Why aren't we making money?

hello everybody can you guys give me a quick uh audio visual check uh while i'm waiting to see that in the comments i promise this is not clickbait this was like actually something that really happened which we'll talk about uh it's really it's really fun uh running a small business some of the stuff that's been we've been through in the last month has been super invigorating but it like set me on the floor when i was like wait a minute why aren't we doing better um so with that note it's three o'clock let's get this started i'm going to try to monitor the comments as best i can i think julie's in here as well so if you have questions by all means shoot them there and if i don't get to them post throw them back up toward the end so this is a story of why aren't we making any money let me switch my screens here so literally what happened was we had a pretty good month earlier this year and i sort of think about this on a daily basis of what is what are we selling what's going out the door and it just bothered me when i looked at this income statement at the end of the month and i thought wait a minute here our profit and loss our income statement doesn't really look as good as i thought it should uh and our checking account doesn't really change either so that's kind of what made me think look let's dive into this um this all relates back to saunders machine works so we're i think a pretty much a quintessential uh brick and mortar business we buy raw material we see here if i can get youtube back up here um we buy raw material like we machine it into fixture plates the mod devices accessories uh we buy other stuff that we just resell screws faster that go into it we buy packaging boxes and we ship it out to folks all over the world kind of world kind of business 101 so the one thing that is a preface to all this that i think is kind of funny is a piece of advice from my second boss somebody who's really influential and i look up to to this day and he was joking when you're doing budgets forecasts modeling estimates performance whatever you want to call it um this idea of you know bill of materials cost of goods sold there's one thing that's true is that's going to be incorrect um kind of a tongue-in-cheek saying but they're just that they're just estimates and what i want to talk to today is do we have a product issue are we not making enough margin or do we have a business issue more relating to the overhead or your overall business product stuff is your margin simple as that you buy all your materials your cost of goods sold and you sell it for enough that needs to make enough money to cover all your business overhead type stuff for us like many businesses the big expenses are going to be payroll and rent um but you've got repairs and maintenance those can be kind of lumpy uh you've got buying equipment we i think if you're on this live stream you probably like cnc machines they're not cheap and there's lots of other accessories and preparatory purchases that can go along with it other lumpy expenses we'll get into uh and accounts receivable so that's another good one that talks about the differences between cash flow and actual uh profitability and accounting terminology so this is literally how i think and it's and it's kind of wrong i think okay we sell a product for these are kind of fictitious numbers but they're not too far off we'll get into that um we sell a product for five hundred dollars we buy the raw material for 125 dollars that's the biggest expense it gets anodized and there's a couple other little things that go along with it screws and so forth 333 dollar contribution margin so the idea is that that's the amount of money that goes toward covering your overhead and obviously you hope there's some left over at the end of the day month or year that goes towards your kind of business profitability 333 so that's wrong um now the example on the right is a little bit overdone it's kind of the extreme version of what it could be taken to but the point is um there's one thing that's true switch back over here you're not really ever going to make more than 500 on selling a product for 500 it's just kind of sort of not possible what is true is there's going to be a bunch of other things that are pulling at that that are either added to your cost of goods sold or other sorts of expenses so in this example on the right side right off the top we've got a credit card fee you can argue about whether that's part of the cost of goods sold or whether it's a business expense but it's it's real and it's variable related to the product so i think it's good to have it in the cost of goods sold everybody's aware of how much raw material has changed recently and so you know we're not able to always update our cost of goods sold or building materials every day so there's a good chance that your prices have gone up and they're not necessarily correct anymore in your excel file or your google sheets or so forth anodizing hasn't changed but one of the things that we realized is it costs us a fair amount of money to send our stuff to and from anodizing in fact probably about two hundred dollars to get a pallet there and back and we send a lot of times maybe eight plates on a crate so 200 bucks out of eight means we're spending about 25 dollars per uh pallet or per plate to get it just to and from anodizing adding to that t-nuts costs went up and not only did t-nut costs go up but we have to spend money shipping those t-nuts and screws from the vendor to us now again we're getting nitpicky here but those costs um they add up and they add up in the sense of when i looked at our income statement at the end of the