of heavy duty pipe fencing or something how did you manage to get the pipe supplies etc.  do you ever teir jobs.  contractors in this area that build building do this-  you pay 20%  when poles are set 20% when trusses and roof on  and the balance when the build is done.  just curious how to swing a big purchase of materials for a job.   great advice and motivation thankswww.burdettenetworks.com
Reply:I don't keep alot of  metal on-hand.  I have the customer pay for the materials ahead of time, or have them pay the metal supplier directly.   That keeps me from having alot of money tied up in materials and shows me that the customer is indeed serious about doing the job so I don't get stuck with projects I built that the customer never came back for.MM350P/Python/Q300MM175/Q300DialarcHFHTP MIG200PowCon300SMHypertherm380ThermalArc185Purox oaF350CrewCab4x4LoadNGo utilitybedBobcat250XMT304/Optima/SpoolmaticSuitcase12RC/Q300Suitcase8RC/Q400Passport/Q300Smith op
Reply:desert rider-  so you dont mark up your materials at all?  What do you charge for a labor rate?  I have talked to different guys about this on lots of occasions.  Some guys charge a higher labor rate and do a even exchange on the materials or get the customer to put them on there account etc.  This seems smart in the fact that you dont have to carry the money for the  duration of the job.  But i know for a fact that my local supplier gets his metal cheaper than he sells it to me so why would i want to buy from him for a job and not at least make 5% mark up?   Is that wrong?  Ag specialties says he has about 30000 in metal on hand now how much do you have to mark that up for resale to justify having that amount of money put out?  Just wondering these are the things that get complicated and are often times just what makes an individual happy and a buisness go or go broke   thankswww.burdettenetworks.com
Reply:On jobs where the customer pays the metal supplier directly, I make up the cost of organizing the material purchase and picking up the materials by increasing the labor quote.   On jobs where the customer pays me for the materials and I go buy them, I increase the materials quote to cover my costs.   On jobs where the customer goes and buys the materials and picks them up, I don't charge anything extra related to materials.   Basicaly, I don't really 'make' anything on materials regardless of how it's handled, I just cover my costs.   On jobs where I use metal I have on hand, I charge a fair price for the metal and sometimes it's pure profit cause it came from leftover scrap from other jobs, and sometimes it's metal that I bought to have on hand so I don't have to go to the supplier for every little thing, in which case I charge enough to cover my costs of buying and keeping the metal around.MM350P/Python/Q300MM175/Q300DialarcHFHTP MIG200PowCon300SMHypertherm380ThermalArc185Purox oaF350CrewCab4x4LoadNGo utilitybedBobcat250XMT304/Optima/SpoolmaticSuitcase12RC/Q300Suitcase8RC/Q400Passport/Q300Smith op
Reply:KburdI have ran my business with no line of credit. Many people have asked me to fill out a credit form, i do and after i do, i tell them, i pay up front and that is how it is. As far as big projects. I pay for all of that up front too. You might be surprised how much money you will save if your suppliers know that you are going to pay your bill up front. I have had to pay for some big project and that is just a fire under my *** to get it done as fast as i can so i can bill it out. My guys all have a card that sucks right out of our bank account. I never let customers pay for there own material inless they insist. That is money out of your pocket. That will be a big problem from day one when you open your doors. I have no idea why people think they should get a break on material the same as you. That blows my mind. People who come into the shop and ask for 8 foot of tubing or 4 foot of shaft gets 2 times mark up. People who come in and want to buy 20 or 100 foot,,,,depending on how often they come, i mark it up 1.35 to 1.5. When you do business with a steel company and buy 200 to 300 hundred thousand with them, you deserve to mark up your steel a little bit. Some Joe blow who comes into the shop and bitches about your mark up, I simply tell him, go buy it from Nucor. Your mim order with them is 5000lb a week. Two things to keep in mind and it helps your business.(1) Get your bills out as fast as you can...(2) Plan your day at half days. If you can get your mind set on the jobs that you have to get done, you will. That was the hardest part for me. You get busy, then someone would call about a 15 min job. You are excited to get their business, so you leave the job halfway and go tackel that 15 min job, shoot the **** and get back to the other job to finish it up, and before you know it, You wasted 8 hours doing 4 hours of work.Anyway........
Reply:desert rider   thanks for that info it helps explain a lot and was along the lines of what i had thought was how it should go.www.burdettenetworks.com
Reply:ag specialties-    man you are a wealth of information.  I understand what you are saying about the paying up front.  Having many years experience in the farming buisness i know how much of a better deal and service you can get when you are a fast, full and consistent paying customer.  we get primo service from mechanics and custom operators because they get a check when they go out the driveway.        I have joe blows that b*tch about mark ups.  In our area we all know who the ones are that complain about everything everytime no matter how good or BAD the work.  these are the ones that can no longer get anybody to do anything because all they do is complain about the job they did and how much it cost they think everything should be cheap and go fast.  And you know you can tell as soon as you drive in there place that everything is done half *** and tight fisted.        anyhow so with the half day plan do you mean plan jobs that will only take 4 or 5 hours as a days work because something seems to always come up?  Then that way you can fill void time with shop work clean up service etc?   I know from doing all the service fix it etc. work at the farm that s*it always happens and nothing ever takes how long you think.  thanks again for all the infowww.burdettenetworks.com
Reply:bumparoowww.burdettenetworks.com
Reply:I'm glad to know that other areas of the country is still doing well in the ag areas.  Around here I would do everything in my power to persuade you from opening ANY farm related business especially in the welding arena.  I built my business much the same as Ag Speciallties, however the past year has taken a toll on me and others in the area.  Shops closing down massive layoffs.  I am down to myself and one helper.  I still don't borrow money, but it's getting harder to keep work coming in steady.  I hope I am wrong, but I suspect that other areas will start to feel this in the near future.  The best advice I can give you is to be fair, honest, and do the best work you are physically capable of.  If you tell someone you will be finished tomorrow then be finished tomorrow.  Don;t rip the customer charge a fair rate that is reasonable for the area, and regardless of the situation be up front and honest with the customer, and even customers that may go elsewhere at the time will be back to give you another shot.  Best of luck in your venture.I'm a Lover, Fighter, Wild horse Rider, and a pretty good welding man......