Hey all, I've been working out of my dads shop for the past 4 years or so, and an opportunity has come my way to branch out on my own. I have a very serious investor that is willing to loan me money to get started. I have to create a business plan to show him. I have very little idea on how to do it...I guess I just kinda always though my work would speak for itself and someone would just fork over some dough :-) Anyhow, somehow I have to come up with this thing pronto, any advice, or know where I can find a good template to start with? thanks a lot.

 

congrats man!

 

nothing???

another question...you guys all go to shops for one reason or another, what would make a shop the best in you opinion? what kind of things do you look for, but don't find? I am going to do a fab/machine/retail store.

 

For a business plan try checking SBA sites for your state. Probably need an executive summary, marketing plan, your market share, maybe a proposed balance sheet or Profit/loss statement, things like that. I suppose it depends on how formal your investor is. If it's a bank they will want to see certain things and in a certain way. If it's a wealthy friend or uncle things may not need to be as formal.

The key to a business plan is to stay honest with yourself. If you add up all your expenses and realize that you will need to sell more than possible, it just plain won't work. If it wont work on paper, it wont work in real life, no matter how much you think it will.

As far as fab shops go I would say if you are gonna have access to some money for equipment think about something like powder coating just to add something to the menu. Maybe just small parts that can fit in a smaller oven. It'll help that you don't have to sub that stuff out as well.

 

half naked female associates, you know like hooters, yeah that'll really bring me in lol

 

Thats why Im going to open a 24 hour diner with strippers as waitress'.

 

I know you are in a time crunch, but DO NOT rush your business plan.

 

whether or not you want to hear it, the best advice is to not use others people money for your business. partnerships are almost always doomed from the start. it is very hard to see eye to eye when you both are offering different services to the business. all the investor wants is money, all you want is to be able to do what you love... see a problem here? the investor will never be as whole heartedly invested in the company as you.


your best bet is to simply start buying the tools you will need now while you work for your dad. then down the line you can start doing personal customer work at nights or on the side. then possibly start renting space from your dad or from another shop just to establish a location for your business. once you can generate possitive net income for at least 6 to 12 months straight then I would consider looking for your own building to rent.

I have worked for and been involved with many many shops and they all have failed for similar reasons. usually the partnership splits up due to both parties feeling like they are doing the grunt of the work, or poor management due to the owners not doing proper paper work and tracking the money in the business. if you just jump into a business with an investor he will be expecting you to be able to provide expense reports and quarterly tax forms documenting all the money of the company. trust me, it took me over a year to figure out how to properly keep track of my expenses and let me tell you it is much more expensive to run a business than you will epect. and you will also have to most likely anticipate a loss your first year, and probably breaking even your seccond year. it will most likely be difficult to explain to your investor that the company will not turn a profit for a few years... let alone you will not be able to pay yourself the first year or so.

just my personal experience, take it how you want, but in business it is always better to make all major decisions in a well thought out manner, not rushed. if it is meant to happen you will not have to rush into it.

 

I agree. Especially in this economy. Business plan or not, you are going to have a hard time. And there is a big difference (both psychologically and financially) between being unable to pay yourself and living on ramen for few months, or being brought under the gun for being unable to fullfill your loan obligations to a first trust note holder on your business.

I would suggest you buy the equipment you need with the financing you personally have available (credit cards, bank loan, parent loans, etc) and forgo the investor/business owner relationship all together. Most of what you will need for a basic fab shop isn't all that expensive (under $10K) and inventory, additional equipment & materials will come later as needed.

 

Loaned money isn't the same as winning the lottery.

 

the #1 thing i have learned after running my own business the last 4 years or so......is if i had to do it over again, i would simply save every penny i could get my hands on as long as needed and absolutely NOT start up on business loans. if i knew what i know now back then, i could have started up on very little money, and be able to profit quick enough to get everything that i have now with out having to pay a huge loan every month. it seems like no matter how much you pay the loan never wants to go away lol

and i would never in a zillion years go into a partnership. finding a good employee is hard enough, i couldnt imagine how much hell a partner would be.

 

No. Why not just take over your dad shop when he retired?

 

Most of this stuff other people have posted is true, except the only advice I wouldn't listen to is to not use other peoples money. That's just not how things work. Using your own capital is very wise in theory, but what you lose is the cost of opportunity. If it takes 3-6 years to save up for a tig welder, lathe, bridgeport, etc., that 3-6 years you could have been making money if that opportunity is there. We're talking tens of thousands of dollars in equipment that you should just save up for? Not gonna work. If you are doing things right that 3-6 years in business should put a lot more money in the bank then working an hourly job and just trying to stash cash.

