Setting up a welding shop: The basics

Now that the economy has hit a low, and unemployment has risen, a lot of people or looking at alternative means of income. Granted, a lot of people will find new jobs somewhere, but others will be forced to create their own job by becoming a small business owner, and finding their "niche". One of the “niche” areas that many people are finding wide open is the need for small welding shops in their area. Of course, many areas are served by large machine shops with $100.00 an hour rates plus materials. However, the average person may not find that a reasonable charge to repair a small household item or to have a small project fabricated, since a small project could easily run into the thousands of dollars. There is a clear need for small repair shops that can handle small jobs, without incurring the same kind of expense that a customer would find at a large machine shop. Some machine shops will actually turn down work if it doesn’t meet a minimum dollar amount. If you perceive a need in your area for a small shop that can customize small repairs, and engineer small projects for a customer, then you may be thinking about what you will need to get started.

Outside of the obvious need for a welder, you will need to see how many welding processes you can afford to have, and you must evaluate the space you have to have them. TIG welding is probably the most expensive process to have in your shop, but it is also the most lucrative, especially when it comes to welding aluminum. MIG of course seems to be the staple found in almost every welding shop. Stick, is the preferred choice for mobile repairs. A plasma cutter is popular for cutting metal, but is not a requirement for many small shops, as long as there is an Oxy/Acetylene setup available. Each process carries with it a demand for space, money, and skill. Be sure to evaluate which processes best fit your operation best in the early planning stages so that you can go after customers that have needs that you can fill with the processes you can provide.

Shop location is another consideration. In a rural setting a small welding shop may be a small pole barn or even a home garage. In more urban areas, it may be a small store front with a side roll up. Or even, the welding operation may be completely mobile with an Engine drive welder providing both welding power and electrical service to the job site. Whatever the location, or arrangement, a well equipped, convenient to access shop and operation is critical to having credibility. Keep in mind legal requirements for insurance, business license and applicable permits and general code requirements when in the planning stages as this will require a significant amount of capital that is often left out of the business budgets when it comes to writing a business plan and assigning an overhead cost to a shop location.

Well-equipped shops often bring customers back for more business. Even if you don’t have the money for the most expensive tools, used, or lower end welding and machining tools can suffice. If a customer goes into a shop and sees maybe one name brand welder, and an oxy acetylene torch, it may not convey a lot of confidence in the customer’s mind. Rather, most customers like to see a fully equipped shop with the expected pieces, like a band saw, chop saw, stationary grinder, hand held grinders, full length floor drill, jacks stands, welding table, small lathe, vises, clamps etc. Especially don’t forget the all important wrench sets, pry bars and hammer sets. As long as these work, name brand won’t be important to the customer. While it may not be possible to sink a chunk of change into all these at once, prioritize your purchases and leverage your buying power at estate sales, and discount tool places so that you can get the most shop “bling” for your money.

Overhead costs are the most manageable when they are in the planning stages. When you are planning for them, then, you are most likely to bid correctly. You may not win every bid, but having a realistic dollar figure for what it takes to operate the shop by the week or by the hour will save you a lot of heart ache and worry. Shorting yourself on bids by forgetting that monthly insurance premiums are due, and the need to upgrade equipment to finish a job won’t help you stay in business, though it may bring you a job you can’t afford to finish. This is never good and should be avoided if at all possible.