month and i was kind of like why isn't it better what's because you spent a bunch of money shipping stuff to and from you and other vendors we have custom boxes for most of our bigger products we have a lot of times buying or using pallets and wood we recycle reuse stuff where we can but we're still buying those some vci like a rust preventative paper bubble wrap fun fact bubble wrap actually super expensive as a packaging material you know we're usually buying stuff from uline now in pretty large quantities so again that really adds up that all does a pretty massive change to your contribution margin it was 67 percent uh and it dropped down to below uh 50 um the dollar amounts are still kind of sort of okay in my opinion you know kind of around that 50 margin number but the other thing to think about is what do you how do you handle broken parts scrap parts broken tools etc this especially ties into the job shop world where it's a little bit more sensitive to buying one-off tools or lower volumes where you can really lose your shirt and of course i don't have the right answer for everybody in every scenario but what i do know is that if we buy a hundred pieces of material throughout the year pretty low odds that that's going to always be a hundred pieces of material sold for whatever reason we may use one for r d we may use one for internal fixture plate we may use one that gets scrapped the shipping company may use one there's all sorts of scenarios um but again my point isn't so much to spend a lot of time coming up with a number here but rather those things add up uh add up and end up kind of eating at your bottom line but the big uh the big cut to this is the is the text down here at the bottom if you end up working with a distributor they're gonna want their cut a pretty normal cut would be 25 to 40 percent and what's brutal about that is that that cut kind of comes off the top so it's not uh related to the expenses but it's 35 off the revenue line and in this case on this product if we offered a 35 cut to a distributor it would take the 333 contribution margin in my like kind of mental scenario and drive it down to 64. or 13 and uh i have friends who have kind of had troubles with businesses i've heard other case studies and anecdotes that this is what um this is what kills you this is what will put you out of business period just not making enough money beyond that there's some hidden costs that we kind of came through this month when we were looking through all this um there was a kind of crummy oh so credit card fees we already talked about that they're not really hidden but they really do add up um the other one is the credit card companies stripe and paypal have decided i think as of last year to no longer refund uh cancelled orders and you know there's nothing we can do about this so at least as far as i know so there's no reason to get too upset about it per se but it's a big deal because if somebody places a um thousand dollar order that's probably thirty dollars in credit card fees at least actually if they then cancel that order for whatever reason they actually cancel because they just want to tweak it or they cancel because they don't want any more um we don't get that 30 back and historically until again about last year you were refunded that amount the other things that we've been kind of fighting with or dealing with are shipping so like any like many folks using shopify we have a pretty decent shipping integration through both shopify and third-party apps where we get bit or where we've found some issues is the parcel companies the fedex and ups's will often quote you one rate but then they'll charge you something different and you can argue about frankly whether that's ethical it's a lot of it's in the fine print but the things that matter if you have anything that doesn't let them have a package be run through their machines like strapping or loose stuff or it's not in a perfect cardboard box they'll charge you a pretty hefty processing fee there's a thing called dimensional weight if you're a shipper take a look into what dimensional weight is it's it's basically the cubic volume times the weight divided by a number that tells you how they actually bill it in any packages that are over 50 pounds now they are usually adding surcharges onto again the issue there isn't just the cost of the shipping it's a question of whether your shipping software is quoting one rate but you're getting charged a different rate similarly we ship a lot of stuff via ltl freight and there's a lot of hidden fees and stuff in the freight industry it's a bit of a rough industry but we get charged for if we only have one pickup and we get charged big time for residential and liftgate again the issue is sometimes they don't quote it that way so the customer pays a low rate but then it ends up being a residence or the customer says oh you know what i need a lift gate and we then get charged for that okay switching over though to timing issues this is a huge part of why at the end of the month when i thought we were doing certain a certain tier and i look at the bank account and it's just not there the the most basic part of this is accrual versus cash accounting so if we sell a plate in september uh to a customer that's paying via po they have net 30 net 60 uh sometimes even longer you don't get paid till november most accounting softwares are going to book that on an accrual basis meaning if you sell it in september you earn the revenue in september but your bank account isn't going to show that if you don't aren't familiar with that we have a link later in this video and in the youtube descriptions for just very basic accounting