Besides, I have a friend that has claimed bankruptcy 3 times. He now employs over 80 people in his printing company and the last press he bought was over 14 million dollars. Other people's money let him do that. The machine will be paid for in a few years and has been friggin minting money since the day they turned it on. Buying something like that with the owners capital is not how the world works. I know it seems like a very much larger scale, but do you have the cash right now to buy even 10% of what you'll need?

The biggest piece of advice for any partnership is to form an Operating Agreement. When you form your company (probably gonna be a 1065 LLC or an S-corp) form an agreement with any partners and lay out all the responsibilities, financially and operationally. I have an LLC and I'm the only member and I still have an operating agreement. It just says I'm responsible for damn near everything lol.

Take a small business course at night or at least read about business. Check out the SBA sites. You're not opening a multinational conglomerate so some basic business knowledge will do you fine. You need to be just as passionate and knowledgeable about the business side as you are about what you do. Don't get discouraged, get ready. Good luck dude.

 

I started a mobile boat repair business 6 years ago after years of working for other shops and doing side work building a reputation and a clientele . It has worked out very good for me you need to start the business at the right time in the right market area . The best thing I have done is always tried to keep my word and be honest with people. That means showing up ,returning calls or calling when you cant keep obligations and being truthful. I started my business with very little money , my tools and a 2500 dollar toyota pick up with a bulletproof 22 re , it ran me everywhere for my first five years .I dont like the idea of other peoples money but it depends on what your long term plans are and you may very well need to use other peoples money . The first couple of years your gonna be putting alot of the money back into the business which helps keep income down . Heres the best quote I can give you for advice when it comes to business "You Keep it Small You Keep it All " .I am a sole proprietor I do all the work, the books, the parts, the calls ,everything keeps me very busy 8 or 9 mos a year . Beats the hell outta working for somebody else and i make about three times as much as working 12 months for somebody else ! Good luck to you hope things go well Just take your time ,do things right ,use quality stuff ,and be honest with people, and you'll be very sucessful .

 

I appreciate all of your answers and suggestions. Here is the scoop, the money is coming from my uncle, so the business plan can be somewhat informal. He wants to see the past four months of what I have brought in, losses, profits, expenses, yada yada. He has seen my work and my work ethic and knows I have talent and a nitch in the industry so I'm not really up against a firing squad. I asking to start out on a relativly small amount ($30-40,000) He has already told me he would expect a return on his money, and not out to get me on turning much of a profit on his end.
There are many reasons I am wanting to get my own shop and not continue to work at my dads, which I don't want to get into all of them. Having something of my own that I built being the number one. Saving up for the equiptment is pretty much out of the question, I plan to spend about $25k on equiptment and tooling...I don't have that laying around or anything near it.

I still want to hear some input on what kind of stuff/capabilities you think the perfect shop should have. Naked chics would be awesome, but not likely. lol.

 

Just remember one thing and this is said by the great late notorious big "Money and blood dont mix like 2 dicks and no bitch find ur self in some serious ****" not saying ur uncle is gonna dick u over but all im saying is be care full with the money do u have any names in mind , location ? name and location are key

 

Do not mix family and business. Makes holiday gatherings very unpleasant. I am not big on taking loans from people. It really stresses things on top of the stress associated with running a small business. I realize you want to be out on your own, but doing it wrong will be much more painful than delaying until you can afford it.

 

QFT.

If I were you I would start very small. With the tools you already have and rent a small location for 6 months. Get some operational experience and see how it turns out. I would not borrow a large amount of money and get in a hole early.

Maybe you can borrow enough money for two months rent but I would not borrow more than may 2K.

 

Unless you are running your shop as a side job, don't plan on working another job. A shop/business specially for the first year or so, takes up most of your life. This is if you want to actually succeed, you can come in every other day, or come in for 3 hours a day but don't expect your shop to succeed. I'd also start saving money, rather then taking out a loan from anybody. This was one of the best things I felt we have done here. When we opened our doors we took our no loans, and to this day we still never took out a loan.

Right now is also not the best time to open up a business, unless you already have that "word of mouth".

Well put, and yes partnerships usually don't work out, my business is half owned and things have been going great. We have been partners for about a year and 6 months. Its all about having one person still being the boss, or else the business would implode. We both have our task to do, and we both stay focus on getting them done.

