New Welding Business

[Bombjockey9]

How’s it goin’ everyone?! New welding biz owner (solo), and F/T Aerospace welder in Chandler, AZ. Millions of questions, as this journey is quite rough so far.

 

[nadogail]

Welcome to the Forum from Southwestern California.

 

[Bombjockey9]

Right on thanks!!!

 

[Bombjockey9]

Any tips on finances? Lines of credit type stuff. The work is there, I need the tools, but the standard options lead nowhere.

 

[Lassen Forge]

Really important - work up a business plan and an intro letter to show potential lenders you have a viable business plan that will make money, including your potential customer base and your estimated potential income/expenses for the next 3 years. With that, you can approach lenders and have a better than average chance of pulling a line of credit.

 

[Bombjockey9]

Really important - work up a business plan and an intro letter to show potential lenders you have a viable business plan that will make money, including your potential customer base and your estimated potential income/expenses for the next 3 years. With that, you can approach lenders and have a better than average chance of pulling a line of credit.

Excellent, I’m on it. Thanks

 

[readhead]

I had a welding, fabrication and erecting business for twenty three years and recently semI retired. I now do detailing and estimating for small welding businesses. I see a lot of startups struggle with finances.

I hope you are single because if you are serious, and it sounds like you are, this will consume every free minute of your life.

Start by talking to an insurance company about what will be required in your area. Then what state and local licenses may be required.

What kind of welding are you looking to do? Will it require you to rent a shop? Will you be offering mobile welding. What qualifications or certifications may be required?

A business plan is a sound idea and may give you a better look at what you want to achieve. The biggest problem I see with small companies is easily accumulating debt that you can’t service. That new welding machine looks awful nice, I could use a newer truck, I’ll hire some friends to help and pay them with cash I don’t have. You already have a full time job so you will have limited time to make money to support the new business.

Borrowing money right out of the gate could sink you in no time. Now you are working to service a payment. Make sure you are working for a profit, not wages. You need to make sure that your estimates are covering all of your overhead, that includes your labor, and then add profit. Your labor is not your profit.

Move ahead slowly and deliberately. Try to pay for expenses without borrowing. Be very careful with the credit card. You get stuff now but the bill will come at the end of the month. You want to create a business for yourself to enjoy, not an anchor around your neck and worrying about how you will pay the bills every month.

Best of luck with your new adventure. Answer the phone. Return calls. Show up on time. Be willing to say no.

 

[Bombjockey9]

Thank you! These are many of the things running thru my head. “Gota spend money to make money” seems NOT to be the immediate route these days. Lots of avenues to study up on. Right now I am recently divorced with a son.

 

[Bombjockey9]

Thank you! These are many of the things running thru my head. “Gota spend money to make money” seems NOT to be the immediate route these days. Lots of avenues to study up on. Right now I am recently divorced with a son.

I do aerospace welding right now but I’ve done commercial, artistic, heavy equipment etc. I’m versed in a lot of processes however I’m limited to my garage+driveway. renting a space is the only option here in town and not likely anytime soon solo.

 

[BillK]

Be the most expensive guy in town but just be ready to perform accordingly. If you start out cheap you will attract cheap customers. As far as borrowing I would say don't do it except maybe financing a piece of equipment. Most equipment suppliers have some type of financing plan.

Find a cpa that is familiar with small businesses and talk to him. Pay for an hour of his time. He will be your most important employee.

I sounds like you are still also working full time. If so I would put every penny of profit from your business back into the business at first. If nothing else put it in the bank so you wont have to borrow.

 

[cannuck]

Have been through and participated in several startups. My advice to almost everyone considering this is: ONLY do something you already know how to do (you are safe on that one). DO NOT try to start a small business on credit - the failure rates are staggering for that. DO NOT quit your day job - until you have enough side gig revenue to live on. The only kind of "outside" money you should consider is a friendly, very patient investor who shares you vision but has the cash to make it happen. I would do the day job thing until you have ALL of the equipment you need bought and paid for. Watch auctions, etc. for deals on good used. Just to put stuff into perspective for others watching: I recently looked into setting up an aluminum MIG welding station. One of my former workers does this, and his budget JUST FOR EQUIPMENT is $40k Cdn per work station. That is essentially on 350Amp welder with water cooled push-pull gun. (Same pulsed arc machine can handle large TIG torch and includes one as well). I am looking at a 250 Amp setup but even that runs way over ten grand. Note: the good stuff is all 3 phase - not something you have at home. I run a rotary converter to feed me 250A TIG welder and that will knock out a 70 Amp 250V single phase breaker long before the welder maxes out. Again for those outside of the trade: I am looking at used welding tables right now. A 5x8x1 1/2" and a 4 x 10 x 1". Both will come in well over a grand each - used.

