Lifestyle of rich and famous machine tool dealers

I was wondering about something. For a while, about 10 years, I did a little hustle on the side, which was buying and selling. (and some
minor repairs).
It always worked out nicely, making money with dirty hands (literally, not figuratively dirty). The profits varied from good to great.
I have a bit more free time from my day job and with that extra time, my income from selling stuff went through the roof. I am now wondering if I should, perhaps, scale it up and make it my day job, with a warehouse and all.
I could sell more of same $30.00-$1,000 stuff, just more of it, or with more expensive things, like smaller size CNC machines. Things that I could move with a flatbed trailer and a forklift. A little cleaning, minor fixes and a quick flip.
I have never been into asking for too much money, just enough for a quick sale.
The question that I have is, do you know anyone who does that sort of thing and makes a decent living. How does it work in "cold, hard reality".
i
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On 8/1/2011 8:01 PM, Ignoramus13162 wrote:

MY advice would be to wait a while. Manufacturing in this country has tanked again. My electronic assembly business was great through July, but we have almost no orders for August or any time in the future. The reason given by our customers is they have no orders for their products. At the same time electronic part distributors are saying the ordering of components has dried up.
We build small quantities of products for a major assembly house in Portland because it's not economical for them to build small quantities. They report their orders from their big customers has also dried up.
I am meeting with my GM tomorrow to plan for layoff and shorter hours for the crew. This feels like 2008 all over again.
I am sure anyone you might sell to will be holding onto their cash, right now. Keep watch of the level of manufacturing in the country and when it begins to rise again, then go for the refurbished tool business. People will buy the refurbished before any new tool. Ask me how many times I have been there!
Good luck, Paul
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Paul, this is what I want to sell, used stuff, not new stuff.
i
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    [ ... ]

    [ ... ]

    He understands that -- and says that businesses are not even in a position to buy used stuff right now.
    And consider the recurring cost of the mortgage on the warehouse you were talking about. It would likely force you to increase your selling price from what you are currently doing.
    You *might* sell to some hobby metalworkers, but not to businesses at the moment.
    So be careful,         DoN.
--
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I am not taking any mortgage. I would, however, have to pay taxes on the building and heating costs.

I believe, very strongly, that being able to sell almost anything, except toxic waste, is just a function of asking price.
Check this out:
http://goo.gl/52nRo
If you look at completed ebay listings for "CNC Lathe", priced between 1,000 and 20,000 (excluding "sherline" crap and the "machinre" asshole), about half was actually sold.
This is the kind of stuff that I have in mind.
I do not beileve that being a surplus dealer in a recessionary environment, is a bad thing. This has not been my experience two years ago, and this is also not what my economics education tells me.
i
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On Tue, 02 Aug 2011 19:50:21 -0500, Ignoramus2407

no mortgage = good. lowers your cost.
What you will have is rigging costs... buy a machine cheap, then pay big bucks to get it moved to your warehouse. Then buyer has to pay big bucks to get it from your watrehouse to his place. This can make even cheap machines expensive.
Unless you know a rigger who works cheap, anit none of them around here.....
Remove 333 to reply. Randy
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I have a bit of experience with rigging costs.
I would hope, of course, to have my own trailer big enough to move the machines, and means to unload. So, I would pay riggers only for loading on my trailer.
For a Bridgeport, the cost to load it on a trailer is around $50-75. For a small machining center, the cost of loading is $200 or so. Not horrible.

i
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On 08/01/2011 10:46 PM, Paul Drahn wrote:

Hmmm, very interesting! I have a small enough business that the fluctuations dominate, and I will go a month without orders, and then get 3 within one week. So, it is hard to identify trends until they are months old. But, your report does seem to fit with slow times at my business, also.
Jon
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On 8/2/2011 1:46 PM, Jon Elson wrote:

Hi, Jon. We decided to go to 4 day work week and lay one person off. Only small orders and prototype builds coming up.
Paul
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On Tue, 02 Aug 2011 15:46:05 -0500, Jon Elson