terminology and accounting uh practices for manufacturing entrepreneurs i would highly encourage you to get a little bit more comfortable it's incredibly valuable to understand how that stuff works the other thing on timing issue is raw material as our business has grown we want to balance that line of having enough material on hand to not get caught with our pants down but i don't want to over invest in raw material it's expensive to store it if you ever change your product rev and ultimately i can't have that much money tied up in it but with covet and kind of this craziness of the last 18 months we've seen material delays material shortages material price changes i'd rather pay a little bit more for material and know i have it in my shop than have a bunch of cnc machines that all have anything to eat so we've been buying more raw material which is great too because our business is growing but that means we have money tied up in raw material that's not in our checking account for us payroll is a pretty large percentage of what i keep in our checking account and all i mean there with the timing issue is that if it happens to be that payroll was run right toward the end of the month that's going to take a chunk out of the checking account that kind of wouldn't have been there if payroll had been run 10 days earlier if that makes sense capital purchases if you buy anything that is capitalized or a big cnc machine or you know your thresholds kind of depend on what you and your accountant or your tax guidance say but certainly anything over thousands of dollars you don't get to just expense that right away you have to depreciate that so take an example we just bought an okuma we wrote a down payment check for that akuma uh and that number doesn't show up on our income statement it definitely comes out of our checking account but it doesn't show up on our income statement because for us we i do all our bookkeeping if you will but we have an accountant i will get with him probably at the end of the year and he'll come up with a depreciation schedule for that machine and the depreciation entry will get added and that's a kind of a non-cash expense so it'll reduce your net income but not by that much because you have to depreciate these machines over their lifetime but what is real is the down payment i just sent so that's actually one of the big reasons why we had a good month and i was surprised to see that our bank account wasn't in better shape but it was that kind of okay because i actually written a check for a machine that we're going to have some equity in but it's not reflected on the income statement yet and i mentioned lumpy expenses this is simple stuff like our business insurance our workers compensation and property taxes those are the ones that came to mind those are all kind of four figure you know thousand dollar plus expenses that get billed once a year and uh you know i enjoy doing some of the cash flow planning and forecasting i like looking at excel but i'm not going through and creating 12-month increment intervals to smooth those out but it's nevertheless worth noting and thinking about so if you are in the same boat if you're a manufactured entrepreneur my advice or what i'm thinking about for our fixture plates our mod vices is if this is a problem is it a product issue or is a business issue so business issues can be fixed that means what if you just you've got too much you bought too much or renting too much space and you need to re-adjust how much space your or your rent is you've got too many machine payments and you just kind of businesses change or slow down and you need to get rid of some of those or you've got too much staff these are all they can be complicated issues but they can be solved and sometimes you've got to take your entrepreneur hat off take a step back and just take a look back and say okay what do i need to do to fix this especially if things get tight product issues cannot be fixed and this is important if you aren't making enough money uh the distributor example before where it drove that margin down to what was it 13 that's a real issue you cannot fix that and if there's one thing i've seen it's it's folks that are passionate about bringing a product to market they're passionate about trying to get into business and they just don't have enough margin out the door period the other things are worth adding if even if you aren't thinking about using a distributor we don't we generally sell most of our solder's machine works stuff either direct via pos or through e-commerce what are you going to do when a distributor calls you up and says hey or a retail store calls you up and says hey i want to buy 10 of your plates for this customer or we want to put 100 of your flashlights in our retail store um i wasn't until that happened to us with the 10 order that i realized oh man i definitely want that business but can i afford it so even if you aren't planning on leveraging retailer or distributors as part of your business model be prepared for it similarly there's all sorts of examples of sales discounts promotions black friday et cetera that are going to be sort of these events that cut into your top-line revenue accounts receivable so basically if you sell that plate in september and you aren't going to get paid until november that's an account receivable this is the whole net 30 net 16 net 90. lots of people really hate this and for good reason it stinks we've you guys have heard of this of companies that really want to string you out it stinks my advice is you got to communicate you got to stay on to it agree up front on the terms and then hold your customer to those terms that can be difficult