Considering a CNC business? - Router Forums
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post #1 of 11 (permalink) Old 01-04-2019, 12:35 PM Thread Starter
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Default Considering a CNC business?

Just found this link in my Constant Contact email. It is a treasure trove of articles on starting a business. Some very practical information for anyone considering starting a CNC or any other kind of busines. Attached is a version of my marketing article, just updated this a.m. Let me know if it needs something else. I am also thinking of downloading some of your CNC project pictures to illustrate it.

@Gaffboat Oliver, maybe we could jointly work on doing the business side addition to your book that we talked about. Ask the professor if that's of interest.
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post #2 of 11 (permalink) Old 01-04-2019, 01:47 PM
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Just found this link in my Constant Contact email. It is a treasure trove of articles on starting a business. Some very practical information for anyone considering starting a CNC or any other kind of busines. Attached is a version of my marketing article, just updated this a.m. Let me know if it needs something else. I am also thinking of downloading some of your CNC project pictures to illustrate it.

@Gaffboat Oliver, maybe we could jointly work on doing the business side addition to your book that we talked about. Ask the professor if that's of interest.
Marketing info is definitely needed for a lot folks interested in using a CNC. I've read many (conflicting) ideas on pricing your work, but most miss the key point that you don't need a price if you don't have a customer. Marketing (not advertising) is the way get and keep customers, and ultimately make money with a CNC machine.
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post #3 of 11 (permalink) Old 01-05-2019, 12:54 AM Thread Starter
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That's so @Gaffboat . What do you think about adding a chapter or two to your book? A lot of it is right here already. Lots of stories and ideas, and I bet a few of the guys would volunteer pictures. The social media/email approach is one way, and we could likely work on exact methods for generating commercial customers.
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post #4 of 11 (permalink) Old 01-05-2019, 08:53 AM
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Good read Tom, and thanks for putting that out there.

Some areas that you touched on ring loud with me. Especially after having owned 3 fabrication companies in the last 30 years.

First is setting your price high enough. I see too many people with the garage shop mentality setting their hourly rate to low in the beginning because they either have a day job or don't depend on the extra income. This is the time to practice with what might feel is murderous pricing. Easier to absorb the cost of not getting a job you spent time quoting on when you don't need the money. You can lower your price point down until you start getting jobs again.

Speaking of spending time on quoting. Get good at "from the hip" quoting. Detailed quotes to the penny might make you feel good, but you will spend all of your time quoting....which is non-billable for the most part. If you are setting your price high enough you won't need to worry about if you are going to make money.
Do not get yourself in the position that you are under bidding everyone else on jobs to get them. That is not a sustainable business model.

You mentioned getting someone to run the machine. No truer words have ever been said. If you are going to make a decision to turn this hobby into a business that will support a family, you have to make it your job to find work and maintain customers. There is not enough time to handle the business side and do all of the work yourself. Well at least not if you like making a profit and growing your company.
Once you get your employee, be ruthless about setting your quality standard with them. Once that is established, trust but verify every time.

Be honest with yourself about something being a worthy business opportunity or not. If you plan on selling the same products that Etsy is littered with you will fail. That one is harsh but true. You will notice Tom described business-to-business opportunities. If you don't know what that is you need to research it.

Their is no bigger cheapskate than the average Joe Public Walk In customer. They want Museum quality work at Chinese prices. Stay out of that market.

I hope this helps someone.

Rob

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post #5 of 11 (permalink) Old 01-05-2019, 10:24 AM Thread Starter
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...You will notice Tom described business-to-business opportunities. If you don't know what that is you need to research it.

Their is no bigger cheapskate than the average Joe Public Walk In customer. They want Museum quality work at Chinese prices. Stay out of that market.

I hope this helps someone.

Rob
I think there are lots of people who have pretty good skills at CNC, and decent machines. They just don't know about what's required to make it pay. Earning back the cost of a $5,000 to $15,000 machine should not take much more than a year if marketing gets handled, much sooner if you take the trouble to get good at it. Modern marketing has NOTHING to do with selling. Right on Rob, the "museum quality at Chinese prices" crowd is not worth pursuing.

Calculating prices should start with a profit margin 4-5 times more than ALL costs, including wear and tear and machine maintenance and eventual replacement. Consider for example, the cost of power to run it when you're talking running a 12 amp machine 12-18 hours per day. You're going to have to replace bearings and other parts, you have to get rid of sawdust and have excellent sawdust collection, and you'll need a few really good conventional tools and saws with premium blades. Don't forget a properly set up finishing area, and if you have an employee, you're subject to OSHA rules, and you'll WANT an accountant to make sure you comply with tax regulations.

Those are costs of doing business that will add up pretty quick, and your price has to pay for all that. Otherwise, it's a hobby.

Which is not to say there's anything wrong with a hobby with maybe 6-8 really good customers per year. Which won't produce much of a living, but a nice second income. Just keep those prices UP!

Hope we're not just talking with the already converted here. I know that I won't buy a CNC unless I decide to make some decent money from it. Making money isn't all that hard. Beside that, it would take up the space remaining in the garage, and my wife would not go along with parking the car outside. I'd have to have a workshop built or plan to be single again. Lots of factors come into play for me, and for anyone considering a CNC move.
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post #6 of 11 (permalink) Old 01-05-2019, 11:14 AM
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Thoughts of this being a stickie? Maybe a sub-forum?
DrT's recent Makin a nice living post went way down the list.
Not everyone goes that far back reading nor bother to search.
Just a thought.
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post #7 of 11 (permalink) Old 01-05-2019, 12:26 PM Thread Starter
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Thoughts of this being a stickie? Maybe a sub-forum?
DrT's recent Makin a nice living post went way down the list.
Not everyone goes that far back reading nor bother to search.
Just a thought.
@Cricket I think this is a good idea. Questions on this issue keep popping up. The 9 pages contain a wealth of information for anyone that wants a CNC to at least pay for itself.
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post #8 of 11 (permalink) Old 01-05-2019, 02:50 PM
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A great article... that Polish eagle guy has a great story....

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post #9 of 11 (permalink) Old 01-09-2019, 11:52 AM
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Thoughts of this being a stickie? Maybe a sub-forum?
DrT's recent Makin a nice living post went way down the list.
Not everyone goes that far back reading nor bother to search.
Just a thought.
I made it a sticky.

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post #10 of 11 (permalink) Old 01-10-2019, 12:47 PM Thread Starter
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@Cricket What is a sticky and where is it kept?

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