Hobby Machining Manufacturing Business?

Due to underemployment I like to do challenging hobby projects at home mostly because I enjoy it, but it's nice to make something that's useful
too. I like automating equipment, cnc, and that type of work. Trying to think what I'd like to be doing, I thought I'd like to design, build, and repair automated equipment and automate manual machines.
I've been thinking about putting up a small building for my home shop and start my own mini (low dollar home shop style) manufacturing business. When I come up with a project idea, such as RC varmint control, I could program the CNC machines to make the special parts needed and sell parts on the internet for others interested in similar projects. That project would need a camera to scope adapter, night vision infrared illumination, and a turret type mechanism to point at the target. When I make parts for myself, I could make a few spares and offer to sell them over the internet. If any of the parts became hot sellers, I could set up to produce more.
The work would all be done on the side as a hobby and if I didn't make a dime I wouldn't loose much since I'd be using the equipment I already have. The idea is that once I do the setup and programming, the CNC machine can make additional parts in a fraction of the time it takes to setup and make on manual equipment. So even though any HSM'ers could easily make a camera to scope adapter, they may not want to mess with it if they can buy one for $5 that I could make on my CNC lathe in 5 minutes.
Another incentive for doing this is that my son in now 10 years old and he'd be able to start running machines in a few years. He's interested in mechanics and electronics and I think it would be good experience for him. Best case, things could take off and my son could have his own business, worst case he'd have experience with manual and CNC machines, operating, programming, repairing, etc.
I know there are a lot of experienced business folk on here and thought there might be some helpful advise and or direction..
Thanks!
RogerN
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A few comments;
Putting up a separate building tends to raise the profile of the whole thing to the point where it hits the local building officials' radar. All of a sudden they take a LOT of interest in your activities, may tell you that you can't do "light manufacturing" in a residential area or similar.
Pricing your product is weird. As long as you are doing it as a hobby, just want to cover the costs of your equipment, make a few bucks for beer you get one set of costs/prices. As soon as you want to make real money, pay yourself some semblance of an honest wage, actually pay down the cost of your equipment, you get another set of costs/prices. The latter is usually at least double the hobbyist version.
Then there is the risk part. In our lawyer happy society, it's really a good idea to carefully review what kinds of things you make. Liability insurance starts looking like a good investment. The company I used to work for flatly refused to do any aircraft related work. Too much liability. (Of course the fact that there wasn't much money in it compared to our mainstream business had a lot to do with making us not do what we said we were not going to do!)
I'd suggest that you figure out if your 'business model' actually works before going too far. Pick one of your pet projects, make the parts in the current shop, set up an e-bay store, see what happens for a few months (or even a year). Keep accurate records of your out of pocket costs and your time. Things like your CNC program development time, your setup time to get a fixture mounted and aligned in the mill, the actual run time, the time spent boxing stuff and running off to the post office/UPS store, etc etc. See what the market will bear for pricing.
All that said, I know a fellow who lives in the country on a 20 acre hobby farm. Has a mail order ONLY business making high end race ATV parts. Has 2000 square foot office/warehouse/shop/garage to work out of. Makes a comfortable living while employing his son part time as a welder and his wife half time as the accountant/shipping clerk. Sounds like a decent life style to me!!! Go for it. Just make sure you know what you are doing before you commit a lot of time or money.
RogerN wrote:

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Sat, 14 Mar 2009 09:48:46 -0500 did write/type or cause to appear in rec.crafts.metalworking the following:

    It goes from being a hobby, to "work". I used to make little wooden boxes. People would say "why don't you sell them." For grins and giggles, I tracked my time. Five hours at minimum wage, no charge for supplies - forty bucks for a box about 4" square, and two inches high. Pretty, but ... would you pay $40 for that? Of course, as a hobbyist, I could use all hand tools, this was "occupational therapy" as much as anything. But I couldn't "produce".
    It has been observed that the best cabinet work is done by hobbyists. They have the time to select materials, be painstaking when setting up, and take the time to produce a beautiful finish. They can do all those things, because their day job pays the overhead.     The Professional, OTOH, has that overhead to meet. "Only customers pay wages", and "Until product goes out the door, checks don't come in."     OTGH, I remember a story of "The Man Who Never Worked." The guy carved and painted wooden duck decoys. It never was "work", as the children who often helped out learned, but a fun thing to do. The cliche is to find something you love, do it and the money will follow.
    So keep that in mind, and have fun.
pyotr
- pyotr filipivich We will drink no whiskey before its nine. It's eight fifty eight. Close enough!
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What I'm looking for is something like the "pet rock" craze of a few years ago, or the Beany Baby craze a little later. Something that costs a nickel to build but that people will spend $19.95 for. Over and over. Millions of times.
My high school civics teacher came up with something like that. He sold bags of sand at county fairs and craft shows. That's right. Bags of sand. Linen sacks filled with plain old beach sand. Big ones. Little ones. Medium ones. Nothing special about them at all. And his pricing was totally helter skelter. A 2" bag of sand could sell for $1 while its neighbor, same size, would have a $50 tag on it. People snapped 'em up like you wouldn't believe, paying any price for them. He only did this for a couple of summers because it was too much hassle traveling to all the craft fairs setting up and tearing down and dealing with "disgruntled customers."
-Frank
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On Mon, 23 Mar 2009 14:38:20 -0700, the infamous Frank Warner

Ooh, me, too! My Exotic Tees, Schnazzy Tees, NoteSHADES, and ToolyRoo products haven't made my million yet, but have kept me in a very unsteady and quite low stream of income for a decade and a half now. ;) I'd like to get that big hit once, too.