 

there is no way you need 40k in tools to start. what tools do you use now for what you do? basic fabrication stuff like a welder, saw, grinder, sander can be had for less than 3 to 4k. don't spend money you don't have on the assumption you can earn it back with a new business. I started my company with my toolbox and a couple grand saved up. I bought my welder, a chop saw, and a belt sander. it held me for the first year or so until the company started to make enough money to buy better equipment. when you are starting it is better to spend more time using crappier tools than to be in dept and be able to get a job done a little quicker. trust me, you will have plenty of free time when you start on your own. and if you do good work you should have no problem being able to afford the tools you want (not need) as the business grows.

and like said before, don't mix family with business. id say at worse case just use a credit card to buy a welder and such to start, and focus on paying that back as quickly as possible. you can even do that now while your working for your dad, start buying tools so when you move out the cost is less.

 

This just honestly sounds like a mess in the making. 40,000.00!!!! What in the hell do you need 40 grand for? Remember your one guy and can only do so much. Do a few functions well versus a bunch of functions so-so. Over time you can build up your services as you find capable people. If you jump in with 40k worth of sh*t and get some business, your gonna go straight under and not have a person that is trained and capable of working for you.

With experience starting a business, yes, you could start more aggressive. Your first time out of the box though, you need to move slowly and cautiously. Start with 10k...spend wisely and see what business you generate, as well as how you handle it all. As your business builds, if you feel there is equipment that can help you grow, go to the uncle and get more.

40k off the bat is just diving in to deep. I've seen some of your work in the past, and I think you need to take things a little slower and establish your skills further. Jumping in with TIG's and Sunnen machines and whatever else....it's just too much.

 

man so much to think about :-)

Okay so I think some of you are on the assumption that I am just your average home fabricator. Not the case, I have been working as a machinist/fabricator for five years now, I have an excellent reputation in my local area. Those who know me all agree that I need to take what I have to a higher level. Basicly, I've been working a "day job" 40hrs/ week, at the same place for 10 years, and joined forces with my dad to help him with his work load about 5 years ago. Somewhere along the way I started building parts for my own cars and freinds cars just for fun. It quickly snow balled into doing things for people I didn't know. Now five years later I have so much work its really interfearing with my "day job", personal life, as well as getting anything done for my dad. I know the skills and knowledge I have picked up along the way are valuable, and I do not want it to go to waste by just keep on keeping on. I cannot grow anymore while trying to juggle a job, family, and trying to keep my situation good with my dad.
I have been in this business for 5 years as I have said, I know what type of equiptment I need to make the kind of money I need/want to make. I did not say I was spending $40k on equiptment (I said $20-25,000). I am only buying equiptment I already use everyday, because I know it makes money. The lathe and mill at my dads shop have paid for themselfs many times over, and will continue to for years to come. I will buy a mill, lathe, tig and mig, forklift, tube bender, saw, grinders etc. add those things up and you get to $20-$25k real fast. The rest of the money will go towards my retail parts store, getting materials in stock, advertising, and setting up the shop, as well as a little buffer for unexpected costs.
I think there is also an assumption that I plan on making my business thrive off of building Honda parts or working on cars...not the case at all (that is a pipe dream). I am very well versed in general fabrication and machining. I currently build handrails, conveyors, compactors, hydraulic shafts, barrels, real world stuff that keeps big business making money. The shop my dad is working out of is located in a small town and he/we are busier than we can keep up with, and we do zero advertising, have no sign on the road, its all word of mouth and being damn good at what we do. I want to move my location to a bigger city, and do some advertising and see what I can make of it.
Still sound unreasonable?

 

The biggest problem I see here is your attitude of not being able to save up the 25k yourself, if you can't do that, I sure as hell wouldn't even consider trying to run a business.

 

Well, I'm 27 years old...how many guys in their 20's have $25k saved up, or can save it in a reasonable time frame? I have been supporting my wife and two kids off of only my income for 4 years now. My "day job" pays my bills and leaves very little "extra", I don't get paid at my dads shop, I trade labor for shop use. So the only "extra" income I have is what I make when fabbing/machining on the side...and there is not enough time left in the day to try to make $25k for the bank account. I totally understand what you guys are trying to say...but a lot of it is "in a perfect world" type serarios. I have never barrowed money in my life from anyone ( exception of a vehicle loan from a bank ). I don't like the idea either, but the bottom line is just about every business out there took a loan to get started. I would love nothing more than to do it without anyones help, but its just not possible. So should I let that stop me? How is it any different than getting a school loan? Other than I will at least have assets to sell if I fail. I know plenty of people paying for school loans that cannot find work in the field they set out for.

 

^^^Based on that post, I would definitely recommend you start with few thousand dollars and figure out how to get your business runing in conjuction with your other activites.