New Business Plan

[Steve Clarkson]

What a wonderful forum this is.....I'm so glad that I found it!

I have read numerous threads on here and they have been extremely informative. Everyone on here seems so willing to help each other out. I hope to be a contibutor some day soon.

I'm a middle-aged banker that was downsized about a year ago and I have been looking to start my own business since then. I have looked at literally hundreds of different opportunities and stumbled onto 3D subsurface laser engraving a few months ago. I toured Vytek a few months ago, but unbelievably, they didn't seem to want to sell me one! But while I was there, they showed me some portraits that had been engraved in marble and I fell in love with the concept of laser engraving.
Since then, I have been researching different laser engravers and the Epilog rep is coming next week to demo one.

However, I'm still trying to define my business plan and could use anyone and everyone's help. First, it seems that the majority of people on here seem to do mostly commercial stuff rather than retail. Is it possible to do both? Initially, I thought that selling directly to the public (engraving names and photos on various items) would have the greatest demand, however, most everyone on here seems to avoid selling directly to the public. I would have thought that a retail mall location would be the best concept since you could would get the retail business, yet you could still do commercial jobs. So any advice from someone that operates out of a mall would be greatly appreciated.

Secondly, how profitable can a stand alone laser business be? I know no one on here wants to reveal their annual sales and net profit......but maybe you could give me your idea of what a REALISTIC earning potential would be......under $50,000? Between $50,000 - $150,000? Over $150,000?

I can calculate the gross profit on one particular item (a $40 black onyx necklace from laser bits that sells for $90 has a gross profit of $50), but the reality is that I don't know HOW MANY necklaces I could sell in one year. So my question is.....how many items do you laser on a typical day?

Also, what are the most popular items that you do? Is it photos on 12"x12" marble, wooden pens, wine bottles, ipods, or something else? And to go along with that.....what is the most profitable item that you do? If the necklace takes 10 minutes to laser and you make $50 and a wooden pen takes 3 minutes but and your gross profit is $5, then you would have to do 10 pens (30 minutes) to make the same profit as one necklace.

Lastly, how long does the typical retail job take? I know that the wattage of the laser will tell me how many inches per second that the laser will engrave, but realistically, if someone hands me a photo and wants it engraved on a necklace or a 12"x12" piece of marble or wood.....can it be done while they wait?

I apologize for the long, rambling thread. I promise to keep future ones shorter and more specific!

Thanks again!

[Darren Null]

Commercial v. retail. It is possible to do retail, but you have to remember that the initial computer work is a large part of the job time. If you're making 1 bit for Joe Bloggs or a grillion bits for XYZ. Inc. you're going to spend the same computer time for both. Commercial is obviously better. You can do retail, but if you're organised you can have 'fill in the blanks' type templates to reduce computer time.

I'm in the seriously under $50,000 bracket, but I haven't hit the 'sweet spot' for my area yet. Earnings POTENTIAL is different. Theoretically, if you can get the sales, you're limited only by how quickly your machine can process the jobs and how long you can stay awake.

How many pieces can I laser in a day? Lots, if they're small (or the area to be lasered is small). Less if the lasered area is big. Also, the more powerful your laser is, the quicker you can go for the same result. Stuff that takes me hours on my 10W can be done in half the time by somebody with a 30W and a quarter of the time using a 60W. Of course, if it's something that just requires marking the surface -like cork, say- that I can do at 100% speed I'm just as quick as anybody. Jobs that require cutting, or really drilling into a hard surface, the more powerful your laser is, the better.

Popular items- well I haven't hit the sweet spot. People like anything with their names/photos on. Marble goes down well. Side-lit acrylic has a big "OOh! Shiny!" factor. The list is infinite though.

While you wait retail. The necklace you probably could do, the 12x12" tile, probably not. The job time depends on:
-The complexity of the computer work needed
-The area to be lasered
-The material you're working on
-The power of your machine.
As an aside, you probably don't want to do retail if you're running the shop alone. Customers say interesting things at moments when you need to be concentrating on getting the settings right/positioning the object to be lasered. You can do without this.

EDIT: Sorry most of the answers are vague. Most of the answers to your questions start with "It depends...". I've tried to point you at the relevant factors.

[James Stokes]

When I bought my frirst laser I tried to do the portrates on granite and marble. Every one liked it but did not really want to pay for it. also the quality of photos really sucked big time. I determined quickly that it was very hard to make money doing it.

[Mike Null]

To be quite blunt, the reason there are so many failures in this business is because people think they've got a cute idea and that the world will want to buy it. In reality a miniscule number will buy though a lot will say they will.

If you think you can make a living laser engraving pictures, etc. for retail I wish you good luck.

Engraving is primarily a service business like the dentist, mechanic and plumber. You need to be available when they need you but don't expect great success in trying to motivate buyers with advertising.

I concentrate on commercial work and use a professioanlly done web site to generate leads. I also do some telephone solicitation to a targeted group and occasional email promotions to existing customers.

I avoid retail work--they'll take three times the time to make up their mind and all the while you're losing money.

