business plan for cnc machine shop

CNC Machine Shop Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business Plans » Construction & Engineering

Are you about starting a CNC machine company? If YES, here is a detailed sample CNC machine shop business plan template & FREE feasibility report.

If you are looking for a profitable engineering business whose products can be used by players in the production industry, then one of your options is to open a CNC machine shop company. Starting a CNC machines shop company is relatively capital intensive because of the expensive lathe machines, milling machines, grinders, drill presses and other machines and equipment needed to run the business.

It also requires serious planning and hard work but the fact remains that it is indeed a profitable business to go into. Below is a sample CNC machine shop business plan template that will help you successfully launch your own business.

A Sample CNC Machine Shop Business Plan Template

1. industry overview.

A machine shop is a room, building, or company where machining, a form of subtractive manufacturing, is done. In a machine shop, machinists use machine tools and cutting tools to make parts, usually of metal or plastic (but sometimes of other materials such as glass or wood).

A machine shop can be a small business (such as a job shop) or a portion of a factory, whether a toolroom or a production area for manufacturing. The parts produced can be the end product of the factory, to be sold to customers in the machine industry, the car industry, the aircraft industry, or others. In other cases, companies in those fields have their own machine shops.

CNC machine shop business is a subset of the Machine Shop Services industry and businesses in this industry cuts raw materials into specific shapes and sizes using a variety of tools such as lathes, milling machines, grinders and drill presses.

Almost all forms of metal product fabrication involve machining, and industry operators may also machine plastic and composite materials. In the U.S., the industry generates over $44 billion annually from more than 19,685 registered and licensed machine shops (CNC machine shops inclusive).

The industry is responsible for the employment of over 248,609 people. Experts project the machine shop industry to grow at a – 0.1 percent annual rate between 2014 and 2019. It is important to state that no machine shop can boast of having a lion market share of the market in the industry in the united states of America.

A recent report published by IBISWorld shows that the Machine Shop Services industry has remained largely unchanged after posting two years of revenue declines and three years of revenue increases over the five years to 2019. Revenue has decreased marginally at an annualized rate of 0.1 percent to an estimated $43.8 billion in 2019.

Although nearly all of this industry’s downstream markets have expanded over the past five years and are currently operating with improved market conditions, falling metals prices between 2013 and 2016 contributed to lower revenue in that period.

Rising metals prices after 2017 is propelling industry growth, with revenue expected to rise 0.1 percent in 2019. Technological advancement in machining is largely driven by the defense and aerospace markets. It is important to point out that a machine shop can be a capital intensive business, because the purchase of equipment can require large investments.

A machine shop can also be labor-intensive, especially if it is specialized in repairing machinery on a job production basis, but production machining (both batch production and mass production) is much more automated than it was before the development of CNC, programmable logic control (PLC), microcomputers, and robotics.

It no longer requires masses of workers, although the jobs that remain tend to require high talent and skill. Training and experience in a machine shop can both be scarce and valuable. Some of the factors that encourage aspiring entrepreneurs and investors to start a CNC machine shop is the fact that the market for its products is growing rapidly in the United States and it is not seasonal.

That makes it easier for entrepreneurs who are interested in the business to come into the industry at any time they desire; the entry barriers might be high but that any serious-minded entrepreneur can comfortably raise the startup capital even if it means collecting loans from the bank.

The machine shop services industry is a highly profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business as long as you are able to obtain the required license and permits; you can choose to start on a small scale producing and supplying at a cottage level or you can choose to start on a large scale with distribution network spread across key cities all around the United States of America.

2. Executive Summary

Jack Anderson® CNC Machine Shop, Inc. is a licensed computer numerical control (CNC) machine production company that will be involved in cutting raw materials into specific shapes and sizes using a variety of tools such as lathes, milling machines, grinders and drill presses.

We will engage in almost all forms of metal product fabrication. We have been able to lease a production facility that is a perfect fit as it relates to the production facility we want to build, and the facility is centrally located in North Platte – Nebraska. Jack Anderson® CNC Machine Shop, Inc. will produce and supply these component parts to end users at affordable prices.

There is growing interest when it comes to the production of machine component parts and new enterprises are springing up, which is why we spent time and resources to conduct our feasibility studies and market survey so as to offer much more than our competitors will be offering.

We have robust distribution network; strong online presence and our distributors are armed with the various payment options available in the United States.

Beyond the fabrication and supply of standard machine parts/components to production companies in the United States, our customer care is going to be second to none in the whole of North Platte – Nebraska and our deliveries will be timely and reliable.

We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they patronize our products. Jack Anderson® CNC Machine Shop, Inc. will ensure that all our customers are given first class treatment whenever they order machine components from us.

We have a CRM software that will enable us manage a one on one relationship with our customers no matter how large their numbers may grow to. We will ensure that we get our customers involved when making some business decisions that directly affect them.

Jack Anderson® CNC Machine Shop, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible.

We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Jack Anderson® CNC Machine Shop, Inc. is owned by Jack Anderson. Anderson has a B.Tech. in Mechanical Production Engineering and with over 25 years of hands on experience in the mechanical engineering production industry, working for some of the leading brand in the United States.

3. Our Products and Services

Jack Anderson® CNC Machine Shop, Inc. will ensure that we go all the way to be involved in the production and distribution of quality machine components. We are in the industry to make profits and we will ensure that we do all that is permitted by the law in the United States to achieve our business aims and objectives.

In essence, we will engage in;

• Manual and computer numerical control (CNC) milling services
• Turning services to produce cylindrical components
• Drilling and boring services
• Sawing services
• Broaching services to enlarge existing holes
• Fastening services using automatic screw machines
• Grinding and planning services

4. Our Mission and Vision Statement

• Our vision is to be listed amongst the top 5 Computer Numerical Control (CNC) machine shops in the whole of the United States of America.
• Our mission is to establish a computer numerical control (CNC) machine shop that will distribute quality machine parts at affordable prices to retailers, and industries in North Platte and other cities in and around Nebraska where we intend marketing our products and services.

Our Business Structure

Our intention of starting a Computer Numerical Control (CNC) machine shop  is to build a standard Computer Numerical Control (CNC) machine shop whose products will be distributed all across the United States of America and the globe.

We will ensure that we put the right structures in place that will support the kind of growth that we have in mind while setting up the business. We want to put modalities in place that will guide us in hiring people that are qualified, honest, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders.

As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of ten years or more. In view of that, we have decided to hire qualified and competent hands to occupy the following positions that will be made available at Jack Anderson® CNC Machine Shop, Inc.;

• Chief Executive Officer (Owner)
• Production Manager
• Human Resources and Admin Manager

Machine Operators

Sales and Marketing Manager

• Accountants/Cashiers
• Customer Services Executive
• Drivers/Distributors

5. Job Roles and Responsibilities

Chief Executive Officer – CEO:

• Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
• Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization
• Reports to the board

Admin and HR Manager

• Responsible for overseeing the smooth running of HR and administrative tasks for the organization
• Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
• Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
• Defines job positions for recruitment and managing interviewing process
• Carries out induction of new team members
• Accountable for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities.

Production Plant Manager

• Responsible for overseeing the smooth running of the Computer Numerical Control (CNC) machine shop
• Part of the team that determines the quantity and quality of machine component parts that are to be produced
• Maps out strategies that will lead to efficiency amongst workers in the plant
• Responsible for training, evaluation and assessment of plant workers
• Ensures that the steady flow of both raw materials to the plant and easy flow of finished products through wholesale distributors to the market
• Ensures that the plant meets the expected safety and health standard at all times.
• Responsible for using space and mechanical handling equipment efficiently and making sure quality, budgetary targets and environmental objectives are met
• In charge of coordinating automated and computerized systems where necessary
• In charge of overseeing the maintenance of vehicles, machinery and equipment.
• Ensures that proper records of machine components are kept and warehouse does not run out of products
• Ensures that the production facility is in tip top shape and machine component parts products are properly arranged and easy to locate
• Controls supply inventory
• Handle manual and computer numerical control (CNC) milling services
• Handle turning services to produce cylindrical components
• In charge of drilling and boring services
• Handle sawing services
• Handle broaching services to enlarge existing holes
• Handle fastening services using automatic screw machines
• Handle grinding and planning services
• Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
• Models demographic information and analyze the volumes of transactional data generated by customer purchases
• Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
• Identifies development opportunities; follows up on development leads and contacts
• Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company

Accountant/Cashier:

• Responsible for preparing financial reports, budgets, and financial statements for the organization
• Provides managements with financial analyses, development budgets, and accounting reports
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensures compliance with taxation legislation
• Handles all financial transactions for the organization
• Serves as internal auditor for the organization

Client Service Executive

• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
• Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products and services
• Manages administrative duties assigned by the human resources and admin manager in an effective and timely manner
• Consistently stays abreast of any new information on the organizations’ products, promotional campaigns etc. to ensure accurate and helpful information is supplied to customers when they make enquiries

Distribution Truck Drivers

• Assists in loading and unloading machine component parts and raw materials
• Keeps a record of vehicle inspections and make sure the truck is equipped with safety equipment
• Assists the transport and logistics manager in planning their route according to a distribution schedule.
• Local-delivery drivers may be required to sell products or services to stores and businesses on their route, obtain signatures from recipients and collect cash.
• Inspects vehicles for mechanical items and safety issues and perform preventative maintenance
• Complies with truck driving rules and regulations (size, weight, route designations, parking, break periods etc.) as well as with company policies and procedures
• Collects and verifies delivery instructions
• Reports defects, accidents or violations

6. SWOT Analysis

Our goal of starting out in North Platte and service industries only within North Platte – Nebraska is to test run the business for a period of 3 to 5 years to know if we will invest more money, expand the business and then start supplying our machine component parts all around the state of Nebraska, other cities across the United States and the world.

We are quite aware that there are several Computer Numerical Control (CNC) machine shops and contractors all over North Platte and even in the same location where we intend locating ours, which is why we are following the due process of establishing a business.

We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be equipped to confront our threats.

Jack Anderson® CNC Machine Shop, Inc. employed the services of an expert HR and Business Analyst with bias in retailing and distribution to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives.

This is the summary of the SWOT analysis that was conducted for Jack Anderson® CNC Machine Shop, Inc.;

Our location, the business model we will be operating on, well – equipped CNC machine shop, reliable machine component parts, varieties of payment options, quality and our excellent customer service culture will definitely count as a strong strength for Jack Anderson® CNC Machine Shop, Inc.

So, also our management team members are people who have what it takes to grow a business from startup to profitability within a record time.

A major weakness that may count against us is the fact that we are a new Computer Numerical Control (CNC) machine shop and we don’t have the financial capacity to compete with leaders in the industry especially as it relates to leveraging on economy of scales.

• Opportunities:

The industrial production index is a composite measure of output from the economy’s manufacturing, mining and utilities sectors. Higher industrial production increases demand for manufactured metal, machined products and machining services. The industrial production index is expected to increase in 2019, representing a potential opportunity for the industry.

The prime rate to our business is the interest rate charged by banks to their most creditworthy and largest corporate customers. A higher prime rate will make it more expensive for companies to fund expansionary activities. Downstream markets will experience challenges as the prime rate is expected to rise in 2019, presenting a potential threat to the industry.

7. MARKET ANALYSIS

• Market Trends

If you are a close observer of Computer Numerical Control (CNC) industry, you will agree that CNC machining is still going strong within the world of manufacturing, showing precipitous growth even amidst the slew of competing technologies and new entrants.

Even so, CNC machining is a wide ocean with many varying interests and trends within it. With so many sub-technologies, it can be hard to keep track of what the latest shifts are so here’s our handy guide for the recent developments in 2019.

A trend that emerges shows that as a result of increased adoption in india, China, Japan and other nations in the region, Asia Pacific is leading the charge. Another factor is that major manufacturers such as Okuma Corporation, Yamazaki Mazak Corporation, and DMG Mori Co., Ltd. are all based in these countries.

As a result, Asia Pacific is probably going to remain a lucrative market, and is poised to remain a leader over the next six years. A large factor that contributes to this growth is government initiatives and investment keeping the market competitive. Asia Pacific stands at USD 22.33 billion in 2018 and is expected to grow further.

So also, Europe is expected to grow as it is considered a major market for advanced technologies. Current roadblocks to beating Asia Pacific in this regard are high barriers of entry and lower investment in the market. On the other hand, the US market is currently saturated with machines.

One of the growth areas within the US has been that of the energy sector, attributing to high demands for alternative new energy sources due to fears of obsolescence of the conventional energy systems. That said, the US is definitely the highest ranking in terms of global Multi-tasking machine tools market.

Growing use of multi-tasking machines in the aerospace industry and high labor cost are the main contributors to this trend.

8. Our Target Market

The machine shop services industry has a wide range of customers; a good number of manufacturing companies, automotive companies, aerospace companies and the likes make use of machine component parts and the services offered in a machine shop.

In view of that, we have positioned our Computer Numerical Control (CNC) machine shop to service businesses in North Platte – Nebraska. We have conducted our market research and we have ideas of what our target market would be expecting from us. We are in business to retail (distribute) machine component parts to the following businesses;

• Machine production companies
• Automobile production industry
• The aircraft industry
• Production companies
• Others related production companies that make use of component fabricated parts.

Our Competitive Advantage

Jack Anderson® CNC Machine Shop, Inc. is launching a standard Computer Numerical Control (CNC) machine shop that will indeed become the preferred choice for companies that make use of fabricated machine component parts.

Our competitive advantage revolves around our ability to attract local support and patronage, easy compliance with government regulations, ability to quickly adopt new technology, ability to raise financing and our ability to follow international best practices.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and objectives.

We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Jack Anderson® CNC Machine Shop, Inc. is in business to attract clients to purchase our fabricated machine parts. We are in the machine shop services industry to maximize profits and we are going to ensure that we achieve our business goals and objectives.

In essence, our source of income will be;

10. Sales Forecast

One thing is certain when it comes to Computer Numerical Control (CNC) machine shop, if your business is centrally positioned coupled with effective and reliable machine fabricators and good distribution network, you will always attract customers.

Jack Anderson® CNC Machine Shop, Inc. is well positioned to take on the available market in North Platte – Nebraska and we are quite optimistic that we will meet our set target of generating enough income/profits from the first six months of operation and grow the business and our clientele base.

We have been able to examine the machine shop services industry, we have analyzed our chances in the industry and we have been able to come up with the following sales forecast.

Below are the sales projections for Jack Anderson® CNC Machine Shop, Inc., it is based on the location of our business, and other factors as it relates to Computer Numerical Control (CNC) machine shop products startups in the United States;

• First Fiscal Year (FY1): $335,000
• Second Fiscal Year (FY2): $650,000
• Third Fiscal Year (FY3): $1.1 million

N.B : This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same products, distribution services and customer care services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

• Marketing Strategy and Sales Strategy

Before choosing a location to launch Jack Anderson® CNC Machine Shop, Inc., we conducted a thorough market survey and feasibility studies in order for us to penetrate the available market and become the preferred choice in and around North Platte – Nebraska.

We hired experts who have good understanding of the Computer Numerical Control (CNC) machine shop line of business to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in North Platte – Nebraska.

In summary, Jack Anderson® CNC Machine Shop, Inc. will adopt the following sales and marketing approach to win customers over;

• Introduce our business by sending introductory letters alongside our brochure to factories, and all the industries that make use of fabricated machine parts and key stake holders in and around North Platte – Nebraska
• Ensure that we have fabricated machine component parts/products at all times.
• Make use of attractive hand bills to create awareness business
• Position our signage/flexi banners at strategic places around North Platte – Nebraska

11. Publicity and Advertising Strategy

Even though our Computer Numerical Control (CNC) machine shop is well structured and located, we will still go ahead to intensify publicity for the business.

Jack Anderson® CNC Machine Shop, Inc. has a long-term plan of opening distribution channels all around the state of Nebraska and other cities in the United States of America which is why we will deliberately build our brand to be well accepted in North Platte before venturing out.

Here are the platforms we intend leveraging on to promote and advertise Jack Anderson® CNC Machine Shop, Inc.;

• Place adverts on community – based newspapers, radio and TV stations
• Encourage the use of word of mouth publicity from our loyal customers
• Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote our business.
• Ensure that our we position our banners and billboards in strategic positions all around North Platte – Nebraska
• Distribute our fliers and handbills in target areas in and around our neighborhood
• Advertise our Computer Numerical Control (CNC) machine shop in our official website and employ strategies that will help us pull traffic to the site
• Brand all our official cars and distribution trucks and ensure that all our staff wear our branded shirt or cap at regular intervals.

12. Our Pricing Strategy

Our pricing system is going to be based on what is obtainable in the Computer Numerical Control (CNC) machine shop line of business. Be that as it may, we have put plans in place to offer discounts once in a while and also to reward our loyal customers especially when they refer clients to us.

• Payment Options

The payment policy adopted by Jack Anderson® CNC Machine Shop, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Jack Anderson® CNC Machine Shop, Inc. will make available to her clients;

• Payment via bank transfer
• Payment via credit cards
• Payment via POS machines
• Payment via online bank transfer
• Payment via check
• Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our clients make payment for our fabricated machine component products purchase without any stress on their part.

13. Startup Expenditure (Budget)

From our findings, we were able to come up with the areas we will spend our resources on and this is what it would cost us to set up Jack Anderson® CNC Machine Shop, Inc. in the United States;

• The total fee for registering the business in the United States of America – $750.
• Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $3,300.
• Marketing promotion expenses in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
• The cost for hiring business consultant – $2,500.
• The cost for insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
• The cost for payment of rent for 12 months at $1.76 per square feet tank facility cum mini depot in the total amount of $250,000.
• The total cost for production facility remodeling – $100,000.
• Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
• Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $150,000
• The cost for Start-up inventory – $300,000
• The cost for store equipment (cash register, security, ventilation, signage) – $13,750
• The cost of purchase and installation of CCTVs – $5,000
• The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, TVs, Sound System, tables and chairs et al) – $4,000.
• The cost of launching a website – $600
• Miscellaneous – $10,000

We would need an estimate of $1.2 million to successfully set up our Computer Numerical Control (CNC) machine shop in North Platte – Nebraska.

Generating Funds/Startup Capital for Jack Anderson® CNC Machine Shop, Inc.

Jack Anderson® CNC Machine Shop, Inc. is a private business that is solely owned and financed by Jack Anderson. He decided to restrict the sourcing of the startup capital to 3 major sources.

• Generate part of the startup capital from personal savings
• Source for soft loans from family members and friends
• Apply for loan from my Bank

N.B: We have been able to generate about $500,000 (Personal savings $450,000 and soft loan from family members $50,000) and we are at the final stages of obtaining a loan facility of $700,000 from our bank. All the papers and document have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.

14. Sustainability and Expansion Strategy

Part of the plans we have in place to sustain Jack Anderson® CNC Machine Shop, Inc. is to ensure that we continue to deliver quality products, services, improvise on how to do things faster and cheaper.

From our findings, another factor that kills new business is financial leakages. In order to plug financial leakages, the management of Jack Anderson® CNC Machine Shop, Inc. will adopt the use of payment machine and accounting software to run the business.

We are quite aware that our customers are key component to the growth and survival of our business hence we are going to continuously engage them to give us ideas on how to serve them better. We will not waste time in adopting new technology, best practices and diversifying our services once the need arises.

Our key sustainability and expansion strategy as a business is to ensure that we only hire competent and technically sound employees, create a conducive working environment and  give employee benefits to all our staff. We know that if we implement our business strategies, we will grow our CNC machine shop business beyond North Platte – Nebraska to other states in the U.S in record time.

Check List/Milestone

• Business Name Availability Check: Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing Point of Sales (POS) Machines: Completed
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Leasing of production facility and construction of production plant: In Progress
• Conducting Feasibility Studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank : In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Printing of Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Purchase of the needed machines, technology, furniture, reservoirs, computers, electronic appliances, office appliances and CCTV : In progress
• Purchase of distribution trucks: Completed
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community : In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Establishing business relationship with fabricated machine component distributors all across the United States of America: In Progress

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How To Start a CNC Business: Ultimate Guide

Written by: CNCSourced

February 20, 2024

For many, starting a CNC business is a dream job. You get to spend your days doing something you’re passionate about, with the potential to earn far more than you would in regular employment.

I know dozens of people – myself included – who have been able to turn their hobby into a thriving business, and while it is incredibly satisfying it is certainly not easy.

Dust Collection

User / customer research, improve machine performance and lifespan, 4. work out your shipping systems, use social media, listening to advice and solving problems, money makes the world go round, how do i find customers for my cnc machining business.

It takes a lot to be successful in this game – and I’m here to walk you through the whole process so you can skip the common beginner mistakes.

There’s a lot that goes into running a CNC business that you might not have considered. You’ve got to have a solid plan for:

• Your start-up costs (machine and materials)
• Market demand (do people actually want what you’re selling)
• Pricing and margins (to make sure you can make a profit)
• Marketing (how are you going to get eyeballs on your product or service)
• Fulfillment (using systems to make sure you can deliver on your promises)

Now, that might seem a little daunting, but it’s all manageable if you just take it one step at a time. I’ll cover it all in this guide.

I’ll set you on the right track to making at least $1000 per month with your CNC business, and then we’ll touch on the next steps for scaling your project with staff members, workplace expansion, and outside investment.

Why Start A CNC Machining Business?

CNCs (including even lower-cost CNC routers) can now easily create complex designs and shapes, from home crafts to office supplies and kitchen implements to original signage, games, and toys.

CNC makers have total freedom to create products that are personalized and different, which makes them very popular on Etsy, Facebook Marketplace, eBay, Amazon, and independent brand e-commerce stores.

You’re not limited to a certain material, either: you can work with wood, plastics and acrylics, glass, and metal (with a strong enough CNC).

