Machine Shop Business Plan Template

Machine Shop Business Plan

You’ve come to the right place to create your Machine Shop business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Machine Shop companies.

Below is a template to help you create each section of your Machine Shop business plan.

Executive Summary

Business Overview

KB Machining is a new machine shop located in Nashville, Tennessee that provides custom fabrication and machining services to local businesses and residents. Our mission is to help the members of our community make their designs a reality. We offer affordable pricing, design services, and the best customer service in the industry. No matter how challenging the project is, we have the experience and capability to produce everything our customers need.

KB Machining is run by Kyle Bannon, who has over 20 years of experience as a professional machinist. Throughout his career, he has worked as a machinist for local businesses, spending much of that time as a manager and trainer for other employees and apprentices. Now he is ready to apply his experience and skills to run his own machine shop that will serve the local community.

 

Product Offering

KB Machining will provide a variety of machine shop services to manufacture our customers’ unique designs and parts. We can work with a variety of materials including plastic, aluminum, and stainless steel. Some of the services we offer include:

• Boring
• Milling
• Lathe machining
• Abrasive machining
• Grinding
• Design and prototype services

The costs for each project will be determined by the materials needed and the amount of labor required.

 

Customer Focus

KB Machining will serve local businesses and individuals residing in the Nashville, Tennessee area. We expect that most of our sales will come from the local automotive, medical, and manufacturing industries. However, we will also be available to help with smaller projects given to us by the residents of Nashville.

 

Management Team

KB Machining is run by Kyle Bannon, who has over 20 years of experience as a professional machinist. Throughout his career, he has worked as a machinist for local businesses, spending much of that time as a manager and trainer for other employees and apprentices. For the past year, he has worked on additional repair and fabrication projects on the side and is ready to turn his side hustle into a full-on business.

Though he has never run his own machine shop business, he has worked in the industry long enough to gain an in-depth knowledge of the business, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).

 

Success Factors

KB Machining will be able to achieve success by offering the following competitive advantages:

• Customer-Focus: KB Machining’s contractors provide the highest quality customer service focused on transparency, communication, and responsiveness throughout the process, from the initial inquiry to the follow-up once the project is completed.
• Management: Kyle Bannon has been extremely successful working in the machining industry and will be able to use his previous experience to help clients with whatever they need. His unique qualifications will serve customers in a much more sophisticated manner than many of KB Machining’s competitors.
• Relationships: Having lived in the community for 25 years, Kyle knows many of the local leaders, real estate developers, and business owners. These relationships will help the company build a significant customer base.
• Affordability: Even though local businesses will make up most of our sales, KB Machining still strives to be an affordable option for local individuals as well. We strive to be the best neighborhood machine shop that can help individuals with all their machining needs for an affordable price.

 

Financial Highlights

KB Machining is currently seeking $550,000 to launch. Funding will be dedicated towards equipment costs and build out as well as three months of overhead costs to include payroll of the staff, rent, and marketing costs. Specifically, these funds will be used as follows:

• Store design/build: $200,000
• Equipment and machinery: $200,000
• Three months of overhead expenses (payroll, rent, utilities): $100,000
• Marketing costs: $25,000
• Working capital: $25,000

The following graph below outlines the pro forma financial projections for KB Machining.

 

Company Overview

Who is KB Machining?

KB Machining is a new machine shop located in Nashville, Tennessee that provides custom fabrication and machining services to local businesses and residents. Our mission is to help the members of our community make their designs a reality. We offer affordable pricing, design services, and the best customer service in the industry. No matter how challenging the project is, we have the experience and capability to produce everything our customers need.

 
KB Machining is run by Kyle Bannon, who has over 20 years of experience as a professional machinist. Throughout his career, he has worked as a machinist for local businesses, spending much of that time as a manager and trainer for other employees and apprentices. Now he is ready to apply his experience and skills to run his own machine shop that will serve the local community.

 

KB Machining History

Kyle Bannon recently began researching what it would take to start his own machine shop and thoroughly analyzed the costs, market, demographics, and competition. Kyle has compiled enough information to develop his business plan in order to approach investors.

Kyle incorporated KB Machining on May 1st, 2023 as an S-Corporation. The business is currently being run out of Kyle’s home, but once the lease on KB Machining’s office location is finalized, all operations will be run from there.