[Rodne Gold]

Net on an operation of the type you want will be no more than 15%, turning over 10k a month will be good after the 3-6-9 months it will take you to get there.
I recon if you get the thing really pumping , you looking at a take home, for yourself of 2-3.5k

In return you will have to conform to mall rules re trading hrs etc , will tear you hair out doing onesies and dealing with cretinous punters, have a single machine with no back up that you rely on , will have to spend design time over and above what you can charge for on difficult customers , pray like hell your settings and positionings are spot on cos onesies means no practice object, be a marketer , salesperson , accountant , corel designer and laser guru all in one. the list goes on.

D I think it's a viable thingy?------no, would I like to do that in my retirement yrs ? no. Am I trying to dissaude you?....yes/no
It would most likely be far more profitable to set up a home show , and go out and seek industrial and niche market work.
Te way to approach this is to have the capital investment to lose , ie spare cash floating around, and being prepared to lose it.

[Dee Gallo]

Steve,

I have approached this from a different angle than most. The key to my "success" is that I identified a niche market which consists of vintage collectors who have disposable income to give me. I provide a service which is available nowhere else in the world and people beg me to take their work. For this, I am able to make as much as I did before I retired, although this is not bragging since I was a teacher. I started very small, expanding my customer base over the course of 3 years to a point where now I have as much work as I like. I also produce a limited edition product which is appealing to high-end buyers and I don't do any advertising, just my website and word of mouth.

My first laser was a used one which easily paid for itself the first year. I have upgraded to 2 newer models (back up is essential!) one used and one new, which paid for themselves in the first 6 months.

My advice to you is to make sure you are very knowledgeable in whatever you choose to do, and make an excellent unique product. It takes time to master the design aspect, software and hardware, so plan on putting in many hours in the beginning as you learn.

We don't know where you are, and location might play a role in how much business you can get. All of my business is by email and mail, since I'm in a rural area. But I don't get annoying interruptions and have no expensive commute and can write off my overhead.

for what it's worth, that's my perspective, dee

[Frank Corker]

Well I think if you take a bit from all of the last five replies, then you have found your answer, it's bang on the button. There are quite a few who join here believing that they have hit the untapped gold mine, reality is that there is a long learning curve that needs to be taken.

Any number of members here who have had their laser for a year or more, will be able to show you some really nice stuff, they will make it look easy to do and there is a reason for that. It's the year of practice and trials.

If you have friends who are on the commercial side and you can get them interested in taking your stuff quickly from the outset and constantly, then you will have a good chance of success. If you relying on just selling them in the local shops you will have fallen for the belief of all those who arrived for the untapped gold mine.

I am fortunate that my work only needs to supplement a guaranteed income, I should imagine you will also be in that group as you have been a banker with a good pension scheme. If it is to supplement your pension you will have something that gives you an interest and potential for making extra money. If you are sinking everything into it as a full time job I would suggest that you hold your horses.

[Joe Pelonio]

I doubt you will find many (or any) members here with a mall store.

Look into the rent at those places, and you will see that even with the laser running 10 hours a day with steady business it will not pay that rent. I moved to my home when the business park rent for 1,900 SF hit $3,000/mo. Yes, it's less than that in many areas but malls are usually higher than business parks. Without that visibility, though, it's hard to attract the volume of business needed to make money on the gift type items. I'd like to do more of it since it's a lot more fun than the large volume commercial jobs, but those tie up the machine much of the time. For next summer I'm hoping to accumulate enough items to try a weekly summer "farmer's market" booth.

For me the income from the laser supplements the income from signs.

[Scott Shepherd]

Great points by all so far. I'd just like to add my two cents. I don't think you can make a living with a single machine like a laser. You have to understand people don't have the time/energy/luxury/money to run all over town these days. If you do laser engraving, but they need laser engraved key chains as well as their logo on coffee mugs, then you'll be sending them out the door with 1/2 of their order. So what's the incentive to buy from you, when the guy 5 miles down the road does mouse pads, coffee cups, laser engraving, etc.?

We started with a laser for a specific application. That works well, but it's no way to grow the market, it is what it is, more or less (that's oversimplifying it, but you get the point). So how do we grow? We have to be able to offer more services. The more you can satisfy your clients in one stop, the better off you'll be, but you simply can't do that with just a laser.

Some things that work well with the laser- Dye Sublimation, Vinyl Plotters, etc. would be great examples of being able to add items to your business.

Personally, I've never figured out how to make money from retail clients and photos. I haven't found the retail clients who are willing to pay me $50 to 'fix" the crappy photo they brought me, then another $50 for the item. People, in general, won't spend $100 on an engraved tile. Some people will, so I have heard, but I have yet to meet any of them.

[Steve Clarkson]

Thank you all very much for your insights. I guess I have been a little mislead.

Everything I have read (other than here) indicates that although there is a learning curve, engraving is generally like using a printer. I ASSUMED that engraving a photograph on a 12"x12" piece of granite or marble would be relatively straightforward and easy to do.....and the quality would be as good as what I saw when I visited Vytek (granted I did not see them actually laser that item, but the 3D subsurface items that they DID do in front of me seemed relatively easy to do). I also assumed that using a 60-75 watt laser, I could do a 12"x12" granite piece in under 30 minutes.......am I totally disillussioned here? So it's not just....scan, import and print?