to do we have a whole video link in the description on how to get paid on time um in we have never been stiffed knock on wood and we sent uh we had our lawyer send a one customer ever we had to send a letter to on a legal letterhead and the payment was made the next day so i don't have all the answers in the world but we've been through the block on this and it matters and one of the reasons it matters is 82 of business failures are due to poor cash flow management if you look at that that is not profitability that is not product margin that is a business issue that is the fact that you can sell a lot of products but if your customers aren't paying you you can't pay your employees you can't pay your rent in accounts receivable you need cash it's a good segue to a video i'm working on for in probably the next month or so kind of thinking about preparing for a slowdown or a downturn which kind of seems counterintuitive the world's been a pretty good place given all this cobit insanity but i always like trying to be a little contrarian and thinking about you know what's going to happen if things slow down or when things slow down or a rainy day and kind of being prepared for that somebody just asked i think does saunders machine works have terms i don't think we explicitly say that on our website vision forge but we have we do offer them um to anybody who reaches out to us directly and frankly maybe something we need to do a better job of communicating to so i just mentioned this about cash matters and and it ties back into exactly how long statistically companies survive um but again the point here is it has a lot more to do with cash flow management than it does just whether you're making money or not so what i do um and what kind of prompted this this uh event when i was like wait what's going on is i've been doing a monthly report at the end of each month where i um export our excel income state or i can export our income statement into excel and i kind of just look through it i think it's really important to do that as um not when you've just been doing all your numbers to kind of take a fresh look at it and i will now make adjustments so some of the adjustments that i made kind of below net income was hey look we ordered a bunch of extra material that's kind of an asset i've got that sitting on the shelf it wasn't really fair to penalize july because i bought four thousand dollars extra of aluminum because i just wanted to have it on hand i also paid a higher price uh we had this discussion i huddled down with ed and grant i said man these material prices went up 30 but what scares me is our um one of our vendors said that they weren't going to get on more material for four months i've never heard that before this is material that they normally have the next day so i thought again i'm gonna pay more and just get it here to make sure we can still stay in business if you guys folks have seen we're building johnny 5 robot it's fun i love it it's not really fair to take into account the costs involved in building johnny 5 from saunders machine works bottom line so i'll usually make an adjustment on something like that like hey we just bought a 300 motor controller um add that back in in the adjustment area similarly travel i mean if it's legitimate business travel by all means but sometimes if it's for us like when we go do film tours if it's something that you know i wanted to do but it's not really again fair to give you an accurate look at how saunders is doing make an adjustment there you know high-end cutting tool a 3d printer you know these are all legitimate business expenses but they don't necessarily show you what the run rate looks like so the comment at the bottom of this really matters it's you can't ignore these non-recurring expenses because you're going to always have some non-recurring expenses but don't necessarily judge your overall business health by them um so just be careful that you're not always making exceptions but i do think it matters a lot to to look through them to get an idea where you are at the end of the month um switching now into a little bit more kind of philosophical stuff that ties into hopefully an inside look at it my life and our life here as a manufacturing entrepreneur we've had a lot of great days and i love it but one question is if you had a good month or you had a bad month were you busy if you had a bad month but you didn't have enough work going on maybe you want to hustle a little bit more we've had some friends do zometry work which i think part of their model is you don't always have to do it but if you have spindle time you can go leverage that to pick up side jobs i did that for seven years we did job shop work on our free time it was frankly a great way to learn how to be a machinist and kind of make some money get paid to do it um and i'm glad i don't have to do that anymore because we're focused on this business but man to me that was part of the dream of being a small business owner and getting us to where we were if you are too busy this is probably the most common thing i see and i don't have all the answers but [Music] you know lots of entrepreneurs work too hard and i admire that because i think that's part of getting to success but it's not always sustainable and it kind of does yourself a disservice because eventually if you do want to break through and start hiring employees or start building out processes or a team the sooner you can start thinking that way the better off you'll be hiring somebody isn't something you can always afford to do or logistically do especially if you're say working in your house or your garage so upwork is a huge resource or even interns