CNC products are also popular on social media platforms like YouTube and TikTok. At the press of a button, you can now showcase your designs to a worldwide audience, growing visibility and sales.

Beyond selling products to consumers directly, you can also supply products and parts for manufacturing businesses. Aerospace, automotive, medical, and electronics industries all rely on the type of high-quality, specialized components that CNC machining can produce

CNC Machining Startup Costs

First, let’s list some of the considerations you need to make to run a successful CNC machining business:

• Equipment: CNC machines, tooling, and work-holding devices.
• Facility: building construction or rent, utilities, and insurance.
• Employee: wages and salaries for machinists, IT, and administrative/financial staff.
• Raw materials: purchasing and stocking of materials.
• Hardware and software: office and workshop computers, internet, CAD/CAM software , and simulation tools.
• Tools and consumables: drill bits, cutting tools, lubricants, etc.
• Marketing and advertising: user research, market research, website design, and promotion of the business to potential customers.
• Legal and professional: obtaining licenses, permits, and other professional services.

When you’re starting out, the two key factors you’ll need to produce your products – consider are the machine you’ll be using, as well as the materials you’ll be using for your workpieces.

That’s the core of your business. After that, you’ll look to find ways to increase your output – either through automation techniques or delegating tasks to members of staff. But that comes later!

Choosing the Right Machine

The CNC machine itself will be your biggest outlay in the beginning. Depending on the machine, this can range from a few hundred dollars to hundreds of thousands of dollars for high-end machines.

Then there is the tooling, CNC software , and additional accessories you’ll need to consider to make things fully operational.

If you’re just starting up, you could consider outsourcing your CNC tasks to local shops to begin with, rather than investing in a CNC right away. You might only break even on your projects, but you’ll be able to assess how viable your idea is before taking any risk.

Where possible I highly recommend trying to borrow someone else’s machine for your first month or so, whether it’s a friend’s, a friendly company, or at a makerspace/hackerspace .

When you’re ready to invest, I highly recommend buying a used machine rather than a brand-new one to save on initial costs, and upgrade as you start profiting from your business. There are machine shops closing down all the time, and looking for machine shop auctions in your area is a great way to find a used CNC for cheap.

In terms of the machine itself, a used Haas machine would be an excellent choice. They’re powerful, easy to run, and are built like a tank. A used Haas machine will also hold its resale value, so you won’t lose much if you change your mind about getting into this business.

You can learn more about the best CNC machines for small businesses in our full guide – but whichever CNC you choose, consider the type of work you will be doing and how much of it you plan to do – so you don’t overspend.

You can easily start with a cheaper, less powerful and smaller CNC machine , and build up to large router or milling machines as you build your income.

Whatever your needs are, try and keep them focussed. Working with a tighter range of materials and product types means you don’t need as much different equipment, and there’s less of a learning curve for you (or any teammates).

P.S We have full guides for the best CNC routers for all of the most popular materials, including aluminum , and woodworking projects. Also, if you need to broaden your understanding of CNC technical terms, we also have a comprehensive guide on CNC terminology to help you.

I cannot stress enough how important it is to invest in a good dust collection solution. 

It’s not just about keeping the workspace clean and tidy. The dust generated during the CNC process can wear out your equipment quicker, cause respiratory issues, and even lead to fires if left unchecked.

A vacuum cleaner simply won’t cut it if you plan on using your CNC machine for business purposes. You need a much bigger and better solution to effectively capture and filter dust particles. Trust me, you’ll thank yourself later if you invest in this early on.

I recommend a dust cyclone system connected to an impeller (~2HP) and 100mm (4″) piping, connected to a canister filter (preferably ~0.3-0.5 micron).

Additionally, at the spindle, it’s important to have a good dust shoe with compressed air to blow out the wood chips. This is because the 100mm piping will have low pressure but high volume, so it won’t be able to suck with as much power as a shop vac up close.

This is the system I use in my workshop, and while it may seem like an unnecessary cost when you’re just starting out, it’s going to save you money replacing damaged equipment in the long run.

Market Research

Market research is key when starting a CNC machining business. It’ll help you identify the potential demand for your products or your services, and help you understand the current industry trends. Some potential areas to research in the CNC industry include:

Market demand

Research which parts and products are most in demand in your target industries and your local market. Identify the customers that need CNC machining services and which applications they need most. This will vary depending on if you’re targeting B2B (local businesses as a service), or B2C (selling custom products to customers on Etsy or similar).

Industry trends

Keep informed about the latest industry trends. Watch emerging technologies, processes, and materials. Be aware of new standards, certifications, and regulations. For example, AI is almost certainly going to be built into CAD/CAM software over the next year , so learning good prompting for design will save you an enormous amount of time designing in the future.

Supply chain analysis

Make sure you’re familiar with how the supply chain of the CNC industry works. Research the manufacturers and suppliers of machines and raw materials. Look into potential suppliers that could reduce your costs, and think about how your workshop layout can be improved to make your processes more efficient.

Industry associations

Join CNC industry associations, both local and national. Attend events and trade shows. Get networking to advance your knowledge on best practices, technology innovations, and the latest industry trends.

Knowing your customers is an essential part of not only the CNC product development process but also understanding who your target audience is. 

Applying some of the following steps will give you a better idea of these important requirements:

• Identify your target audience: Before anything else, you should have a clear idea of the audience you’re targeting. Perhaps you’re using your CNC machine to supply shelving, furniture, wall art, or candle holders for a domestic customer base.
• Conduct surveys: Conducting surveys can gather invaluable feedback from users. Structure survey questions to identify your target market’s preferences , pain points, and needs. Also, find out how easy it is to use existing products. This kind of feedback can provide better direction regarding design and service requirements.
• Carry out interviews: Interviewing your target audience gives you more in-depth insights about what your users actually need , and what they would prefer from your products or services. You can do this face-to-face or remotely, and either speak to a single person at a time or as a group.
• Analyze the data: Once you’ve collected the data from your user research, analyze it to identify important trends and patterns. Identify the main preferences, needs, and common pain points among your target audience.
• Build a user persona: Once you’ve analyzed all your data, you can build your user persona . This is a profile of your typical user, their age, demographics, buying habits, and personal needs – this is who you’ll focus on marketing to.

Use these insights you’ve gained through market and user research to find anything you can improve in your process, marketing, or whether you need to pivot to a different niche within CNC manufacturing.

Identify Your Unique Competitive Advantage

I’ll cut to the point: the CNC market is oversaturated.

It is easy to fall into the trap of thinking that you can open an online store, sell whatever you like, and become wealthy overnight. 

You’ve seen guys on Youtube talking about how much money they’re making – sounds easy, right?

In reality, there are companies selling similar products for insanely low margins, and producing them far faster than you possibly could.

To convince someone to give you their money instead of a competitor, you need to identify a reason why they should.

You’ll have a chance to succeed if you can beat the competition in one of three areas

As a one-man army, you’re very unlikely to be able to compete on price. You’re battling against huge businesses that can buy their materials in bulk and outsource their labor incredibly cheaply. Do not try to match their margins.

And given the difference in machinery and infrastructure you have available compared to these huge corporations, you won’t win on speed either, unfortunately.

So that just leaves quality where can stand out and add value to the consumer

Quality is a broad term, but in this case, I’ll summarize it as something that people just can’t get elsewhere – which is either going to be something hyper-specific, or personalized so it is unique.

If people can’t get what you’re offering elsewhere, of course it’s the best quality option available – because it has nothing to compete against!

The best way to produce CNC products that sell as a beginner is to use your CNC expertise and design skills to produce one-of-a-kind products that your customers cannot find elsewhere.

Choosing Products That Will Sell

When it comes to deciding which products to focus on for your CNC business, you have to start by identifying a genuine need among potential customers.

Consider what problems you or others around you have that could be solved with anything a CNC machine could make. We’re looking for the intersection between the type of items you’ll be happy to work on every day, and what people are actually willing to pay for!

While there may be competitors with larger machines and cheaper labor, you can set yourself apart by offering a unique product that can’t be easily found elsewhere.

Remember, the CNC machine itself is just a tool – the real value lies in the product you create with it.

Pick Something You Can Build a Range Around

It’s much easier to convince people who have already bought from you to buy again than it is to find new customers. 

So, your focus should be on giving your customers a good experience , and then retargeting them with other products they might be interested in.

Be specific, because you’re going to have to brand this at some point. Think about products that consumers might buy together to increase your average order value (AOV).

Repeatable Products

It’s also worth considering the potential for scalability and the opportunity to produce large quantities of a particular product.

The more repeatable the production process, the more efficient you can be, ultimately leading to increased production output and profitability.

One way to achieve this is by choosing products that have a consistent design and require minimal setup changes between runs. You do NOT want to be using new equipment, tools, or software for each individual order – keep things consistent.

This is much more scalable than a business that relies on producing original custom art for every order or having to adapt to a new material type for each engraving.

When it comes to pricing your CNC-produced products, it is important to strike a balance between pricing and production efficiency. You don’t want to spend too much time and effort on a product if the profit margins are too low.

That’s why I recommend personalized products where you can charge a premium price. You get rewarded in line with the unique value you can bring to the market, and customers are willing to pay extra for something that’s tailored to their specific needs and tastes.

You’re going to need to sell relatively expensive products to generate enough margin to make a good income – so make sure your core offer is at least $50 per product.

Trust me, no one ever got rich making $1 per sale from $10 products. You just won’t have the resources you need to sell enough products to make a living if you’re lurking in the bargain basement.

So that’s your core offer – but even with that in mind, you’ll want to consider a couple of cheaper add-on products that your ideal customer might also be interested in adding to increase your average order value.

Analyze your competitors

Analyzing your direct and indirect competition in the CNC industry is complex and time-consuming, but essential for learning how to market your business, and shows you what’s working well for them.

• Identify key players: Research the key international players within the CNC industry. Companies like Haas , Mazak , Okuma , and some others may not be in direct competition as they manufacture CNC machines, so these aren’t as useful to study. Instead, if you’re starting a CNC service, investigate successful machining services close to you. 
• Marketing research: Look at their websites, social media, public client lists, SEO strategy, and lead generation forms. Note what looks good, and what looks to be working well.
• Research pricing: See what your competition charges, and whether you can realistically compete here (or if you need to compete on quality, or in another area instead).
• Look at competition trends: Look closely at those of your anticipated direct competition and see how these may have changed over time. This will give you insights into whether you can expect increases or decreases once you begin trading and into the future.
• Assess market share: Look at the market share of your direct opposition. You’ll get a better idea of which businesses are dominant, and what they’re doing right that got them there — so you can replicate this.
• Consider the competition’s customer base: It helps to know what customers your competition is focused on. Logically, if they’re direct competitors of yours, you’ll want to convince some of those customers to move across to your business.

Try to understand your competition and their pricing and systems. In that way, you’ll be more informed regarding strategic planning and when you buy and sell, or operate as direct competition on projects.

Stay on top of trends in CNC (and new technology)

Staying on top of CNC machinery technology lets you get more efficient, and provide the highest-quality products and services. In this way, you’ll stay competitive within the industry and cater to your customer’s ever-changing needs.

Consider the following to grow and maintain a foothold in the CNC machinery sector you choose:

Reduce potential damage through upgrades

CNC machinery is evolving all the time. Upgrades, such as to a vacuum table, for example, reduce any chance of collision with workpiece holders, and is better for keeping your machines in good shape as well as health and safety.

Enhance speed and scope with multi-axis, modular machinery

Multi-axis CNC laser cutting, milling, and waterjet machines are getting cheaper as technology improves. The best multi-axis CNC machines can cut two parts at the same time, while others can cut and perform another task like boring simultaneously.

Granted, one of these machines may still be too costly for a small business, but it is worth staying on top of the technologies.

If you are able to utilize more axes in workpieces, you’ll reduce the time of setting up your machine and can tackle more complicated tasks (that are often the most profitable projects).

Sensors have become more efficient and affordable, with many companies in the CNC industry incorporating them into their current systems. This helps increase the performance and lifespan of the machines.

By connecting CNC machines to the Industrial Internet of Things (IIoT), businesses can take advantage of a network that combines both software and hardware. This allows them to share and use data more effectively, ultimately improving their operations. If you have a CNC business, you can likely benefit from using IIoT technology for your sensor and data-sharing needs.

How to Sell Your Products

If you’re new to selling CNC products, I recommend getting started with Etsy.

It’s a super easy platform designed for selling custom-made products, with a good stream of built-in traffic to help you get some initial exposure and acquire your first few customers.

From there, you can look to build out more “sophisticated” marketing strategies (more on that in a second), but for now, the name of the game is gauging demand for your products and getting the ball rolling with your first few sales.

You can have your first few listings up within an hour or so – and it’s a really good way to test the waters.

The feedback you get from customers around pricing, quality, and ideas for new products or tweaks to your existing offer can be really valuable before you go ahead and invest a load of time and money in your own website or a paid marketing campaign.

My Top Tips for Etsy

1. run sales.

I generally find that running sales on Etsy helps my listing get more exposure and generate more sales, so I recommend pricing your products a few dollars higher than you would otherwise and running frequent promotions (somewhere between 10-20% off is enough)

2. A Picture Says a Thousand Words

It’s really important to take high-quality photos of your products to help them stand out on the search page.

Professional-grade camera equipment will get you the best possible results, as well as staging “action shots” of your products to help your customers get a real sense of how they look in real life.

• Photograph in natural light – Using natural sunlight assists with soft lighting that can improve how your item looks. Try capturing images outside or by an open window. Starting with good lighting means you won’t need to use flash on your camera. Camera flash creates harsh lighting with dark shadows and an unnatural appearance.

• Creatively compose your images – Capture multiple images in different environments to find the best setting to showcase your item.
• Take different types of shots – To showcase your products, you can take different types of photographs to show it in different settings and contexts.

• Leave space around your items – Take your picture from a far enough vantage point where you can see the entire product with extra negative space around your product. This will help when you crop the thumbnail of your listing photo.

• Take photos horizontally – When you upload your photo, a horizontally oriented picture means you’re able to use more of the available space within the thumbnail frame. Vertical images will require more information to be cropped out.

• Clean your camera lens – A dirty camera lens will prevent the ability to capture crisp images that properly focus on the product.
• Try not to zoom – Using the zoom feature on mobile devices and cameras usually results in a digital zoom, which produces a lower-quality image being captured. Instead of using zoom, physically move closer/further away from your item.

3. Optimise Your Titles and Descriptions

You also need to make sure your titles and descriptions follow best practices so that your items appear earlier in search results. Make sure to include all the relevant details in your product descriptions, such as dimensions, materials, and colors in your listing, because customers can search through categories based on these criteria.

(Check the Etsy Sellers Handbook for their official recommendations to have the best chance of attracting more eyeballs).

Last but not least – fulfillment. At the end of it all, you have to get your products in customers’ hands.

Packing, shipping, and dealing with customers can be a time-consuming and challenging part of running an Etsy shop. 

Like producing the products themselves, the easy way to take the pain out of shipping is through a repeatable and systemized process.

I like ordering my packaging supplies in bulk to save time and money, and schedule my deliveries for home pick up a couple of times per week so I’m not always taking trips to the Post Office.

Other Ways to Market Your CNC Business

When you’re ready to take the next step, there are a number of other ways you can invest to grow your new CNC business.

Some more advanced ways you could consider marketing your CNC brand include:

Build a professional website

A top-class website that stands out is a great place to start your marketing efforts. It should aesthetically appeal to visitors, while also being easy to navigate. Provide them with relevant, authentic information about your product and services, as well as your personal backstory (and if applicable, your team’s). Include any awards you’ve won, any publications you’ve featured in, and anything else that builds trust, such as a Trustpilot or other score.

Use search engine optimization (SEO)

If your target audience is searching on Google for local suppliers or businesses, you want to show up first. For local SEO, make sure you have an optimized NAP (name, area, phone number) on your Google Business Profile, and build citations on local directories and industry directories.

And for more general content, create content around the keywords your customers are searching, but also be realistic in what you target — you’ll unlikely outrank Haas for CNC questions as they’re a huge brand with a strong backlink profile. Try to get links from your partners and suppliers, and make sure your site loads fast and is mobile-friendly.

Develop targeted marketing campaigns

With the user research you’ve carried out, devise marketing campaigns. These should speak to your audience’s needs and desires implicitly. Targeted online advertising, direct email campaigns, and website landing pages are all effective for the right audience.

Social media platforms like Facebook, Instagram, LinkedIn, and Twitter can be effective marketing tools. Share photos and videos of your work and processes, and post updates about your current projects and your capabilities. Engage with potential customers via forums, groups, pages, and threads to generate further interest in your brand.

CNC Tool and Machine Mastery

A CNC machinist needs to be a highly-skilled technical operator. You’ll need skills in areas like product design, CNC programming, planning, and quality control. Add the right blend of creativity, reasoning, time management, and problem-solving to the mix — and you’ll be an exceptional CNC machinist and manager of staff.

As you develop your skills, you’ll be able to competently produce more complex designs that you can charge more and achieve a better margin with.

The following traits and skills (among others) will help you and your employees to be successful in the CNC field:

Before you’ll be successful at anything, you need the desire to master it. Without the desire to do something properly, you’ll likely not excel. The other skills and traits on this list won’t matter as much without desire. You need to set yourself high standards and hold your team to those same standards.

Practical aptitude and abilities

As a CNC machinist, you’re going to need to handle tools and display an understanding of the principles of engineering. You may need specialized knowledge of certain CNC machining. Without the aptitude and practical ability, it’ll be very difficult to familiarize yourself with the machine or your role.

Math skills and knowledge of software

You’ll also have to be able to make sense of numbers and math problems to understand models and drawings. You’ll also need expertise in CAM and tool path strategies. You’ll often switch offsets in diameter, for example, to keep the size of cuts exact. You’ll also need to understand CAD, simulators, quality control, audit tools, and file management, among others.

Concentration and attention to detail

As a CNC machinist, you will need to concentrate. The world around you may be going mad, but your single-minded focus on what you’re cutting is needed. You should have the ability to envisage potential problems to make you a great machinist.

If you’re able to identify problems and solve them on the fly, you’ll succeed. It’s all part of the learning curve, and if you have the aptitude for the work, you’ll pick this skill up quickly. While it’s important to solve problems well, listening to co-workers is essential.

Reinvesting in Your Business

First and foremost, the most important investment you can make in your CNC business is making yourself more available. Your first goal should be to use the profits of your CNC business to make a living, so you can decide whether you want to quit your job and dedicate more of your week to growing your enterprise.

Once you’re full-time on your entrepreneurial grind, there are a number of other steps you can take to increase your output and scale your income even further.

The three main levers you can pull are:

• Equipment – High-quality equipment and tools will increase efficiency and reduce downtime. 
• Building a team – Hiring reliable and skilled people will allow you to increase output, and buy back more of your time to work on the business, rather than in it.
• Workspace – Expanding into larger premises, or optimizing your layout to improve workflow and minimize wasted space.

When choosing the right time to buy, consider the potential time-saving benefits that the equipment will provide.

A basic CNC machine can be a good stopgap to cover you across a variety of tools, but if you have the capital it’s a good idea to invest in purpose-built tools for more efficient machining.

For instance, you can plane materials by running a surfacing pass on your CNC, but it will take longer, and the final “straightness/squareness” will depend on the flatness of your cutting surface and the calibration of your CNC machine.

And while you can get away without a bespoke joiner if you’re working with thinner woods, you’ll need to invest in the proper tool if you want to graduate beyond that.

The right tools will give you better results and free up your CNC machine for simultaneous tasks.

On that note – CNC machines can be quite slow, and detail work can take hours per piece. So even if you decide you really need a joiner or planer, you might just consider investing in another CNC machine anyway to increase your output.

However, if you find yourself needing square stock, and it takes too much time to wait for either your CNC or your turn at the planer, then it might be time to invest in additional equipment. 

As your CNC business grows, you may find yourself in need of extra hands to keep up with the demand. But when is the right time to hire new staff?

One sign is when you start turning away work due to lack of capacity, and or are consistently struggling to find time for important tasks like customer care, inventory management or packaging orders.

When it comes to hiring, experience is important, but so are soft skills. Ideally, you want someone who not only knows their way around a CNC machine but also has good communication skills, can work well in a team, and is open to learning new things.

When evaluating potential hires, ask about their previous experience working with CNC machines, and ask them to demonstrate their skill – we can all bluff in an interview, but a trial day doesn’t lie.

In addition to technical skills and communication abilities, it’s also important to consider the individual’s work ethic. CNC work requires attention to detail, patience, and persistence. A good candidate should be willing to put in the effort and time required to ensure high-quality results.

As your CNC business grows, you may find yourself running out of space in your home workshop or communal workspace. While these spaces may be convenient and cost-effective in the early stages of your business, they come with several drawbacks that can limit your potential for growth.

Working from a home workshop may seem like an attractive option for cost savings, but it can lead to distractions and interruptions that can hinder productivity. There are safety concerns to consider when working with heavy machinery which may not be adequately addressed in a home workshop.

Similarly, communal workspaces may have limited access to equipment and resources, which can impact your ability to complete projects on time.

To overcome these limitations and take your CNC business to the next level, it may be appropriate to expand your work premises and move to a dedicated warehouse.

With a larger workspace, you can increase your production capacity, take on larger projects, and improve overall efficiency, leading to increased revenue and profitability.

When considering a move to a larger workspace, it’s important to consider the location, size, and layout of the new facility. 

You’ll want to ensure that it’s easily accessible for your employees, suppliers, and customers, and that it has sufficient parking and loading/unloading areas for your equipment and materials. 

