Suggestions for Startup Manufacturing Businesses

Thank you MrPlasma for sharing your experiences with us and the other contributors to this thread. Most interesting and lots of good information.

mrplasma said:

Other than a 4x4 unit being made by another startup company, the only remotely comparable machines out there in 1998 were the expensive industrial machines you mention above. They were sold via distributors, and it was difficult to find any on-line pricing whatsoever. There was a tremendous vacuum that needed filling, i.e., a low cost 4x8 machine sold exclusively via the Internet to hobbyists and small businesses.

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That flyer you mailed out (I think on request only) Doo you know how many small mom & pop weld shops I saw that flyer in, tacked up on the wall ?

Having the price right up front, showing what the machine would doo, and then saying that the kit of parts you are buying was cut on my plasma table, same as the one you will be assembling.

I saw that similar promotion style, years later by "lockdown securities" brochures for a Bar & pipe bender they were selling, a copy of the famous Hossfield.

Good overall advise mrplasma,
I was especially drawn to your;

3. WHEN YOU DO MOVE TO A LARGER FACILITY, RENT RATHER THAN BUY!

A large portion of business start-ups cringe at what industrial space cost, but the reality is, shop space is the cheapest form of real-estate. I would also point out that the majority of manufacturing business failures, did not shut down because their rents were too high.

I have had many try to convince me that renting is wasteful, for those that want to purchase... congratulations, your now in the real-estate business.

2 more questions:

1. your product was pretty much one design, so parts count was as low as could be.
I recall seeing "custom sizes" how did you handle these "one off's" ?
Time & materials ?

2. I also saw export sales to foreign countries, how did you get the word out internationally,
to drive those sales ?

digger doug said:

2 more questions:

1. your product was pretty much one design, so parts count was as low as could be.
I recall seeing "custom sizes" how did you handle these "one off's" ?
Time & materials ?

2. I also saw export sales to foreign countries, how did you get the word out internationally,
to drive those sales ?

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In the very early CNC days, all I sold were DIY kits that would work regardless of the size table the customer built. I had the gear racks machined so they could be butted end to end without the spur gear knowing there was a joint. When I started using hardened and ground rails and 8020 extrusions, I had them drop shipped to the customer in whatever size was required. I kept a variety of Origa linear rail sizes on hand. The linear cassettes didn't care about the length of the rail.

As the Internet grew, people could access the web site from all over the world. At first, I used letters of credit for International sales -- later, wire transfers and credit cards. Toward the end, about 25% of sales were international. It takes a lot of credibility for someone in a foreign country to wire transfer, say, $15,000 U.S. to your account.

You mention having sold the business in 2011 about the time competitors were springing up. It's rare that the timing works out for selling a business; it requires the buyer to believe it's still on the way up.

Is the guy who bought your operation still in business?

Oldwrench said:

You mention having sold the business in 2011 about the time competitors were springing up. It's rare that the timing works out for selling a business; it requires the buyer to believe it's still on the way up.

Is the guy who bought your operation still in business?

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I would think so....Lincoln Electric.

mrplasma said:

As the Internet grew, people could access the web site from all over the world. At first, I used letters of credit for International sales -- later, wire transfers and credit cards. Toward the end, about 25% of sales were international. It takes a lot of credibility for someone in a foreign country to wire transfer, say, $15,000 U.S. to your account.

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It would be nice to see dot's on a globe....I can't imagine where these machines are at.

mrplasma said:

As the Internet grew, people could access the web site from all over the world. At first, I used letters of credit for International sales -- later, wire transfers and credit cards. Toward the end, about 25% of sales were international. It takes a lot of credibility for someone in a foreign country to wire transfer, say, $15,000 U.S. to your account.

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And the word of mouth when entering a new market is satisfying indeed.
If you sold out to a big company like Lincoln, that's the holy grail compared to the way most businesses get disposed of. I hope that sooner or later somebody with a big enough checkbook wants to own my business more than I do. Although I never had that particular goal in mind, there's a school of thought that aims just for that.

Oldwrench said:

And the word of mouth when entering a new market is satisfying indeed.
If you sold out to a big company like Lincoln, that's the holy grail compared to the way most businesses get disposed of. I hope that sooner or later somebody with a big enough checkbook wants to own my business more than I do. Although I never had that particular goal in mind, there's a school of thought that aims just for that.

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When my folks sold their business they were very supprised as to what the buyer wanted/didn't want. In the end the buyer took posession ot their trademarks and rented the building my folks business was in for most of 5 years with everything in it just as it was the day it sold, machinery, inventory, manuals, everything just sat there for 5 years untouched, pops finally made them come get the stuff and even then they left a lot. He always thought it would be the stuff he sold not a few pieces of paper.

