Biggest challenges for biz start up

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For those of you that have, or have had, a welding business what was the biggest challenge that you had when starting up and how did you solve the problem?
Reply:Customers, having enough money saved up and set aside. Having all of your ducks in a row in before you start up, by this, make sure you have all the proper paper work done, people in the right postions, and an exit plan.. Maybe you should ask these questions in your orginal thread instead of making a new one for every question you want answers for. I just think it would be easier to have all your startup buisness questions in one thread, and you can reference it easier then sifting through thread on thread.  Just my thought.
Reply:Getting people to pay for work. People are so cheap now a days when it comes to this. I had someone email asking how much to weld something. Forgot what it was, but I said $40. His replay was "are you kidding me? The muffler shop will charge $10. "So my response: If they charge $10 why are you emailing me asking for a cheaper price? They will mig weld stainless and I will tig weld stainless. It's not worth my time to wait for someone who is always late, has a dirty part, is going to sit there over my shoulder and watch me for less than $40. I won't even waste my time for less than $40 to do it.Torchmate 2x2 CNC with Flashcut CNC controlsHypertherm Powermax45 Esab ET220i Razorweld 195 MigRazorweld 200ac/dc TigTormach 770, Tormach xstechRazorweld, Vipercut/Vipermig, SSC Foot Pedal Dealer
Reply:Cash flow!!!
Reply:Wldnfrk, your biggest challenge will be to know your market.  It doesn't matter if you're in any geographic location, or doing any specific service (I've done welded metal boats in Alaska, and oil and gas control systems manufacturing there too)  What matters most is to know the market.  Did you notice that there's one big Catch22 there?  You can't know a market without being in it, but knowing it is the key to starting out in that market... so how do you start if you have to know what you don't? It costs an 'arm and a leg' to get this info, that is why others are telling you to have a bank balance to 'rely' on.  It doesn't matter if you move to any given service niche; you have got to know the market's potential to buy your product and then you have to provide that product at a cost competitive rate ; or there is no business success.99%, of all welders don't know their market when they start, (that includes me three or four starts), and the advice to have a 'pad' to rely on is an indication of that market fact.  I'd say we 'want people' to want our services!!! I did.  I wanted to "be my own boss", but the business was just me and my wishes until I learned what did or did not sell, and for how much?  All market facts- don't substitute your own fantasy; for facts. (well, go ahead, countless of the rest of us have )    Just be honest- does this area need what I have to offer?  Or can I offer/provide what the area needs and will buy?  These go before any realistic business opening, but few of us, me first in this list, paid any attention to this fact!I've started a few businesses and bought a few too, my biggest problem was that I did not really know the markets for each business.  I guess I overcame those problems by learning those markets.  You can look to see if there are others doing the work you're planning to do?You can research if you can compete with their rates, skills, scope of service, and rep.'s?You can see if people have to travel any distance to get their work done?You can see if there are unsatisfied customers for the existing services?You can see if there are long lines to get some type of work done?You can see if there are 'unmet' needs in your community?And last but not least... you can end run your market if you have design abilities.  I know from personal experience that if your design for any given locally used product is a 'better mouse trap' there are ways to get that out, and you can open a competitive business.Not everyone accepts these facts but in almost every circumstance I've seen they were all true.Cheers,Kevin MorinKenai, AK
Reply:what do you mean by "end run your market", Kevin?