Expanding Your CNC Business Through Investment

If this is your first CNC business, I strongly recommend starting small. Save up a little, and invest that money in the essentials and grow at a manageable pace.

If you’re up and running and are having some success, you may consider trying to find some outside investment to turbo-charge your growth.

For that, you’re going to need a compelling business plan.

Lenders or investors need to see you’ve got some business sense and will invest the money prudently, and understand the expected returns for that investment.

This means drawing on all the research you’ve done and collating it into a single document that inspires trust.

Let’s take a look at what you should include:

Who Are You?

• Executive summary: You should open your plan with an executive summary. With this, you provide an overview of your CNC machining business, including a mission statement, financial projections, and proposed target market.
• Company description: Your company description should detail the types of CNC machining services you’ll offer, the products you’ll make, etc. Don’t confuse people with jargon and nonsense — try to explain everything as simply as possible, but without sacrificing detail. Also, mention the potential location of your CNC machining business. Include anything from your working history that will support your suitability to run a small business or a large one — investors need to trust your expertise and that you know what you’re doing.

What Do You Offer?

• Research and analysis: The research you’ve done comes in handy now. You should include the results of the analysis you’ve done from your research into the CNC market and its trends, your competition, and your target audience. Detail the type of research you’ve carried out, and summarize how it leads to your confident projections as a result. This is an important part of your business proposal. It shows financial institutions or potential investors how thorough you are as a business owner.
• Services and products: Describe in detail the specific CNC services and products you’ll offer. You might be manufacturing prototypes for business or custom parts through a custom manufacturing shop. If you are going to involve your business in the design of products for customers, mention this fact. List and define any other services, such as consulting for manufacturers, that you also intend to offer.

How Are You Going to Execute?

• Marketing and sales: Show how you’ll reach your audience and how you plan on keeping them once they’ve approached you. Provide insight into your website, your online marketing, and your physical marketing. Define your brand in detail and add samples of promotional materials and links where possible. You need to convince those reading your plan that you’re in the process of founding a successful CNC machining business.
• Operations and management: Banks need to know about your plans for hiring and any other processes. Also show how you’ll be able to manage your team efficiently. Give a detailed breakdown of the technology and equipment your new business will have. This way you’ll provide insight into the quality of work you’ll be able to produce.
• Financial projections: You’ll want to be as detailed as possible here. Include startup costs, cash flow projections, and profit and loss predictions over the next years, and any existing figures if you’ve already started the business. Showing you’re organized and fluent with the numbers is the most important thing you can do here. And be precise.
• Funding requirements: Give an outline of why you need the amount, and show exactly how you plan to use the money. Again, being precise is essential. A last tip on this point: make sure you include details of your business bank account.

Do I need any special certification or training to start a CNC machining business?

No, you don’t need any formal training or certification to start a CNC machining business! Though, if you have experience in engineering, machining, or a related field, this will definitely come in handy. You’ll likely have to apply for a business license and any local permits to operate heavy machinery, and you’ll also need a taxation number.

What are some challenges I could face if starting my own CNC machining business?

A common challenge you might face when starting a CNC machining business is finding skilled employees and retaining their services. It can also be challenging and expensive to keep up with the latest technologies and equipment while managing cash flow and costs.

Plus, it can be demanding to balance the production capacity of CNC machining with customer demand.

Network with other businesses and attend trade shows and industry events. Create an online business presence on social media and through a website. Keep your services excellent, and your pricing competitive.

Final Thoughts

Starting a successful CNC machining business requires careful research and planning. You’ll need to identify your direct competition, your target market, and your services and pricing structures, plus you’ll also need to know how much does a CNC cost . Follow this by developing a market strategy based on the findings of your research. Only then should you select the equipment you need and identify your future staff.

Establish a business proposal and approach financial institutions or investors – be sure to include your skills and certifications.

If there’s any way we can be of assistance from the beginning of the process to the end, feel free to contact us and we’ll guide you through CNC machining.

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How to Start a CNC Machining Business

Many products that businesses use and sell are made through a highly precise process called computer numerical control (CNC) machining. CNC machining businesses specialize in this type of manufacturing, which uses computer-controlled machines to produce products with a high degree of accuracy.

Learn how to start your own CNC Machining Business and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services .

Start a CNC Machining Business by following these 10 steps:

• Plan your CNC Machining Business
• Form your CNC Machining Business into a Legal Entity
• Register your CNC Machining Business for Taxes
• Open a Business Bank Account & Credit Card
• Set up Accounting for your CNC Machining Business
• Get the Necessary Permits & Licenses for your CNC Machining Business
• Get CNC Machining Business Insurance
• Define your CNC Machining Business Brand
• Create your CNC Machining Business Website
• Set up your Business Phone System

We have put together this simple guide to starting your CNC Machining Business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas .

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

What will you name your business?

• What are the startup and ongoing costs?
• Who is your target market?

How much can you charge customers?

Luckily we have done a lot of this research for you.

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our CNC Machining Business Name Generator

If you operate a sole proprietorship , you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name , we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability .

It's very important to secure your domain name before someone else does.

Want some help naming your CNC Machining Business?

Business name generator, what are the costs involved in opening a cnc machining business.

CNC machines aren’t inexpensive. Lathes alone can cost anywhere from a few thousand dollars to tens of thousands, and many shops have several pieces of equipment. Nevertheless, there are ways for business owners to keep their startup costs relatively low -- and it’s possible to start a CNC machining business for very little.

First, many business owners start out working from their garage or a workshop that they already have. This eliminates the need to lease a workspace until there’s regular work.

Second, business owners don’t need lots of equipment or the fanciest available equipment when first getting started. For example, Todd Adlon opened his shop with just a mill and a lathe, adding equipment later on. Several other business owners got started with just a basic lathe.

Having only basic equipment will limit the amount and type of work that a CNC machining business can do, but there’s enough basic work available to support a small shop that has only one or two machines. Specifically, there are lots of clients who need prototypes made, and larger shops often won’t make one-off prototypes.

What are the ongoing expenses for a CNC Machining Business?

The ongoing expenses for a CNC machining business can be substantial. They include raw material costs, utilities, equipment maintenance costs, lease payments, and employee salaries.

Who is the target market?

Most CNC machining businesses serve other businesses, although a few make products that are directly marketed to individuals.

Business-to-business machine shops can be divided into two categories: job shops and product shops . Job shops take orders from clients and then make items that are built to their client’s specifications. Product shops design and create their own products, then sell those products to businesses.

How does a CNC Machining Business make money?

A CNC machining business makes money by selling machined parts. Prototypes may be sold as single items, but most orders are for large quantities of the same part.

The cost of CNC machining job varies greatly depending on the type of product ordered, how many are ordered and whether there are special setup requirements. Kennewell CNC Machining  uses the following rubric to set prices for lathe jobs:

• A setup charge of $120 to $160
• Raw materials are marked up by 20 to 35 percent
• Special fixtures are added onto the total cost
• Machining is charged at a rate of $60 to $150 per hour
• Post-machining work that’s subcontracted is marked up by 20 to 35 percent

How much profit can a CNC Machining Business make?

Most successful CNC machining businesses operate on a 10 to 15 percent net profit margin. For a shop that has just $500,000 in annual work, that generates a profit of $50,000 to $75,000 on top of the business owner’s salary.

How can you make your business more profitable?

CNC machining businesses can increase their profitability and diversify their revenue by slowly expanding the machining services they offer. Shops can do this without taking on too much risk if they only expand when a contract for a different type of work becomes available. If a contract will pay for a new piece of equipment, then taking on that creates an easy way to afford new machinery that lets a business expand its offerings.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship , partnership , limited liability company (LLC) , and corporation .

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your CNC Machining Business is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services . You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website . If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil .

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history , which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate a 3D printing design business. Learn more about licensing requirements in your state by visiting  SBA’s reference to state licenses and permits .

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses .

Trademark & Copyright Protection

If you are developing a unique product, concept, brand, or design, it is prudent to protect your rights by registering for the appropriate trademarks and copyrights.

Learn more about trademark and copyright protection

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance . This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance . If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners , we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended : Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker .

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator . Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a CNC Machining Business

CNC machining businesses may reach potential clients through industry organizations, networking events, and old-fashioned cold calling. Some businesses also have success working through platforms like Xometry , which matches product designers and other clients with CNC machining businesses.

How to keep customers coming back

CNC machining businesses can set themselves apart from many competitors by getting certifications that matter to their clients. Following ISO 9000 standards and becoming ISO 9001-certified are two marks that clients look for.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business .

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

• All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
• Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
• Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended : Get started today using our recommended website builder or check out our review of the Best Website Builders .

Other popular website builders are: WordPress , WIX , Weebly , Squarespace , and Shopify .

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: Phone.com

Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

Anyone who likes building things and working with their hands may enjoy running a CNC machining business. Although machined parts are made by computerized equipment, there still is a substantial amount of hands-on work involved in the manufacturing process.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a CNC Machining Business?

CNC machining involves loading materials into machines, programming machines, and letting the machines run. Depending on the work being done and type of machine, it may be necessary to manually operate the machine or manipulate the parts at certain times.

When not working directly with machines, business owners and employees take customer orders, order additional supplies and ship completed orders. Additionally, there is usually a designated person who schedules the machining work to maximize efficiency. This person may be the business owner or an employee.

What are some skills and experiences that will help you build a successful CNC Machining Business?

Business owners must know how to operate CNC machines, which is more complex than using non-computerized equipment. Most business owners have previous experience working as a CNC machinist for other businesses, and those who aren’t already familiar with these machines may want to spend some time working for someone else before opening their own shop.

Additionally, business owners can take CNC machining classes. Vocational schools, technical schools, and community colleges sometimes offer such courses, and there are also online programs. Tooling University and SME are two organizations that offer online courses.

What is the growth potential for a CNC Machining Business?

A CNC machining business can remain a small operation that’s run by one or two people, or it can grow to be a large company that completes orders for clients throughout North America. American Tooling & Prototype is a local CNC machining business in Ann Arbor, Michigan, and Plethora is an example of a larger company.

TRUiC's YouTube Channel

For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.

Take the Next Step

Find a business mentor.

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

What are some insider tips for jump starting a CNC Machining Business?

Todd Adlon and many other business owners warn against growing a CNC machining business too quickly. Investing in equipment and hiring employees before a business is ready to only increases overhead and makes it harder to remain profitable.

Instead, a strategy that slowly grows a CNC machining business is more likely to provide long-term sustainability and profitability. Business owners should only hire employees once there’s enough work for them do to, only purchase machines once there are employees to operate them and only lease larger spaces once there’s the equipment to fill it.

How and when to build a team

Many business owners start out working by themselves, bringing on CNC machinists as employees once the business’ workload and revenue allows. Half of all CNC machinists make between $20.20 and $31.28 per hour, according to the Bureau of Labor Statistics .

Useful Links

Industry opportunities.

• National Tooling and Machining Association

Real World Examples

• Advanced CNC Machining

Have a Question? Leave a Comment!

Machine Shop Business Plan Template

Written by Dave Lavinsky

Machine Shop Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their machine shops.

If you’re unfamiliar with creating a machine shop business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a machine shop business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What is a Machine Shop Business Plan?

A business plan provides a snapshot of your machine shop as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan for a Machine Shop

If you’re looking to start a machine shop or grow your existing machine shop company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your machine shop to improve your chances of success. Your machine shop business plan is a living document that should be updated annually as your company grows and changes.

Sources of Funding for Machine Shop Businesses

With regards to funding, the main sources of funding for a machine shop are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for machine shop companies.

Finish Your Business Plan Today!

How to write a business plan for a machine shop.

If you want to start a machine shop or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your machine shop business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of machine shop you are running and the status. For example, are you a startup, do you have a machine shop that you would like to grow, or are you operating a chain of machine shops?

Next, provide an overview of each of the subsequent sections of your plan.

• Give a brief overview of the machine shop industry.
• Discuss the type of machine shop you are operating.
• Detail your direct competitors. Give an overview of your target customers.
• Provide a snapshot of your marketing strategy. Identify the key members of your team.
• Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of machine shop you are operating.

For example, you might specialize in one of the following types of machine shops:

• Computer numeric Control (CNC) Milling Machines: Used in a wide array of products including automotive, aerospace, and medical devices, electronics, and agriculture.
• CNC Pocket Milling: Type of milling often used in aerospace and shipbuilding.
• Lathe Machines: Used in woodworking, metalworking, and glassworking to produce items such as gun barrels, candlesticks, screws, table legs, baseball bats, musical instruments, etc.
• Drill Press: Typically used for woodworking.
• Welding Machines: Many industries rely on welding machines including automotive, construction, and aerospace.

In addition to explaining the type of machine shop you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

• When and why did you start the business?
• What milestones have you achieved to date? Milestones could include the number of customers served, the number of projects completed, reaching $X amount in revenue, etc.
• Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the machine shop industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the machine shop industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your machine shop business plan:

• How big is the machine shop industry (in dollars)?
• Is the market declining or increasing?
• Who are the key competitors in the market?
• Who are the key suppliers in the market?
• What trends are affecting the industry?
• What is the industry’s growth forecast over the next 5 – 10 years?
• What is the relevant market size? That is, how big is the potential target market for your machine shop? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your machine shop business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, schools, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of machine shop you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

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With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other machine shops.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes other types of machine shops and inhouse machining. These competitors need to be referenced as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

• What types of customers do they serve?
• What type of machine shop are they?
• What is their pricing (premium, low, etc.)?
• What are they good at?
• What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

• Will you make it easier for customers to access your product or service?
• Will you offer products or services that your competition doesn’t?
• Will you provide better customer service?
• Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a machine shop business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of machine shop company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide milling, drilling, grinding, or welding services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your machine shop company. Document where your company is situated and mention how the site will impact your success. For example, is your machine shop located in an industrial district, a business district, a standalone warehouse, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your machine shop marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

• Advertise in local papers, radio stations and/or magazines
• Reach out to websites
• Distribute flyers
• Engage in email marketing
• Advertise on social media platforms
• Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your machine shop, including answering calls, scheduling employees, billing customers and collecting payments, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your machine shop to a new city.  

Management Team

To demonstrate your machine shop’s potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing machine shops. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a machine shop or successfully running a small machining operation.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you produce 20 of a particular product each day? Will you offer customers discounts for repeat business? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your machine shop, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a machine shop:

• Cost of equipment and office supplies
• Payroll or salaries paid to staff
• Business insurance
• Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a list of machinery and equipment you own.  

Writing a business plan for your machine shop is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the machine shop industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful machine shop.  

Machine Shop Business Plan Template FAQs

What is the easiest way to complete my machine shop business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your machine shop business plan.

How Do You Start a Machine Shop?

Starting a machine shop business is easy with these 14 steps:

• Choose the Name for Your Machine Shop
• Create Your Machine Shop Business Plan
• Choose the Legal Structure for Your Machine Shop
• Secure Startup Funding for Your Machine Shop (If Needed)
• Secure a Location for Your Business
• Register Your Machine Shop with the IRS
• Open a Business Bank Account
• Get a Business Credit Card
• Get the Required Business Licenses and Permits
• Get Business Insurance for Your Machine Shop
• Buy or Lease the Right Machine Shop Equipment
• Develop Your Machine Shop Marketing Materials
• Purchase and Setup the Software Needed to Run Your Machine Shop
• Open for Business

Don’t you wish there was a faster, easier way to finish your Machine Shop business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.   Click here to see how a Growthink business plan writer can create your business plan for you.

Other Helpful Business Plan Articles & Templates

Machine Shop Business Plan Template

Written by Dave Lavinsky

Machine Shop Business Plan

You’ve come to the right place to create your Machine Shop business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Machine Shop companies.

Below is a template to help you create each section of your Machine Shop business plan.

Executive Summary

Business overview.

KB Machining is a new machine shop located in Nashville, Tennessee that provides custom fabrication and machining services to local businesses and residents. Our mission is to help the members of our community make their designs a reality. We offer affordable pricing, design services, and the best customer service in the industry. No matter how challenging the project is, we have the experience and capability to produce everything our customers need.

KB Machining is run by Kyle Bannon, who has over 20 years of experience as a professional machinist. Throughout his career, he has worked as a machinist for local businesses, spending much of that time as a manager and trainer for other employees and apprentices. Now he is ready to apply his experience and skills to run his own machine shop that will serve the local community.

Product Offering

KB Machining will provide a variety of machine shop services to manufacture our customers’ unique designs and parts. We can work with a variety of materials including plastic, aluminum, and stainless steel. Some of the services we offer include:

• Lathe machining
• Abrasive machining
• Design and prototype services

The costs for each project will be determined by the materials needed and the amount of labor required.

Customer Focus

KB Machining will serve local businesses and individuals residing in the Nashville, Tennessee area. We expect that most of our sales will come from the local automotive, medical, and manufacturing industries. However, we will also be available to help with smaller projects given to us by the residents of Nashville.

Management Team

KB Machining is run by Kyle Bannon, who has over 20 years of experience as a professional machinist. Throughout his career, he has worked as a machinist for local businesses, spending much of that time as a manager and trainer for other employees and apprentices. For the past year, he has worked on additional repair and fabrication projects on the side and is ready to turn his side hustle into a full-on business.

Though he has never run his own machine shop business, he has worked in the industry long enough to gain an in-depth knowledge of the business, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).

Success Factors

KB Machining will be able to achieve success by offering the following competitive advantages:

• Customer-Focus: KB Machining’s contractors provide the highest quality customer service focused on transparency, communication, and responsiveness throughout the process, from the initial inquiry to the follow-up once the project is completed.
• Management: Kyle Bannon has been extremely successful working in the machining industry and will be able to use his previous experience to help clients with whatever they need. His unique qualifications will serve customers in a much more sophisticated manner than many of KB Machining’s competitors.
• Relationships: Having lived in the community for 25 years, Kyle knows many of the local leaders, real estate developers, and business owners. These relationships will help the company build a significant customer base.
• Affordability: Even though local businesses will make up most of our sales, KB Machining still strives to be an affordable option for local individuals as well. We strive to be the best neighborhood machine shop that can help individuals with all their machining needs for an affordable price.

Financial Highlights

KB Machining is currently seeking $550,000 to launch. Funding will be dedicated towards equipment costs and build out as well as three months of overhead costs to include payroll of the staff, rent, and marketing costs. Specifically, these funds will be used as follows:

• Store design/build: $200,000
• Equipment and machinery: $200,000
• Three months of overhead expenses (payroll, rent, utilities): $100,000
• Marketing costs: $25,000
• Working capital: $25,000

The following graph below outlines the pro forma financial projections for KB Machining.

Company Overview

Who is kb machining.

  KB Machining is run by Kyle Bannon, who has over 20 years of experience as a professional machinist. Throughout his career, he has worked as a machinist for local businesses, spending much of that time as a manager and trainer for other employees and apprentices. Now he is ready to apply his experience and skills to run his own machine shop that will serve the local community.

KB Machining History

Kyle Bannon recently began researching what it would take to start his own machine shop and thoroughly analyzed the costs, market, demographics, and competition. Kyle has compiled enough information to develop his business plan in order to approach investors.

Kyle incorporated KB Machining on May 1st, 2023 as an S-Corporation. The business is currently being run out of Kyle’s home, but once the lease on KB Machining’s office location is finalized, all operations will be run from there.

Since incorporation, the company has achieved the following milestones:

• Found a retail space and signed a Letter of Intent to lease it.
• Developed the company’s name, logo, and website.
• Planned the suite of services to be offered.
• Determined equipment, supplies, and materials needed.
• Begun recruiting key employees

KB Machining Services

Industry analysis.

As long as society depends on metal, there will always be a demand for machining, manufacturing, and welding services. These services are essential for several industries, including automotive, construction, and aerospace. Without expert machinists, many of these industries would suffer, which would severely impact the global economy.

According to Global Newswire, the Global Machining Services Market is expected to grow by $18.07 billion at a CAGR of 4.67% over the next five years. This success is primarily due to the industry’s adoption of integrated digital solutions and automation. The recent advances in machining technology and processes have increased the demand for these services. There is no indication that this demand is dying down, making this a great time to open a new machine shop.

Customer Analysis

Demographic profile of target market.

The demographics of Nashville, Tennessee are as follows:

Customer Segmentation

KB Machining will primarily target the following customer profiles:

• Local businesses
• Individuals

Competitive Analysis

Direct and indirect competitors.

KB Machining will face competition from other companies with similar business profiles. A description of each competitor company is below.

Carl’s Machine Shop

Carl’s Machine Shop is a machine shop in Nashville, Tennessee. In business for over 40 years, Carl’s Machine Shop focuses on providing custom fabrication and repair services to local individuals. They help with all sorts of projects, from automotive to furniture.

Carl’s Machine Shop’s services are generally for customers at the upper end of the market who are looking to customize their expensive cars, furniture, and other objects. As a result, the company’s prices are quite high and are not realistic for the average middle-class resident or business owner. We will price our services more moderately, attracting the customers who are priced out by Carl’s Machine Shop’s services.

Precision Machining Inc.

Precision Machining Inc. is a small machine shop that primarily serves the local construction industry. Established in 1997, the company offers a wide range of machining services, including prototyping. They do not serve individuals nor specialize in repair services.

Though we expect Precision Machining Inc. to continue to thrive, we plan to price our services more moderately, making us an active competitor with the company. Our management team also has better relationships with the industry and experience that will make KB Machining a more appealing option.

Raise The Bar

Raise The Bar is a local machine shop that provides a variety of machining services for local businesses. They primarily work on construction projects but help out businesses in other industries as well. Raise The Bar is known for its well-priced services and high-quality fabrications.

While Raise The Bar will continue to thrive in the local community, it does not offer any services to individuals. Furthermore, our management team has strong relationships with local businesses that will make our services more appealing than this competitor.