===============FYI http://www.ft.com/cms/s/0/b672a5a0-bc4c-11e0-80e0-00144feabdc0.html http://www.thisismoney.co.uk/money/markets/article-2021289/Obama-debt-deal-rally-hit-US-factory-slowdown.html?ito eds-newsxml http://www.ft.com/cms/s/0/b672a5a0-bc4c-11e0-80e0-00144feabdc0.html http://www.telegraph.co.uk/finance/economics/8675510/US-manufacturing-slowdown-casts-grim-shadow-on-global-economy.html and a whole bunch more
Google on <US manufacturing contraction OR slow-down> for last month for 1,440k hits.
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wrote:

Ah, your business is just like mine. Steady by jerks.
My other quote.
Business comes two ways: Too Fast. Too slow. Too fast is two times better.
karl
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Wow thats a lot to ask. There are many variables in what you want to do. I had the type of bussines you are describing in chicago for 32 years. If you want to talk about the details i will be happy to discuss them with you via email. Retired in 2003.
Best Regards Tom.
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I am very interested, send your email to ichudov at domain gmail.com.
Thanks
i
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On 08/01/2011 10:01 PM, Ignoramus13162 wrote:

Note that the machine tool business is extremely cyclical, and that probably extends to accessories and tooling, also. I know several people who have gotten into it in a big way, it looked to them like a full-time occupation, and then suddenly had the bottom drop out and no sales for many months.
I think anyone who can get a good reputation in circles of interested folks, knows their way around the internet, and can identify and fix up gear, ought to be able to make some money at it. Whether that can be a full income, I just don't know. You seem to be able to turn over a lot of stuff pretty quickly, and definitely have found sources to buy the stuff at what must be bargain prices.
I think a warehouse is pretty essential, as some items will just sit a while until the guy who needs that particular item comes looking for it.
Jon
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Jon, selling used stuff is not nearly as cyclical business as is selling new stuff. I went through this in 2008-2009. Machines that previously could be bought for $500 and sold for $1,000, could be sold only for $500. The silver lining, though, is that they could be bought for just $150. I loved 2008-2009.
i
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wrote:

Keep good records...and maintain a good relationship with your accountant.
--the IRS isn't particularily shy when it comes to seizing assets.
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On Mon, 01 Aug 2011 22:01:39 -0500, Ignoramus13162

I don't know any machine dealers personally, but I can tell you that there used to be a few of them in our small town phone book 25 years ago. Now there are none. It must not be an easy way to make a living.
Right now you're doing ok because you're in an industrial area and have lots of inexpensive product to choose from. You'll do OK for awhile, but eventually the majority of good deals for those attending auctions and factory closings will end.
On top of that, the bar to entering the business isn't very high. If the economy turns around there will be competition from other small dealers for the machinery, and your profit margins won't be as good.
I'm glad you're around to help those of us hobbyists, but don't quit your day job.
RWL
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On 2011-08-03, GeoLane at PTD dot NET <GeoLane> wrote:

Maybe I will do something else, then.

i
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What I mean is not that you convinced me not to do it, but that if reselling becomes less profitable, I would do something else.
I have been able to make money in a couple of pursuits, reselling is one. Websites is another pursuit and they have been paying me very well.
i

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wrote:

Sorry I didn't follow this thread, but keep in mind that the weakest part of commercial metalworking in the US is the marginal players who buy a lot of older used machinery. Downturns tend to kill off new, small, and otherwise undercapitalized shops first. The used machinery dealers who do well in downturns are the ones who sell relatively new machines, which solid buyers purchase to save on the price of new machinery. They're looking at relatively smaller marginal savings than someone who buys a 20-year-old Bridgeport or an obsolete CNC machine.
I don't know how well that pattern holds through non-machine-tool products, like welders and compressors, etc. But I tracked the figures on machine tools for decades, and the pattern is always the same. The bottom end always is the most vulnerable and the first to fall.
--
Ed Huntress


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