Disgruntled customers? Um, things like "My bean bag doesn't DO anything!" and "My bean bag doesn't talk any more!"?
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I didn't go into all the detail in the original post but I plan to put up a little pole building for my home machine workshop anyway. The house I used to live in has a 30 X 50 building and that is my home machine shop, it's about 5 miles away from my current house. Currently I live out of town and have around 4-1/2 acres with no outbuildings except a portable storage building.

Sounds like good advice, I don't plan to quit my day job :-) I plan to have a building for my home shop, it would be nice if it could be used for paying for the building, but I won't depend on it. I guess if I go at it with the primary goal of having fun, learning, and teaching my son, it will be worthwhile even if I don't make any money at it. On the other hand we might come up with some specialty parts that might make a decent second income.
RogerN
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You home insurance is not likely to cover a loss to the building or contents you are manufacturing from.
Wes
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Find the closest office and go have a chat with these folks.
http://www.score.org/index.html
While you may be willing to ignore a lot of things because you are unemployed at present, it is best for the long term if you pay attention to all the costs and aspects of running a business - it's not at all like having a job. If you can manage to have fun doing what you like and make money at it, that's great. If you turn a hobby you used to enjoy into a job you hate, that's not so great. If it sinks you into debt instead of making money, that really sucks.
If you don't already, you might go hang at CNCZone - lots of folks already doing the sort of thing you are contemplating (ie, making parts to make making machines easier and selling them to others making machines) - helps to know what the competition is up to.
Many folk that enjoy making things find that they hate selling them, doing paperwork required, etc. Or they fail to account for the actual cost of doing business and end up working for 25 cents an hour, or losing money outright.
Costs most people forget about include providing for heath insurance, retirement, self employment taxes, liability insurance, and business insurance on the premises - when it's not a hobby shop, homeowner's insurance will not cover you.
Check zoning and local laws before doing much at home. Get a dedicated business checking account and put all money from the business into it, and pay all costs of the business out of it - if you stick to that, you will at least have a vague idea of whether you are making money or not. Don't forget to pay taxes, or the IRS and your state tax folks will make things a lot more expensive for you. If your state has sales tax, you'll also need to pay them for any in-state transactions.
Good luck with it, but go in with your eyes wide open - most small business fail in the first 5 years.
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Roger, a lot of people seem to go the job shop route, and just take small quantity orders from local customers. Seems to be a low risk route, less risky than "developing your own product line". You already have all the equipment.
In fact, if I ever need to make something complicated, with CNC, I will contact you and will order from you if the price is right.
i
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Since I work full time plus overtime, I see a job shop as someone wanting a part yesterday and I'd be having to work long hours at the day job.
What I had in mind was more making things as a hobby and trying to sell the items over the internet. That way, if I'm too busy at work, and I sell out of an item, I simply put "Sold Out" on the item and make another run as soon as I get the chance. Also, since I'm relatively new to 3D CAD/CAM and CNC I would hate to take on a job for a complicated piece and then not be able to deliver what the customer wanted. I like the idea of coming up with the parts I want, figuring out how to best make the, then offer the items for sale after I have them like I want.
I have done some job shop machining in my home shop, some works out fine, others not so well. After I get going, get better tooled up, and better at CAD/CAM and CNC, then I'd be more interested in doing job shop type of work.
I wouldn't mind setting up my machines to produce parts for companies. Then maybe keep a few parts on hand to take care of the emergencies until I could run their parts.
RogerN
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That's a good point. I have seen many things sold on ebay that are made with CNC equipment, such as plasma cut signs made from stainless, etc. Very cool and involves no liability issues.
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RogerN writes:

It is a splendid idea, but consider whether people really want to spend much on what you'll be making. Making money in metalworking usually means making something that makes (or saves) money for your customer, not something that a consumer likes to have. There is no end of "opportunities" in goods and services that aren't made and aren't sold because few people will actually pay for them. And anything "robotic" has a high potential for this kind of impractical appeal.
The "better mousetrap" is hard to do because the old mousetrap (literally) costs near nothing to make, and can be retailed profitably for $1.
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but what you probably COULD sell is a do it yourself 5 axis CNC machine that would handle a 4 inch cubic workpiece
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