Stop To Think Before Starting A Business

I remember standing in front of a Mazak machining center sometime in 1986 watching the machining of a complex automotive die component that I had just spent a couple of days programming. It had lots of intricate surfaces and looked more like a piece of abstract art than a die horn. The ball end mill flowing over the part and gracefully transitioning from one surface to another was like a perfectly choreographed machining ballet. As the part began to take shape I thought to myself, “I am a machining god. I should start my own shop.”

Looking back, I am overwhelmingly grateful that I didn’t have the money for a down payment on a machine. My naiveté was in thinking that I should start my own business only because I could make quality parts. I didn’t know a thing about sales, marketing, customer service, financing, accounting, contract/lease negotiation, and so on. Had I started my own shop, it would have been a financial disaster.

It is relatively easy to start a business these days, but that doesn’t mean you necessarily should. Sure, machine tool manufacturers are eager to sell machines and will offer you creative financing. Landlords are eager to rent buildings that are sitting vacant, and material suppliers are willing to extend liberal credit terms. It’s easy to be get lured into the trap.

I can’t tell you how many shop owners I meet who tell me they had no business starting a business. They long for the days of working for someone else and having to worry about nothing else but making perfect parts. Once they started their own business, however, they worried about making their machine payments, rent payments and installments on the second mortgage they took out to generate start-up cash.

Heavily leveraged entrepreneurs have to generate a lot of cash, start-up and otherwise, or go bankrupt. Since the newly minted shop owners I’ve met had no experience in sales or marketing, they found work the easy way—by working cheap. Working cheap is unsustainable and hurts the industry.

Don’t get me wrong, I am a passionate entrepreneur and an advocate of entrepreneurship. It’s the backbone of our economy and results in innovations that constantly improve our quality of life. I encourage anyone who has aspirations of starting their own shop to do so. However, go into the endeavor with business skills over and above part-making expertise, and bring something resembling a business plan. It will dramatically increase the chances of success.

Here are three ways to begin the process of developing business skills and a plan:

Get experience. Sales and marketing are essential skills for successful entrepreneurs, so be on the lookout for ways to get experience. It may be difficult to find a full-time sales job in the industry overnight, but sales and marketing are very transferable skills, and opportunities abound. Consider internships and volunteer activities for non-profits.

Learn accounting. It’s important to develop a working knowledge of basic accounting principles because every business depends on it.

Identify your niche. Taking whatever work comes along and low-balling the competition is a recipe for shop failure. Instead, identify what you love to do and what you’re best at; market it heavily; pull out all the stops to find customers; and charge a profitable rate for the service.

I would argue that these considerations are far more important to a would-be shop owner than technical skills.

At first glance, some of this might sound out of reach. If it really bothers you, consider staying in your present job and focusing on making great parts. If, on the other hand, you still feel compelled to try it on your own, take heed of my advice before you jump in. Look at your assets, borrow judiciously (be careful with those second mortgages), and plan on working long and hard to build a successful business.

Mitch Free is president & CEO of MfgQuote.com, Atlanta, Georgia. He can be reached at (770) 444-9686, ext. 2946 or at mfree@mfgquote.com