Goal Setting

[John Esberg]

Laser Engravers,

I've had my cutter for 2 years now. I've used it on the side, not as my primary source of income. As a matter of fact, I reinlisted in the Navy to get a bonus big enough to buy my machine.

Recently I've been told that it has been set in stone that I will be medically discharged. I should be recieving the equivalent of a 20 year retirement. So needless to say, I need to plan for the future, especially with my newborn son.

After 10 years of operating nuclear reactors on test platforms and on submarines, my equivalent civilian pay is $83K not including medical or dental benifits. I know this is surprising to most people, but please understand that I do get taxed differently. You would also be impressed at how many of the junior (<4 years experience) personel don't file bankrupcy when they make less than $1000 a month.

So, here's the question. Do you believe it is possible for us to make $83 a year off of a laser engraving business? If so, what methods?

Looking forward to your replies,

DAK

[Keith Outten]

John,

I doubt that I could make 83K with just my laser engraver, I expect that there may be a few with establised businesses who might. Now if you combine a CNC Router with your laser engraver and get into commercial signs the number is very reasonable with good marketing. Remember that a startup business needs to allow some time to get the ball rolling, most would suggest 3 years.

Commercial sign customers require that you establish a business resume' before you can bid on large commercial building projects. I hit this wall just after purchasing my laser engraver. The companies I scheduled meetings with loved my work but wouldn't even let me bid because I had no commercial work experience. I refused to give up and eventually got a break that got the ball rolling and now have several major facilities behind me. Once you are on your way your prices will be less of an issue :)

.

[Joe Pelonio]

John,

Considering my most profitable items and how long it takes to make them, if I ran 8 hours a day 20 days a month making just those and did nothing else my gross revenue wouldn't be much more than that. Then there's materials and overhead. I don't think it's physically possible to make that much profit with just one laser and no help.

Like Keith the laser is a tool that I added to my sign business. I did so to provide additional services for existing customers, and have since been lucky enough to find some good customers for laser work, but not enough to give up the signmaking. Think about the customers that you have had during the time you've done it on the side, and ask yourself where you will find the additional customers to keep the laser running all day every day.

[Mike Null]

Well.....I've had $2500 days and $4000 weeks so it's definitely physically possible to do. But I've also had 0 days and 0 weeks. It all boils down to how good you are at marketing and how hard you really want to work. If $83K is your bogy then your target has to be $120K because of materials and expenses.

I believe you have to have a good web site and you must have commercial accounts. Commercial accounts provide two important advantages, ie. larger orders and repeat business. They could be lower margin but not necessarily.

If you plan to work from your home a professional web site is very important. Most amatuers are not capable of writing html in such a fashion as to make the site as productive as it must be.

I would find things to supplement the laser engraving busienss such as sublimation, sand carving, rotary engraving or vinyl cutting. These are are related in that they provide a means of marking but also use a common software.

You also, at some point will have to evaluate whether your equipment can give you the production you need.

[Rodne Gold]

You should make at least $60 an hour of laser time , assuming you can fill your laser for 3-4 hrs a day , thats about $200 a day , over 200 working days a year - 40k. Thats turnover and not profit.

If a capital equipment buy of $20 k with a 2-3 yrs lifespan can easily generate 80k profit per annum , well you would have a flood of folk purchasing.

If you are earning like 83k a yr , a 20 yr payout should be HUGE - surely would enable you to buy into a good franchise in some other field that can generate that revenue for you?

[John Esberg]

FYI, the military payout depends on the disability level. Under 30 percent, the multiply a random factor of up to 2 by the number of years you've been in by your base pay by 12. In other words, if you had a factor of 2 determined by a medical board after 12 years of service, you can expect to see almost $60,000 with no taxes.

30 to 50% disability gives you 1/2 base pay for life. I think that means you would get $1200 a month before taxes.

After that it grows up to 100% of base pay for your given rank.

Personally, I expect 30-40%. I won't be getting enough to buy some fancy franchise. I wish.

DAK

[Keith Outten]

John,

Mike Null and Rodne Gold are both Professionals with establised businesses. I would take their advice, in fact I always do when they share their expertise here at SMC. Mike has a unique business mix that has worked for him a long time and Rodne has often shared his tips for developing products to enhance your engraving services. These two represent a major percentage of the overall expertise here in this Forum and we are fortunate to have them participate here at The Creek. Joe has also been around awhile and like me he has expanded his business to be able to provide more services, diversification is often necessary to keep customers from going to your competitors for services you can't offer.