Since incorporation, the company has achieved the following milestones:

• Found a retail space and signed a Letter of Intent to lease it.
• Developed the company’s name, logo, and website.
• Planned the suite of services to be offered.
• Determined equipment, supplies, and materials needed.
• Begun recruiting key employees

 

KB Machining Services

KB Machining will provide a variety of machine shop services to manufacture our customers’ unique designs and parts. We can work with a variety of materials including plastic, aluminum, and stainless steel. Some of the services we offer include:

• Boring
• Milling
• Lathe machining
• Abrasive machining
• Grinding
• Design and prototype services

The costs for each project will be determined by the materials needed and the amount of labor required.

 

Industry Analysis

As long as society depends on metal, there will always be a demand for machining, manufacturing, and welding services. These services are essential for several industries, including automotive, construction, and aerospace. Without expert machinists, many of these industries would suffer, which would severely impact the global economy.

According to Global Newswire, the Global Machining Services Market is expected to grow by $18.07 billion at a CAGR of 4.67% over the next five years. This success is primarily due to the industry’s adoption of integrated digital solutions and automation. The recent advances in machining technology and processes have increased the demand for these services. There is no indication that this demand is dying down, making this a great time to open a new machine shop.

 

Customer Analysis

Demographic Profile of Target Market

KB Machining will serve local businesses and individuals residing in the Nashville, Tennessee area. We expect that most of our sales will come from the local automotive, medical, and manufacturing industries. However, we will also be available to help with smaller projects given to us by the residents of Nashville.

The demographics of Nashville, Tennessee are as follows:

 

Customer Segmentation

KB Machining will primarily target the following customer profiles:

• Local businesses
• Individuals

 

Competitive Analysis

Direct and Indirect Competitors

KB Machining will face competition from other companies with similar business profiles. A description of each competitor company is below.

 

Carl’s Machine Shop

Carl’s Machine Shop is a machine shop in Nashville, Tennessee. In business for over 40 years, Carl’s Machine Shop focuses on providing custom fabrication and repair services to local individuals. They help with all sorts of projects, from automotive to furniture.

Carl’s Machine Shop’s services are generally for customers at the upper end of the market who are looking to customize their expensive cars, furniture, and other objects. As a result, the company’s prices are quite high and are not realistic for the average middle-class resident or business owner. We will price our services more moderately, attracting the customers who are priced out by Carl’s Machine Shop’s services.

 

Precision Machining Inc.

Precision Machining Inc. is a small machine shop that primarily serves the local construction industry. Established in 1997, the company offers a wide range of machining services, including prototyping. They do not serve individuals nor specialize in repair services.

Though we expect Precision Machining Inc. to continue to thrive, we plan to price our services more moderately, making us an active competitor with the company. Our management team also has better relationships with the industry and experience that will make KB Machining a more appealing option.

 

Raise The Bar

Raise The Bar is a local machine shop that provides a variety of machining services for local businesses. They primarily work on construction projects but help out businesses in other industries as well. Raise The Bar is known for its well-priced services and high-quality fabrications.

While Raise The Bar will continue to thrive in the local community, it does not offer any services to individuals. Furthermore, our management team has strong relationships with local businesses that will make our services more appealing than this competitor.

 

Competitive Advantage

KB Machining will be able to offer the following advantages over their competition:

• Customer-Focus: KB Machining’s contractors provide the highest quality customer service focused on transparency, communication, and responsiveness throughout the process, from the initial inquiry to the follow-up once the project is completed.
• Management: Kyle Bannon has been extremely successful working in the machining industry and will be able to use his previous experience to help clients with whatever they need. His unique qualifications will serve customers in a much more sophisticated manner than many of KB Machining’s competitors.
• Relationships: Having lived in the community for 25 years, Kyle knows many of the local leaders, real estate developers, and business owners. These relationships will help the company build a significant customer base.
• Affordability: Even though local businesses will make up most of our sales, KB Machining still strives to be an affordable option for local individuals as well. We strive to be the best neighborhood machine shop that can help individuals with all their machining needs for an affordable price.

 

Marketing Plan

Brand & Value Proposition

KB Machining will offer the unique value proposition to its clientele:

• Client-focused machining services, where the company’s interests are aligned with the customer.
• Service that is built on long-term relationships and personal attention.
• Professional industrial experience in a small business setting.
• Excellent customer service that can’t be beat.
• Affordable pricing.

