Partnering with the big guys

Over the last eight years, a lot of smaller shops have closed their doors. Now that we are in something of a recovery, a lot of them are thinking about getting back into the game. But start-up capital is not so easy to come by.

One guy I know had sold off most of his equipment and given up his shop space as part of his survival tactics. When he started thinking about going back into business, he found that he was unable to borrow money or get leases on new equipment. He thought about trying to hire on with one of the bigger survivors but then he had an idea.

He worked up a proposal which he presented to several large shops. These shops were pretty much production shops, geared toward mid-priced, large volume work. They needed custom capability to meet the demands of the more discriminating clients that were beginning to reemerge.

My friend's proposal was that the big shop would set up a small satellite shop in which he would produce custom pieces that did not fit into the work flow of the production lines. He would bid the work as an independent contractor. At the same time he would be free to solicit other work as time allowed and, over time, he would buy the satellite shop while continuing to provide the larger operation with the same services.

If done right, a win/win all the way around.

D.D.