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10 tips when starting a CNC business

Digital fabrication using CNC machining is in high demand. Its core benefits of high-precision, low upfront investment, and wide arsenal of high-performance materials make it an attractive option for one-offs, prototypes, and low to medium production series.

Yet in any profitable business, supporting technologies are only a means to an end. Getting the gears of a machine shop running successfully requires far more than that CNC operator degree. Let’s look at 10 tips you need to know when starting a CNC business.

A rapidly advancing field

CNC is entirely different from better-known forms of manufacturing like 3D printing and injection molding in that it uses a combination of subtractive tools — like drills, mills, and lathes — to carve an object out of a solid block of material.

Input geometry has been digital in the form of a CAD/CAM model since the 1960s, and since then the field has flourished with innovations. If your nearest competitor has fully-automated multi-axis machinery with AI optimization allowing them to offer perfect tolerancing, accelerated delivery times, and reduced prices, how is your business going to make the cut?

1. Know what you are getting into

In any metropolitan area with consistent demand for parts, it will not work to run a CNC shop as if it were a hobby gone rogue. The field can get as competitive as the real estate or restaurant business, so staying afloat will be about more than just doing what you love.

Think of the venture first and foremost as an economic entity that needs to add value. And getting that to work should be the real challenge, and the thing to love.

2. Plan

If all goes well and the people stay enthused and hardworking, a company naturally evolves into prosperity. But it all starts with a good business plan.

A business plan is like a marketing plan with your company as the product. It encompasses various aspects, from product quality to pricing strategies to customer service.

The following are aspects that every great business plan should have.

What is your shop type?

Will you be a job shop, taking customers’ orders to spec? A product shop that sells B2B? Or a hybrid of the two? What industries or areas of expertise will you focus on?

Who is your competition?

Researching your direct competition is paramount to being able to attract a customer base. For example, if their procurement officers are friendly with the local university workshop and are able to run jobs there over the weekend at rock bottom prices, how will you stand out? Similarly, if there is a large-scale CNC factory available, why not use them for base products that your shop processes further?

What is your target market?

With online service providers and fab labs sprouting all over the globe, it is best to carve out a niche. Create an accurate profile of your intended audience and make sure to understand their values, needs, and wishes.

Decide your pricing

List startup and ongoing costs such as stock materials, tools and utilities, maintenance, leases, and salaries. Calculate intended return on investment (ROI) and profit margins. Together with customer research and a market penetration strategy, that will determine your hourly charge.

Conduct a risk assessment

Besides your strengths, it is good to know the weaknesses that will show up along the way. Being prepared gets you halfway to the solution. And you will find that some of the risks or barriers to entry can be easy to alleviate beforehand.

3. Start minimally

Whatever your budget, treat your venture like a $1,000 startup. This forces you to focus only on high-priority aspects and core business activity. At this moment, there is no plan B, and the first steps will be formative for the remaining years.

Instead of hopping on the high-tech bandwagon immediately, consider what can be done with bare necessities. It’s often better to run a small 3-axis machine together with a run-of-the-mill lathe from the garage than to invest everything in an expensive, cutting-edge 5-axis machine and rent a studio downtown.

4. Make your mark

After determining the operational fundamentals for your CNC shop, choose a name. List a myriad of keywords, including surprising and random ones, and conduct several brainstorming sessions. Use a thesaurus or free writing to come up with alternatives.

Experiment with creative writing techniques such as rhyme, alliteration, acronym, palindrome, and metaphor to create some company name ideas with extra pizzazz.

Then shrink your list of possible names to five candidates. Check your country’s business records, trademarks, and social media for overlapping interests. Verify web domain availability, including novel domain extensions such as .io, .xyz, .tech, .shop, .space, .me, .build, .cam, .cyou, .art, .pro, and .work.

Consider to what extent you want to fit into the local business landscape, what values you want to embody, and imagine your customer entering your shop. How will the experience be memorable?

With all boxes ticked, the last step will be contacting a talented graphic artist for a logo. Also consider opting for a creative, laser-cut business card with a QR-code linking to your website.

5. Pivot

Don’t take running a manufacturing business lightly. “Go hard or go home” should be your motto. In the world of CNC, advancing from 60% to 90% part correctness may take your company five years, and then another five to get your parts to be 99% on spec.

This is a long journey. And if it doesn’t go according to plan, it’s sometimes best to pivot from CNC entirely and become a fab lab, model making shop, 3D print farm, reseller, or design studio instead.

6. Work smart

If it isn’t strictly necessary, do not invest in gaining expertise in 3D modeling, CNC programming, or working with ultra-performance polymers. Instead, use principles of lean manufacturing to re-examine workflows from time to time, chopping major bottlenecks and establishing incremental efficiency boosts.

Consider investing in digital readouts (DROs) for added precision, and sensors to detect axis feed or ball screw malfunctions. Machine learning and online data solutions add connectivity to the machine park to optimize efficiency and prevent malfunctions.

7. Optimize settings

For existing machinery, find the sweet spot in feeds and speeds for the most common materials and build types. Adjust toolhead vs. spindle rotation speed to maximize surface finish, throughput speed, or tool life.

The aim in terms of chipload should be to feed the right thickness of material into each cutting edge as it moves through the work so that it creates chips, not dust. Getting such fundamental parameters right will significantly boost your efficiency levels.

8. Build long-term relationships

People are comparative creatures. It is important to gain their appreciation and respect in order to build a reputation. For a startup business, social interaction and sales skills are more important than building comprehensive expertise.

First, find connections in your existing personal and professional network. Go to trade fairs. Then create a growth plan that revolves around these relationships and set milestones. Keep your contacts alive and expand on existing contracts by sending out newsletter updates and pondering new opportunities for components taken up into the production pipeline.

9. Learn to say no

The overall goal of a machine shop is to minimize downtime. To achieve maximum occupancy, triage projects into the following categories before accepting them:

It is great to have runners, but in practice these are rare. It is wiser to focus on repeaters for steady incoming work. Strangers should be kept to a minimum and only accepted if they offer special benefits or fall in line with the growth goals of the company.

And most of all, don’t agree to jobs like a personalized cutting board series for your best friend’s 600-person wedding.

10. Create a great work atmosphere

Despite relatively high salaries, machinists rank in the bottom 11% when it comes to job satisfaction. This can be a significant problem, considering dissatisfied employees cost U.S. businesses up to $550 billion annually.

To keep your staff motivated, give them a creative outlet with internal competitions, take them on outdoor team building trips, or award end-of-year bonuses.

Provide service training to promote operators into experts on CAM, CNC G-Code, or 3D design. Also involve your crew in high-level decision-making. If you provide a listening ear, their loyalty to the company will only increase.