(+1) 9784800910, (+44) 020 3097 1639 [email protected]
Select Page

Last updated on October 7th, 2023

machine shop

Executive Summary

Your executive summary is the first part of your business plan, but you usually write it last because it is a summary of all the important parts.

The point of your executive summary is to get the reader’s attention quickly. Tell them what kind of machine shop you have and how things are going. For instance, are you a new business, do you own a machine shop that you want to grow, or do you run a chain of machine shops?

Next, give an overview of each part of your plan that follows.

  • Give a short summary of the machine shop business.
  • Talk about what kind of machine shop you are running.
  • Detail your direct competitors. Tell us about your ideal customers.
  • Give a quick summary of your marketing plan. Find the important people on your team.
  • Give an overview of how you plan to handle your money.

Company Overview

In your company summary, you’ll explain what kind of machine shop you run.

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

  1. CNC milling machines are used in a wide range of products, such as cars, airplanes, medical devices, electronics, and farm equipment.
  1. CNC Pocket Milling is a type of milling that is often used in shipbuilding and aerospace.
  1. Lathe machines are used to make things like gun barrels, candlesticks, screws, table legs, baseball bats, musical instruments, etc. out of wood, metal, and glass.
  2. Drill presses are usually used to work with wood.
  1. Welding machines are used in many fields, such as the automotive, construction, and aerospace industries.

In the company overview, you need to say what kind of machine shop you will run and give some background information about the business.

Include answers to things like:

  • When did you start your business, and why?
  • What important steps have you taken so far? Milestones could be things like the number of customers served, the number of projects finished, making $X in sales, and so on.
  • Your legal stuff Are you set up as an S-Corporation? An LLC? A sole proprietorship? Tell us about your legal structure.

Industry Analysis

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

Even though this may seem pointless, it has more than one use.

First of all, learning about the machine shop business gives you knowledge. It gives you a better idea of the market you are in.

Second, market research can help you make a better marketing plan, especially if you use it to find market trends.

The third reason is to show readers that you know what you’re talking about. You do just that by doing the research and putting it in your plan.

In the industry analysis section of your machine shop business plan, you should answer the following questions:

  • How much money does the machine shop industry make?
  • Is the market going down or up?
  • Who are your main rivals in the market?
  • Who are the main market suppliers?
  • What changes are happening in the field?
  • How fast is the industry expected to grow in the next 5–10 years?
  • How big is the market that matters? That is, how big is your machine shop’s potential market? You can figure out such a number by figuring out how big the market is in the whole country and then applying that number to the population in your area.

Customer Analysis

In the customer analysis section of your machine shop business plan, you should describe the customers you serve or hope to serve.

Individuals, schools, families, and corporations are all examples of customer segments.

As you might guess, the type of machine shop you run will depend a lot on the customer segment(s) you choose. People would respond differently to marketing campaigns than, say, corporations.

Try to figure out who your ideal customers are based on how they look and how they think. In terms of demographics, you should talk about the ages, genders, locations, and levels of income of the people you want to serve.

Psychographic profiles explain what your target customers want and need. The better you can understand and define these needs, the easier it will be to find and keep customers.

Competitive Analysis

In your competitive analysis, you should list your business’s direct and indirect competitors and then focus on the direct ones.

Other machine shops are their direct competitors.

Indirect competitors are other things that customers can buy besides your product or service that aren’t in direct competition with it. This includes other kinds of machine shops and machining done in-house. These competitors also need to be mentioned.

Give an overview of each competitor’s business and list their strengths and weaknesses. Unless you’ve worked at one of your competitors’ companies, you won’t know everything about them. But you should be able to find out important facts about them, like

  • What kind of clients do they work with?
  • What kind of machine shop is it?
  • How much do they charge (high, low, etc.)?
  • What can they do well?
  • What do they do wrong?

For the last two questions, try to answer them from the customers’ point of view. And don’t be afraid to ask the customers of your competitors what they like and dislike about them.

