Starting a Machine Shop

Summary: Thinking of owning a machine shop, and wanting to know what you need to do so? Our guide will give you an idea how much capital you would need to buy one, how much is your expected turnover and profit, your equipment needs, where to look for in buying an existing shop.

A machine shop is a capital intensive business mainly because of its equipment needs.

Machine Shop Equipment Need

The equipment needed in a machine shop will depend on what the machine shop would do. The equipment could come in different sizes for performing work on or producing materials of different sizes and different grades of refinement too. For practical reasons, it is wiser to have tools that are durable and can do a variety of functions. Generally, a machine would need machine and cutting tools; vise benches; tools for refining, measuring and adjusting; marking-off table; electric or manually-driven portable tools; and equipment for lifting and moving heavy work. It would further need a storage room for these tools when they are not in use. Storage and space are the factors that you need to consider when thinking about starting this business at home.

Machine Shop Financial Figures

Machine shops can build large projects such as aircraft; provide support spare parts for aviation and marine industries, among others; provide various services to the semi-conductor or medical fields; or specialize in repairing motor vehicles and trucks, radiator, hydraulic and brake pipes. Generally, their services encompass prototyping, production of parts, assembly and testing. Machine shops can be bought from about $400,000 to millions. It can report turnover of $300,000 to millions. Profit in this kind of business is generally 10 to 20% of turnover or $100,000 to $200,000.

Buying a Machine Shop

BusinessforSale.com has a long list of machine shops for sale in the U.S. and all over the globe. One factor to consider when buying a machine shop is the length of time that the shop is operating. A longer time of operation could mean a solid client base for you. Other features to consider are the shop's accessibility, potential for expansion and profitability record. Sellers usually advertise that a business is earning, if it does. Also look into the reason why the owner is selling, as well as the business' standing with customers, its reputation, and credit record.

Examine the purchase price and determine what is included in your purchase. Does it include inventory and stock value, furniture, fixture, and equipment? Is the owner willing to train you and your men how to operate the machines? As a prospective machine shop owner it would be advantageous at the start, however, that you have a mechanical background or a trained machine operator yourself.

12 Responses to "Starting a Machine Shop".

2. Pete on 7/20/2009 12:52:31 PM

Benjamin

The licenses are dictated by your state and county. Usually you will have to register your business (DBA or Doing Business As) with the Secretary of State for your state. Then you will have to comply with city or county business licensing. That will mean a visit to city hall. This means compliance with zoning rules. If you are setting up a shop in a garage behind your house you will have to go to the zoning board to ask for a waiver. Also you will have to file for an IRS employer Identification number.

As far as environmental as it pertains to a machine shop is concerned there are minimal requirements unless you start handling lots of solvents, in which case your compliance requirements become more complex. You also have heavy EPA compliance if you paint any products in your shop. There are regulations under the Code of Federal Regulations that govern the airborne release of Volatile organic Compounds.

Also there are regulations at the Federal, State and in most cases local level governing how to dispose of oils and chemicals used in machining. Usually it entails having an EPA approved disposal service remove the material for hundreds or maybe thousands of dollars a barrel. You can search the CFR database. Enter the search term EPA and all the regulations will come up. Also you can contact your state environmental office, sometimes they are helpful. Your county also has an environmental compliance officer that has the information you seek.

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