Competitive Advantage

KB Machining will be able to offer the following advantages over their competition:

Marketing Plan

Brand & value proposition.

KB Machining will offer the unique value proposition to its clientele:

• Client-focused machining services, where the company’s interests are aligned with the customer.
• Service that is built on long-term relationships and personal attention.
• Professional industrial experience in a small business setting.
• Excellent customer service that can’t be beat.
• Affordable pricing.

Promotions Strategy

The promotions strategy for KB Machining is as follows:

Website/SEO

KB Machining will invest in developing a professional website that displays all of the services offered by the company. It will also invest in SEO so that the company’s website will appear at the top of search engine results.

Social Media

Kyle Bannon will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographic.

KB Machining understands that the best promotion comes from satisfied customers. The company will encourage its clients to refer other individuals and businesses by providing discounts on future services for every new client produced. This strategy will increase in effectiveness after the business has already been established.

Direct Mail

KB Machining will blanket neighborhoods in the area with direct mail pieces. These pieces will provide general information on KB Machining, its services, and promotional discounts.

KB Machining’s pricing will be estimated on a project-by-project basis, drawing on Kyle Bannon’s deep expertise in machining. The pricing will be determined by the materials needed and the amount of labor required to finish the job. However, overall our pricing will be moderate so clients feel they are getting great value when availing our services.

Operations Plan

Operation Functions: The following will be the operations plan for KB Machining.

• Kyle Bannon will be the owner of KB Machining. He will oversee the general operations of the company and manage the staff. He will also work on all machining requests and projects until he hires a sizable staff of machinists to keep up with demand.
• Kyle will hire an Administrative Assistant to help him with all the administrative functions of the company.
• Kyle will also hire a Marketing Manager to manage all of the marketing and advertising functions.
• As the business grows, Kyle will hire other machinists to keep up with client demand for KB Machining’s machining services.

Milestones:

KB Machining expects to achieve the following milestones in the following months:

• 7/202X – Finalize lease agreement
• 8/202X – Design and build out
• 9/202X – Hire and train initial staff
• 10/202X – Kickoff of promotional campaign
• 11/202X – Launch KB Machining
• 12/202X – Reach break-even

Financial Plan

Key revenue & costs.

KB Machining’s revenue will primarily come from providing fabrication, repair, and other machine shop services to local businesses and residents. Pricing will be determined by the materials and labor required.

The main cost drivers for KB Machining will be labor expenses, marketing, and lease for the retail space.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Year 2: 100
• Year 3: 150
• Year 4: 200
• Year 5: 250

Financial Projections

Income statement, balance sheet, cash flow statement, machine shop business plan faqs, what is a machine shop business plan.

A machine shop business plan is a plan to start and/or grow your machine shop business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your Machine Shop business plan using our Machine Shop Business Plan Template here .

What are the Main Types of Machine Shop Businesses?

There are a number of different kinds of machine shop businesses , some examples include: Computer numeric Control (CNC) Milling Machines, CNC Pocket Milling, Lathe Machines, Drill Press, and Welding Machines.

How Do You Get Funding for Your Machine Shop Business Plan?

Machine Shop businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

What are the Steps To Start a Machine Shop Business?

Starting a machine shop business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Machine Shop Business Plan - The first step in starting a business is to create a detailed machine shop business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your machine shop business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your machine shop business is in compliance with local laws.

3. Register Your Machine Shop Business - Once you have chosen a legal structure, the next step is to register your machine shop business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

4. Identify Financing Options - It’s likely that you’ll need some capital to start your machine shop business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

7. Acquire Necessary Machine Shop Equipment & Supplies - In order to start your machine shop business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your machine shop business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.

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Machine Shop Business Plan

The ever-expanding marketspace, high profit margins, and recurring revenue model make starting a machine shop a lucrative and rewarding profession.

Starting a machine shop requires substantial investments. A detailed business plan can help you secure the funding and scale the business like a pro!

Need help writing a business plan for your machine shop? You’re at the right place. Our machine shop business plan template will help you get started.

Free Business Plan Template

Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

• Fill in the blanks – Outline
• Financial Tables

How to Write A Machine Shop Business Plan?

Writing a machine shop business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the entire business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Products and services:.

Highlight the machine shop services you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

Describe your business in this section by providing all the basic information:

Describe what kind of machine shop you run and the name of it. You may specialize in one of the following machine shops:

• Machine milling
• CNC pocket milling
• Drill press
• Welding machine
• Specialty machine shop (automotive, aerospace, medical device)
• Describe the legal structure of your machine shop, whether it is a sole proprietorship, LLC, partnership, or others.
• Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established machine shop service provider, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Market size and growth potential:

Describe your market size and growth potential and whether you will target a niche or a much broader market.

Competitive Analysis:

Market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your machine tooling business plan:

• Conduct market research, industry reports, and surveys to gather data.
• Provide specific and detailed information whenever possible.
• Illustrate your points with charts and graphs.
• Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Machining services:

Production & volume manufacturing:, customization & prototyping:, quality measures.

: This section should explain how you maintain quality standards and consistently provide the highest quality service.

Value-added Services

In short, this section of your machine shop plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.

Pricing Strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your machine shop business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your machine shop, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, equipment & machinery:.

Include the list of equipment and machinery required for the machine shop, such as manual, grinding, CNC and EDM machines, sawing and fabrication equipment, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your machine shop’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your machine shop services, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

• Add a table of contents for the appendix section to help readers easily find specific information or sections.
• In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
• Provide data derived from market research, including stats about the machine shop industry, user demographics, and industry trends.
• Include any legal documents such as permits, licenses, and contracts.
• Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your machine shop business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

Fill-in-the-blanks and automatic financials make it easy.

This sample machine shop business plan will provide an idea for writing a successful machine shop plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our machine shop business plan pdf .

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Frequently asked questions, why do you need a machine shop business plan.

A business plan is an essential tool for anyone looking to start or run a successful machine shop. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your machine shop.

How to get funding for your machine shop business?

There are several ways to get funding for your machine shop, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

• Bank loan – You may apply for a loan in government or private banks.
• Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
• Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
• Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your machine shop business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your machine shop business plan and outline your vision as you have in your mind.

What is the easiest way to write your machine shop business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any machine shop business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

How detailed should the financial projections be in my machine shop business plan?

The level of detail of the financial projections of your machine shop may vary considering various business aspects like direct and indirect competition, pricing, and operational efficiency. However, your financial projections must be comprehensive enough to demonstrate a complete view of your financial performance.

Generally, the statements included in a business plan offer financial projections for at least the first three or five years of business operations.

Can a good machine shop business plan help me secure funding?

Indeed. A well-crafted machine shop business plan will help your investors better understand your business domain, market trends, strategies, business financials, and growth potential—helping them make better financial decisions.

So, if you have a profitable and investable business, a comprehensive business plan can certainly help you secure your business funding.

About the Author

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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Back to All Business Ideas

How to Start a CNC Shop

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on May 25, 2023 Updated on May 7, 2024

Investment range

$54,300 - $88,300

Revenue potential

$260,000 - $1,300,000 p.a.

Time to build

Profit potential

$52,000 - $260,000 p.a.

Industry trend

A computer numerical control (CNC) machine is a computerized cutting tool that can make complex shapes and designs from wood, metal, plastics, or even glass. If you know how to operate a CNC machine, whether it’s a CNC router or a CNC mill, you could start a CNC shop to make products or parts for other local businesses. The CNC machine market is growing rapidly, as the applications that a CNC can be used are expanding.

But before you get started, you need to understand the business. Luckily, this step-by-step guide has all the information you need to start a successful CNC shop. 

Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.

Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services .

Step 1: Decide if the Business Is Right for You

Pros and cons.

• Good profit potential
• Growing market
• Help other businesses grow
• Investment required
• Knowledge and skills required

CNC shop industry trends

Industry size and growth.

• Industry size and past growth – The global CNC machine industry was worth $96.4 billion in 2021.(( https://www.precedenceresearch.com/computer-numerical-control-machine-market )) 
• Growth forecast – The global CNC machine industry is projected to grow to $153.8 billion by 2030. 

Trends and challenges

• Advancements in technology have increased the efficiency of CNC machine processes and decreased the time it takes to complete projects.
• Many CNC shops are focusing on producing parts for up and coming industries, such as electric vehicles.
• Increasing energy costs are having a negative impact on the profit margins of CNC shops.
• Economic conditions may decrease the budgets of CNC shop customers. 

Demand hotspots

• Most popular states – The most popular states for machinists are New Hampshire, Oregon, and Connecticut. (( https://www.zippia.com/machinist-jobs/best-states/ ))
• Least popular states – The least popular states for machinists are Florida, Oklahoma, and South Carolina.

What kind of people work in CNC shops? 

• Gender –  7% of machinists are female, while 93% are male. (( https://www.zippia.com/machinist-jobs/demographics/ ))
• Average level of education – The average machinist is high school educated.
• Average age – The average machinist in the US is 47.6 years old.

How much does it cost to start a CNC shop business?

Startup costs for a CNC shop range from $50,000 to $90,000. Costs include the shop space rental and the equipment.

You’ll need a handful of items to successfully launch your CNC shop business, including: 

• CNC milling machine

Most CNC businesses also have other tools such as welders and a variety of manual machines and tools.

How much can you earn from a CNC shop business?

Generally, you’ll charge customers a setup fee of around $150, a marked up price for raw materials, and an hourly rate for the job which should be between $100 to $150. Job prices will obviously vary greatly, but these calculations will assume an average job price of $5,000. Your profit margin should be about 20%. 

In your first year or two, you might do one project per week, bringing in $260,000 in revenue. This would mean $52,000 in profit, assuming that 20% margin. 

As you gain traction, sales could climb to five projects per week. With annual revenue of $1,300,000, you’d make a tidy profit of $260,000.

What barriers to entry are there?

There are a few barriers to entry for a CNC shop. Your biggest challenges will be:

• Having the required skills
• Funding the startup costs

Related Business Ideas

How to Start a Welding Business

How to Start a 3D Printing Business

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Step 2: hone your idea.

Now that you know what’s involved in starting a CNC shop, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Why? Identify an opportunity

Research CNC shops in your area to examine their services, price points, and customer reviews.

• Make a list of CNC shops that offer similar services. 
• Review your competitors’ services – their features, pricing, and quality – and marketing strategies
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

You’re looking for a market gap to fill. For instance, maybe the local market is missing a CNC milling shop or a CNC shop that specializes in CNC machined parts for cars.

You might consider targeting a niche, such as CNC parts for manufacturing equipment.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products and services

The list of items you can make with a CNC machine is endless. You can decide to specialize in a certain type of item or make a variety. Consider the types of businesses in your area that might be customers. That might give you an idea of what to specialize in.

Explore a variety of CNC router business ideas that could inspire your entrepreneurial journey.

How much should you charge for CNC services?

Check what other CNC shops in your area charge and make your prices competitive. You’ll also want to consider your costs for each project when giving estimates.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be business owners in your area. You can connect with them on LinkedIn or call on them directly.

Where? Choose a CNC shop location

You’ll need to rent out a shop space. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a CNC Shop Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “CNC shop” or “CNC machine shop”, boosts SEO
• Name should allow for expansion, for ex: “Universal CNC Creations” and “Infinite Machining Solutions” over “PrecisionAutoParts CNC” and “AeroCraft CNC”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

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Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a CNC Shop Business Plan

Here are the key components of a business plan:

• Executive Summary: A brief overview outlining the CNC shop’s focus on precision machining services for various industries.
• Business Overview: Introduction to your CNC shop specializing in computer numerical control (CNC) machining services for custom parts and components.
• Product and Services: Description of services including CNC milling, turning, and precision machining for metals, plastics, and other materials.
• Market Analysis: Analysis of the demand for CNC machining in sectors like automotive, aerospace, and manufacturing, and the shop’s potential market share.
• Competitive Analysis: Evaluation of local and regional CNC shops, their service offerings, pricing, and client base.
• Sales and Marketing: Strategy for attracting clients through industry networking, digital marketing, and showcasing project portfolios.
• Management Team: Information about the team’s experience in CNC machining, business management, and industry knowledge.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to CNC shops. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your CNC shop will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company ( LLC ) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.  Here’s how to form an LLC .
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.  Read how to start a corporation here .
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have. 

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2024

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like  Kickstarter  and  Indiegogo  offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like  Fundable  and  WeFunder  enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a CNC shop business. 

Step 8: Apply for CNC Shop Business Licenses and Permits

Starting a CNC shop business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your CNC shop business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Modern Machine Shop or Production Machining , to manage your costing, estimates, and workflows. 

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Get Quote Now”. This can sharply increase purchases. 

Online Marketing

Here are some powerful digital marketing strategies for a CNC shop: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences. It’s a very good platform for creative businesses. 
• TikTok: This social media platform has over 1 billion monthly active users and it is used primarily by a younger demographic.
• LinkedIn: the most effective place for B2B marketers.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
• Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
• Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Pay – per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
• Do a webinar – Share your CNC expertise online with a video seminar.

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. 

Traditional Marketing

Traditional marketing is any form of marketing that uses offline media to reach an audience. Some options that might work for a CNC shop business include:

• Cold calling – Close more sales with less stress.
• Sponsor events – You can pay to be a sponsor at events that are relevant to your target market.
• Seek out referrals – Offer incentives to generate customer referrals to new clients. 
• Testimonials – Share customer testimonials about how your CNC shop helped them.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your CNC shop meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your CNC shop business could be:

• Precision machining excellence delivered with every project at our CNC machine shop
• Unleash your manufacturing potential with our state-of-the-art CNC machine shop
• Quality craftsmanship and superior precision for your machining needs

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a CNC shop business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in CNC shops for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in CNC shops. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a CNC shop business include:

• CNC Machinist – handle CNC production
• Marketing Lead – create and implement marketing strategies
• General Manager – scheduling, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

CNC machines offer a world of possibilities, and can produce products or parts of all kinds. The CNC machine industry is large and growing, so it could be the perfect time to start your own CNC shop. It’s an opportunity to make a great living, and grow your business over time.

You’ve got the knowledge you need, so now its time to set up shop and get on the road to success!

• CNC Shop Business FAQs

The profitability of a CNC shop can vary depending on factors such as the size of the business, the demand for CNC machining services, competition, operational efficiency, and pricing strategies. A well-managed CNC shop that delivers high-quality precision machining, maintains strong customer relationships, and effectively manages costs can be profitable.

During a typical day at a CNC shop, various activities take place to ensure smooth operations and efficient production. These may include:

• Programming and setting up CNC machines for specific machining tasks.
• Operating and monitoring CNC machines to produce precise and accurate parts.
• Conducting quality control checks and inspections to ensure adherence to specifications.
• Collaborating with engineers or designers to optimize machining processes.
• Managing inventory of raw materials and tooling supplies.
• Communicating with clients to understand project requirements and provide updates.
• Maintaining and troubleshooting CNC machines for optimal performance.
• Planning and scheduling production tasks to meet project deadlines.

The growth potential of a CNC shop can be significant, especially with the continuous advancements in manufacturing technology and increasing demand for precision components across various industries. Growth opportunities may arise from expanding services to new industries, investing in advanced CNC machines and software, developing expertise in specialized machining techniques, and building strong relationships with clients and suppliers.

A CNC shop is a type of manufacturing business that specializes in computer numerical control (CNC) machining. It involves the use of automated machines controlled by computer programs to precisely shape and cut materials into custom-designed parts. CNC shops work with various materials, such as metal, plastic, and wood, to produce components for industries such as aerospace, automotive, electronics, medical, and more. The primary focus of a CNC shop is to provide high-quality machining services with exceptional precision and accuracy.

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a CNC Shop Name
• Create a CNC Shop Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for CNC Shop Business Licenses and Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Start Making Money!

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Business Tips

12 Tips For Growing Your CNC Machining Business

Team Thomas September 7, 2021

Growing a business can be a challenging endeavor, especially for entrepreneurs entering a crowded market with large, well-established competitors already in place.

As the manufacturing industry experiences shifts in how it operates, how can CNC machining businesses secure contracts and grow within the industry despite today's challenging obstacles ?

It's a good question, and we're here to help answer it — take a look at our  tips and suggestions for small  CNC machine shops to continue growing their businesses in an ever-crowding market.

1. Develop Partnerships

For many machine shop owners, the early days can be an uncertain time in which numerous concerns, such as volume expectations, client lists, or even floor plans, have yet to be resolved.

In these circumstances, existing friendships and business connections can be valuable assets.

Whether having friends steer clients in your direction, enter into partnerships, or simply provide advice on business practices, relying on your current connections can give you a useful leg-up.

Many also build their network through industry events and webinars .

2. Target Your Segment of the Marketplace

It is generally a good practice to focus on the specific types of purchasers that will buy your products at the best volume rate.

For example, if your shop specializes in producing gear shafts with a diameter under five inches, try to   establish relationships with companies that purchase this product at a rate favorable to your production cycle and turnover. 

Targeting your market niche will help you make the best use of your specialty, like only in replacement parts. Some CNC companies see this as a very successful model for what may seem like a limited market. As you grow your company, you can diversify into other markets .

Another marketing method is leveraging emerging technologies such as the internet, videos and social networking which can help improve your shop's visibility online and reach more buyers.

Don't forget to share videos touring your shop floor — you can have a video created by Thomas for free with an advertising program to help prospects get a look at your operation. (Take a look at the example below!)

3. Diversify According to Demand

While it’s sometimes a bad idea to take on a job outside the capabilities of your shop when you're just starting, new projects that seem within reach and will provide a cost-efficient result can be a helpful way to diversify your operations.

If, for example, a lathing shop has the training and funds to undertake a profitable milling or plastic fabrication contract, then the resulting diversity can help provide sustainable growth even during periods when one sector of the market is on a downswing.  

4. Don’t Rush to Expand

Purchasing machines that are not yet cost-efficient or enlarging facilities without the staff needed to maintain them can slow down business growth and hinder long-term expansion.

In many cases, it may be better to concentrate on making steady gains rather than giant leaps forward, as even a small shop with fewer than a dozen machines or employees can still meet or exceed the national productivity average.

It's important to also communicate your growth plans — even the small ones — to your entire team.

5. Remain Open to New Technology

Although new technical innovations can be costly in terms of additional training and initial set-up, recently-developed equipment may have a positive long-term effect by simplifying production methods or providing the means to accomplish tasks that were once considered impractical.

New technology can sometimes help a business remain competitive, especially if the innovation gains widespread notice.

💡 Thomas Tip: CNC machining companies can see how their online presence compares with competitors by requesting a free digital health check .

Shop owners might want to consider purchasing more manufacturing equipment to fulfill existing and future orders. This can be a difficult decision to make, as future growth isn't guaranteed and buying equipment has many upfront costs. On the positive side, however, n ew machinery equipment will increase production capacity and improve cycle times, which will, in turn, create more opportunities for your business.

Business owners must weigh the risks versus the rewards — and again, communicate your efforts to your team accordingly.

If investing in new machinery isn't an option, see if you can modify and update your current equipment. This approach requires a much lower investment than purchasing new items, but it can still improve your production capacity and cycle speeds. 

6. React To Your Competition

Being aware of your main competitors is a valuable practice under most circumstances, particularly in times of economic volatility.

Market fluctuations can cause a slowdown in commercial manufacturing, while leaving military production relatively unchanged (and vice-versa).

In this case, competitors from one side of the spectrum may bring their operating standards to the other, forcing companies to accelerate their production rates or lower prices to maintain market share.

7. Invest in Digital Marketing Efforts

Another growth method is leveraging digital marketing efforts such as emails, videos and social networking which can help improve your shop's visibility online and reach more buyers.

Keeping your customer base happy is key to building your business, but being online is the golden ticket if you want to attract more customers.

Begin by building on what you currently have and talk to existing customers about what could be better. This feedback will help you learn about their challenges and how you can create resources to address their concerns.

What type of content do they consume? What are their jobs to be done? Publish this information on a high-quality website to attract new customers. Organize the content into an "Examples of Work" or "Markets Served" section on your website, like the CNC machining website example seen below.

8. Be Flexible in Multi-Stage Processes

Companies that combine both internal fabrication and  machining   operations can often save time or money by acquiring equipment that incorporates secondary work into its primary function.

For example, using a cutting laser can often reduce the need for post-fabrication finishing, such as smoothing or evening edges.

9. Integrate Your Operations

While vertical or horizontal integration is beyond the reach of many small CNC businesses, it may still help bring as much of the manufacturing process in-house as you can.

Streamlining measures , such as organizing a production schedule around a machine shop’s in-house capabilities or prioritizing jobs based on your own production center rather than an external supplier’s availability, can help smooth workflow and ultimately improve output.

10. Initiate Scalable Growth

In many cases,   successful business growth   is not dependent on the size of the products being manufactured, but on the depth of the fabricating process.

It can be beneficial to evaluate the services or products you provide to your customers, and see if you can expand the reach of those services. I you produce steel tubing for your purchasers, see if you can also provide them with the fasteners used to join these components together. Securing more expansive contracts from existing relationships can be a secure and scalable method of growth.

Whatever your growth plan is, skipping a business plan is a common mistake industrial businesses make . Create a plan that documents what milestones you should be hitting and the steps to reach them. This will also help you as you apply for small business loans, grants, or other crowdfunding campaigns.

➡️ See our free business plan template to get started .

11. Step-by-Step Value Addition

CNC machining   is essentially a multi-staged process in which there is the potential for value-added work at each stage.

Consequently, a shop’s potential for expanding its business largely depends on how many of those value-added steps it can perform. A small business seeking to expand can evaluate its manufacturing strengths and take advantage of any opportunity to insert itself into a value-added production stage.

This approach, coupled with gradual service integration and streamlining, can be a valuable way to expand your small CNC business.