Should you decide to just offer laser engraving you will have a serious disadvantage when compared to your competitors.

If your goal is to reach your $83k figure based on your engraving work plus your pension I think it is certainly possible depending on your final pension figure.

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[John Esberg]

I really appreciate the advice I get from everyone here. It doesn't take long to know that pro's like Mike, Rodne, & Kieth are on the ball. So Gentlemen, thank you for your input.

On the side I've recieved some private messages about this subject. Two themes came into play.

One idea that came across was the need for realistic business perspectives. We really are often focused on product and systems. There's always a need for accounting, marketing, and legal issues to be met.

I remember a job I carried earlier this year that was actually classified. I had to have a government security clearance to do the work. I remember on day 2 of the job at 1 AM in the morning thinking, "This is great but where's the next job?" 5 days later of 24 hour laser work I was finished with a nice profit, but no more work for 3 weeks. It was a nice lesson of "you're only as good as your last sale".

I also got some feedback from another business owner. I'll see if he'll let me post it for him.

Well, I'm going to let some people post to this reply. I've got my machine to attend to. :)

DAK

[Keith Outten]

John,

When I'm working in the shop I'm not marketing and when I'm marketing I'm not working in the shop :(

We would all love to have jobs stacked up so we could keep a continous stream of products going out the door but it rarely works that way. The exception for me is very large jobs like making signs for a large commercial building which takes months.

Being a one man operation has it's challenges, I make an exception when it comes to installs, I rarely install signs alone.

.

[Tim Goldstein]

I would echo the theme that there is much more to business than the machines and making things. My primary "real" business is as a manufacturer of machined products for the bench top metal machining hobbyist that we market directly. The machinery is wonderful I have a 20hp Haas CNC machine center with a 25 tool automatic changer and a 20hp Haas CNC lathe with a 12 tool turret and live tooling. To drive it all I use about $30K worth of design and engineering software. It is wonderful stuff and close to being the most fun you can have with your clothes on. But the reality is I only use the equipment about 5% of the time and the other 95% is focused on issues regarding running the business. This is not to say the equipment is not used, I have 2 employees that handle the day in day out machine operator duties, assembly, and packing and shipping.

Where I find my time is most effectively spent (but not most enjoyably) is in marketing. One call to a magazine editor with a follow up sample was worth at least $3000 in sales over the next 4 months. A press release in another publication will usually get me about $2000 in sales. Designing a new product, prototyping it, developing production fixturing, packaging, and instructions along with promoting it is good for a $5000 a year boost in sales. The point is the place I can bring the greatest value to my business is not in running the machines even though that is what drew me into putting my house on the line and investing more well over 6 figures into a new venture.

The way I like to think about it is there are things that you have to do to stay in business. This would include paying bills, producing product, shipping orders, ordering materials, filing taxes, record keeping, etc. But none of that will make your business grow. That is all based on the things that are easy to put off because you are too busy. What is primarily in this category is marketing, marketing, marketing, and new product development backed up with marketing.

So from my experience the most important part is how are you going to market what your business produces. If you can get a handle on that the rest is easy (easy meaning something you can do, not that it is without work).

Just my $0.02 worth on where an small business owner need to focus their efforts.

[Joe Pelonio]

John,

When I'm working in the shop I'm not marketing and when I'm marketing I'm not working in the shop :(

We would all love to have jobs stacked up so we could keep a continous stream of products going out the door but it rarely works that way. The exception for me is very large jobs like making signs for a large commercial building which takes months.

Being a one man operation has it's challenges, I make an exception when it comes to installs, I rarely install signs alone.

.
Same here, I have had as many as 4 employees but adding the laser has allowed me to do more work alone, start a job and work on vinyl sign jobs, change material when the bell rings. Moving to the house will help too, with everything in one big room instead of running around between the 4 rooms here. Typically I have work piled up all summer and about this time it slows down and I can do some marketing and some of the more "fun" laser projects, and maybe a little stained glass work. I don't know if it's unique to this area but due to our weather we pack all kinds of events into the few dry months. It's important to have some regular customers that need my products all year though to keep the revenue flowing in during the winter. In one case, with the customer's cooperation, I'll be working during the winter to stockpile their products they will sell in the spring and summer.