How to start, establish, and grow a welding or manufacturing business
Advice from someone who’s been there, done that
Many welders and other highly skilled workers likely have thought about going into business for themselves, but lacked the business knowledge required to launch a successful venture. A new book endeavors to provide that knowledge.
After observing that many welders who own their own shops also work for someone else, David Zielinski, owner of www.gowelding.org, saw the need for practical information about building successful welding and manufacturing businesses from the ground up. His own experience convinced him that this subject had never been covered properly and inspired him to write The Welding Business Owner’s Handbook (Figure 1)
Published in September 2013, the how-to book is a candid, comprehensive guide covering all aspects of ownership—deciding what type of business you want to build, getting the right legal advice, analyzing your market, developing a marketing focus, networking, putting together a business plan, hiring, and utilizing available resources. It also presents an overview of niche markets to help you zero in on those you’d like to serve.
Zielinski recently answered some questions for thefabricator.com.
Question: Is there an ideal candidate for a welding business owner?
Zielinski: Any welding or manufacturing business owner needs to be outgoing and not scared of rejection. You need to have an uncontrollable desire to succeed and enjoy dealing with people. As I wrote in my book many times, people buy from people they like, and that is a fact of life. To succeed in this or any business, you need to like going out to introduce yourself to potential customers, spending countless hours bidding on contracts, and after all that, your efforts may not pay off for a long time. Besides being a people person, you need the creativity to come up with new or innovative business ideas that nobody else is doing. Any business in general is a gamble, and you need to keep a laser-like focus on the ultimate goal, which is locking in contracts at all costs!
Question: Conversely, what type of individual is not suited for the role?
Zielinski: I hate to be the bearer of bad news, but here is the truth. Most welders, fabricators, and machinists are not good candidates to run a business. Craft professionals don’t like getting involved in politics, nor are they the outgoing sales and networking types. If all you want to do is weld or fabricate, then a business is definitely not for you.
Ask yourself this: Am I willing to spend the next few months knocking on the doors of strangers? If the answer is no, then a business is not for you. Welders need to understand that if you don’t have a paying customer, then how can you expect to strike an arc? This simply tells you that a business is not for you; save your time and money for things that you enjoy.
Question: How well should a potential owner be able to weld before considering opening his or her own business?
Zielinski: It all depends on where they are starting from and the industry they want to service. Since this is a tough question to answer, I will give a couple of examples: starting a one-person mobile welding business and starting a metal fabrication shop. The book also covers starting a manufacturing business.
A One-person Mobile Welding . I would say you should at least be able to pass a 6G E6010 open root with an E7018 fill and cap welding certification, and a stainless 6G open root TIG all the way out certification. At the very minimum, you should be able to pass a 4G welding cert.
A lot of welders don’t want to hear that, but you need to remember that as a one-man shop, there is no one to turn to for help. You are on your own, and you really need to know what you are doing. Besides that, chances are that you are going to get some jobs that will require you to weld in some really tight places and sometimes with mirrors. It is just the nature of the business.
A Metal Fabrication Shop. If you are starting a one-person metal fabrication shop, you might be fine with a 3G MIG and stick certification. In this case, the business is more about fabricating and building products.
On the other hand, if you have the financial freedom to hire welders and fabricators from day one, then you don’t need to know how to weld. However, you should have a strong enough industry background to understand the issues that come with working with metals. It’s my personal opinion that many engineers and project managers working these days are not qualified to manage many of these jobs. They, like a good business owner, reached their positions by networking and selling themselves to the right people, but are not truly qualified for these positions. For example, not properly understanding metals, they may rush jobs that shouldn’t be rushed, such as welding chrome pipe.
When it comes to welding skills, it is not easy to give a one-size-fits-all answer simply because welding is involved in so many industries. You could never expect the same skill level of the owner of a mobile welding business that serves nuclear power plants to be the same as the owner of a shop that builds trailers for Jet Skis. They each have different standards and ultimate goals—one is a quality-driven service and the other is a production rate- and price-driven industry.
On the other hand, you don’t even need to know how to weld as long as you have been around the industry long enough to catch those hidden issues that need to be addressed before bidding on certain jobs. For example, you might charge four hours of labor to weld a 5-in. pipe, but welding that same 5-in. pipe in a tight spot might require 25 or more hours to weld. As awelding business owner, you need to have an intimate understanding of your niche industry; otherwise, you’ll put yourself out of business!
Question: On average, how long does it take for a new welding business to become profitable?
Zielinski: Again, this is a very tough question that requires a few examples to answer: Independent contracting; mobile welding business; and fabrication shop.
Independent Contracting. This is the best case and easiest way to get started as a welding business. It is as easy as hiring yourself out as an independent contractor to local businesses that need temporary help. All you need is the right insurance and basic personal protective equipment (PPE). For under $1,000, you could become profitable in just a few days.