12. Warehousing 

Equipment isn't the only part of the physical shop floor that needs to be changed if you're expanding your business.

Storage facilities and warehouses should also be considered once you grow to accommodate additional production.

This year, warehousing demand has been ramping up  so be sure to plan accordingly. If adding on to your current shop floor isn't an option, off-site warehousing might be the way to go. 

Final Thoughts: Increase Sales In Your CNC Machine Shop

Now is the time for shop owners to do all they can to manage and maximize their growth. The good news is that no matter how small your industrial business, digital efforts have been proven to grow businesses.

Not ready to make the call yet? Check out the additional resources below to help get more CNC machining contracts:

1. It's not rare to see a job shop fail — check out real advice from real job shop owners on the biggest mistakes to avoid. 

2. Thinking of expanding your business into profitable markets? Check out our blog How To Market Online To Buyers In The Defense Industry

2. Small business manufacturers who advertise their business on Thomasnet.com receive more online RFQs. It's free to sign up — create your free Thomasnet.com profile here . 

3. Planning your marketing budget? Read this eBook to learn 10 ways manufacturers effectively spend their marketing budget and where you should allocate yours to increase sales.

4. Learn how small manufacturer USTEK used online advertising to grow their business (37 new RFQs in less than 18 months) in their case study here .

And, finally, as we mentioned above—we can do a free digital health check of your business to make sure that your online presence is maximized and ready to help you out perform your competitors and take on new business.

Did you find this useful?

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How to write a business plan for a CNC machining workshop?

Putting together a business plan for a CNC machining workshop can be daunting - especially if you're creating a business for the first time - but with this comprehensive guide, you'll have the necessary tools to do it confidently.

We will explore why writing one is so important in both starting up and growing an existing CNC machining workshop, as well as what should go into making an effective plan - from its structure to content - and what tools can be used to streamline the process and avoid errors.

Without further ado, let us begin!

In this guide:

Why write a business plan for a CNC machining workshop?

• What information is needed to create a business plan for a CNC machining workshop?
• How do I build a financial forecast for a CNC machining workshop?

The written part of a CNC machining workshop business plan

• What tool should I use to write my CNC machining workshop business plan?

Having a clear understanding of why you want to write a business plan for your CNC machining workshop will make it simpler for you to grasp the rationale behind its structure and content. So before delving into the plan's actual details, let's take a moment to remind ourselves of the primary reasons why you'd want to create a CNC machining workshop business plan.

To have a clear roadmap to grow the business

Small businesses rarely experience a constant and predictable environment. Economic cycles go up and down, while the business landscape is mutating constantly with new regulations, technologies, competitors, and consumer behaviours emerging when we least expect it.

In this dynamic context, it's essential to have a clear roadmap for your CNC machining workshop. Otherwise, you are navigating in the dark which is dangerous given that - as a business owner - your capital is at risk.

That's why crafting a well-thought-out business plan is crucial to ensure the long-term success and sustainability of your venture.

To create an effective business plan, you'll need to take a step-by-step approach. First, you'll have to assess your current position (if you're already in business), and then identify where you'd like your CNC machining workshop to be in the next three to five years.

Once you have a clear destination for your CNC machining workshop, you'll focus on three key areas:

• Resources: you'll determine the human, equipment, and capital resources needed to reach your goals successfully.
• Speed: you'll establish the optimal pace at which your business needs to grow if it is to meet its objectives within the desired timeframe.
• Risks: you'll identify and address potential risks you might encounter along the way.

By going through this process regularly, you'll be able to make informed decisions about resource allocation, paving the way for the long-term success of your business.

To anticipate future cash flows

Regularly comparing your actual financial performance to the projections in the financial forecast of your CNC machining workshop's business plan gives you the ability to monitor your business's financial health and make necessary adjustments as needed.

This practice allows you to detect potential financial issues, such as unexpected cash shortfalls before they escalate into major problems. Giving you time to find additional financing or put in place corrective measures.

Additionally, it helps you identify growth opportunities, like excess cash flow that could be allocated to launch new products and services or expand into new markets.

Staying on track with these regular comparisons enables you to make well-informed decisions about the amount of financing your business might require, or the excess cash flow you can expect to generate from your main business activities.

To secure financing

Crafting a comprehensive business plan for your CNC machining workshop, whether you're starting up or already established, is paramount when you're seeking financing from banks or investors.

Given how fragile small businesses are, financiers will want to ensure that you have a clear roadmap in place as well as command and control of your future cash flows before entertaining the idea of funding you.

For banks, the information in your business plan will be used to assess your borrowing capacity - which is defined as the maximum amount of debt your business can afford alongside your ability to repay the loan. This evaluation helps them decide whether to extend credit to your business and under what terms (interest rate, duration, repayment options, collateral, etc.).

Similarly, investors will thoroughly review your plan to determine if their investment can yield an attractive return. They'll be looking for evidence that your CNC machining workshop has the potential for healthy growth, profitability, and consistent cash flow generation over time.

Now that you understand the importance of creating a business plan for your CNC machining workshop, let's delve into the necessary information needed to craft an effective plan.

Need a convincing business plan?

The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

Information needed to create a business plan for a CNC machining workshop

Drafting a CNC machining workshop business plan requires research so that you can project sales, investments and cost accurately in your financial forecast, and convince the reader that there is a viable commercial opportunity to be seized.

Below, we'll focus on three critical pieces of information you should gather before starting to write your plan.

Carrying out market research for a CNC machining workshop

Before you begin writing your business plan for a CNC machining workshop, conducting market research is a critical step in ensuring precise and realistic financial projections.

Market research grants you valuable insights into your target customer base, competitors, pricing strategies, and other crucial factors that can impact the success of your business.

In the course of this research, you may stumble upon trends that could impact your CNC machining workshop.

You may discover that customers are increasingly interested in CNC machining services that can provide cost savings or shorter lead times. Additionally, you could discover that clients may be looking for CNC machining services that offer high levels of customization to meet their specific needs.

Such market trends play a pivotal role in revenue forecasting, as they provide essential data regarding potential customers' spending habits and preferences.

By integrating these findings into your financial projections, you can provide investors with more accurate information, enabling them to make well-informed decisions about investing in your CNC machining workshop.

Developing the marketing plan for a CNC machining workshop

Before delving into your CNC machining workshop business plan, it's imperative to budget for sales and marketing expenses.

To achieve this, a comprehensive sales and marketing plan is essential. This plan should provide an accurate projection of the necessary actions to acquire and retain customers.

Additionally, it will outline the required workforce to carry out these initiatives and the corresponding budget for promotions, advertising, and other marketing endeavours.

By budgeting accordingly, you can ensure that the right resources are allocated to these vital activities, aligning them with the sales and growth objectives outlined in your business plan.

The staffing and equipment needs of a CNC machining workshop

Whether you are at the beginning stages of your CNC machining workshop or expanding its horizons, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is vital to ensure your business's success.

To achieve this, both the recruitment and investment plans must align coherently with the projected timing and level of growth in your forecast. It is essential to secure appropriate funding for these plans.

A CNC machining workshop might incur staffing costs such as wages for machinists, supervisors, and office personnel, as well as payroll-related costs such as taxes and employee benefits. Equipment costs could include the purchase of CNC machines, cutting tools, measuring instruments, and other specialized tools. Additionally, the workshop may need to allocate funds for preventive maintenance, repairs, and replacement of worn parts.

To create a financial forecast that accurately represents your business's outlook, remember to factor in other day-to-day operating expenses.

Now that you have all the necessary information, it's time to dive in and start creating your business plan and developing the financial forecast for your CNC machining workshop.

What goes into your CNC machining workshop's financial forecast?

The objective of the financial forecast of your CNC machining workshop's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for a CNC machining workshop are:

• The profit and loss (P&L) statement ,
• The projected balance sheet ,
• The cash flow forecast ,
• And the sources and uses table .

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for a CNC machining workshop shows how much revenue and profit your business is expected to make in the future.

A healthy CNC machining workshop's P&L statement should show:

• Sales growing at (minimum) or above (better) inflation
• Stable (minimum) or expanding (better) profit margins
• A healthy level of net profitability

This will of course depend on the stage of your business: numbers for a startup will look different than for an established CNC machining workshop.

The projected balance sheet of your CNC machining workshop

Your CNC machining workshop's forecasted balance sheet enables the reader of your plan to assess your financial structure, working capital, and investment policy.

It is composed of three types of elements: assets, liabilities and equity:

• Assets: represent what the business owns and uses to produce cash flows. It includes resources such as cash, equipment, and accounts receivable (money owed by clients).
• Liabilities: represent funds advanced to the business by lenders and other creditors. It includes items such as accounts payable (money owed to suppliers), taxes due and loans.
• Equity: is the combination of what has been invested by the business owners and the cumulative profits and losses generated by the business to date (which are called retained earnings). Equity is a proxy for the value of the owner's stake in the business.

Your CNC machining workshop's balance sheet will usually be analyzed in conjunction with the other financial statements included in your forecast.

Two key points of focus will be:

• Your CNC machining workshop's liquidity: does your business have sufficient cash and short-term assets to pay what it owes over the next 12 months?
• And its solvency: does your business have the capacity to repay its debt over the medium-term?

The cash flow forecast

As we've seen earlier in this guide, monitoring future cash flows is the key to success and the only way of ensuring that your CNC machining workshop has enough cash to operate.

As you can expect showing future cash flows is the main role of the cash flow forecast in your CNC machining workshop business plan.

It is best practice to organise the cash flow statement by nature in order to show the cash impact of the following areas:

• Cash flow generated from operations: the operating cash flow shows how much cash is generated or consumed by the business's commercial activities
• Cash flow from investing activities: the investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.) either to maintain the business's equipment or to expand its capabilities
• Cash flow from financing activities: the financing cash flow shows how much cash is raised or distributed to financiers

Looking at the cash flow forecast helps you to make sure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.

Your CNC machining workshop business plan will normally include both yearly and monthly cash flow forecasts so that the readers can view the impact of seasonality on your business cash position and generation.

The initial financing plan

The initial financing plan - also called a sources and uses table - is an important tool when starting a CNC machining workshop.

It shows where the money needed to set up the business will come from (sources) and how it will be allocated (uses).

Having this table helps understand what costs are involved in setting up the CNC machining workshop, how the risks are distributed between the shareholders and the lenders, and what will be the starting cash position (which needs to be sufficient to sustain operations until the business breaks even).

Now that the financial forecast of a CNC machining workshop business plan is understood, let's focus on what goes into the written part of the plan.

The written part of a CNC machining workshop business plan plays a key role: it lays out the plan of action you intend to execute to seize the commercial opportunity you've identified on the market and provides the context needed for the reader to decide if they believe your plan to be achievable and your financial forecast to be realistic.

The written part of a CNC machining workshop business plan is composed of 7 main sections:

• The executive summary
• The presentation of the company
• The products and services
• The market analysis
• The strategy
• The operations
• The financial plan

Let's go through the content of each section in more detail!

1. The executive summary

The first section of your CNC machining workshop's business plan is the executive summary which provides, as its name suggests, an enticing summary of your plan which should hook the reader and make them want to know more about your business.

When writing the executive summary, it is important to provide an overview of the business, the market, the key financials, and what you are asking from the reader.

Start with a brief introduction of the business, its name, concept, location, how long it has been in operation, and what makes it unique. Mention any services or products you plan to offer and who you sell to.

Then you should follow with an overview of the addressable market for your CNC machining workshop, current trends, and potential growth opportunities.

You should then include a summary of your key financial figures such as projected revenues, profits, and cash flows.

Finally, you should detail any funding requirements in the ask section.

2. The presentation of the company

The second section in your CNC machining workshop's business plan should focus on the structure and ownership, location, and management team of the company.

The structure and ownership part provides an overview of the legal structure of the business, who the owners are and how much each has invested and owns. If you are seeking financing it is important that the reader gets a clear picture of which legal entity is receiving the funds, and who controls the business.

The location part should give an overview of the premises from which the company is operating, and why that location is of particular interest (catchment area, accessibility, amenities nearby, etc.).

When describing the location of your CNC machining workshop to a third party financier, you may want to emphasize its strategic position in the market. You could highlight its proximity to a major transportation hub, which may enable efficient access to a variety of suppliers and customers. You might also point out the presence of a highly skilled labor force in the area that could help you optimize production. Additionally, you could mention the availability of a supportive local business environment, which could help foster growth.

Finally, you should introduce the management team. Explain each member's role, background, and experience.

It is also important to emphasize any past successes that the members of the management team have achieved, and how long they've been working together, as this will help potential lenders or investors understand why they should trust in their leadership.

3. The products and services section

The products and services section of your business plan should include a detailed description of the offerings that your company provides to its customers. 

For example, your CNC machining workshop might offer custom machined precision parts made from materials such as aluminum, steel, and plastic; intricate precision machining for medical, aerospace, and defense industries; and CNC machining of parts for prototypes, replacements, or repairs. These products and services are offered as they enable customers to get the exact parts they need that are made to precise specifications, and provide industries with custom parts that meet their exact requirements.

When drafting this section, you should be precise about the categories of products or services you sell, the types of customers you are targeting and how customers can buy them.

4. The market analysis

When presenting your market analysis in your CNC machining workshop business plan, you should detail the customers' demographics and segmentation, target market, competition, barriers to entry, and any regulations that may apply.

The goal of this section is to help the reader understand how big and attractive your market is, and demonstrate that you have a solid understanding of the industry.

You should start with the demographics and segmentation subsection, which gives an overview of the addressable market for your CNC machining workshop, the main trends in the marketplace, and introduces the different customer segments and their preferences in terms of purchasing habits and budgets.

The target market section should follow and zoom on the customer segments your CNC machining workshop is targeting, and explain how your products and services meet the specific needs of these customers.

For example, your target market might include businesses in the automotive industry. This could include car manufacturers and parts suppliers who need high-quality and precise parts for their cars. Additionally, this segment could include aerospace companies that need complex and intricate parts for their aircraft.

Then comes the competition subsection, where you should introduce your main competitors and explain what differentiates you from them.

Finally, you should finish your market analysis by giving an overview of the main regulations applicable to your CNC machining workshop.

5. The strategy section

When writing the strategy section of a business plan for your CNC machining workshop, it is essential to include information about your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

The competitive edge subsection should explain what sets your company apart from its competitors. This part is especially key if you are writing the business plan of a startup, as you have to make a name for yourself in the marketplace against established players.

The pricing strategy subsection should demonstrate how you intend to remain profitable while still offering competitive prices to your customers.

The sales & marketing plan should outline how you intend to reach out and acquire new customers, as well as retain existing ones with loyalty programs or special offers. 

The milestones subsection should outline what your company has achieved to date, and its main objectives for the years to come - along with dates so that everyone involved has clear expectations of when progress can be expected.

The risks and mitigants subsection should list the main risks that jeopardize the execution of your plan and explain what measures you have taken to minimize these. This is essential in order for investors or lenders to feel secure in investing in your venture.

Your CNC machining workshop faces a variety of risks. For example, there could be a risk of injury to workers due to the dangerous machinery used. Furthermore, there may be a risk of a fire due to the combination of flammable materials and high temperatures that can be produced by the machines. It is important to be aware of these risks and take the necessary precautions to ensure the safety of your staff and workshop.

6. The operations section

The operations of your CNC machining workshop must be presented in detail in your business plan.

The first thing you should cover in this section is your staffing team, the main roles, and the overall recruitment plan to support the growth expected in your business plan. You should also outline the qualifications and experience necessary to fulfil each role, and how you intend to recruit (using job boards, referrals, or headhunters).

You should then state the operating hours of your CNC machining workshop - so that the reader can check the adequacy of your staffing levels - and any plans for varying opening times during peak season. Additionally, the plan should include details on how you will handle customer queries outside of normal operating hours.

The next part of this section should focus on the key assets and IP required to operate your business. If you depend on any licenses or trademarks, physical structures (equipment or property) or lease agreements, these should all go in there.

You may have key assets such as expensive machinery, tools, and computer numerical control (CNC) systems. You could also have intellectual property such as product designs, processes, and trade secrets. These may be used to create a variety of products with precise dimensions and shapes for a variety of applications.

Finally, you should include a list of suppliers that you plan to work with and a breakdown of their services and main commercial terms (price, payment terms, contract duration, etc.). Investors are always keen to know if there is a particular reason why you have chosen to work with a specific supplier (higher-quality products or past relationships for example).

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of the content of a CNC machining workshop business plan, let's look at some of the tools you can use to create yours.

What tool should I use to write my CNC machining workshop's business plan?

In this section, we will be reviewing the two main solutions for creating a CNC machining workshop business plan:

• Using specialized online business plan software,
• Outsourcing the plan to the business plan writer.

Using an online business plan software for your CNC machining workshop's business plan

Using online business planning software is the most efficient and modern way to create a CNC machining workshop business plan.

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

Hiring a business plan writer to write your CNC machining workshop's business plan

Outsourcing your CNC machining workshop business plan to a business plan writer can also be a viable option.

Business plan writers are skilled in creating error-free business plans and accurate financial forecasts. Moreover, hiring a consultant can save you valuable time, allowing you to focus on day-to-day business operations.

However, it's essential to be aware that hiring business plan writers will be expensive, as you're not only paying for their time but also the software they use and their profit margin.

Based on experience, you should budget at least £1.5k ($2.0k) excluding tax for a comprehensive business plan, and more if you require changes after initial discussions with lenders or investors.

Also, exercise caution when seeking investment. Investors prefer their funds to be directed towards business growth rather than spent on consulting fees. Therefore, the amount you spend on business plan writing services and other consulting services should be insignificant compared to the amount raised.

Keep in mind that one drawback is that you usually don't own the business plan itself; you only receive the output, while the actual document is saved in the consultant's business planning software. This can make it challenging to update the document without retaining the consultant's services.

For these reasons, carefully consider outsourcing your CNC machining workshop business plan to a business plan writer, weighing the advantages and disadvantages of seeking outside assistance.

Why not create your CNC machining workshop's business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write a CNC machining workshop business plan is a terrible idea.

For starters, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.

As a result, it is unlikely anyone will trust your numbers unless - like us at The Business Plan Shop - you hold a degree in finance and accounting and have significant financial modelling experience in your past.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Also, using software makes it easy to compare actuals vs. forecasts and maintain our forecasts up to date to maintain visibility on future cash flows - as we discussed earlier in this guide - whereas this is a pain to do with a spreadsheet.

That's for the forecast, but what about the written part of my CNC machining workshop business plan?

This part is less error-prone, but here also software brings tremendous gains in productivity:

• Word processors don't include instructions and examples for each part of your business plan
• Word processors don't update your numbers automatically when they change in your forecast
• Word processors don't handle the formatting for you

Overall, while Word or Excel may be viable options for creating a CNC machining workshop business plan for some entrepreneurs, it is by far not the best or most efficient solution.

• A business plan has 2 complementary parts: a financial forecast showcasing the expected growth, profits and cash flows of the business; and a written part which provides the context needed to judge if the forecast is realistic and relevant.
• Having an up-to-date business plan is the only way to keep visibility on your CNC machining workshop's future cash flows.
• Using business plan software is the modern way of writing and maintaining business plans.

We hope that this practical guide gave you insights on how to write the business plan for your CNC machining workshop. Do not hesitate to get in touch with our team if you still have questions.

Also on The Business Plan Shop

• In-depth business plan structure
• Business plan conclusion explained
• Tips to write an effective business plan
• How to write the business plan for a grant application?
• Key steps to write a business plan?
• Free business plan template

Know someone who owns or wants to start a CNC machining workshop? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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• How to start a CNC Machine Shop

Last updated on October 20th, 2022 at 09:26 pm

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Starting a cnc machine shop

Are you wondering How to start a CNC Machine Shop? Start with planning. Draw a plan looking at costs, target market, and a business name. Register for taxes and form a legal entity that protects your company if you get sued. Open a business bank account to protect your assets and set up business accounting to record your expenses and sources of income. 

Get the required licenses and permits to operate legally. Get business insurance for safety and strengthen your brand to keep customers coming. Create a business website and set up your business phone system. Familiarise yourself with what happens in a CNC machining business and get some skills and experience. That comes with training and time. With this, strive for growth.

What is a CNC machine shop?

A CNC machine shop is a business entity that makes and sells machines through computer numerical machining. A CNC machine is a precise machine controlled by computers, making products highly accurate. 

Learning how to start your CNC machining business is a process that requires knowledge and equipment. The starting point is the business idea, and the next step is what is in this article. 

Below are the steps to follow for a successful CNC machining business. You should also see How to Make Money with a CNC Machine. At the end of this presentation, you should be able to plan your business well, register legally, and be good to go.

Plan your business

Planning your business makes the process clear and gives you a chance to draw out the specifics of your business. Some concepts are better on paper, and that is how you discover the potential of your business. 

As you plan to build your plan, some topics guide you. Look at the startup and the ongoing costs. Know your target market so you will not keep finished goods for years without selling them. 

What tells you the target market is the community you live in. Know what they want, what is lacking, and what sells better. Looking at your products, know how much you will charge customers. Giving a name to your business matters. It provides the first impression to the customers. I will explain these pointers below for clarity. 

Calculate the costs involved when you want to open a CNC machining business. Capital is not enough, and the CNC machines are in a reasonable price range, depending on your budget. As you gather your costs, it does not mean they have to be high. 

They are ways to keep them minimal. These include: buying a low-budget CNC machine and working from your workshop or garage . You will not need a lease for the workspace; you can only have it when business boots. 

Use the available equipment. You may even start with a lathe and upgrade later. Ongoing expenses include raw materials, maintenance costs of your equipment, and salaries. Your business has to serve other business projects. 