The last part of your competitive analysis section is to list the ways you are better than your competitors. As an example:

  • Will you make it easier for people to buy your product or use your service?
  • Will you sell or provide things that your competitors don’t?
  • Will you treat your customers better?
  • Will you price things better?

Think about how you will do better than your competitors and write them down in this part of your plan.

Marketing Plan

Usually, a marketing plan has four parts: the product, the price, the place, and the promotion. Your marketing plan for a machine shop business plan should include the following:

Product: In the product section, you should repeat the type of machine shop business you described in your company overview. Then, explain what products or services you will be selling. Do you offer services like milling, drilling, grinding, or welding?

Price: Write down the prices you’ll be charging and how they compare to those of your competitors. In the product and price sections of your plan, you show what products or services you offer and how much they cost.

Place is where your machine shop business is located. Write down where your business is and how the location will affect your success. For example, is your machine shop in an industrial district, a business district, a stand-alone warehouse, or only online? Talk about why your site may be the best place for your customers.

Promotions: The last part of your machine shop marketing plan is to write down how you will bring potential customers to your location (s). Here are some ways you could promote your business:

  • Advertise in the local newspapers, radio stations, and/or magazines
  • Get in touch with websites
  • Put out flyers
  • Engage in email marketing
  • Place ads on social media sites
  • Improve your website’s SEO (search engine optimization) for specific keywords

Operations Plan

In the other parts of your business plan, you talked about your goals. In your operations plan, you talk about how you will reach those goals. Your plan for operations should have two separate parts.

Everyday short-term processes include everything you need to do to run your machine shop, like answering calls, scheduling employees, billing customers, collecting payments, etc.

Long-term goals are the goals you want to reach in the future. These dates could be when you expect to get your Xth customer or when you hope to make $X in sales. It could also be when you want to open a new machine shop in a different city.

Management Team

To show how successful your machine shop could be, you need a strong management team. Showcase the backgrounds of your key players, focusing on the skills and experiences that prove they can help a company grow.

You and/or your team members should have managed machine shops before. If so, talk about your experience and skills. But also highlight any experience you think will help your business succeed.

If your team is missing something, you might want to put together an advisory board. A two-to-eight-person advisory board would help your business by giving advice. They would help answer questions and give advice on how to plan. If you need to, look for advisory board members who have run a machine shop or a small machining business successfully.

Financial Plan

Your 5-year financial plan should include a monthly or quarterly breakdown for the first year, then an annual breakdown after that. Your income statement, balance sheet, and cash flow statement are all parts of your financial statements.

Income Statement

A more common name for an income statement is a Profit and Loss statement, or P&L. It shows your income and then takes away your expenses to show if you made a profit.

You need to make assumptions in order to make your income statement. For example, will you make 20 of something every day? Will you give discounts to customers who buy from you more than once? And will sales grow by 2% or 10% every year? As you might expect, the financial forecasts for your business will be greatly affected by the assumptions you choose. Do as much research as you can to try to make sure your assumptions are true.

The Balance Sheets

Balance sheets list what you own and what you owe. Balance sheets can have a lot of information, but try to boil them down to the most important parts. For example, you won’t make money right away if you spend $50,000 to build out your machine shop. Instead, it is an asset that you can use to make money for years to come. Also, if someone gives you a check for $50,000, you don’t have to pay it back right away. Instead, you will have to pay that back over time.

Statement of Cash Flow

Your cash flow statement will help you figure out how much money you need to start or grow your business and make sure you never run out of cash. Most business owners and entrepreneurs don’t realize that you can make money but still go bankrupt if you run out of money.

When making your Income Statement and Balance Sheet, be sure to include some of the most important costs of starting or growing a machine shop:

  • Cost of office supplies and equipment
  • Payroll or salaries given to employees
  • Insurance for businesses
  • Taxes
  • If you’re starting a new business, you’ll also have to pay for legal fees, permits, computer software, and equipment.