if you're in your garage consider is there any way to even you have a remote intern um again may not work for everybody but something to think about uh and finally um just kind of a candid share you know at the end of that month when i was like man why didn't we make more money i thought we were doing better um it got me down for a second and then i realized wait a minute john i love what i'm doing and we didn't have as profitable a month as i want but i'm still paying everyone on our team we're covering our bills and i'm paying myself and okay so what i love what i do that doesn't necessarily mean i want that to be the case forever but um be real careful about whether you're gonna let yourself get depressed or upset or sad or feel um like you're not succeeding just because of that sort of a blip um and a good segue to um a solopreneur mentality so when you're just starting out and it's just you it's really hard to think about how your business is doing separate from your personal situation but as things grow that really changes um you know we have six or seven employees here quite a few interns i really go out of my way to think about saunders machine works is a different thing than my personal stuff and on that note basically your business checking account has no bearing on your success and i think john on grims when i've talked about this some on our podcast it's really easy to look at that account and think whether it's a good thing or a bad thing and i just can't emphasize this enough um in the beginning if you're just you and your bank account basically just means that's how you're doing i get that and that's how we were for years but again at this point we may have just bought a bunch of material we may have just done payroll we may have just put a deposit on a machine um i really have detached myself from from paying attention to what that business checking account balance means and finally i think we're wrapping up here um why are you budgeting whether you want to call budgeting or forecasting or so forth um i do this for different reasons first off from a kind of basic standpoint you do want to make sure you're making money make sure this your business isn't an expensive hobby um but sometimes i'm looking forward so i'm trying to figure out hey i really want to be able to buy a new machine how am i going to get there um sometimes it's just saving for personal goals so so sort of how much can i take out of the business to help me justify what i'm doing and then finally are you just trying to do it to build a cash cushion for your business so kind of different reasons to think about you know if it's a if it's a bad month in terms i didn't meet my goal but we are still have a cash cushion that's good and it means maybe you aren't going to get there quite as soon to buy that new machine but okay i can start thinking about where i want to do and how i want to get there and finally i've revisited this list a number of times it is wonderful all these bullet points i think are actually great bullet points the one i really want to focus on is number 10 here though and it says there will be sacrifices work to find a balance in your business so that you don't become a financially successful loser it's not about the income it's about the outcome i love what i get to do i'm super grateful whether it's building this business running the shop machining parts doing youtube videos touring other factories there are days where you wish you made more money there's days where you do okay but ultimately the outcome is so much richer than just that number i've got links below to these two videos again the first one is accounting a beginner's guide for manufacturers manufacturer entrepreneurs and machinists and then the other one was the one i mentioned about how to get paid on time and again we're working on a video of preparing for a slowdown preparing for a downturn because i think it's um it's my opinion that uh it's been a really good 10 12 year run and if you look historically at uh our economy in most economies um they're cyclical and i think that sometimes downturns come when you're least expecting them and when covet hit i think we were all expecting a downturn it never happened um i can't predict when it's going to happen i will be ready though so i'm going to hop back over to see if i can see the comments now um thank you everybody though i hope you guys enjoyed that um i'm catching up right here um sorry my light's just turned off um okay questions let me get that working here made from the mind would love a quick word on deciding how much resources an appropriate bet to place on developing your product or otherwise pursuing some other new development okay i actually love this question and i have what i think is a great answer find a way to make some money uh for us back when i first got started it was strike mark we were making these picatinny camera mounts we made them we made money on them and we knew they sold we then were willing to not pay ourselves that much and so we took all of the profits from that and rolled that into r d um and didn't really care if uh it succeeded or didn't of course we cared but uh we weren't playing with our money anymore in a sense um and the lesson i learned there we were trying to develop this uh my camera my camera showed up there a second we were trying to develop a um rifle target and that is a very difficult thing to do and we expensive thing to do and what i realized the lesson learned was to develop the simple product first that can help make you some money see if this is working again and then you can go spend all your sorry get this fixed you can spend that profitability to to flow into