 

[nadogail]

Be the most expensive guy in town but just be ready to perform accordingly. If you start out cheap you will attract cheap customers. As far as borrowing I would say don't do it except maybe financing a piece of equipment. Most equipment suppliers have some type of financing plan.

Find a cpa that is familiar with small businesses and talk to him. Pay for an hour of his time. He will be your most important employee.

I sounds like you are still also working full time. If so I would put every penny of profit from your business back into the business at first. If nothing else put it in the bank so you wont have to borrow.

My Tax Accountant has made me much more money than I have paid her.

 

[LeeG]

When I started my consulting business back in the 90's, I was desperate for customers. I submitted a bid for some work, and when I made my followup call to the customer, the owner told me, "I liked the detail and organization of your quote, but at the hourly rate you are quoting, you cannot stay in business. I want to work with someone for the long term and you won't be around charging these low prices".

On every bid I did after that, I charged the same rate that all the big consulting firms changed. I didn't get every bid, but I got a bunch of them, and each one made me far more money than I would have otherwise. There is a temptation to charge low rates to get started. Avoid that. It is very hard to raise your rates once customers are used to paying a below market rate.

Best of luck to you.
Lee

 

[cannuck]

When I started my consulting business back in the 90's, I was desperate for customers. I submitted a bid for some work, and when I made my followup call to the customer, the owner told me, "I liked the detail and organization of your quote, but at the hourly rate you are quoting, you cannot stay in business. I want to work with someone for the long term and you won't be around charging these low prices".

On every bid I did after that, I charged the same rate that all the big consulting firms changed. I didn't get every bid, but I got a bunch of them, and each one made me far more money than I would have otherwise. There is a temptation to charge low rates to get started. Avoid that. It is very hard to raise your rates once customers are used to paying a below market rate.

Best of luck to you.
Lee

Extremely good point. A good friend of mine left a big buck job at a large bank to go out on his own and offer same services as were being provided under contract to him at the bank. His business plan was instead of charging $400 an hour for some snot nosed brat with a brand new MBA but knew diddly squat about real world banking or business as the big companies were doing he would use "packaged out" people who already knew the exact job/department/market and he could make really good money charging them out around $250. His big mistake was being honest. He didn't realize anywhere near the level of graft the big consulting firms poured into the back door taking senior execs (who made the contract decisions) by chartered bizjet to foreigh 5 stars for "business meetings". My guess is about 1/4 of the gross revenue was being kicked back. When he reported those findings (with documented proof) to chief counsel of one bank (his largest customer) he was thanked profusely for pointing out these obviously non-policy conflicts (that were actually criminal) and never saw another nickel from them.

I am not saying one should go into business by planning to be a criminal scumbag, but KNOW YOUR MARKET and who and why the players are where they are. Play it straight and you could go a long way, but thinking you can be the good guy and walk over the surface of a snake pit is naiive and could cost you everything (as it did my friend).

 

[Walkers]

Pick what you are going to do and specialize in it. If you are working on residential or commercial properties be sure you have a contractors license. You can get one at Az Registrar of Contractors. Get yourself a good liability policy. Be sure to get your Transaction Privilege Tax number (TPT). Then get to work.
I am surprised you need a lot of equipment, I just started out using the welder and gear that I already had from doing it as a hobby, then upgraded as jobs required. I have never taken out a loan, or needed a line of credit.

 

[Bombjockey9]

Pick what you are going to do and specialize in it. If you are working on residential or commercial properties be sure you have a contractors license. You can get one at Az Registrar of Contractors. Get yourself a good liability policy. Be sure to get your Transaction Privilege Tax number (TPT). Then get to work.
I am surprised you need a lot of equipment, I just started out using the welder and gear that I already had from doing it as a hobby, then upgraded as jobs required. I have never taken out a loan, or needed a line of credit.

Interesting. I’m working with what I have as you did, but the mobile route is extremely pricey. Gear, tools, licenses…it’s daunting.

 

[nadogail]

I started my Handyman Business with a Credit Card. I paid the balance in full every month.

 

[cvairwerks]

Doubt you will get any answer as OP hasn't been back onsite for over 2 years.