Mobile Welding Business. This type of business typically becomes profitable in about six months. A lot of expenses need to be recouped before you see a free and clear paycheck. Your costs are the vehicle, welding and cutting equipment, insurance, living expenses, and advertising. You need to remember that the more you spend on equipment, the longer it will take to turn a profit. You can buy a used rig and equipment and cut your break-even point by a significant amount of time or spend $100,000 on a rig and take years to break even.
Fabrication Shop. Fab shops need a lot of start-up capital, so the point of profitability can range from a few months to at least five years. If you are building boat T-tops and aluminum boating accessories, then it may take only a few weeks to break even. If you are fabricating pressure vessels, the necessary equipment can cost millions, which means it can take 10 years or longer to reach profitability.
If you are planning to open a welding business, you need to develop a business plan. Most welders think business plans are a waste of time. The truth is, a business plan will give you a very good idea about how much money and time you need to establish your business.
Question: When it’s time to hire employees, what is the best way to find them and to figure out how much to pay them?
Zielinski: It’s time to hire when you find yourself spending more than 40 hours a week welding and fabricating. While this is an excellent sign that your business is doing well, it’s also a dangerous time, because you are so busy servicing current customers that you lose sight of attracting new customers.
I do not suggest hiring employees in the traditional sense. Besides making the financial commitment, you also need to realize that committing to a full time employee is also committing to support the person and his family. As a business owner you need to understand that these people will depend on you for their survival and that should not be taken lightly.
I suggest hiring independent contractors or using a staffing agency. In my opinion, independent contracting is the future of jobs. They are self-employed workers that typically are paid more than traditional employees but are legally responsible for themselves. They work for a flat hourly rate agreed upon in a contract and don’t cost you anything in terms of insurance or other administrative fees that traditional employees require. They do not receive overtime wages, and once the job is done, there are no unemployment benefits.
Contractors earn more, but hiring them actually saves the business money and affords it the freedom to hire as many workers as needed. Contractors typically are aspiring welding business owners and are highly skilled.
For short bursts of extra work, I also would consider using a staffing agency that provides temporary workers before committing to any long-term financial obligations.
The hourly rate can be difficult to determine because of the many different areas and skill sets in welding. As a basic guideline, I would offer the going welder overtime rate for your area and industry, which should be somewhere around the time-and-a-half rate for the type of work to be performed.
Some suggestions for finding welders are through word-of-mouth, local schools, welding inspectors, welding supply stores, and publications such as Industrial Projects Report and Industrial Tradesman. These are all resources for welders who want to own their own businesses and are looking for a foot in the door to working for themselves.
Another alternative is borrowing welders from other welding businesses that are slow and giving that owner a small markup on the hourly rate. In this case, you give a struggling shop a break and some much-needed income. This way, everybody is happy!
Question: What is the downside to starting your own welding business?
Zielinski: As with all businesses, the downside is long-term commitment. This is a financial and geographical commitment that once you start, you can’t just get up and move to another place. As an employee, you can quit and walk away at any time. Business owners don’t have that option, because it takes a lot of time, money, and work to start a business. Besides, once you get a taste of the freedom and money that can be had, it becomes an addition.
Question: What do you believe is the biggest reason a new welding business fails, beyond the obvious—no customers?
Zielinski: Most welding businesses fail because they have no real business plan. In my book, there is a subchapter with a title that sums up business plans: If you fail to plan, then you must plan to fail!
Think about that. Do you just work as much as you want and spend whatever you feel like? No. We all budget for what we need and want for the amount of money we earn for a certain period of time. Planning for business is no different than planning for life. We know what we need to earn and we spend accordingly to what we can afford. Many new business owners simply fail to plan, and that almost always ends in a plan to fail!
Question: What aspect of business do new owners overlook the most?
Zielinski: Customers are everything! Most welders use a business as an excuse to buy personal toys—aka, welding equipment—and forget that as a business owner, you are no longer a welder. You need to focus on getting the business in the door the same way you go about finding a job by marketing your resume to hiring companies. The reality of a welding business is that you need to be a good salesperson who goes out there to meet new people every day.
Just remember this: You can’t strike an arc if you don’t have a paying customer who needs your service.
Question: What is the single most important piece of advice you can give would-be owners.
Zielinski: If you want to start a welding business, you need to have a good business plan on how you are going to make it happen.
My book is loaded with information on how to make it happen, ranging from small, start-up independent contracting jobs all the way up to securing multibillion-dollar government contracts for well-established businesses. There’s a section on getting free government help, such as meeting face-to-face with other successful business owners that already have done what you are trying to do.
The Welding Business Owner’s Handbook is available directly through CreateSpace (an Amazon Company) and at most online retailers, such as Amazon and Barnes & Noble. Schools, welding suppliers, and bookstores can contact Zielinski directly at firstname.lastname@example.org for special pricing.