Prepped For Success
A few months ago, I wrote about the noticeable increase in startup machine shops (www.mmsonline.com/columns/0605mmw.html). One of the most enlightening responses to this commentary came from Mitch Free. Mr. Free is the founder and CEO of MFG.com (www.mfg.com), an online request-for-quote site. It’s the nature of his business that he comes into almost daily contact with many of the startup shops that subscribe to his service for dynamic access to customers.
Unfortunately, he observes that a lot of these shops are started by individuals who are good at making parts, but are not necessarily good at running a business. “They have little clue about how to manage a business, hire people, manage cash flow, market their services, analyze the market, differentiate themselves, service their customers, handle pricing, structure contracts and establish synergistic partnerships,” he told me. As he put it, too often the “American Dream” becomes a nightmare.
He’s right. Before starting a shop of your own, it’s essential to develop some solid business management skills. In fact, it would be good if everyone working in an existing shop went through the exercise of learning what it takes to succeed as an entrepreneur. They’d have a much better appreciation of the challenges their managers and shop owners must confront.
If you do decide to start a shop, the first thing I would recommend is reading some good books about starting and managing a business. Look for one that emphasizes practical advice, such as how to develop a sound business plan, rather than inspirational messages. A book focused specifically on metalworking job shops should also be considered. One such book is “Top Shops” by Robert G. Wilson and John D. Linscott (available at www.hansergardner.com).
Once some basic concepts and terminology are understood, consider enrolling in some small business development classes. Community colleges often offer such courses. A number of big-city universities sponsor centers for training entrepreneurs and encouraging business startups. For a sample of what you might find, visit www.uwsbdc.org/startup.htm.
The U.S. Small Business Administration also has resources worth checking out (go to www.sba.gov and click on “Starting Your Business”). For valuable advice about opportunities in the metalworking field, the National Tooling & Manufacturing Association (NTMA) (www.ntma.org) is a good organization to contact. An experienced mentor who knows both the business of running a shop and the demands of machining good parts would be enormously helpful at this point. Sometimes a current employer will help out.
Finally, every would-be entrepreneur should understand that sheer good luck is always a factor, even though thorough preparation makes this factor less significant. I define good luck as the favorable coincidence of random events. Sometimes random events don’t go your way. Every startup has to be reconciled with this risk and understand the consequences of failure.
It’s great when a new shop manages to flourish and grow. It’s not so great when, as Mr. Free says, shop owners “go into business on the basis of ‘I-can-make-awesome-parts-fast’ and then crash and burn because of lack of business acumen.”