questions bout starting up a small business

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Histill sort of new on the forum and know the business topic is talked about a lot, but mines a bit different so I thought I'd make a posting. I'm almost 21 and have been interest in metalworking since my 2nd year of high school. I was very interested in it when I graduated from high school and landed myself a job a metal shop where most the work was custom railings. I worked at that shop for nearly 2 years while attending school and learned a lot. About a year after working there i picked up the welding bug and bought a hood and the guys there started teaching me to weld. I have been layed off for about a year now from that company and just taking a break while taking classes at the community college for my engineering degree. I have been tossing around the idea of starting up a fairly small business while i am going to college but guess i always felt I didn't quite know enough so it deterred me. well my brake will be over in April and i have been putting more thought into starting my own shop rather than working for someone. Major benefit to starting my own shop would be i could make my own hours during school, hard to find someone that wants a part time employee that makes their own hours because of a school schedule i had it good at the last place. The machines I currently have are a diversion165, MM211 w/ SM100, 60 gallon compressor, a 6" atlas lathe,marvel 4b hacksaw, 2 portabands, a nichols mill that is in the mail at the moment, and quite the collection of hand tools. I have been doing a few things a year for 1 or 2 people but nothing to justify the amount of money i got sitting out in the garage. I wouldn't have much over head just hand my dad some money for the electric bill and would like to avoid any need for insurance unless i can establish a stable income. That being said I was considering starting at $30 an hr with the hopes of making at least $150 a week in my pocket anything more would be nice. some questions:-ways to advertise. was considering craigslist and going door to door to some businesses seeing if they wanted to maybe pass some small jobs or simple production jobs down to me for piece work or something. Maybe do 1 or 2 for free to show them what kind of work i could do.-if I got work from shops are most willing to pay cash? reading some business threads sounds like business forms and tax forms are headaches. rather keep it as simple as possible.-insurance. can I get away without it to start as long as i'm not making/repairing anything that it structurally critical?-if you own a business big or small could I hear some example of some of your products or parts you get from other shops or business you receive from other businesses.  Thanks for the advice in advance and feel free to mention anything i may have left out.Andy
Reply:Andy, since it's been almost a day and you haven't gotten any replies, I'll give you a comment or 2.  1. Advertising. I've never gotten any luck from advertising on CL or in the newspaper.  OTOH, I've gotten plenty of work from word-of-mouth referrals.  It's easier if you grew up where you now live, which I did not.  Drop by some businesses with some business cards and a short spiel about yourself.  I would NOT do work for free.  That's setting yourself up for failure, and you'll be taken advantage of from day one.  You don't say what area you're in, but since you're starting out, set your hourly rates on the low end of the going-rate scale.2. No shop I've ever known of, besides a pawn shop, pays cash for work.  They want a receipt for the work so they'll be able to turn it in as a tax expense.  They also want written proof in the form of a paper trail (checks) that you did the work in case something goes wrong with it in the future.  If the work is over $600, they'll also be having you fill out a W-9 form.  Private individuals pay cash.  3. Insurance - you need it.  Non-structural things still have inherent liability issues in today's litigious society.  Just read the news.4. Stuff I get from other businesses - all consumables, tools, and raw materials.  I have a working relationship with a local machine shop that I buy pre-made parts from if it's less expensive for my customer than me building them with limited tooling onsite.  Often, it is.  In return, they refer any customer who calls for onsite work to me.NOW, WITH ALL OF THAT SAID:It sounds like you want all of the benefits of owning your own business with none of the headaches involved.  This, my friend, is not the way the system works.  I won't preach on it, but as a business owner I don't like seeing other people coming in the market, doing things underhandedly (no insurance, no tax reporting, no licensing if required), and undercutting legitimate business' work because said shady person doesn't care to play by the rules.  These people usually start up, go for a few months, realize they don't have what it takes, and die out.  In the meantime, they've taken a piece of the market away from legitimate businesses, many of which are already struggling in this economy.  Do you want to be known for that, especially in your hometown?  Think about it.  The most valuable business asset you'll ever own is your reputation.
