The machine shop launch plan
Every step from deciding to opening, in the order it happens, shaped to your situation, with your own numbers beside it. About 51 steps in 8 phases, 23 of them specific to a machine shop. Free to read; ticking steps off and putting in your own numbers come with membership.
The plan51 steps
- 01Not started0/6Fold
Decide with the numbersa week or two
Before a dollar is spent. Most expensive mistakes happen here, and this phase costs nothing.
A machine shop makes money by turning spindle hours into billable parts, and the order you grow the work decides your margins.
Typical for one unit is $625,000 to $2,175,000 a year; the owner keeps 17 to 30% of it before paying themselves. If that band does not cover what you need, that is the signal to pause and look again.
~50-60% survive 5 years. Roughly half of all new U.S. businesses reach five years.
Twelve questions about your money, time, experience and temperament, scored. Then the 5 questions this business asks of its owner, about the hours and the work. Answer both before you spend a dollar.
Rule of thumb: if you can buy a certified shop with repeat OEM contracts and machinists likely to stay (ideally with the owner’s help through a transition), buying buys you years and a certification... Answer it in your situation above and the plan reshapes.
Customers, prices, rent, staff pay, what it costs to open. We filled in typical numbers; change what you know and everything on this page follows.
- 02Not started0/5Open
Plan the moneya week
What it costs to open, where the money comes from, and the cushion that keeps you alive until the business pays for itself.
A machine shop is capital-heavy to start: most of the money goes into the machines, the tooling and workholding to run them, the inspection gear that holds certification, the power and rigging to...
The itemized cost to open9 lines
- CNC machines and shop machines: $239,000 to $1,290,000Three mills and two lathes, used at the low end and new with a 5-axis machine at the high end, plus a manual mill, saw, drill press and compressor; financing...
- Tooling, workholding and inspection: $53,000 to $305,000Holders, cutters and vises for every machine, hand gauges, and a CMM above the low end
- CAM seats and computers: $5,000 to $37,000Perpetual CAM licenses and programming PCs; subscription software is a monthly cost
- Rigging, power and air drops: $30,000 to $109,000Machine move-in and setup, three-phase service and a drop at each machine
- Forklift, racking, benches and safety gear: $21,000 to $61,000A used forklift at the low end
- Starting bar stock and plate: $5,000 to $25,000
- Certification, deposits, permits and insurance: $11,000 to $88,000AS9100 at the high end, lease and utility deposits, first premiums, legal setup
- Sign and capabilities website: $3,000 to $22,000
- Initial working capital: $100,000 to $300,000Payroll, material and rent for the months before customers pay on 30 to 60 day terms; the plan sizes yours
Costs start on day one; customers take months. Map the first twelve months of cash so the business does not run out of money while it is getting going.
The business has to earn your pay like any other bill. Set it in your numbers and watch the month it move.
How deals in this business are financed4 lines
- SBA 7(a) loan (Up to 10 yr (25 with real estate) · 75-85% government-guaranteed)The workhorse for buying an existing machine shop or funding a startup’s machines and working capital.
- Equipment financing (Secured by machines & equipment)Finance CNC machines and major equipment, secured by the machines themselves.
- Seller financing (Often 5-25% of price · 3-7 yr)Common when buying a shop.
- SBA 504 loan (Long-term fixed-rate · real estate & equipment)For owner-occupied real estate and large equipment, a 504 loan pairs a bank loan with a long-term, fixed-rate CDC portion.
Most new shops pair an with 10 to 20% of your own cash. Know the monthly payment before you look at a single space.
Before you shop. A lender tells you what they would fund, what they need from you (credit, your cash in, a plan with numbers), and a pre-qualification letter makes a landlord or a seller take you seriously.
- 03Not started0/4Open
Set up the companya day or two
A day of paperwork, and it has to come before the space: a lease, a loan application and every permit are in the company’s name.
Your state’s business name search, the trademark register, and the domain, before the name is on a sign, a van, or a lease.
A , an , and the S-corporation election each change what you keep and what you are exposed to. Compare them with the numbers, confirm with a CPA and an attorney, then file with your state.
After:The is free from the IRS in minutes once the company exists. The bank account needs both. Keep business money separate from day one.
After:Pick the accounting software and connect the bank account now, so every cost of opening is captured and the numbers you later are real.