into the r d stuff i hope that is what you're looking for made made from the mind uh material costs are killer this year yeah and so that's a good question uh dmb works you know at what point do we change our prices and do we start kind of passing that stuff along um it will be inevitable if this keeps up i'm kind of waiting to see what we see elsewhere parker engines asks have you thought about stockpiling a huge amount of material to prepare for increasing prices no because ultimately if you know if aluminum doubles everyone will have to kind of be in that situation so i don't worry as much because you know a fixture plate competitor is going to kind of be buying the same in the same situation um kind of a tangential anecdote in the airline industry i think southwest was known for buying oil futures or contracts or hedges or whatever and when oil prices went crazy in a certain decade i don't remember which one they were the only airline that had kind of locked in their oil prices with these complicated financial contracts now a company like us we we can't buy metal futures like that we're too small um big companies certainly could so there are tools at hand to look at that um let's see here a couple of questions from omid q1 perhaps a video about transferring from job shop to product pacific yeah shoot me a follow comment or note i mean we did that kind of gradually in fact i would guess if you asked our employees i probably was reluctant to slow i should have slowed down the job shop work quicker i kind of chuckled because look i'm not a great machinist i can machine a great part but like i always kind of joke like i'm not god's gift to machine i love it um but we had a couple of job shop customers who were really upset when we told them we were going to stop doing it and look i'll take it as a compliment we got them great parts at a reasonable price on time we were great to work with and they were like we don't want you to stop this we want to keep working with you so if you're out there as a job shop take that as kind of the it's not always that hard to succeed treat people well communicate do do your work on time uh be a santa person and the future will be kind to you lowry racing asks what are your thoughts about investing in in-sourcing processes what kind of roi do you look for so it's a great question the obvious answer is um if you have the capital and space and so forth it's great to vertically integrate but um some things like anodizing are almost impossible to do so think about how much hassle factor how critical it is um oh i had a point on this though that really mattered um oh shoot i lost my train of thought on that um make sure you if you do that you still need to kind of pay yourself if that makes sense so another fatal flaw i see from a product level is people think well if i bring that in house i can reduce my prices well not really because if you buy a hundred thousand dollar machine a lapping machine anodizing solution setup grinding machine you you really should make sure you're earning some amount of return on that what we've seen i think like anybody this year though is that um being able to control quality and lead times means insourcing uh can really really help there max says okuma machine question mark which i'm guessing means you bought it a movie machine we sure did we mentioned it on the podcast we bought a genos m660 it should be here in approximately 22 days in five hours or so we are excited um let's see here where am i at here this is insanely good advice thank you for sharing thank you mason i appreciate that um no questions they just want to say i'm sure you're happy with my plate thank you didn't mean to read that comment um hi john what about engineering time how to calculate pro product you need to wait create a new product even small we don't know how long it will be um so you got to figure that out my goal advice is if it's a lot of time but you're confident you can execute on it then you can put a kind of number on how much you need to make for that um again to go back to my example when we tried to bring that rifle target to market it had circuit boards and water jet parts and laser parts and electromechanical parts and i didn't know anything about any of those things and so not only was it comp uh not only was it complicated but i wasn't the right person to do it so i have no problem investing a bunch of time but if you can make a a widget um you know i joke with some of my friends about hey what's the sweet spot is it a 50 machine part 100 machine part and you can start making a thousand bucks a month two thousand bucks a month shipping that widget boy it's a big confidence booster you also learn a lot about business about buying that material processes packaging warranties shipping and while you're doing that you can kind of parallel process developing the long tail product or you can do that while you're still at a day job dan asks is zometry a good backup secondary source of income um we've to be honest we've seen mixed reviews but i've seen enough people i know that are doing well with it um that it's certainly noteworthy if it's not for you then pass but i think it's the key the key is uh they don't make you do anything to uh like you have to pay to become uh you go through a process but you have to pay i think there are some other companies in the past that i think were a little bit sketchy on that um so if you want if you have extra spindle time or you want to earn some more money um it's probably worth taking a look at full disclosure they they have bought a ad on our nyccncf site in the past and i've gotten to know them but again we've got a number of people that are doing