Oldwrench said:

I hope that sooner or later somebody with a big enough checkbook wants to own my business more than I do. Although I never had that particular goal in mind, there's a school of thought that aims just for that.

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Try chrome plating or TiN coating the things.....

Trends

I believe an awareness of evolving trends is crucial in planning for a startup business.

As an example, before personal computers permitted advertising copy to be produced in one's home office, we had to get it type set and printed commercially. At one point I used a printer who set up shop using his grandfather's typesetting machine. It must have weighed ten tons. A reservoir of molten lead was directed into letter-shaped molds as he typed on a keyboard. The finished letters were then blocked and inked in preparation for paper to be rolled on top of them, like the old fashioned newspapers were laid out. After the paper was printed, the lead letters went back into the reservoir and melted again for re-use.

In hindsight, that type of business was clearly headed for extinction, or at least a major upheaval. At that time, the handwriting was on the wall -- Radio Shack computers and daisy wheel printers had already arrived. However, this guy fashioned his business around his grandfather's aging equipment out of tradition and family sentiment. Could he have seen the changes coming? Possibly. Did he look for them? No.

What kinds of trends are taking place right now? Geographical barriers are dissolving. Department stores and shopping malls appear to be going away. Other than some clothing and items such as used machinery, cars, etc., that need to be seen and/or handled personally before buying, almost everything else can be purchased on-line. The customer base of a business is not necessarily limited to a particular locality or even commuting area. Customers are potentially world-wide.

CNC machinery and industrial robots, while not cheap, are becoming more reasonably priced. Many of us can remember when PCs and desktop printers took the place of IBM electric typewriters. What will happen to manually operated machinery, when its automated counterparts become as inexpensive, or even less expensive?

Teleconferencing and skyping have been around for a while, but never really took off. With the recent Covid epidemic, many businesses had no choice but to conduct meetings remotely. The savings in travel and hotel expenses, travel down-time, etc., has to have shown up in those companies' bottom lines. No one could argue that Covid was good for businesses. Far from it. However astute businesses probably took note of where savings did occur. More and more businesses allow employees to work from home. Is it possible that commuting to work and business travel are on the way out? Who knows? If people have to travel less and can work from home, what impact will that have on office-oriented clothing, the hotel business, 2nd family cars, etc.?

The Covid lockdowns caused people to rush out and buy large stockpiles of toilet paper and other paper products. They started using food delivery services, and bought far less gasoline. New auto sales dropped, causing some chip manufacturers to cut down on production. When Covid infections declined and auto sales picked up, some car manufacturers were stuck with large inventories of cars that couldn't be delivered because there was a shortage of chips. The point is that some trends are temporary, and don't warrant any kind of long term business investment.

There are numerous trends in play as we speak. I'm not smart enough to be able to think of most of them. However, I do believe that an understanding of where things are headed can not only help avoid pitfalls for a startup business, but also reveal great opportunities just around the corner.

Business Life Cycle

There may be some disagreement here, but I think businesses are a lot like movie actors.

The majority of people who go to Hollywood in hopes of becoming a star don't make it. Those that do generally have a period of peak popularity, and then fade away with time. There are, of course, some those who remain popular, and change with the times and their own aging to maintain their audience appeal. Others reinvent themselves into totally new personas. The same might be said of some sports figures.

It is my view that for a business to remain successful, it must stay in tune with the development of technology, changes in social standards and expectations, new marketing and advertising trends and opportunities, etc. Fifty years ago, a company could focus on customers within its immediate geographical area without much fear of losing business to remote competitors. Beginning about 25 years ago, with the advent of the Internet, a competitor could just as easily be located across the Country, or even across the World (China for example). The creation of a web site or other kind of on-line presence became almost mandatory. Now, almost every business has a web site or other on-line presence. It is more important than ever to stay on top of new trends, developing technologies, and the changing commercial landscape.

Shopping malls appear to be on the way out. On-line businesses can handle your needs without you having to leave your building. At the same time, additional constraints are being placed on most kinds of travel. More taxes are being placed on gasoline or possibly even travel miles, and pollution reduction requirements on vehicles are multiplying on a daily basis. Work at home programs are on the increase. Skype, FaceTime, Zoom and other teleconferencing services, along with skyrocketing travel costs will likely reduce the amount of travel involved in holding down a job. What impact will these changes have on industries and businesses which are largely dependent on travel? The World is changing in many ways other than physical travel. What ways? What will be their impact?