 

Promotions Strategy

The promotions strategy for KB Machining is as follows:

Website/SEO

KB Machining will invest in developing a professional website that displays all of the services offered by the company. It will also invest in SEO so that the company’s website will appear at the top of search engine results.

Social Media

Kyle Bannon will create the company’s social media accounts and invest in ads on all social media platforms. It will use targeted marketing to appeal to the target demographic.

Referrals

KB Machining understands that the best promotion comes from satisfied customers. The company will encourage its clients to refer other individuals and businesses by providing discounts on future services for every new client produced. This strategy will increase in effectiveness after the business has already been established.

Direct Mail

KB Machining will blanket neighborhoods in the area with direct mail pieces. These pieces will provide general information on KB Machining, its services, and promotional discounts.

 

Pricing

KB Machining’s pricing will be estimated on a project-by-project basis, drawing on Kyle Bannon’s deep expertise in machining. The pricing will be determined by the materials needed and the amount of labor required to finish the job. However, overall our pricing will be moderate so clients feel they are getting great value when availing our services.

 

Operations Plan

Operation Functions:
The following will be the operations plan for KB Machining.

• Kyle Bannon will be the owner of KB Machining. He will oversee the general operations of the company and manage the staff. He will also work on all machining requests and projects until he hires a sizable staff of machinists to keep up with demand.
• Kyle will hire an Administrative Assistant to help him with all the administrative functions of the company.
• Kyle will also hire a Marketing Manager to manage all of the marketing and advertising functions.
• As the business grows, Kyle will hire other machinists to keep up with client demand for KB Machining’s machining services.

 

Milestones:

KB Machining expects to achieve the following milestones in the following months:

• 7/202X – Finalize lease agreement
• 8/202X – Design and build out
• 9/202X – Hire and train initial staff
• 10/202X – Kickoff of promotional campaign
• 11/202X – Launch KB Machining
• 12/202X – Reach break-even

 

Management Team

KB Machining is run by Kyle Bannon, who has over 20 years of experience as a professional machinist. Throughout his career, he has worked as a machinist for local businesses, spending much of that time as a manager and trainer for other employees and apprentices. For the past year, he has worked on additional repair and fabrication projects on the side and is ready to turn his side hustle into a full-on business.

Though he has never run his own machine shop business, he has worked in the industry long enough to gain an in-depth knowledge of the business, including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).

 

Financial Plan

Key Revenue & Costs

KB Machining’s revenue will primarily come from providing fabrication, repair, and other machine shop services to local businesses and residents. Pricing will be determined by the materials and labor required.

The main cost drivers for KB Machining will be labor expenses, marketing, and lease for the retail space.

 

Funding Requirements and Use of Funds

KB Machining is currently seeking $550,000 to launch. Funding will be dedicated towards equipment costs and build out as well as three months of overhead costs to include payroll of the staff, rent, and marketing costs. Specifically, these funds will be used as follows:

• Store design/build: $200,000
• Equipment and machinery: $200,000
• Three months of overhead expenses (payroll, rent, utilities): $100,000
• Marketing costs: $25,000
• Working capital: $25,000

 

Key Assumptions

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and pay off the startup business loan.

• Number of clients:
  • Year 1: 50
  • Year 2: 100
  • Year 3: 150
  • Year 4: 200
  • Year 5: 250

   

  Financial Projections

  Income Statement

  		FY 1	FY 2	FY 3	FY 4	FY 5
  Revenues
  	Total Revenues	$360,000	$793,728	$875,006	$964,606	$1,063,382
  Expenses & Costs
  	Cost of goods sold	$64,800	$142,871	$157,501	$173,629	$191,409
  	Lease	$50,000	$51,250	$52,531	$53,845	$55,191
  	Marketing	$10,000	$8,000	$8,000	$8,000	$8,000
  	Salaries	$157,015	$214,030	$235,968	$247,766	$260,155
  	Initial expenditure	$10,000	$0	$0	$0	$0
  	Total Expenses & Costs	$291,815	$416,151	$454,000	$483,240	$514,754
  EBITDA		$68,185	$377,577	$421,005	$481,366	$548,628
  	Depreciation	$27,160	$27,160	$27,160	$27,160	$27,160
  EBIT		$41,025	$350,417	$393,845	$454,206	$521,468
  	Interest	$23,462	$20,529	$17,596	$14,664	$11,731
  PRETAX INCOME		$17,563	$329,888	$376,249	$439,543	$509,737
  	Net Operating Loss	$0	$0	$0	$0	$0
  	Use of Net Operating Loss	$0	$0	$0	$0	$0
  	Taxable Income	$17,563	$329,888	$376,249	$439,543	$509,737
  	Income Tax Expense	$6,147	$115,461	$131,687	$153,840	$178,408
  NET INCOME		$11,416	$214,427	$244,562	$285,703	$331,329