However, there are products marketed to individuals. There are job and product shops, and job shops make specific items for specific clients. Product shops make their products and sell them to businesses. 

You should know if your shop will be making orders in bulk or selling as single items. You know what is good for your business, and the type of orders you sell determines how much you will charge a customer. 

Calculate your monthly and annual profit and make ways to increase profits and diversify your revenue by expanding the machining services. Look for ways that machinery is affordable. The right name for your business is challenging, but it sells on its own. Brainstorm till you have one. Make use of social media as you look for a name. 

• Rentals costs.
• CNC machines prices .
• Utility bills.
• Property insurance.
• Repairs and maintenance of business premises and equipment.

Make a legal entity

There are business structures you need to research to make the right decision in choosing yours. A business entity such as a corporation protects you from being the only partner responsible when the company gets sued. There are partnerships, corporations, and limited liability companies. 

Register for taxes

Register for state and federal taxes before you officially open the business. The tax you will pay depends on the business structure you choose. Apply for an EIN, and it is free. Learn how to get an EIN.

Open a business bank account and credit card

Open a business bank account and a credit card. It helps you protect your assets. Whenever you set up a business, your assets are at risk. These include your house, car, and other valuables. Your business can get sued anytime. 

A business bank account separates your assets from the business. Accounting and tax filing are made more accessible. Open net-30 accounts. It is a business credit arrangement that pays the vendor within 30 days of receiving goods or services. 

It creates a business relationship with the vendors, and you instantly qualify for credit cards. Get a business card to separate business and personal expenses. It builds the company’s history. 

Set up business accounting

It keeps your business records of expenses and sources of income. You become aware of the company’s financial performance. The information is as accurate and detailed as it simplifies your annual tax filing. 

Get necessary permits and licenses

Learn about sales tax and how it affects your business. Permits and licenses prevent fines, and when it comes to the worst, your business will shut down. These state the requirements from the state. 

Check with the town clerk. You would also protect your rights to your products and designs, and you will be protecting your rights as a CNC machine shop owner as you register for necessary trademarks and copyrights. 

Get business insurance

Business insurance protects your business in case of accidents, ensures lawful operations, and keeps your company’s well-being in place in case of loss. You should compare multiple insurances, and General liability insurance can be a starting point if you have limited information. 

Define your brand

Your brand refers to what the company represents, giving the public’s perception of your business. A strong brand is worth keeping as it stands out from competitors. Check on how to make the best logo. 

Marketing plays allow you to reach potential clients. Networking makes your company popular and attracts clients. Use platforms that reach a wider audience. Keep customers coming back. 

Create your business website

A business website reaches a broader audience, making your business legitimate online. You may have social media platforms, but a website is a must-have. It takes hours to master a website. Use website building guides till satisfied. 

Set up your business phone system

Get a phone system for your business to keep your personal and business life separate. It makes the business legitimate and makes contact with clients easy. 

Safety rules and regulations 

• Wear appropriate clothing, such as safety shoes, glasses, and ear protection. 
• Stay healthy.
• Know the machinery. Only qualified machinists should be allowed to use machinery. 
• Keep the shop clean since dirty floors can cause slippage.
• Avoid distractions such as headphones and phones.
• Do not leave machines unattended.
• Safe storage for equipment.  
• Mark exits clearly.

Final stage

There are questions you should ask yourself before you commit yourself to the business. There is a sign that the CNC business is right for you. Enjoy making the parts using a CNC machine. As much as minimal physical effort is required, you should be able to operate the machine. 

Familiarise yourself with day-to-day activities at the workshop. These include landing stock. Programming machines and running them too. The ability to schedule machining works maximizes efficiency. 

Gather some skills and experience for business growth. The complexity of the CNC machine has to be simplified by knowledge. Take online courses and training. You determine if you want the business to grow or remain small. 

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Crafting Your CNC Machine Shop Business Plan: A Comprehensive Guide with a Free PDF Template

In this blog post, we will explore the key components of a successful business plan for a CNC machine shop and provide you with a downloadable PDF template to help you get started.

Starting a CNC machine shop can be a rewarding venture, but it's important to have a solid business plan in place to set yourself up for success. Without a plan, it's easy to get stuck in the weeds and lose sight of your ultimate objective. But, where do you begin?

The first step in crafting a successful business plan is clearly defining your vision and mission. Once you have these in place, you can start looking at your market and competitors, figuring out your unique selling points, and identifying your target customers. You'll also need to consider your expenses, funding, and revenue streams. All of these elements and more are crucial to building a comprehensive and effective business plan.

In our blog post, we'll walk you through each of these elements in detail, providing tips and strategies for how to craft a successful plan that sets you up for long-term growth and sustainability. We'll also touch on the importance of updating and revisiting your plan periodically as the market and your business evolve.

To make things even easier, we're also providing a free downloadable PDF template designed specifically for CNC machine shops. This template covers all the essential components of a business plan and can be customized to fit your specific needs and goals.

By the end of this blog post, you should feel confident in your ability to craft a solid business plan that takes your CNC machine shop to the next level. So, what are you waiting for? Let's get started!

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• One -to-one friendly service
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Equipped with 3-4-5 axis CNC milling and CNC turning machines, which enable us to handle even more complex parts with high precision.

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Low investment, fast lead time, perfect for your start-up business.

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Our talented sheet metal engineers and skilled craftsmen work together to provide high quality custom metal products.

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We offer SLA/SLS technologies to transform your 3D files into physical parts.

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Sigma Technik Limited, as a prototype production company and rapid manufacturer focusing on rapid prototyping and low volume production of plastic and metal parts, has advanced manufacturing technology, one-stop service, diversified manufacturing methods, on-demand manufacturing services and efficient manufacturing processes, which can provide customers with high-quality, efficient and customized product manufacturing services and help customers improve product quality and market competitiveness.

CNC Machining Case Application Field

CNC machining is a versatile manufacturing technology that can be used for a wide range of applications. Common examples include components for the aerospace, automotive, medical industries and etc.

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Cnc machining faqs.

Get the support you need on CNC machining and engineering information by reading the FAQ here.

What are the reasons for the unstable accuracy of CNC machining parts？

It may be caused by unstable processing equipment or tool wear and other reasons, so it is necessary to check the equipment and tools in time and repair or replace them.

What to do if the surface roughness of parts does not meet the standard after CNC machining？

It may be due to severe wear of cutting tools or inappropriate cutting parameters, which require timely replacement or adjustment of cutting tools or adjustment of machining parameters.

How to Resolve CNC Machining Program Errors?

It may be caused by programming errors, program transmission errors, or programming parameter settings, and it is necessary to check and modify the program in a timely manner.

What are the reasons for vibration and noise in CNC machining？

It may be due to equipment imbalance or unstable cutting tools during the processing, and timely adjustment of equipment and tools is necessary.

What to do if the cutting fluid used improperly in CNC machining？

The quality and usage method of cutting fluid can affect the surface quality of parts and tool life. It is necessary to choose a suitable cutting fluid based on the processing materials and cutting conditions, and use it according to the instructions.

How to handle deformation of CNC machining parts？

It may be due to residual stress in the material and thermal deformation during processing, and it is necessary to consider the compatibility between the material and processing technology to reduce part deformation.

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How to Start a Machine Shop in 14 Steps (In-Depth Guide)

Updated:   January 31, 2024

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Machine shops are essential to industries across America. CNC machining businesses specialize in the fabrication of parts, and the maintenance of metal, plastic and glass equipment. CNC machine businesses offer a variety of services based on equipment and training.

The CNC machine shop industry may see a decline in 2023. Still, Statistica suggests the market will hold a value of $27.4 billion by next year. Grand View Research predicts a CAGR of 4.3% between 2022 and 2030. If you’re thinking of starting a CNC machine shop, the time may be right.

Starting a new business is stressful. It requires a thorough and accurate business plan, including relevant market research, chosen services, pricing, and more. Throughout this guide, we’ll walk you through the ins and outs of starting your own machine shop. 

1. Conduct CNC Machine Shop Business Market Research

Market research is the first step in the process of starting any new company. As a machine shop owner, you need to know what you need to get started, what competitors are offering, and who your customers are.

There are two ways to collect this information, primary research, and secondary research. 

Primary research is the act of collecting data for yourself. This first-person research includes polling local businesses for computer numerical control machining needs and visiting competing shops in town.

Secondary research is available data collected by others and made accessible to you. This includes things like government website information, industry statistics, and online reviews of competitors left by local customers. 

Some of the information you should look at collecting for your shop include:

• Target customer demographics
• Number of competing shops in the area
• Services offered by most CNC machining businesses tin the area
• Top industries in town potentially requiring machining services
• Top machining services
• Current prices in the market

You may also want to look at local businesses indirectly related to the machining industry. Businesses you could partner with, rather be in direct competition with.

Choosing the Right Services for Your Shop

Machine shops come in all shapes and sizes, catering to a variety of industries. Choosing the right services for your shop is important. Your market research will help you determine the most lucrative services for local business owners in your area. Some of the services most commonly offered by machine shops in the U.S. include:

• Milling (4-axis CNC milling and precision milling)
• Heat sink manufacturing
• Assembling (Hardware, bearings, sub-assembly match machining, bushings, etc.)
• CNC turning

As a CNC machinist, you should also decide on the materials you’ll work with so you have the right tools on hand. Common materials are:

• Stainless steel

CNC machining businesses serve business owners in industries such as medical, aerospace, military, and construction. 

2. Analyze the Competition

According to the  Bureau of Labor Statistics , there were 254,090 employed in the machine shop industry as of 2021. Knowing your competition within your field of machining is important to the success of your new business. 

Most of the competition you’ll come across as a machine shop is local (Unless you partner with, or obtain a contract from a large company in another state). 

Some of the ways to analyze competitors include:

• Visiting other machine shops in person
• Asking businesses how their experiences have been with local machine shops
• Reading online reviews
• Visiting competitor websites

As you investigate the competition look at prices, services offered, and look for gaps you can fill within the industry.

There are plenty of shops in every state across the country. To find local competitors try searching with a search phrase like, “Machine shops in,” and add your city and state to the end of the phrase.

While most of your competition is local, it helps to look at national shops as well. Here are some of the major players within the machine shop industry.

Avanti Engineering Inc.

Avanti claims to be the “#1 screw machine products manufacturer in the U.S.” The company specializes in high volume machining, CNC machining, and screw machine products. They work with steel, aluminum, brass, stainless steel, and plastic.

Machinery Maintenance Inc.

Machinery Maintenance is based in Illinois. The shop is open 24/7 and offers services such as gearbox repair and rebuilding, boring and bushing, field welding, CNC machining classes, and quality control, and industrial pump repair, among others. 

Xometry is considered one of the top suppliers of machined products in the country. They offer custom online CNC services including turning, milling, metal sheet fabrication, die casting, and more. Xometry also partners with machine shops to supply raw materials and other resources, as well as jobs.

3. Understand the Costs of Starting a Machine Shop Business

As you learn to start your own machine shop you’ll notice some obvious and not-so-obvious costs involved. There are initial startup fees and ongoing costs to consider. Everything from registering your business to buying the equipment and materials needed to provide customer services is an investment.

Here, we’ll talk about some of the costs you’ll encounter and why they fluctuate.

What Does It Cost to Start a Machine Shop Business?

Initial startup costs vary depending on the size of your shop and the services you offer. The biggest costs within this industry are equipment related. A single machine, such as a milling machine can cost anywhere between $5,000 and $5,000 depending on the size, make, and model. Most shops start with a few different CNC machines. 

Some of the main expenses you’ll encounter outside of equipment include:

• POS system 
• Website domain, design, and upkeep
• Employee pay and training
• Accounting 
• Permits and licenses
• Marketing 
• Administrative supplies
• Machining materials

Between equipment, leases, business registration, and other expenses, you could be looking at spending anywhere between $100,000 and $500,000 to start a successful shop in the U.S.

Business Equipment/Materials

Equipment in your machine shop will be the majority of your startup costs. CNC machines also need to be maintained and repaired, transforming your equipment into an ongoing cost as well.

Some of the equipment you’ll need to start your own shop includes:

• Milling machine: $5,000 to $5,000
• Lathe machine: $1,000 to $25,000
• Boring bars: $40 to $1,000
• Shapers:$600 to $3,000
• Planers: $500 to $10,000
• Grinding machine: $800 to $20,000

You’ll also need to invest in a design computer, software, hardware, and materials for fabrication. Some places to buy equipment for your own shop include  Glen Mills  and  Penn Tool Co .

Cost of Renting or Leasing a Location

A commercial or industrial space for your shop will likely lease by the square foot. If the realtor is asking for $24 per square foot on a 1,000-square-foot building, you’ll pay roughly $24,000 a year to lease the place. 

Commercial leases cost more in city centers, and near large populations. You may also pay more for new buildings.

Business Formation

To form a business you must first register with the  Small Business Administration . Registering your business name and obtaining all necessary licenses and permits should cost between $300 and $800.

Business Insurance

Insurance is important for all businesses. Especially businesses where heavy machinery is being operated. High-risk workplaces should protect themselves, their staff, and customers with high-end insurance plans. Most machine shops invest in general liability insurance as a minimum level of insurance coverage.

Utilities are a big cost for CNC machining businesses. Running electric machines regularly increases the electric bill from standard commercial property usage. Common utilities include:

• Electricity

Most business owners should plan to spend roughly 4% of business expenses on utilities.

What Are the Ongoing Costs of a Machine Shop Business?

Ongoing costs are fees you pay continuously over the life of your business. Anything you need to replenish or make payments on falls into this category. Some of the common ongoing costs for a CNC machining business are:

• Lease payments
• Employee wages
• Materials and inventory
• Equipment maintenance costs
• Fuel for commercial vehicles

Paying for repairs and parts of your machines is another ongoing cost. Having regular maintenance should extend the life and minimize the need for these repairs.

4. Form a Legal Business Entity

Your business name isn’t the only registration necessary when starting a CNC machining business. You also need to form a legal business entity. There are four main types of business formations. These are limited liability corporations (LLCs), sole proprietorships, partnerships, and corporations. 

Limited Liability Corporation (LLC)

LLC formations are often the preferred choice of entity formation for small businesses. It gives you power over your company while maintaining a wall of separation between personal and business assets. 

If something happens to your business, only business finances are used to pay for liability, legal, or medical financial repercussions. 

Sole Proprietorship  

For a single business owner or a married couple who own a business together, a sole proprietorship formation is an option. Sole proprietorships put you in the driver’s seat for your company. You get sole decision-making rights, but you also leave your personal assets at risk.

A sole proprietorship doesn’t separate personal and business assets like an LLC. If your machine shop business goes bankrupt, lenders will come for your personal assets.

Partnership

If a business is owned by multiple people, a partnership is a good option for families running a business together. Partnerships work the same as sole proprietorships, except ownership and decision making is split among the members. 

Similar to a sole proprietorship, partnerships also don’t separate personal and private assets. If your machine shop damages parts for a client and legal action ensues, your savings could be at risk.

Corporation

The largest and most complex business entity is a corporation. Corporation formations protect your personal assets, but they’re difficult to apply for. There’s a lot of paperwork involved, and the process is more costly than any other business entity formation. 

5. Register Your Business for Taxes

Paying taxes is part of every U.S. business. To pay taxes your company must first register an employee identification number (EIN). EINs are also referred to as federal tax IDs because they’re used to file annual taxes.

Your business needs an EIN to:

• Pay employees
• Open a business bank account
• Apply for a business credit card

Get your EIN through the  U.S. Small Business Administration .

6. Setup Accounting for Success

Machine shops have many moving parts and employees to manage. Having accounting procedures in place helps organize incoming and outgoing money, manage inventory, remember client orders and service prices, and more.

As a small business, there are many options for bookkeeping and accounting. Some of the common recommendations for CNC machining businesses include the following.

Accounting Software

Automating bookkeeping processes through accounting software saves time and money. One of the best resources for this is called  QuickBooks . QuickBooks software is designed with customizable features and tools to suit any business type. It also comes in different packages for varying budgets.

Some of the features of QuickBooks include:

• Inventory control
• Bill and payroll management
• Job costing

QuickBooks is designed for small to mid-sized companies. It’s the perfect resource for a new business.

Find an Accountant

Even the best business accounting software needs help at tax season. Working with a certified accountant ensures all paperwork is filed correctly and nothing gets missed. 

An experienced accountant can charge up to $400 an hour. 

Get a Business Bank Account

According to The Small Business Tax Workshop by the IRS , opening a business bank account is a smart step for small businesses. There are many factors to consider when organizing finances. A business bank account makes it easier to monitor earnings and spending. 

Opening a business bank account requires you to legally register your company name and EIN, and form an entity. 

Separating personal and professional finances minimizes the risk of fraudulent spending. It keeps business owners accountable and creates an accurate report for the IRS.

Apply for a Business Credit Card

Like a business bank account, a credit card for CNC machining business purchases separates personal and professional money. Business cards also get a variety of benefits personal cards don’t see. Higher travel mile and cash back rewards and lower APR are a few advantages.

7. Obtain Business Licenses and Permits

Running a small CNC machining business requires certain permits depending on the city and state you’re in. There are no set federal license regulations for machine shops. Check with the U.S. Small Business Administration before opening shop to be sure you’re in the clear. 

For local permits, check with your local government and visit the SBA ’s website.

8. Get Business Insurance

Machine shops are filled with potential peril. Insuring your business protects you against financial hardship if legal or liability issues arise. Machine shop owners have a wide range of product types to choose from. The most common are general liability, commercial/industrial property, and commercial vehicle. 

General liability insurance covers damage to people and/or their property caused by services or products of your machine shop. Rates vary depending on the size of the company, risks involved in running the company, and past claims. 

For $1 million in protection, you could pay anywhere between $300 and $1,500 a year.

9. Create an Office Space

Machine shop businesses involve a lot of manual and mechanical labor. That doesn’t reduce the need for administrative tasks. All businesses need time to organize finances, schedule employees, and complete paperwork. 

Some shops have the benefit of an on-site office. This is a room dedicated to office work, and separate from the CNC machining business noise. If you don’t have an office in your shop, there are a few options.

Home Office

Many small business owners in the U.S. choose a home office for administrative duties. If your CNC machining business doesn’t have an office on-site, this is an affordable option to create one. 

Home offices come with tax benefits. The IRS allows deductions of up to $1,500 per year. You can deduct individual expenses, including utilities, mortgage costs, and even gas money. Or, deduct $5 per square foot up to 300 square feet.

CoWorking Office

A coworking office is just as the name suggests. An office shared by workers. Think of it a little like a vacation timeshare. It’s leased by multiple people who share the cost and alternate use of the space. This is a great solution for business owners looking for an office without a lengthy commitment. 

A great resource for coworking office spaces is WeWork . WeWork has options for every budget and work style. Choose from private, semi-private, and shared offices.

Commercial Building Office

The most expensive option for an office is leasing through a commercial office building. Commercial offices, like other commercial properties rent by the square foot. While they hold a lot of pomp and prestige, they may not be the best fit for a new small business owner.

10. Source Your Equipment

Starting a new machine shop comes with many expenses. Finding the best places to source equipment is a huge advantage. Equipment needs to be affordable, but also reliable. Here are some of your options.

Machine shop employees rely on the tools and equipment at their disposal. Without reliable equipment, it’s tough to create high-quality products and repairs. Buying new ensures your equipment is in tip-top shape and ready to take on the task it was made for.

Some of the top places to find new machining tools and materials are Grainger and KBC Tools and Machinery .

Used equipment isn’t as desirable as the new stuff, but if vetted, it can be just as durable. Be careful to thoroughly inspect equipment and ask for proof of sale, age, and maintenance on large expensive items. Some places to buy used include Facebook Marketplace and Craigslist. You can also find used machine shop equipment through Bid-On-Equipment .

11. Establish Your Brand

Branding your business defines it within the machine shop industry. It helps locals understand what your business does and why they should choose it over other machine shops in town. Everything from the colors in your logo to the design of your website impacts branding.

There are several ways to begin branding your business. Here are a few ways to get started.

Get a Business Phone Number

A business phone number is yet another way to separate the personal and professional. It’s a beneficial investment because:

• It organizes client phone numbers
• Creates a singular mode of contact for your machine shop
• Provides a sense of authority within your industry

There are plenty of business line options through major phone companies like AT&T. If you want something affordable and outside of the box, try  Google Voice . It works from any digital tool including phones, laptops, adn tablets. And you can start a business line for as low as $10 a month.

Create a Logo & Brand Assets

Your logo makes your business memorable and unique. Think about the differentiation between similar big brands like Coke and Pepsi. We all know the logos, the colors used in the logos, and even the font type. Your logo helps customers set you apart from local competitors. 

Try  Looka  for a simplified logo design experience. The platform uses AI to design a logo based on your tastes. You select other designs you like, colors, and styles of font and imagery. From your choices, Looka creates the perfect logo and layout for your brand.

Create Business Cards and Signage

Business cards, signs, posters, mailers, and everything in between help brand marketing campaigns, event booths, and even the exterior/interior of your machine shop.  Vistaprint  is a one-stop shop for all these things. 

Like Looka, Vistaprint offers design options based on your personal preferences. Choose the font, color, and design you want and Vistaprint gives a variety of styles and print options for your machine shop marketing materials. 

Purchase a Domain Name

The domain name for your website is important. Anything too vague and customers don’t know it’s a machine shop. Anything too over the top and your company may appear unprofessional. The ideal domain name for a machine shop is the name of your brand followed by dot com. 

Try  Namecheap.com  for domain names as low as $6 a year.

Build a Website

Machine shops are an in-person brick-and-mortar business model. Even so, a website is a must-have to stay relevant, increase brand recognition, and engage with customers.