- 04Not started0/6Open
Find and secure the spaceone to three months
A machine shop is not a retail location: your "market" is the industrial base you serve and the labor pool you can hire from.
What decides it for this business: local oem & manufacturer base, premium end markets (aerospace / medical / defense), skilled-machinist pool, industrial power, floor & access, not oversaturated with job shops.
One call to the planning desk with the address: is this use allowed there, and what will it take (, permits, fire sign-off)? A space that needs a change of use can add months.
Rent, free months for the , who pays for what, the and the renewals, subject to financing and permits. The lender needs this letter or a draft lease to take your application.
After: ,, renewal options, increase caps, what the landlord adds on top of rent, and what happens if you have to leave. For a location business the lease is part of the purchase price.
After:at minimum; property, workers’ compensation and the rest as the business needs. The landlord asks for a certificate at signing and the lender at closing.
Walk the floor plan and the equipment list, then get contractor quotes. The lender wants the quotes; the health department wants the plan.
- 05Not started0/2Open
Get the loanfour to eight weeks
Four to eight weeks with an SBA lender, longer if the file is incomplete. Everything else waits on this, so send a complete file.
Your plan with numbers (download it as a PDF from this page), the company’s papers, the or draft lease, the and equipment quotes, your personal financial statement, and proof of the cash you put in.
After:The lender approves against the ; you sign the lease once approved; the loan closes against the signed lease and the insurance certificate. Ask for the to match the or longer.
After:
- 06Not started0/12Open
Permits and the build-outone to three months
A machine shop is more about certification and environmental compliance than trade licensing: you run heavy equipment, handle coolants and metalworking fluids, and ship parts into regulated industries.
Bind the policies you had quoted before a contractor, a vehicle or a customer is in play. Keep the certificates; the landlord, the lender and the city will ask.
After:Your contractors pull the building, plumbing, electrical and mechanical permits and close them out by inspection. Hold the free rent months for this.
After:Most cities approve exterior signs separately; signs take weeks to make. Order early.
Register your or corporation and obtain a city or county operating license.
State registration to collect, remit, and document tax on material and finished parts where applicable.
If you machine defense or controlled parts, registration and compliance with export-control rules are .
Coolants, cutting fluids, and chips are regulated waste.
Mist collection, finishing, and any discharge may need local air or wastewater permits depending on processes.
Coverage for the equipment, the premises, and the parts you ship, often to bid contracts.
Machine guarding, lockout / tagout, PPE, and a documented safety program for a shop floor with heavy equipment.
Fire-marshal review of exits, extinguishers and load, after the build and before the .
After:The city’s sign-off that the space is approved for this use. You cannot open the doors without it.
After:
- 07Not started0/11Open
Set up to runduring the build
During the build, so the business runs from day one: the systems, the prices, the people and the routine.
The backbone: quotes jobs on cycle time, schedules the cells, tracks job cost, and tells you which work actually made money.
Turns drawings into verified toolpaths and simulates the cut before a chip flies.
CMM software, statistical process control, and traceability documentation are what hold AS9100 / ISO certification and unlock premium aerospace and medical...
A dedicated account and an equipment-financing relationship keep the books clean and let you add machines without draining .
You run heavy equipment and ship parts that go into aircraft and devices.
See the price the the business needs implies, then check it against what the market pays.
Federal plus state employer, withholding, and workers’ comp once you hire machinists.
After:Wages are the start: , insurance, training time and the hours you stop billing. Owners usually post the jobs a month out and hire two to four weeks before opening so training happens before the doors open.
Early morning: Check overnight lights-out runs, clear chips, and confirm parts ran... Quoting & programming: Estimators price new jobs on cycle time and setup; programmers write... Setup & first article: A machinist fixtures the job, sets offsets, and cuts a first article...
Opening, closing, the sale, the complaint, the cash. One page each. This is the manual a franchise would have sold you.
Free, and it is how most people will find you. Address, hours, photos and the menu or price list, live before opening day; then the sign, the soft opening and the first regulars.
- 08Not started0/5Open
Open and measurethe first ninety days
You own it. Now run it on the numbers.
Friends, neighbors and a short menu or list. Find the problems while the room is forgiving.
Enter the real numbers and see every cost line against the for this business.
Machinist & programming time; Scrap, rework & out-of-tolerance parts; CNC depreciation & tooling.
Growth consumes cash before it produces it. Find the rate your own cash funds before you push.
Machine shops are in steady demand from buyers.