a lot of work with them and are doing it and they're also doing some pretty cool stuff supplier side stuff they have some new financial tools that i think are pretty interesting but we'll cover that later if it's appropriate um let's see here thanks for this weekly discussion thank you caveman's sc21 oh it's hard to follow these comments guys sorry i feel like i'm out of the loop on some of these conversations um i love your videos i'm 26 year old trying to start my own business i recently bought a tormach is it a good machine to start making money any advice so the answer i give is usually a question like should i buy a tormach or a hot if you have to ask generally i'm going to say buy a tormach simply because you if you're asking you don't necessarily know and you can sell a tormach if you outgrow it or it's not the right machine for very little lost compared to our first haas the rigging alone their freight and rigging was 4 500 um so um tormach's have their limitations as do frankly haas machines focus on what you need to make the parts you to make and start learning get smarter on it and then you'll figure out what the right machine is to buy there umax says okuma is wonderful one of the best in the world never use the control but looking forward to seeing your videos trust me you won't have any reliability issues yeah so we bought it because we needed a bridge mill and the genesis is effectively a bridge mill design but the more we've learned about osp their control which has some pretty cool open architecture to integrate with their api we're going to try to integrate it with lex which holy cow that could be cool um i said kobe killed lean did you ever think about giving your metal supplier order for six to 12 months of material but you only take material when you need it i've heard of people doing that i've never tried and it's a actually a good segue to a question of what are you trying to get at i i have fallen victim of the rabbit hole before of oh man i'm going to go find these screws that we've been buying for mcmaster i'm going to find this supplier in nebraska that sells them for cheaper and i'm going to open a credit count with them and i'm going to buy 10 000 screws and then you realize wait here you're going to save like 200 of course the whole year just keep buying it from mcmaster they show up the next day when you need them so make sure if you're going to go through stuff that you look at what it's actually going to do to your bottom line um into bun gamer i want to start a cnc business in my parents garage with my own money but they don't want to give me the place for a machine i don't know that's between you and your parents um uh get as small as machines you can i guess the question is they don't want to give you a place is that because they don't believe in your business and maybe you got to demonstrate you are going to be able to do this i had some skepticism from my loved ones and i was going to maker spaces i was teaching myself this stuff and then i kind of earned their trust um or maybe you have some issues on physical space which can be an issue um and so forth so um see if there's another place where you can get the machine a maker space or they make small machines now that are enclosed so put it in your room and is investment in additive manufacture too early for now i mean that's a too broad of a question we're we love 3d printing we use it but it's very different than machining zap zack asks hypothetical when you were doing a lot of job shop work if a smaller shop was to approach you and ask to partner up and share jobs that were too big small would you have accepted uh sure there's nothing like uh that's a deal breaker to start that conversation um i always kind of ask myself why are they coming to me um you know is it is it something where you can overthink it look and i'm prone to to overthinking or analyzing it but yeah you basically treat yourself as a sub to them that's not a big deal where i've generally had a lot more concern or caution is kind of contract manufacturing for somebody else's product because if i'm doing chop shop work that's fine but if i'm going to invest my time into helping develop something i kind of want to be part of the upside and most of the time if somebody's like hey i want to do this together they really want all the upside and i don't blame them but i wasn't always interested in that uh so okay so rich asks the st20y would be great but it's expensive would you stick with non-live tooling and use the cx's on a small mill or bite the bullet on a big lathe look we love our sc20y um we i would have i understand that i could be helpful to have a simple two axis lathe and we have the little tormach 8l now it's great for like fixtures little one-off pins and stuff i love that but man that has i wouldn't want it any other way driven tooling y-axis and a sub-spindle yes wes asks did we ever finish johnny five so of the i'm gonna round here round numbers of the four thousand parts like thirty nine hundred are done like a huge number of them are done uh we are assembling him we've put some pictures up on instagram um to be honest i don't know how to turn this into a video content at this point um we've got an intern from a local high school team who has been crushing it having a great job so most of it at this point is some finishing some some fitment a few less a few more parts and so forth um into bun says they don't believe in me physical is less so convince them um go get smart go make parts show them that passion um i don't know your parents um and i could see why you could fee anybody could be upset that their parents don't believe in them but to be blunt i kind of