I'm in Upstate NY and a kiosk in our local mall is going for $750/mo (but it jumps to $4,000/mo for Oct-Dec). If I could make $40 on that 12"x12" piece of marble......that's only 20 per month (less than 1 per day) to cover the kiosk. Granted I know that a kiosk location would be a challenge due to the venting issues. What am I missing? Does the average parent not want to spend $50 on a picture of their kid etched in marble?

Also, I guess I was surprised that there are so many business failures.....I haven't really read anything about that on the net and the number of used lasers for sale seems relatively small.

So if I don't go retail........does anyone have any good niche market ideas that they'd be willing to share with me? I went to Dee's website and was very impressed with her sets.....but obviously it must have taken her quite some time to develop that market.

Thanks again for all your comments and advice!

[Rodne Gold]

Try this for some less mainstream applications
http://www.sawmillcreek.org/showthread.php?t=22369

[Jim Good]

Steve,

With practice you can make a nice photo etching on marble, granite, or wood. That is not the problem. Getting the customer to agree to give you money to laser a picture on a substrate is the problem.

I think most people cringe at the thought of doing onsie/twosies in order to make some money. Most pictures from customers are not of good quality. Most have backgrounds that need to be removed or the engraving will not look good. Some people will give you a wallet size picture and want you to put it on a 12x12" tile. There is a lot of labor involved in getting the picture ready. If they only want one engraving, you will need to have it look good the first time. It wouldn't pay to go through a trial and error process and waste a couple pieces of marble to get one good engraving completed.

You'll need to find a subject matter that can be marketed nationally or at least regionally. That way you can make a larger volume of the same picture or lasered product. Join Laserbuzz's newsletters or email him and he can get you copies of some of his articles on making money with your laser. It may change the way you look at making money with your laser.

Having said all this, the bottom line is still marketing. You have to spend time finding your customers and doing a good job of marketing to them. Having an awesome product does you no good if the people don't know you have it or can make it. I think 10% of your success is attributed to your product and 90% is marketing! Some may say the 10% is generous!

You better be willing to beat the bushes.

Jim

[Joe Pelonio]

Thank you all very much for your insights. I guess I have been a little mislead.

I also assumed that using a 60-75 watt laser, I could do a 12"x12" granite piece in under 30 minutes.......am I totally disillussioned here? So it's not just....scan, import and print?

Power is speed for cutting. Engraving the power is less important, it's the speed at which the laser goes on the x axis and for a photo on a tile it may be an hour or more for an 8" square. The other problem is that when the dealer does a demo the photo is probably optimized ahead of time, and is not going to be like the ones the customer gives you that need a lot of work to prepare.

Also, your 20 tiles/month to pay the rent does not compute, you have to factor in the laser cost, laser maintenance cost, the tile itself, plus any wasted by errors, electricity, phone, advertising and other overhead.

Look for your own niche market, based on contacts you may already have. For example, you were in banking, so may have contacts to do name badges and desk name plates in an industry with high turnover in the entry levels. Someone active in local youth sports might want to get into trophies.

In my case there has been a lot of income from quilting templates, with contacts through my wife and organizations she belongs to, and her hobby providing me with some knowledge of the quilters' needs. I have also made many items for the classic and custom car industry, that coming from my (recently abandoned) hobby of classic and muscle cars.

[Mike Null]

Scott has made a very good point. A single piece of equipment will not produce nearly the income you need.

If you're still determined to open in the mall with a laser engraver I trust you're independently wealthy and don't require income from this business.

[martin g. boekers]

Greetings,

A few different thoughts. If you are serious about taking this on location check with environmental factors first. You have to have some form of ventilation for the laser, Some places may not let you set up there.

Are you close to a military installation? They usually have an engraving shop in their Arts & Crafts Center. There are all sorts of possibilities for base work. Awards and going aways happen frequently and consistantly.
There is always the possibility of setting up in the Base Exchange Area as a gift and engravig shop if they don't already have one. Even if they have an engraving shop on base there is still potential for a fair amount of work.

Coming from the banking business you probably have quite a few contacts that are already buying from an ASI distibutor. Check them out.

I do engraving of images to many substrates, I come from a graphic arts background and still it takes time to get an acceptable piece. If you have someone from a laser company doing a demo for you pick up a 12x 12 piece of granite from you building supply store (about $7-$8) you supply the image for them to engrave, make it a poorer quality image, flat not much contrast. and have them go through the procudure with you. That way you can see it happen and actually time the process.

One thing I would consider if price is an issue go with higher power as per larger table size. I can't speak for everyone else but it has been rare for me to use the 24x36 space I have available. Power is good!!

One other thing if you would like to go to location think about a second smaller table top model. That way you could take it to car shows, art fairs etc. Still they can be a hard sell for year round.

One last item as I am sure we all can attest to, It's not as easy as it sounds! Be prepaired to spend may long hours making things happen and to stay with the curve of new products and techniques. Most of all you have to enjoy it if you don't I might not be worth the effort.

Hope this helps a bit.


Marty