CNC School of Hard Knocks: Starting your own custom CNC Shop

Thinking of starting a custom CNC shop? It isn’t as easy as you may think… and expect some bumps along the road.

There are many pitfalls when it comes to starting a new business, regardless of the industry you are trying to serve or customer base you are expecting to reach. At the end of the day, there is really very little difference, business wise, between a pizza shop and a custom CNC shop. There are account receivables, tabs, equipment maintenance and purchases and suppliers of various raw materials that need to be kept happy.

Ask your customer what THEY want, not what you can provide

One of the things I THOUGHT would help me when I started CNCROi.com was that I had all this experience designing models at CNCKing.com. Telling customers that you can design anything is one thing, being able to prove it is quite another. So, one of my selling points was that I can design anything they need at any scale… and that’s when reality hit. They liked, for instance, the CNC laser cut Eiffel Tower but they wanted flat 2D metal plaques for their machines.

This is when I learned that regardless of what you can do, it’s what they need that will lead you to a customer. I’d love to be designing awesome custom projects all day, but our bread and butter has been at the very simple 2D end of things, far more than the 3D.

Of course, having that experience is invaluable when it comes to making custom CNC projects for customers, so it’s an incredible asset I bring to customers, just the need isn’t as strong as I thought it would be.

Challenge your customers

I know that for some customers, they only want X and that’s all you’ll ever do for them, but once you get to know them a bit more, you realize what else you can do and can begin challenging them to think bigger. For instance, I have a customer that we do fantastic anodized aluminum plates that are a custom size that must meet specific specs. Not a problem, but what about making a holder to hold their widgets at trade shows as well? How about trying to update a design so that we no longer need a plaque but just put the part of the widget under our laser instead? These small upsells add up over time!

I think we are all in business to collaborate, learn from one another, and if I think of something that can benefit the client, that’s something that they’ll remember. Sometimes I get designs that, if they tweeked it ever so slightly, would allow them to achieve a significant time savings and produce a better design. This may cut into my “laser time” but it also increases the volume they are able to get done, which increases my “laser time” over the course of the lifetime of my business. They get more optimized widgets and I get more repeat business and referrals!

PRICE, PRICE, PRICE

I have some customers who are very specific about a price they need to hit for a project, what I tell them is to tell me that number and we can figure out a way together of achieving it. At the end of the day, a customer needs to know that yes, you are there to make a profit, but also, you are there to help them long term as a trusted source to solve their issues.

As for CNCROi.com, my focus, just like CNCKing.com, is long term. If I wanted to double my sales overnight or exponentially increase my traffic to this site, the easiest thing I can do is lower the prices across the board and give away free models. The problem with that is that I’ve killed the value of my time and attracted customers who aren’t in the demographic I’m trying to serve.

At the end of the day, a customer is buying trust from you, the price is secondary. If you can tell them that YES, XYZ will be finished tomorrow and they end-up waiting a week for the project to be completed, you’ve lost their trust and they will never ask you about price again as they are gone. At CNCKing.com, customers trust that a design they buy actually works. At CNCROi.com, a customer trusts that what we do for them will be as agreed upon.

Cash Flow

The biggest challenges with any business is cash flow, with CNCROi.com, I generally have to purchase materials, pay electricity and other payments in advance of doing a project, only later do I get a cheque to pay myself back these expenses and get a profit out of a job.

It’s like getting a job and in the first two weeks before you get your salary, you need to purchase a desk, phone, computer, chair etc… sometimes you get a “signing bonus” which helps, but that isn’t always possible.

Cash flow is what can help or kill a business within short order. Control when you spend and when you get paid as much as possible, as you never know if a client will just “not pay” or have to delay payment for any reason under the Sun. Your boss decides not to give you a salary on scheduled date, you have a lot of ways to get it, for a business, it’s generally a write-off.

One of my friends who now runs a successful business had is VERY FIRST CLIENT not pay his bill. How much was that? 40 000$CDN. This happens and he had to get over it, that’s more than most people here in Canada make net in a year, throw in expenses like salaries and materials to do the project and he’s out significantly more. That was a very rough start to his business but he overcame… and that’s what entrepreneurship is all about.