was in that situation too and then all of a sudden i started doing stuff and making parts and proven it out and i'm glad that i went that route because i really earned it um okay a couple more questions that i'm going to wrap up okay motive tools we can hire another employee and schedule third shift or buy another machine to get more spindle time how to think about that um adding a third shift is usually pretty difficult i would probably look at a machine because there's a lot of things i can do with that and if it doesn't work out i can sell the machine make it use it to do something else pick up different work for it a lot a lot easier in some respects on the flip side if you've got somebody you know who's a great machinist wants to work that third shift run with it but we've heard most people we've talked to say man third shift is really tough to manage to qc um etc i've learned supply chains are weak twice over the past two years we've been unable to get supplies um have you have plan in place if you need to shut down temporarily asks andrew so i don't have like a formal plan but we don't plan to um we have material on hand and i have a cash cushion which is hugely important i think so um if we had to shut down temporarily because you know the government mandates it because of covet or something again i suppose but i don't plan on shutting down because we can't get the material we need todd says i started a drop shot purchased the tools but ended up going different machine now trouble selling so the most started uh talk to a machinery broker make sure you're asking a fair price i mean look the hard answer is that some people want more than a machine than it's worth but ultimately it's worth what you can find somebody to pay for it nyc how do you track talent um youtube is huge are you paying competitively i'd like to think so i obviously don't have all the answers wages are regional specific um most of our employees are local we actually haven't really ever had somebody come work here who just found us through youtube like and moved here or whatever um as we've changed a lot as a business it's exciting to be in a position where i love our team and i love making sure they get compensated for being part of this story look money is a huge part of it i my buddy john area 409 i think is a great example when they publish their job offerings it's like hey here's what we're paying like we're not going to bs you and drag you through details on this there's also more to a job than just that the culture the responsibility the chance to learn push yourself grow that all matters but money matters too um what do you think about meltronics no firsthand experience i don't think they're bad machines but but don't know much um into monastics buying a used bigger machine instead of buying a tormach we have a video on that take a look at it google it um shortest answer buying a tormach easy to work on easy to fix um it's gonna be new it's gonna have a warranty you're gonna be able to make parts if you know how to buy a used bigger machine rock and roll but boy you can end up with 3 000 10 000 repair bills pretty quick and if it's a bigger machine that you're going to have to rig in with riggers and forklifts i think you were the fellow just asking about space in their parents garage that's going to be tough a couple more questions i can't resist michael have you used daytron and mills and machines other than the neo they are they are superb they are very expensive but uh vince has been doing a lot of testing with them and he even the expensive one he's like oh my gosh it's expensive but i love it so they're really good um thanks for all the kind words what do you think about willowman now that grimsby has one cody sit tight on that i'm i'm i'm chewing i'm chewing i love them though um what was the reason for choosing okuma we'll talk more about this in a dedicated video but we needed a we needed a bridge mill i think the genos is one of the best large format bridge mill 3-axis machines out there and we looked at dmg we looked at toyota seriously we looked at those two we looked at some other stuff we're keeping our vf6's this is just a little bit of a different kinematic design for what we need now allen says challenged me to open my books my spirit supplier um get blanket order pressing okay we'll take a look at it um and finally wrapping up um savage fabrication says been a sole proprietor for six years two years ago create a product that has increased our revenue good for you recently offers a position at another business we sell that to a salary what i should make sorry savage feel free to email me i'll take i'm happy to follow up with this offline um i want to wrap up though at this point um folks thank you i've said this before i'll say it again i love that i get to do what i've done we've had a great year we've had some really good growth i hope this stuff can help you both see some of the successes but look i don't have all the answers and sometimes you want to hear how other people are doing it i hope this is a little bit of an insight into that mental state as well as true business state and machining operations and all that good stuff but as always folks take care thanks for watching see you soon

Channel: NYC CNC

Views: 37,231

Rating: 4.9110322 out of 5

Keywords: tormach, fusion 360, how to, cnc, machine shop, nyc cnc, DIY, machining, milling, CAD, cnc machining, cnc milling, learn cnc, john saunders, manufacturing entrepreneurship, provencut, CAM toolpaths, workholding techniques, fixturing, saunders machine works, fixture plates, modular workholding

Id: De8sxsxIZXM

Length: 47min 22sec (2842 seconds)

Published: Wed Sep 22 2021