Reply:I worked independently as a consultant for a few years - charged by the hour.  The local business licenses are indeed a pain to deal with, but most communities have a chamber of commerce that will give you some help for free.  They often have a DVD or on-line guides to starting a business.Use free resources as much as possible.  You sound like I felt early on - afraid of the details of government forms and requirements.  Look for community college courses in your area on small business.  Get references for a decent lawyer and CPA and maybe even book keeping professional, don't pick one out of the phone book, there is a good chance you will regret it.  If no one you know can offer these references then ask the LWS folks, steel supplier and anyone else you deal with in the area who THEY use.Always keep business cards on you - when you interact with other businesses ask to leave a few cards with them.  People you spend money with are more likely to spend money with you - they can be your best customers.Look up other folks doing similar work in the area and ask if they need a hand - won't pay as well as doing the work all on your own, but something per hour is better than nothing per hour and you might find a way to help each other out in ways that will build your business.Finally, be realistic about your money.  Most small businesses fail because they didn't have sufficient capital to start out.  DO NOT borrow money, if you can't make it on what you have now then save money until you can.  There is a universe of difference between working to make a buck to buy a new tool and working to keep the repo man off your property (everything sucks when you HAVE to do it to pay someone else).Hobart LX235Victor 250 Oxy-Acetylene Rig (welding and cutting)Bobcat 773F-350, 1999, 4x4, 16' 10K# trailerOutdoor Wood Burner - 10 cords/year
Reply:What you've got to remember is that you don't have something that a lot of brick and mortar businesses have, a building, and thats going to work against you.Most people see a welding business, in a building (owned or leased, doesn't matter as long as its got a welding sign in front) and assume its withstood the test of time.  There is an assumption made that its not a fly-by-night operation, that it has stood behind the work it has produced otherwise local opinion would run sour and eventually they couldn't keep up on the rent.If an individual with a welder in their garage doesn't do a good job, doesn't stand behind their work, what did they have to lose?  A little bit of side business and maybe some local gossip or trash-talking.  If said individual welds a trailer hitch that falls off and wrecks a mercedes or kills somebody, no insurance and (probably) nowhere near the money to right the situationI do a lot of work on the side (welding, machining, and mechanical repair) in addition to my day job.  My experience with CL has been less than stellar.  While CL is great for picking up deals on tools, most of the types on their looking for services are unwilling to take it to a brick-and-mortar business due to the cost.  If you do hawk CL for work expect to be lowballed constantly by some idiot who wants to pay you less than you'll have in materials to fix their busted mower deck, as well another poster here almost got arrested for picking up work on CL because the local police were trying to bust people without business licences - even though the poster (can't find the thread) had a business licence he still wasted his gas/time bidding a jobLast edited by greenbuggy; 03-03-2011 at 04:12 PM.
Reply:I'm not in the welding business, but I think that tbone summed it up pretty well that you would be setting yourself up for failure if you don't jump through the hoops required to become a legitimate business. If you are wanting to do your services "for hire" you will need to get the proper insurance and business license(s) that are required for your work. Catch a customers house on fire while installing a iron fence and you will be ruined, not your business, YOU since you wouldn't have a legal business to shelter yourself or separate yourself from the liability nor the insurance to cover damages. That said there are things that you can do that you can make some money at, set your own hours and would be a gray area as far as needing all the insurance and business license stuff. I'd suggest that you make things to sell, either through word of mouth, craigslist or setting up at a flea market or craft fair. Ornamental things that you could make in your spare time and either post an add or accumulate enough to set up a booth start selling them. If you have a scrap yard close by you should be able to get material for cheap, so if your idea doesn't sell you won't be out much. You could make BBQ pits, fire pits, candle stick holders, planter box holders, hanging basket stands,  mailboxes, mailbox posts, arbors, air conditioner cages, garden carts, coat racks, boot scrapers, yard art, shelves, end tables, coffee tables, benches......anything that you can think of that you can build better or more unique than what is out there already. Think of what your hobbies are and things that might pertain to that hobby that you could build. I do a lot of shooting and will end up making myself a couple target stands for placing out in the field, a lot of guys don't have any knowledge of welding and would buy a couple if they saw them for sale.....I know since I've been "that guy". I belong to a shooting club with 4 thousand members, that's a pretty concentrated market if I came up with a shooting related product to build. Basically, think outside the box and give it a try. I think that at one point or another all most people who own their own business started out doing small time work on the side. One thing that you will learn that rings true with just about any business is that you have to be able to sell as good as you build. There are absolutely incredible craftsmen all over the place that won't ever do much better than scraping by because they never put any work into learning how to sell. They may be the best there is at what they do, but if they can't sell then it does them nor their potential clients any good. Selling is a skill all it's own and if you can sell you will never go hungry. But, be able to back up what you sell, aka don't let an alligator mouth overload a hummingbird ***.Powcon 400SM2-PD60 wire feedersMiller XR controlAlumapro push/pull gunSpeedglas 9100xBFH
Reply:X3 what Tbone550 said, I started in my garage but I done it with all the proper headaches. license, CPA, insuranse and all of the other stuff that goes with being the BOSS. Do it right and don't sell your work cheap, word of mouth is the best advertiser.LarryMiller XMT 304 CC/CVSyncrowave 180 SDLincoln PowerMig 255XTTermalDynamics 52Lincoln 305GComlpete machine shop to back it up