A website is like a digital storefront. It offers potential new customers an idea of who you are and what you do. It also helps them navigate service options and find contact information. 

Not all machine shop owners are well-versed in web design. Fortunately, there are plenty of places to find experienced professional web designers that won’t break the bank.  Fiverr  is a good place to start. It’s a freelancer platform where you can find web designers looking for work, or post your own ad and accept bids on the project.

12. Join Associations and Groups

Joining machine shop business associations provides a place to gain advice, ask questions, and even source equipment. Some associations to watch for include  National Tooling and Machining Association  and  Precisioned Machined Products Association .

Local Associations

Along with international associations, there are local associations to look for. Sometimes local associations incorporate other business types within your industry. This is useful for finding new clients, or partnering with teams that will later benefit your brand. For example, as a machine shop, you might find it useful to partner with a parts or hardware manufacturer. Getting discounts on tools and supplies is extremely beneficial in the competitive world of machines.

Find local associations by searching, “Machine shop associations in,” and adding your city and state. 

Local Meetups

Meeting with machine shop groups and organizations offers valuable resources. Tradeshows and conferences are one place to get in touch with machine shop owners and upper-level management. You can also use digital resources like  Meetup . 

Meetup lets you find, or create your own, event or group. Search by city, zip code, event type, and industry to find the right meetup for you and your team.

Facebook Groups

Facebook groups are often left an untapped resource when starting a new business. As you start your machine shop, think about the networks you build and the people you connect with. Facebook groups are a great place to meet like-minded individuals on the path to successful machine shops.

• Small Machine Shop Owners
• Small Machining Business Group
• Machine Shop and Group of Industry

Facebook groups are valuable because they cost nothing to joint. You can access information and connections within your industry locally or globally. You can also start your own Facebook machine shop business group if you aren’t getting what you want from existing groups.

13. Focus on Marketing

Marketing your machine shop business is a necessary step in getting started. Niche businesses in the industrial sector, like this one, need to make themselves noticed. Things like search engine optimization and direct mail flyers help increase brand recognition among locals. 

Here are some of the ways to begin marketing your machine shop in town.

Ask Friends, Family, and Coworkers

Word-of-mouth marketing makes an impact on consumers, especially business owners. If you have friends or family members in industries supported by machine shops, ask them to spread the word about your new business. 

Your loved ones can help get your machine shop off the ground in several ways.

• Hand out business cards
• Tell locals about the business
• Visit the website and leave a review
• Rate the business on Google Businesses and other online business listings
• Put up flyers in the community

According to  Forbes , 90% of consumers are more likely to buy or use a service based on a recommendation. This stands true even if the recommendation comes from someone they don’t know. It’s more impactful when the recommendation comes from a trusted source.

Digital Marketing Ideas

Digital marketing has become an integral part of any successful business strategy. As a new machine shop just starting out, digital marketing engages customers and spreads brand awareness. 

Some forms of digital marketing are:

• Email campaigns
• Facebook ads
• Social media posts
• Video uploads (TikTok and YouTube)
• QR codes and backlinks
• Newsletters
• SEO (search engine optimization)

Your website is also a big part of any digital marketing campaign. Ads, QR codes, and even social media posts should lead customers to your website to obtain services. The more traffic your site gets the better your chances are of a return on investment (ROI).

Traditional Marketing Ideas

Marketing your machine shop takes more than savvy Google ads and blog updates. While the machine shop industry is constantly evolving, there’s a strong sense of traditionalism among laborers and technicians. This calls for traditional marketing methods to spread the word throughout local industrial circles. 

There are many forms of traditional advertising to choose from. Anything with a tangible visual impact does the job. Some classic forms of traditional marketing include:

• Business cards
• Direct mail brochures
• Bus and bench signs
• Television commercials
• Newspaper ads
• Community center bulletin flyers

You can also market your machine shop with commercial vehicles sporting logos and business names. 

14.  Focus on the Customer

Without customers, a machine shop is just a warehouse full of equipment and the experts who use them. Finding ways to show clients they matter to you promotes your brand above local competitors. 

Machine shop clients are generally business owners within the industrial sector. Create customer focus by:

• Creating exclusive services and discounts
• Posting relevant DIY and “How To” videos to social media
• Connecting with industry leaders through networking events
• Offering loyalty and referral rewards
• Having tools and parts on hand for clients within niche industrial environments

Developing lasting client relationships is easier when you are an authority in your field. Show customers, you’re the right team for the job by knowing your products and services inside and out.

Hopefully, this guide has been helpful in learning to start your own machine shop. From branding and registering your EIN to engaging with customers, there’s a large market for successful machine shops. Best of luck as you get started with yours!

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Sample CNC Machine Shop Business Plan

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 SAMPLE

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.

Capital Investment

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.

Target Customers

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.

Business Expenses

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.

Marketing Strategies

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.

Rewarding Referrals

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.

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CNC Machine Shop: A Guide for Concept & Selection

• Updated: April 30, 2024

Table of Contents

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Even simple products like shafts or fasteners require multiple machining operations, from milling to surface finishing. As complexity increases, more machining operations and equipment are necessary to shape the workpiece. Meanwhile, a CNC machine shop is a space or factory that contains all the equipment and arrangements to handle all subtractive manufacturing designs.

Furthermore, this article will uncover the different machinery & safety protocols in a machining shop. We will also examine the advantages, applications, challenges, and how you can choose the best shop for your manufacturing project at the end.

What Is a CNC Machine Shop?

First, let’s understand its basic concept: What is a machine shop? It is a confined space with various manufacturing equipment, machinery, tools, workforce, and other essential things to convert any design into a physical item. The term ” machine shop” is for the subtractive manufacturing facility, which involves various advanced and CNC-controlled systems and machines, from a CNC mill to a drill press and inspection equipment like a CMM machine.

The main goal of this manufacturing shop is to provide machining services for a wide range of industries based on their designs and production requirements. It can produce diverse parts & production, whether it is a prototyping project for a startup or large-scale runs for an established business. So, product developers can excel in their ideas in the market or produce their existing products without their own CNC machining factory.

The Role of CNC Machine Shops in Different Industries

Do you know how many manufacturers supply the parts for a single aircraft? Many specialized CNC machining shops produce some specific components. For example, one shop might work on turbofan blades, while another can make the fuel nozzles:

So, different industries rely on separate manufacturing partners to outsource the required components.

Types of CNC Machines in a CNC Machine Shop

The CNC equipment is what makes a space a machining workshop. Manufacturers installed and set the various equipment and mechanisms to handle the expected machining tasks. Meanwhile, most of the machines in such shops shape the workpiece by removing the material from the outer surface using cutting tools.

Although each shop might have different machines according to their CNC machining business model, they commonly include the following CNC machines;

• Milling Machine
• Machining Center
• Grinding Machine
• Drill Press
• EDM Machine
• Inspection Equipment

1. Milling Machine

A CNC Mill or milling machine can handle different materials to shape them according to the designed geometry. The machine could have 3, 4, 5, or even more axes movement ability. Typically, the work table moves along the X and Y-axis, carrying the workpiece to the proper position. Meanwhile, the spindle holds the cutting tools and moves along the Z-axis for vertical cutting operations. Here, table movement also controls the feeding against the rotating milling tool.

This machine is ideal for shapes with flat surfaces. However, it can also make complex geometries with the use of respective tools & operations like CNC milling , drilling, slotting, profile milling, thread milling, etc. However, drilling can be separately done by a drill press or CNC drilling machine. Here you can read the differences between CNC milling vs. Drilling .

In contrast to a mill, a lathe machine removes the material by feeding the tool into a rotating workpiece. Here, the work rotates symmetrically( around its center). So, lathe operations are valuable in cylindrical & conical parts  manufacturing.

During the lathe machining, the spindle( tool) moves across the workpiece and removes the material. At the same time, the Chuck holding the work can be adjusted to align the positioning with the tool.

Furthermore, a CNC lathe machine can execute the CNC turning , cutting, facing, knurling, and other operations with proper tooling.

3. Machining Center

It is the advanced version of the milling machine with more production and complexity handling advantages. The main difference with other CNC equipment is its diverse capability of CNC machining , including milling, drilling, and tapping. Next, the Machining Center also contains an automatic tool-changing mechanism that reduces the setup time and performs multiple operations seamlessly on the work material.

Two types of machining centers can be found in the manufacturing industry based on the spindle orientation;

• Horizontal Machining Centre
• Vertical Machining Centre(VMC)

Moreover, the universal type of CNC machining center can move its spindle in both directions to tackle the complex features and details.

4. Grinding Machine

The role of a grinding machine in a   CNC machining shop   is to customize the machined surface of parts to the intended level of dimensions and finish. It removes the burrs, attached chips, and cutting marks using an abrasive wheel.  

When the spinning wheel with abrasive on the surface comes in contact with the surface of the machined parts, it cuts the excess or attached material and leaves a smooth surface.

The grinding process can fix minor dimensional inaccuracies of components and achieve a mirror-like finish (Ra 0.02 μm). The thing is, the result depends on the type of abrasive material and feeding control.

Furthermore, the perfect combination of material type and grit number of the abrasive wheel is essential to achieve the desired Ra value. The grit number refers to the coarseness or fineness of the abrasive particles used on the wheel. 

• Low Grit (10-24) : These are suitable for rapid material removal and roughing.
• Medium Grit (30-60) : Balanced for moderate material removal; typical in general fabrication.
• Fine Grit (80-120) : For finer surface finishes and lower material removal; used in finishing operations.
• Very Fine Grit (150-600) : Provides very smooth finishes; suitable for precision tasks and delicate surfaces.

5. Drill Press

This machine is known for precise and deep-hole drilling. It contains a drill tool mounted on the press. Meanwhile, the press can have a mechanical, hydraulic, or automatic mechanism. Once the drill tip touches the surface, the connected motor system rotates the drill to penetrate it into the material.

Here, the operator can control the down-feed pressure of drill edges into workpieces or with the automatic control systems. It can drill holes faster and more easily than CNC drilling .

Large bars, blocks, or sheets cannot be processed directly with CNC machines or other fabrication equipment. Instead, they are required to be cut into appropriate sizes before shaping. Thus, the bend saw in the CNC machine shop is known for straight & curved cuts into the workpiece and cutting the work material into small pieces.

The working of a bandsaw involves applying long flexible blades into the cutting position front & back. In the return stroke, blade edges exert force and throw away the material to form a desired cut.

7. EDM Machine

The Precision CNC Machine Shop also needs an Electrical Discharge machining setup to manipulate the hard materials and intricate geometries. It is compatible with extremely hard materials like titanium and tool steel.

• Complex or intricate shapes
• Sharp corners
• Cavities with fine details
• Diverse Patterns
• Micro-machining
• Gear profiles

The material removal takes place with an electrical discharge on the work metal that forms when the electrode touches the workpiece. Meanwhile, both the workpiece and cutting tool (electrode) remain in the dielectric fluid.

The EDM machine produces intense heat during machining, which melts the machining area precisely to create the designed geometry. Subsequently, it is only workable for the conductive metals as they can only create electrical discharges.

8. Inspection Equipment

The quality control process ensures that machining services meet the specifications and requirements stated in the design. Therefore, every prototype and production machine shop includes various inspection equipment to monitor the production process and verify the dimensions, tolerances, features, roughness level, etc.

Here are some typical inspection equipment & tools;

• Coordinate Measuring Machine (CMM)
• Micrometers and Gauges
• Optical Comparators
• Laser Scanners
• Rockwell Hardness Tester

The CMM machine is a highly preferred inspection machine across the machining shops. It measures different geometric dimensions & accuracies, alignments, surface contours, feature locations, etc.

Manual vs Automated Machining

The features and speed of automated machining outdo the manual machining capabilities. Since the CNC system can work with minimal human intervention, it increases accuracy & precision. Moreover, CNC machines can perform multiple operations with ATC mechanisms. Also, there is higher safety than manual ones.

Let’s look at the following comparison table for specific differences between Manual vs. Automated machining;

Advantages of Utilizing a CNC Machine Shop

Each of the industries we discuss above has several benefits from collaboration with a CNC machine shop. It gives the opportunities to businesses to manufacture their design without significant investment in the machining & CNC tooling setup. They can simply send the design to machine shops anywhere around the world and can get the part ready at the door.

The primary advantages are;

High Precision and Consistency

The CNC machines and tooling in a CNC shop produce precise and consistent products, regardless of production volume. The computer control mechanism guides the tools to accurately remove the material.

However, the precision might depend on cnc machining capabilities of a particular machining workshop. This means precision is determined by shops that have lower or higher axes machines (3, 4, 5, or even higher taxes machines).

Production Speed & Efficiency

The automatic control of machining processes and minimal human intervention speed up the production cycles. Additionally, the CNC equipment can operate 24/7 with proper maintenance and care.

The high production speed reduces the lead times and costs. Typically, CNC is 3 to 5 times faster than conventional machines.

Cost-effective Production

The tool path optimization in CNC machining lowers the material waste and machine setup time. Consequently, minimal human intervention reduces the time also. All these reasons make CNC a highly cost-effective method, from prototyping to mass production.

Complexity and Flexibility

The tooling adjustment can process almost every type of design with a single setup. As a result, CNC shops can machine complex geometries, like irregular profiles, deep cavities, and surface detailing.

Next, the manufacturer can quickly change their designs with minimal cost and time to optimize the production quality. It also supports customization and innovation.

Common Challenges Faced by CNC Machine Shops

Like other technologies, CNC machine shops are not free of limitations or challenges. Here are some technological, operational, and economic challenges associated with it;

1. High Upfront Investment

Not only the CNC machines and other manufacturing equipment but the cost of quality control tools, electrical arrangement, tooling, and space is also significant for a CNC shop than conventional setups. However, the long-term use of these machines and tools contributes to the lower per-unit cost.

2. Rapid Technological Advancements

We are at a time, where every day new technologies are coming regarding machineries, process monitoring, and tooling. Sometimes, the shop owner might struggle to adapt due to a lack of expertise and investment. For Example:

If a shop integrated an electronic monitoring system one year ago, now the same shop needs to update it with AI integration to be competitive in the market.

3. Operational & Maintenance Challenges

First, skilled and expert operators can only execute the machining tasks. So, it is challenging to find such skilled manpower that can learn and adapt to the new advancements.

Next, the maintenance cost for CNC systems and machine components is also high because of complexity, required precision level, and regular software updates.

4. Workshop Saftey

The workers, machinery, and even environmental safety are crucial for a workshop. At the same time, planning & execution of safety rules and principles is challenging because it demands frequent training, continuous customization of safety equipment, routine inspection, machine maintenance, and consideration of environmental impacts.

CNC Machine Shop Safety Rules to Follow

Shop safety practices are not only about an operator wearing PPE in the machining factory. Moreover, it entails identifying and correcting the potential risks before any damage. Therefore, setting and following the CNC machine shop safety rules is essential for the shop’s operation.

Let’s elaborate on the three major safety rules in brief;

1. Personal Protective Equipment (PPE)

It refers to protective gear like helmets, earmuffs, shoes, goggles, and related clothing designed to safeguard the operator or any other professional in the CNC shop from physical hazards. Consequently, what kind of PPE is determined by the specific job he/she handles or the potential risks associated with that.

2. Machine Operation Safety

Any faults in machines, tools, and, alignment can cause a risk to the overall shop’s safety. So, the operators should be well-trained and knowledgeable about the machinery and possible errors during the machine’s operation.

Next, the machine itself should be fit and safe to execute the machining process. The digital monitoring systems track the tool wear, machine health, and performance metrics to predict the risk and required maintenance.

3. Material Handling Safety

The sharp edges of material can cause injuries in a lack of proper material handling. Consequently, other similar risks are associated with material & product management. Thus, following the safety rules for material handling is absolutely necessary.

This safety measure focuses on training workers and adopting handling tools and mechanisms like conveyors and forklifts.

How to Select the Right CNC Machine Shop?

The only right machining workshop according to your requirements can eliminate the burden of installing a CNC factory to manufacture your designs and product ideas. Therefore, many considerations are necessary while selecting the CNC shop, such as available machinery, precision capabilities, project timeline, cost, etc.

1. Capabilities and Services Offered

First and foremost, does the shop have the equipment and tools to handle your design? You need to consider 3, 4, or 4-axis CNC machines, what level of tolerance the machine can achieve, available material options, surface finish, and more.

Next, look for the services they offer. It could be what machining processes they offer ( milling, drilling, turning, etc.) or industries they are supplying parts for.

2. Competitive Pricing

The price of the same project or design differs from one to another shop. Meanwhile, your project specifications like size, precision, timeline, and material also influence the cost. Here, the goal is to find the perfect balance of quality and cost. But, you cannot compromise the features and functionality of the intended item.

The best way to find a cost-effective shop is to request detailed quotes for your design from different shops and analyze their offering and costs.

3. Production Capacity and Scalability

Another factor is the capacity and scalability option of the CNC machining shop, what volumes can the shop deliver in a specific timeframe? If you just need some prototypes or small batches, can the factory or shop extend the production with reasonable cost & time in the future?

4. Experience and Expertise

It is the primary requirement that the shop you are going to partner with must have a similar experience. Only that, you can ensure they can handle the task to the specifications without any error. For example, if you need to machine aircraft engine components, the shop must have experience working with several clients from the aerospace industry.  

5. Quality Control and Certifications

The certification is extra important, especially for applications that require certain standards to fulfill like medical and aerospace parts. To ensure that potential collaborator has rigorous quality control, you can check their certification like ISO, CEN, FDA-approved material, etc.

Choose Your CNC Machine Shop

As cost & precision are crucial factors of any CNC service , you can choose a manufacturing center in China for your current or upcoming project. The vast network of material chains and manufacturing infrastructures makes China the best destination to outsource the machining parts and products.

The low labor cost, government subsidies, expert professionals, heavy R&D, and reliable logistic allows Chinese firms to offer way lower costs than US & Europe-based companies.

RapidDirect is a China-based manufacturing service provider with over a decade of experience producing parts & products for numerous industries across the world. We have our own machining factory with 3,4,5-axis milling, turning, EDM machine, inspection equipment, and surface finishing facilities.

Furthermore, we are flexible with the volume of production and further scalability. We are ready to help your business, so send us your design for an accurate & detailed quote.

Overall, manufacturing all components in own factory is not feasible and beneficial for companies in a current fast-paced market. Therefore, industries take benefit from the cumulative experience of various CNC machine shops to manufacture the components and end products. Instead of working on how to start a machine shop, they can focus on design and innovations to be ahead in the market. Meanwhile, external manufacturers like RapidDirect can work for those companies to create high-standard parts at less cost.

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Key Components of a Machine Shop Business Plan

• Thread starter ediaz700
• Start date Jul 5, 2022
• Views 3,714
• Jul 5, 2022

Hello everyone, after scanning over the forums on multiple occasions I've finally decided to make an account and start being more active. I am fairly new to the world of machining although I have been around it my whole life. My father has been a machinist for over 30 years and started his own shop in California. Unfortunately, that did not last. We are years removed from that first initial shop and now I am a young man that's recently graduated from college. My goal is to "resurrect" the shop my Dad had. From what I can gather it was a lack of planning that doomed the first shop, and now that my father is older and I will be taking on the responsibility of both business management and to a lesser degree shop management, I want to make sure we are well prepared this time around. That said, I would greatly appreciate any advice from shop owners on this forum. What helped you all in establishing your shop and what advice what you have for someone looking to write a comprehensive business plan? What key factors would you suggest I include or be aware of? Although I will also be partly relying on my own finances, I am also planning on raising capital so this is why I am focused on creating a comprehensive business plan. Thank you all for your time.  

Covenant MFG

As the saying goes, plans are useless but planning is essential. You'll need two main skills- machining and business. If you don't have a strong knowledge of both, it's gonna be rough. Doable, but you need to assume you're going to learn some VERY expensive lessons. So, if you don't have at least a strong sense of knowing exactly what it is you don't know, I'd recommend starting small and learning the hard lessons on your own dollar first. Once you've graduated the school of hard knocks, then spend the $$ to get a big operation. Investors are going to be way more confident in a guy who's proved he can run a great profit on a beat up old machine than in a guy who's got a smooth tongue and money backing him. Bootstrapping is slower, less glorious and more tedious but that's it. If you can be in a spot where the work completely dries up and you just say "ok no biggie" without losing your house, that's where it's at.  

David Ferguson

Key parts of the Business Plan: - Defining what you do well - Determining the basic costs of making that product, or providing that service. - How you will find customers that need the product / service you do well. - How much will these customers need your product/service (how much will they spend, and how often). - How many customers like that do you need to hit your break-even, and growth goals. - What resources are required to grow the business? - How will you finance getting those resources.  

Some dumb luck helps too  

The question that just keeps on giving... What kind of shop? Milling, turning, Swiss, etc? Job shop or product based? And can you raise capital for a job shop? Is that a thing? I understand getting loan for a machine, but "raising capital" has a different connotation.  

Don't do it if your trying to ressurect a distant memory Why did the shop fail first time around? What are your machining skills? What is your ability as a businessman? If you don't have good machining skills then how are you going to quote jobs, and do the work. Obviuosly you can hire people, but imho you need to be able to supervise these machinist, and without knowing how to machine it could be problematic supervising the machinists. If you don't have a decent head for business then your completely wasting your time. Unless you have customers willing to send you work, your wasting your time. You would be better off starting in a garage, keep your overhead low, and then expand if you get the work. If I had a chance to do it all over again, I'd have been better off with a proper job with benefits, 401k etc etc  

• Jul 6, 2022

My opinion is depends entirely on location..........my first shop was very successful because I was next door to a big bacon factory ,and very near about five other big factories in the pre CNC era..........by the time I closed in 2001 ,the big places and all closed and been sold for real estate,and the smaller places were being run by idiots who didnt want to pay ,unless under extreme duress....I was told right at the start...avoid truckies,earthmovers,mechanics ,and builders.........which by 2001 was all that was left.  