Reply:Wldnfrk, in the literature of the business of marketing and sales, there's a book that describes two types of technology changes; one is a step up along the same path and the other is a change in path.End running your market is a concept where your design 'disrupts' the market it doesn't just take it up one notch.So let's say your local market for welding services has a vehicle that many local people like and want- in one area that could be tube body rail car, in another market that may be a welded aluminum sprint boat for the 'ditch' circuit races.If you offered a good shop rate, good repair and reliable work in either, as long as you're just 'me too' - or just another choice (even if you're the best choice) then you're a step up.  But if you design a new car frame, new 'something', or a new hull building method and some sprint hull design upgrades or changes: then you can end run your market.If you provide a design and build service that is based on a disruption of previous thought and accepted products, you will experience a sales graph that is low to the left at the beginning and then can go off the chart, depending on the level of the disruption and how fast the existing suppliers can adapt to your product or service.Let's look at this welder who's got a truck with a stick machine on it.  His area has hundreds of flat sheet steel water tanks that constantly rust out because the clients refuse to consider liners, galvanized plates or some other 'legacy' thinking.If you just do those repairs in competition with a MIG rig on your truck, then you're doing a step up technology solution to compete, and the same old welding-in plates happens.  Yep, you're in and out faster and the welds are just as good so the overall you displace the older technology and he'll get a MIG for his truck and flatten back out your lead, and the farmer will save as the rate stays the same and hours are dropped a little bit.But if you go to a machine shop to have some galvanized plate punched, rolled and flanged so you can bolt up a tank that's round and free standing (where the previous tanks were all welded of flat sheet and unpainted) then you're discussing a disruption in the technology. That is; you'd end run the market.The first few tanks would be low profit affairs but when the neighbors saw how it worked? well the land rush would be on. Next, what if you had enough money to finance the tanks for the farmers?  That is; your firm could offer a 'buy on time' - "Complete install, just sign on the line."  Now, you're doing bidness, since the interest on small consumer products of a specialty nature are worth a lot to the overall cost of the final product..... you'd have 'end run' the local market.I've end run my market a few times, and it was by designing a (almost totally) new version, one that substantially different and therefore had the competition scrambling. That adjustment period was aided by my continued upgrade of designs and building methods and that left all the other shops to play 'catch-up'.That is what I meant by 'end running the market'.  Offer something that is 'disruptive' not just a step up along the logical lines of the existing versions of work being offered.but, you've got to know the market to do this. Not everyone is a good designer, and if you're not, then that doesn't mean you can't perform this trick, it just means you'd have to have someone else do the design.  [The most effective design changes come from people who know the 'problem' well enough to imagine the next generation of solution; please don't ignore this important fact.]Cheers,Kevin MorinKenai, AK
Reply:Awesome advice. Ill have to look into that book. Thanks again.
Reply:The thing I have wanted the most has been money. You need enough money to run the business for two months with no income, and that's AFTER you are up and running. So I'd say you'll need enough money to set up shop, pay any required fees, pay yourself, and buy materials for your current work, and then enough left over to pay yourself and all your bills for two months after that. Minimum.Another bit of advice: do not buy anything until you need to, you'd be amazed how fast your needs change. Example: one day you think you'll need 100 bolts for the upcoming job, then the next day you need a new saw blade, and without the saw blade the bolts are useless, and if you spent all your money on bolts, you're stuck.Last edited by fortyonethirty; 06-04-2013 at 10:25 AM.Ian TannerKawasaki KX450 and many other fine tools
Reply:http://en.wikipedia.org/wiki/Disruptive_innovationhttp://whatis.techtarget.com/definit...ive-technologythis should help get some leads on the ideas.I agree with 4130's idea, and that is why i used to get the 50% deposit to make sure I didn't have to finance the materials and 'bank' the project, if the payment or pickup is late then you're not getting interest- just headaches.cheers,Kevin Morin
Reply:Well said kevin , great advice.you are a wise man.
Reply:@ Wldnfrk - * Ensure there is a market for your products & services.  What differentiators make your business stand out and prosper? Ask yourself, "what makes me the reason that humans seek and select my services? High quality work? Schedule and timely execution? Cost effectiveness? Customer service? There's a great welder and customer oriented shop locale to your area. Be better than them.  Recommend you execute your business only after you have written, re-written, and then re-written a logical and well thought out business plan.  Your business strategy and operations have to makes sense to YOU.* Cash Flow & Financial Resposibilty. Be able to identify and accurately account for the IN & OUT of every cent expended (invested) and received.  You are in a capitalistic society to earn a profit, not to break even or merely to do some cool welding a la a hobbyist. Do nothing without being compensated. Learn to say "No".  Ovesimpified, the core principles of balancing a checkbook of $100 apply to managing larger capital investments. Seek "winning principles" from others known business owners that you know and trust.  Never hesitate to ask questions of owners and seek out answers.* Trust, but Verify. As others have stated, humans will not pay when they say they will, will not select you after promising you 'the job', and not hesitate to walk in 30sec when they see the heat coming around the corner.  Be prepared for the unknown.  Remember, the definition of "insanity" is doing the same thing over and over and expecting different results.* Remain Relevant.  Rip the OODA (observe, orient, decide, and act) loop 24x7. Every business decision should align to your written business plan. Grow slowly and smartly. Have an exit strategy.Note: the above assumes you posses the necessary technical SKAs (skills, knowledge, and abilities) to deliver your products and services. What equipment, tools, etc you need would be low on my list."Discovery is to see what everybody else has seen, and to think what nobody else has thought" - Albert Szent-Gyorgyi