Anyone starting a drive-in theater business in the late 70s would have had tough sledding. With the advent of Blockbuster and Erols video rental stores, drive-ins went away. When on-line dvds rentals became available, Blockbusters went away. With streaming video, on-line dvd rentals are going away. Just one example.

Enough said. Any reactions?

mrplasma said:

Enough said. Any reactions?

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no disagreement, but its kind of motherhood...fairly universally accepted change can wreak havoc on a business or create opportunity and that if you not changing and striving....you're going to eventually get whacked. Large organizations, heavily invested in the current success, have an extremely difficult time acknowledging that why they are doing now isn't going to work anymore. Trying going into the boardroom of some business that's on top and propose that the very strategy that put them on top needs to be flushed. Motorola is one company that did an amazing job of this....until they didn't

Have you read the book the Black Swan? Its by Nassim Taleb, mathematician, hedge fund manager, author, trader (investment banker), professor and philosopher...he's a really fascinating person. Anyway, the Black Swan idea is that forevermore people thought swans were white until they built boats that made to Australia where the unexpected happened - there are black swans! So the black swan became a metaphor for the unexpected happening.

The observation is made that most human thought process, institutions etc focus on the likely events and discard the remote chance things - i.e. systems are designed to address the bulk of the distribution and ignore the outliers. However its further observed that's its those very outliers, the largely unforeseen, that cause the big changes - the disruptive inventions, stock and economic collapses or even the randomness of how you met your spouse.

So we have a problem, the things that really cause change are extremely difficult to see coming down the pipe. His book gives some ideas on dealing with it, but for me, the answer has to be always moving, trying new things,new products etc. As small entrepreneurial businesses, our great advantage is nimbleness - we have a better chance at surviving and prospering from change than the Consolidate Flanges of the world

Bobw said:

Dude... That's complicated..

Replacing her. Well... On paper it would be easy, she doesn't bring any fantastic skills
to the shop, and "On Paper" anybody with a pulse could do her job. If I was a bean counter
idiot, I would lay her off and hire somebody for minimum wage.

In Reality.. I would have a damn near impossible time replacing her, even if I was in an
area that actually had a pool of people to pull from, it would be incredibly difficult.j

In 4.5 years, she has called out twice. TWICE!!!!!! once because she was sick, and once
because her car was dead. TWICE!!!!! She went home early a few times, but we all have those
days. TWICE!!!!!!

The most important thing.. She doesn't steal my shit.

Can I afford it.. Sometimes.. Don't care.

So, yesterday I asked her if she was making enough. And she said "Yeah".
So I asked if she wanted a raise, and she said "No, I'm happy where I'm at".
She actually said that.. Have any of you ever had somebody working for
you say that?

So I gave her a dollar an hour raise. I'll probably slide in another dollar
with her X-mas bonus.

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I've heard that statement before. So instead of forcing money down their throat, I worked in the background, adding ancillary benefits such as dental, additional health insurance, and even a savings bond for their kids. Something to think about.

Does anyone have any ideas to share on types of businesses and/or products that might prove successful today, given the current economic climate?

mrplasma said:

Does anyone have any ideas to share on types of businesses and/or products that might prove successful today, given the current economic climate?

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You could start a business hypnotizing working age individuals to show up and work? Businesses worldwide would compensate you well for your service.

At least make it illegal to vote if you didn't work first

mrplasma said:

Does anyone have any ideas to share on types of businesses and/or products that might prove successful today, given the current economic climate?

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Sure I think 3yrs back the Chinese government banned the import and stopped buying all of America's recycled plastics.

What most people don't realize is that most of your municipal recycling plastic was all being sold to China where they would process/reuse it. The Chinese were paying such high prices for the materials and had so much empty return container space on the ships that a domestic industry never really took off or was able to process it.

Now with China out of the picture a lot of that stuff has nowhere to go and is going to landfills from what the various videos I have seen on YouTube.

I think there has to be a large opportunity for someone to repurpose recycled plastic into new product. I gather it's really far too much effort to turn that old Ketchup bottle into a new one so you need a lower grade non food product to create with all that scrap.

Years back I saw plastic railroad ties the things seem to be a great market for all that plastic waste. They never rot and last forever and the railroads are willing to pay a premium for them over wood due to their longevity.

Now if only I had a few million dollars in startup capital and knew what it takes to take municipal scrap plastics and turn them into new products.

Does this qualify for the type of opportunity you're looking for?

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That's the right kind of thinking, in my opinion. As you have said, it would take someone with the necessary knowledge and financial resources.