Here is a guide on writing a CNC machine shop business plan.
Ever heard of subtractive manufacturing? This term is commonly associated with a manufacturing process where 3D objects are constructed by carving, cutting, boring, grinding, or drilling materials of solids.
Such solids may consist of plastic, metal, bars or rods, etc.
CNC MACHINE SHOP BUSINESS PLAN GUIDE
Now, CNC machining is an important part of subtracting manufacturing. The abbreviation CNC simply stands for Computerized Numerical Control.
Here, pre-programmed computer software is fed into the system which then determines or dictates the movement of a variety of factory machinery and tools.
The brief explanation provided above should suffice for the uninitiated. Now, if you’ve been a player in the subtractive manufacturing industry before, the above explanations will be unnecessary. However, planning or setting up your independent operation or CNC machine business is very vital.
This is where we step in to help you in the planning process.
Great businesses are borne out of diligent planning and implementation. This is why we’re interested in showing you just what you need to include when writing your CNC machine shop business plan.
Sufficient funding is one of the main requirements upon which every business thrives. The same applies to a CNC machine shop. While this is true, how you get access to such funds is equally important.
Now, there are several ways to finance your CNC machine shop business. The most common include personal savings, bank credit, family and friends, partnerships, money lenders, angel investors, venture capitalists, and customers just to name a few.
However, one of the most effective and reliable ways of sourcing for funding for small businesses such as yours is the U.S government’s Small Business Administration (SBA) loan program.
Before we go any further, it’s important to mention the bureaucratic bottlenecks involved in the process. Lots of businesses apply for this loan each year which adds to the competition. Nevertheless, getting an SBA loan will be worth your time.
How good your business plan is will determine if you get the needed funding or not. The SBA (as well as any lender) wants to know your story about how viable the business idea is. You have the responsibility to show where the money is.
One of the key aspects of your CNC machine shop business plan must be the clear identification of your target market or customer base. CNC manufacturing is quite wide with different company types having their different CNC needs.
For more clarity, your CNC machine shop may be any of the following; prototype-producing, product-producing, tooling-producing, and workpiece-producing shop. Your target customers or clients will depend on what your CNC machining specializations are.
Prototype-Producing CNC Machine Shop
As the name implies, this class of CNC machining shop specializes in the production of prototypes.
Product producing companies are mainly targeted clients here. They rely on your prototypes to manufacture or produce goods.
Product-Producing CNC Machine Shop
Product producing companies will also demand a wide range of CNC machine shop products and services. Your business will serve as a support to the type of services and products it develops or manufactures.
Tooling-Producing Machine Shop
A lot of businesses rely on tooling-producing CNC machining shops for a variety of needs. You’d be producing a wide range of tools that include gages, cutting tools, fixtures, and dies among others.
Workpiece-Producing Machine Shop
This type of business specializes in the production and sale of a wide variety of workpieces to product-producing companies. There’s never a short supply of demand for such tools as they are essential to the production process of goods and services.
Being able to identify your niche area helps you easily identify your target market or customers. This should be spelled out in your business plan.
What Timeframe Do you Have in Mind?
One of the keys to operate a successful CNC machining shop is setting a realistic timeframe within which your business is expected to turn a profit. More often than not, entrepreneurs make the mistake of assuming steady growth can be attained much sooner.
As a technician with significant experience in CNC machining, it’s an entirely different ball-game to operate one than working in one. Business owners face greater challenges than workers. Not only are you tasked with managing your business operations, but you’d also be involved in ensuring client satisfaction among several things.
You’re likely to discover that things aren’t as they seem. Therefore, we recommend setting a realistic timeframe for organic growth in your business operations. This process shouldn’t be rushed. The target you set in your business plan helps you manage your expectations better.
In your bid to set up a CNC machine shop, you should know that it’s a capital intensive venture that will require adequate funding. Apart from the cost of buying the right machinery, there are running costs as well.
Such running costs will include advertisements, payment of utilities, wage bills, and maintenance among other things. You should have these properly worked out for better management of the business.
Being able to identify all possible expenses helps you plan better, thus avoiding insufficient funding which can cripple the business.
For your CNC machine business to become profitable and grow, you’ll need to adopt effective marketing strategies. Several strategies have been tested with very effective results to show. They include forming strategic partnerships, offering diverse services, and rewarding referrals.
You can also boost your sales by identifying your specialty and leveraging it on LinkedIn.
Forming Strategic Partnerships
A CNC machining business with clear-cut marketing strategies is likely to perform better than one without it. Strategic partnerships can be entered into with competing CNC machining shops near you. Here, you promote and advertise for one another.
Offering Diverse Services
There is always one form of improvement or the other in machining technology. Paying attention to such trends and adding them to your list of offerings enables you to offer wider and better services.
One of the most effective promotion strategies for CNC machine shops involves rewarding referrals. Satisfied and loyal clients go out of their way to recommend your business to potential clients within their circles. This is even more effective when there’s a reward system in place.
Identifying Your Specialty
If you want your CNC machining business to stand out, you’ll need to identify your specialty. There are several specializations within this field. Some viable areas include CNC services, rapid prototyping, and custom parts, etc.
Leveraging on LinkedIn
Promoting your business has never been easier using the right social media platforms. LinkedIn is one of the effective tools for B2B promotion. Consider including this among your strategies.
This CNC machine shop business plan provides the necessary guidance needed to establish and grow a strong business operation. You’ll need to be diligent in carrying out all recommendations provided here to enhance your chances of success.