• Jul 7, 2022

Hmmm, yep the start in a garage idea is where I would start off. Learning about some of the business ins and outs at this stage will help you for sure. Thats where my show started. Business plan, yeah next question..... You can have all of these wondereful ideas, but its grabbing opportunities as they come along, some will work out well, others not so. Many changes in direction will probably occur, be open to it. Plenty of examples out there of that. Mazda comes to mind. Seen plenty of folk come thru my door claiming that they will "change the world", so to speak. Few do. Be wary of them. Dont be too surprised if what u envision and how things turn out are completely different. Keeping your finance to a bare minimum at the early stages is important in my humble opinion.  

Freedommachine

• Jul 22, 2022

What do a machine shop, a hotel, a bakery and an apartment complex all have in common? They all serve the exact same purpose to those who control them; to act as an engine that generates cash flow. If a 'thing' does not serve that purpose, then it is not worth doing. I'm only 2 years into my own entrepreneurial adventures. Maybe I can offer a slightly different perspective and some insight gained the hard way. First, I would advise learning how money works before you ever consider starting a business. Seriously, your new hobby and passion in life should be studying money. Read books like; Rich dad Poor dad; The richest man in Babylon; Think and grow rich; and The art of money getting. Using your current income and expenses, turn your life into a mock business. Create quarterly profit and loss statements, cash flow statements, accounts payable... All that stuff. Save all of your receipts and classify everything based expense type. Develop a system and routine for doing this and never break it. Your books are the most important part of your cash flow generator i.e. 'business'. You will need that information to make important decisions, obtain lines of credit, deal with taxes and possibly to win large contracts. Learn how to obtain near perfect credit for yourself and work to achieve a 5 digit credit card limit. - Don't use it irresponsibly, just obtain it. Study LLC, S-Corp and C-corp entities so that you understand the differences in how each one handles their finances and tax liability. Become very familiar with the different methods a business might use to obtain a line of credit, a lease, or an advantageous contract with another business. The more you know about money, business finance, basic business etiquette and the like, the better off you will be. When it's time to buy machines, lease a space, meet with new potential customers, ect. You will know what to bring, what to ask, what terms are acceptable and you will naturally carry yourself like a guy who really knows his shit. I really wish this site had a section for the business aspect of running a machine shop. There are some brilliant people here who have built business of all shapes and sizes. I'm sure there are a more than a few like myself who could benefit from that type of wisdom / mentorship from time to time.  

• Jul 23, 2022

Hi ediaz700: I applaud you for wanting to plan before you commit, but it's critical for you to understand and differentiate those things you can nail down and those things that are hopes, wishes or fantasies. I say this because most business plans project rosy growth and stable expenses, neither of which can be assumed with confidence, but which just about every business planning guru invites you to pretend to believe in. So the most useful tool I've ever seen is a projection of what happens when things go wrong. The one I've seen and liked used Excel spreadsheets and mapped graphically how the business would tank and over what period of time if you got whacked by circumstance. You could set the circumstance in the spreadsheet, let it run the calculation, see the effect of the remediation options you had graphically, and thereby shape your thinking well before you needed to panic in real life. I have no idea who wrote that spreadsheet or if it's commercially available, but there's got to be something equivalent out there. For example, what happens when you've committed to an expenses burden of X dollars/month predicated on Y dollars of revenue and your revenue is suddenly halved, or you take a big expenses hit? What happens if a machine is down a month? What happens if you lose a contract? What happens if a customer stiffs you? The best of these plans lets you see what happens if you have to fire a guy, or move into cheaper digs , or stop maintaining your toys, or whatever. All have ripple effects, some of which you can map out to help you shape your thinking if the awful event actually happens. That gives you a better sense of the turf you're actually playing in, and what kind of financial, mental and emotional cushion you need to have. (Yes, all three are important) All the pro-forma income and expenses projections I've ever seen are bullshit, and yet many still rely on them to create their dream and then pretend they've done some real planning. When you stress test the fantasy in the way I've described you get a better sense of what you really have to be prepared to do. Cheers Marcus www.implant-mechanix.com www.vancouverwireedm.com  

• Jul 24, 2022

kustomizer said: Some dumb luck helps too Click to expand...

barbter said: Niche. You need a niche.... Click to expand...

camscan said: Why does he need an itch? Click to expand...

Orange Vise

implmex said: Hi ediaz700: I applaud you for wanting to plan before you commit, but it's critical for you to understand and differentiate those things you can nail down and those things that are hopes, wishes or fantasies. Click to expand...

Orange Vise said: Yup, I can attest to this. There is no substitute for experience. Without it, your business plan is full of guesses. Most people starting out don't have much experience, so most people's business plans are full of guesses. That's the bad news. The good news is that CNC Machining is one of the few industries that can be successfully run at home while keeping a day job. Such an arrangement is a low(ish) risk way to test the waters. You gain experience while simultaneously being able to put food on the table. Eventually you'll also be able to keep your machines running at home while you're at your day job. Also consider it a litmus test of whether you can juggle a 40-hour/wk day job with a 40-hour/wk machine shop business. If you can't, ask yourself if you'd be able to survive running a 80/wk do-or-die business full time. Your day job can literally be anything, including flipping burgers. Hustle does not discriminate. You'll get a lot further raising your own capital and being self sufficient. Click to expand...

hvnlymachining

As my dad said many times, "starting a business to get rich is a good way to go broke" and "Owning and operating a business allows you to choose your coworkers but requires far more work for less pay" It all depends on motives on how you move forward with a new business.  

• Jul 26, 2022

Let's start here...."I recently graduated college".......with a degree in what exactly?  

Business plan: 1. Find people who want parts. 2. Make da parts. 3. Git paid for da parts. 4. Profit!  

mhajicek said: Business plan: 1. Find people who want parts. 2. Make da parts. 3. Git paid for da parts. 4. Profit! Click to expand...

Freedommachine said: Side bar question; out of my own curiosity, Do you make Orange vises? Click to expand...

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Precision equipment for Russian arms makers came from U.S.-allied Taiwan

Moscow-based importer also sought to supply a secretive Kremlin effort to mass-produce attack drones, a Post examination found

It had been a busy year for the employees gathered in June for I Machine Technology’s corporate retreat at a resort on Russia’s Black Sea coast. With war raging in Ukraine, the Russian defense industry was hungry for the advanced manufacturing equipment the Moscow-based supplier specialized in importing.

Dressed in summer linens, chief executive Aleksey Bredikhin welcomed the crowd seated among plates of local delicacies and flutes of prosecco. He paused to recognize several guests who had traveled thousands of miles to join the festivities in Sochi.

“I especially want to welcome our friends from faraway Taiwan,” he said, video footage of the event posted online shows. “For almost a year now, we have been working very hard.”

Since January 2023, I Machine Technology has imported over $20 million of sophisticated equipment called CNC machine tools made in Taiwan, a U.S. strategic partner, according to trade records and Russian tax documents obtained by The Washington Post. The computer-controlled machines are used for the complex and precise manufacturing that is critical in many industries, including weapons production.

The Taiwan-made machines accounted for virtually all of the Russian company’s imports in the first seven months of last year, according to the records, and the company’s sales during that period were overwhelmingly to the Russian defense industry. Bredikhin also sought to make the machines available for a secretive Russian effort to mass-produce the attack drones that have unleashed horrors on the U.S.-backed Ukrainian army, according to an invitation sent to one of the project managers overseeing engine construction for the drone program.

What’s at stake?

• Taiwan is a U.S. strategic partner. Since Russia’s 2022 invasion of Ukraine, Taiwan has placed restrictions on exports to Russia.
• Post reporting finds that a Russian company, a supplier to arms makers, continued to import high-tech manufacturing equipment from Taiwan.
• The company sought to supply the machines to a secretive Russian effort to mass-produce attack drones , documents show.

Kevin Wolf, a former senior Commerce Department official who once headed the agency that implements U.S. export controls, said shipments identified by The Post probably violated prohibitions Taiwan and the West imposed last January on the sale of technology to Russia, in response to the Ukraine war. He said the shipments should “absolutely” be an enforcement priority for authorities in Taiwan.

“This is why export controls against Russia were imposed,” he said. “You’ve got tools that are very important for making military items. You’ve got a lot of connection to military end uses and users. You have connections to drones. You’ve got a large dollar amount. This is a classic enforcement priority issue.”

The shipments highlight how, despite a U.S.-led regime of global restrictions that is one of the most expansive in history, Russia’s defense industry has remained robust partly because of regulatory loopholes and lax enforcement. Critical goods have continued to flow directly to Russia, as well as through China and other countries that are not participating in the restrictions — including, in this case, goods that originated on a self-governed island that is allied with the United States.

“On the one hand, we appreciate the efforts taken by our partners so far to disrupt Russian supply chains,” said Vladyslav Vlasiuk, a sanctions expert and adviser to Ukrainian President Volodymyr Zelensky. “At the same time, it is clearly not enough.”

The machines were sent in 63 separate shipments, according to Russian trade data obtained by The Post and export records provided by the Center for Advance Defense Studies, or C4ADS , a Washington-based nonprofit focused on global security. The first batches, worth $4.47 million, were sent directly to Bredikhin’s firm from a similarly named Taiwanese trading company, I Machine Tools. Yu Ming Je, who describes himself on LinkedIn as a sales director for the company, was among those Bredikhin paused to recognize at the retreat in Sochi. Yu was previously a co-owner of the Moscow-based firm, according to Russian business records.

By the end of May, the direct shipments of CNC machine tools to Russia ceased. The remaining equipment, worth $17.8 million, traveled a circuitous route. Though Bredikhin imported those shipments from Turkey or China, trade records show that the machines were manufactured by several other Taiwanese companies.

Bredikhin acknowledged in a phone interview with The Post that he had for years imported CNC machine tools from I Machine Tools, but he denied doing so after the restrictions were put in place last January. He said the shipments after that point were for spare parts and so did not violate export controls.

“I’m not buying anything from them except for parts,” he said.

He did not respond after being given copies of trade records showing that in nearly every case his firm was importing complete CNC machine tools, some listed by model and trade code, and not merely parts.

After The Post contacted Bredikhin, dozens of posts were deleted from I Machine Technology’s Instagram account. Among them were images and videos of the Sochi retreat, of Yu with other Taiwanese executives and of Bredikhin visiting Taiwan.

In an interview, Yu initially said that his company stopped all shipments to Bredikhin’s firm once Taiwan imposed export restrictions. After being told of the records gathered for this report, he acknowledged the shipments last year but said they involved parts that were not subject to export controls.

“You still have to do this kind of service, because when the sanctions are lifted in the future, we can still cooperate, instead of just cutting it off,” he said.

I Machine Tools-branded goods made up more than 40 of the shipments to I Machine Technology last year, including some that came via Turkey and China, according to Russian import records. Only several were for parts, the records indicate.

After those records were sent to him, Yu said that since export controls were imposed, “our company has no longer transacted with this dealer.”

He also suggested that the records might not be authentic and said his firm has not been a supplier for the Chinese and Turkish companies that sent shipments to I Machine Technology.

He said he was not aware of I Machine Technology’s ties to the Russian military. “Distributors basically have many users,” he said.

Security alignment

Taiwan has condemned Russia’s invasion of Ukraine and, in April 2022, imposed controls on exports of technology to Russia. In January 2023, it expanded those measures to include certain CNC machine tools, making the controls “substantially equal to those of the E.U. and U.S., as well as in line with those of democratic allies,” Taiwan’s International Trade Administration said at the time.

The alignment occurred as Taiwan looks to the United States for security amid fears the island could be invaded by China. The response to Russian aggression in Ukraine is widely seen as one indicator of how the West might respond to a Chinese invasion of Taiwan, giving Taipei added incentive to support Ukraine’s defense.

“The current government in Taiwan does feel a strong motivation to signal clear support for a U.S.-led policy of restricting technology imports by Russia,” said John Dotson, deputy director of the Global Taiwan Institute . “They want to stake out that position to show their affinity with the United States to further shore up their own security relationship.”

Taiwan’s International Trade Administration, in the Ministry of Economic Affairs, declined to comment on whether the Taiwanese companies identified in this report violated export controls. The Taiwanese government is planning to bar Taiwanese companies from selling their goods to I Machine Technology out of concern they could be used for weapons production, the agency said in a statement.

At the request of The Post, researchers at the Washington-based Institute for Science and International Security reviewed the trade data, financial records and technical documentation gathered for this report.

The team — led by former U.N. weapons inspector David Albright and researchers Sarah Burkhard and Spencer Faragasso — found that several of the models of CNC tools described in the records were probably subject to export controls, but said a definitive assessment would require input from the Taiwanese government.

“If Taiwan has aligned its export controls with the United States, its stated policy, then many of I Machine Tool’s exports would be illegal under Taiwanese law and/or regulation,” they wrote in their assessment. “But a complicating factor is that Taiwan sometimes lags in new situations to writing expanded control or sanctions legislation and enhanced export controls and then enforcing the new laws.”

“If any of the machine tools went to entities involved in WMD [weapons of mass destruction] or the means to deliver them, such as by missile, Taiwan’s law would control such exports,” they wrote, noting that “Taiwan should have done a better job ensuring its exports did not contribute to Russia’s war effort.”

The arrangement between the two similarly named companies puts them in a category by themselves, according to the researchers. The Taiwanese firm effectively has a “Russian domestic sales” branch that provides access to a wide range of companies in Moscow’s military industrial complex, they wrote.

In early November, 10 members of Congress urged the Biden administration to prioritize the curbing of exports of CNC machine tools to Russia. The letter noted a “troubling trend” of machine tools produced by U.S. allies, including Taiwan, making their way to Russia’s defense industry.

That same day, the U.S. Treasury Department imposed sanctions on Bredikhin’s firm, citing its connections to the Russian defense industry.

A reliance on imports

Russia for years has been heavily reliant on imports to obtain CNC (computer numerical control) machine tools. The machines, typically weighing thousands of pounds, are used to mass-produce goods that require an extreme and consistent level of precision. They follow computerized instructions to shape metal or other materials, using drills, lathes, mills or other components.

“CNC machine tools are the quintessential dual-use goods,” said Allen Maggard, an analyst with C4ADS. “Depending on the instructions you put into the machine, you can make the firing pin of a rifle or a metal water bottle from a block of metal. They remove human error and increase productivity. ”

An estimated 70 percent of Russia’s CNC machine tools have been foreign-sourced in recent years, according to the nonprofit Economic Security Council of Ukraine (ESCU). After the West imposed export restrictions, Russia increasingly turned to Asian-based suppliers, including Taiwan , for equipment needed by its defense industry.

From January to July of last year, I Machine Technology was paid more than $80 million for unspecified goods and services provided to over 40 weapons manufacturers and Russian military contractors, according to tax records provided by the Kyiv-based ESCU, which tracks goods used by Russia’s defense industry and investigates sanctions evasion. Several of those companies are under sanction by the U.S. Treasury Department for assisting the Kremlin’s war effort.

The records show that Bredikhin’s largest customer last year was Moscow Machine Building Plant Avangard, a key supplier of missiles used in Russia’s S-400 air defense system. Another customer operates a factory that produces command posts for Russia’s nuclear-capable Yars intercontinental ballistic missile system. The newly developed missile, capable of carrying multiple nuclear warheads, was demonstrated during an October military exercise that simulated a retaliatory nuclear strike.

Bredikhin acknowledged in the interview that his firm received millions of dollars in payments last year from the Russian defense industry. Without elaborating, he added, “To my great regret I am not supplying them anything anymore.”

Under Taiwan’s rules, controlled CNC machine tools cannot be shipped to Russia even if they are routed through third countries, experts said. Companies must disclose who the end user is to get export permits for such items, they said.

“If the end user is Russian, that would not be approved,” said Chou Hui-hsin, a Taipei-based trade lawyer.

In March of last year, thousands of people traveled to Taiwan for the Taipei International Machine Tool Show. Among the attendees were Bredikhin and a handful of employees of I Machine Technology, photos of the event show.

An employee of one of Taiwan’s largest CNC machine tool manufacturers, Arthur Deng, said in an interview that he was approached by a Russian attendee — not from I Machine Technology — who hoped to bypass Taiwan’s export restrictions and ship products via a third country.

“They know very well that many Taiwanese manufacturers do business in China, Turkey or some Eastern European countries,” said Deng, a regional director for Tongtai Machine and Tool, who said his company had stopped all exports to Russia by last January.

‘Russian partners come to Taiwan’

Photos posted to social media show Yu in years past visiting the facilities of Taiwanese CNC makers whose goods were imported by I Machine Technology in 2023; in some shots, he’s seen posing with company executives. Photos also show Bredikhin and Yu at some of the other companies’ facilities late in 2022.

In since-removed company webpages, Bredikhin described his firm as a “Russian branch” of I Machine Tools. The description is one of several indicators that the companies are related.

The companies’ logos are similar — each combines the letters “i’ and “m” — and the trademarks for both logos are registered to the same Taiwanese firm, ROST Group and Technology. That firm, owned by a Russian national, Alexander Braslavskiy, specializes in exporting machine tools.

Braslavskiy’s son, Artem, a manager at the company, told The Post in a brief interview that I Machine Tools and I Machine Technology are “the same company.”

Yu said he was unfamiliar with Braslavskiy’s firm.

Russian corporate records show that in 2011 Yu was listed as a founder of I Machine Technology, owning a one-third stake in the Moscow-based company. His stake in the company was reported last week by the Insider and the Reporter, media outlets from Russia and Taiwan, respectively, in a joint investigation of machine tool shipments.

Yu has traveled to Russia frequently over the past decade on business, his social media posts show. One image from a trip to Moscow in 2012 shows Yu and Bredikhin, along with a former co-owner of Bredikhin’s firm.

That summer, Bredikhin and several business associates traveled to Taiwan, where they joined Yu for steak dinners, cigars and a fishing trip, according to social media posts. One post from the trip was captioned: “Russian partners come to Taiwan.”

It marked the beginning of a lucrative relationship for I Machine Technology.

By 2013, the company began publicly touting its connections to Russia’s defense industry, advertising that its “metalworking equipment” was used by helicopter factories, air defense systems manufacturers and ammunition cartridge producers, according to archived versions of its webpages. Other clients have included the producers of the Ka-52 attack helicopter and the manufacturer of the Buk missile system, according to government procurement records.

That year, I Machine Technology was awarded a contract for more than $100,000 to provide a CNC machine tool to Unit 45185 of Russia’s Federal Security Service, or FSB, procurement records show. The unit is home to a technical and scientific research center, according to the London-based Dossier Center, sponsored by exiled Russian tycoon Mikhail Khodorkovsky, a vocal critic of Vladimir Putin’s regime.

In 2014, the firm was awarded a contract for 4,378,000 rubles — or $115,000 at the time — to provide a CNC machine tool of Taiwanese origin to the FSB’s Unit 43753, which plays a role in Russia’s communication security and cryptology.

After the invasion, an opportunity

I Machine Technology’s long-standing connections to Taiwan proved beneficial as the Kremlin began to suffer massive losses of military equipment after invading Ukraine in February 2022.

In April of that year, the company assured customers that its deliveries of machine tools would remain uninterrupted. “Despite all the sanctions restrictions and difficulties, the logistics chain of our company operates as usual and all equipment is consistently delivered to the territory of Russia on time,” it said on Instagram.

That November, Bredikhin’s firm invited a project manager at a drone factory then being built in the Tatarstan region, 500 miles east of Moscow, to visit machine tool production lines in Taiwan. The project manager was involved in building engines for the drones, according to personnel documents leaked to The Post from inside the program, a secretive collaboration with Iran that was previously exposed by U.S. authorities.

“During the trip you will see the largest enterprises producing lathes and grinding machines,” read the invitation, which has Bredikhin’s name on the signature line. The invitation described Taiwan-based I Machine Tools as “our company.”

Russian engineers at the drone factory hoped to use equipment from I Machine Technology to make some of the most challenging parts of the drone engines, according to a slide presentation detailing production plans at their facility.

The documents reviewed for this report do not indicate whether the official involved in the drone program went on the December trip to Taiwan. Nor do they say if the drone factory ultimately acquired the Taiwanese equipment.

During the trip, Bredikhin visited four of the Taiwanese machine tool manufacturers whose equipment he later imported, as well as one other, according to since-removed images and posts shared to Facebook and Instagram. At three of the facilities, he and Yu are pictured giving a thumbs up.

Bredikhin told The Post his firm “offered Chinese machinery for drone production” but said that he didn’t know the specifics and that his firm does not “currently” have any active contracts with the drone factory. He did not respond to follow-up questions about whether his firm supplied equipment to the factory at any point.

Bredikhin denied sending the invitation. He did not respond after being told the document appears to bear his signature.

For the Sochi retreat in June, Yu was accompanied by three other people from Taiwan, one an executive with another of the companies whose equipment was imported by Bredikhin, according to travel booking data obtained by a Ukrainian hacking group and reviewed by The Post. Images show the four individuals at the party.

Bredikhin said in the interview that the Taiwanese attendees were his “old friends.” He said that he invited them “to drink vodka” and that no business was discussed during the trip.

Yu said he was in Turkey for business and traveled to Sochi because “even though there’s no business, we are still friends.”

At the retreat, speaking to Yu in Mandarin, Bredikhin reflected on their business relationship.

“I think us meeting and getting to know each other was truly fortuitous,” Bredikhin said on video.

After he spoke, the men embraced.

Ilyushina reported from Riga, Latvia. Kuo and Wu reported from Taipei.