  Balance Sheet

  		FY 1	FY 2	FY 3	FY 4	FY 5
  ASSETS
  	Cash	$154,257	$348,760	$573,195	$838,550	$1,149,286
  	Accounts receivable	$0	$0	$0	$0	$0
  	Inventory	$30,000	$33,072	$36,459	$40,192	$44,308
  	Total Current Assets	$184,257	$381,832	$609,654	$878,742	$1,193,594
  	Fixed assets	$180,950	$180,950	$180,950	$180,950	$180,950
  	Depreciation	$27,160	$54,320	$81,480	$108,640	$135,800
  	Net fixed assets	$153,790	$126,630	$99,470	$72,310	$45,150
  TOTAL ASSETS		$338,047	$508,462	$709,124	$951,052	$1,238,744
  LIABILITIES & EQUITY
  	Debt	$315,831	$270,713	$225,594	$180,475	$135,356
  	Accounts payable	$10,800	$11,906	$13,125	$14,469	$15,951
  	Total Liability	$326,631	$282,618	$238,719	$194,944	$151,307
  	Share Capital	$0	$0	$0	$0	$0
  	Retained earnings	$11,416	$225,843	$470,405	$756,108	$1,087,437
  	Total Equity	$11,416	$225,843	$470,405	$756,108	$1,087,437
  TOTAL LIABILITIES & EQUITY		$338,047	$508,462	$709,124	$951,052	$1,238,744

  Cash Flow Statement

  		FY 1	FY 2	FY 3	FY 4	FY 5
  CASH FLOW FROM OPERATIONS
  	Net Income (Loss)	$11,416	$214,427	$244,562	$285,703	$331,329
  	Change in working capital	($19,200)	($1,966)	($2,167)	($2,389)	($2,634)
  	Depreciation	$27,160	$27,160	$27,160	$27,160	$27,160
  	Net Cash Flow from Operations	$19,376	$239,621	$269,554	$310,473	$355,855
  CASH FLOW FROM INVESTMENTS
  	Investment	($180,950)	$0	$0	$0	$0
  	Net Cash Flow from Investments	($180,950)	$0	$0	$0	$0
  CASH FLOW FROM FINANCING
  	Cash from equity	$0	$0	$0	$0	$0
  	Cash from debt	$315,831	($45,119)	($45,119)	($45,119)	($45,119)
  	Net Cash Flow from Financing	$315,831	($45,119)	($45,119)	($45,119)	($45,119)
  	Net Cash Flow	$154,257	$194,502	$224,436	$265,355	$310,736
  	Cash at Beginning of Period	$0	$154,257	$348,760	$573,195	$838,550
  	Cash at End of Period	$154,257	$348,760	$573,195	$838,550	$1,149,286

  Machine Shop Business Plan FAQs

  What Is a Machine Shop Business Plan?

  A machine shop business plan is a plan to start and/or grow your machine shop business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

  You can easily complete your Machine Shop business plan using our Machine Shop Business Plan Template here.

  What are the Main Types of Machine Shop Businesses?

  There are a number of different kinds of machine shop businesses, some examples include: Computer numeric Control (CNC) Milling Machines, CNC Pocket Milling, Lathe Machines, Drill Press, and Welding Machines.

  How Do You Get Funding for Your Machine Shop Business Plan?

  Machine Shop businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

  What are the Steps To Start a Machine Shop Business?

  Starting a machine shop business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

  1. Develop A Machine Shop Business Plan - The first step in starting a business is to create a detailed machine shop business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 

  2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your machine shop business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your machine shop business is in compliance with local laws.

  3. Register Your Machine Shop Business - Once you have chosen a legal structure, the next step is to register your machine shop business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.

  4. Identify Financing Options - It’s likely that you’ll need some capital to start your machine shop business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.

  5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.

  6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.

  7. Acquire Necessary Machine Shop Equipment & Supplies - In order to start your machine shop business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

  8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your machine shop business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.