3 Ways To STOP Your Machine Shop From Losing Money

Spread the love

In today’s age … every machine shop is looking for an ADVANTAGE. Most, however, are looking for the “home run” … and overlook the advantages / solutions they trip over every day. It’s not always that big hitter but a lot of little things that can contribute to your shop losing money and profits.

We know that the task of turning around a non-profitable shop is daunting … so we decided to help by focusing on some of the small fixes … that can mean big profit reversals. Hope they help and get you thinking … and turning your shop around.

#1 – Break the “CYCLE”


The Problem :

For many shops, every day is business as usual. The same cycle … day after day. Doing the same things … producing parts the same ways … working with the same clients. Unfortunately, it’s the cycle of losing money .. and most don’t know how to get out of it … or are scared to make a change.

Also unfortunately … doing things this same old way won’t turn things around.  Most shop owners simply think that by just getting more business … they can turn profits around and solve any and all financial problems. The truth is … the more business you bring in … the more the existing problems will be exacerbated.  Probably … the more money and profits will be lost … the hole will just get deeper.

The Solution :

The first step is to step back … take a breath … and realize “Houston, we have a problem.” The first act of fixing a problem is realizing that there IS a problem … and being 100% committed to working to fix the problem. But how do you identify the problem?

You need to look deeply at every aspect of your business. All the things as a business owner you do every day need to be assessed completely. Most times … you already know the things that frustrate you and that you know “aren’t right”. Each week … take one … focus on it … and it alone. Try to come up with some ideas either yourself or in group discussions to move it along … and implement at least two.

Will they work? Will they be the right solutions? Maybe YES … maybe NO. But as I mentioned above … you need to break the CYCLE. Sometimes just changing things up highlights another road or opens another door.

Realizing that there is a problem … and being 100% committed to trying to resolve it … is an monumental first step.


#2 – Chasing Your Tail


The Problem :

RFQ’s are coming in the door left and right … and your sending out bids and quotes to match. At this clip business must be good. Right?

There is a huge difference between winning WORK … and winning PROFITABLE WORK. If your shop is losing money … the first place to start looking is in your bidding process. OBVIOUSLY ( doesn’t really need to be stated does it? ) … quote to high you won’t win the job … quote to low you won’t make any profit.

The Solution :

WARNING … SALES PITCH AHEAD. You knew it was coming … but it’s true. Spreadsheets and an outdated quoting and estimating process is almost all the time a big culprit. NUF SAID about this. OBVIOUSLY … we recommend a trip over to HERE and explore some options we have to offer. Created from our almost 30 years in a variety of manufacturing environments … including running shops from small to high volume manufacturers.

TURN LEADS AWAY. That’s right. One effective way to “fix” your quoting and estimating process is to turn leads away. Not every job or RFQ you receive is the right job for your shop. As mentioned above … sometimes getting more work will simply lead to losing more money.

PRE-QUALIFY. Invest some time upfront in qualifying those RFQ’s. Ask about their budget … ask when they plan on making a decision … find out who the decision maker is and make sure you’re in contact with the right person. A little bit of pre-qualification will save you a lot of time and frustration with leads who will never result in business.

TRUST YOUR PROCESS. You need to have a cycletime and cost estimating process in place that you can trust. Take some time to compare jobs you won … against the costs of actually manufacturing and delivering the job. Time consuming I know … but definitely time well spent. Once you know that your bids are turning a profit … that’s a process you can trust.  When you work up the numbers … that’s it. That’s the cost … period. No undercuts. No additional discounts. If you lose the job … good .. you wouldn’t have made any money anyway.  Don’t spend valuable time running after profit-losing business … invest your time in winning profitable work. It makes no sense in bringing in work just to bring in work. The mantra needs to be ONLY PROFITABLE WORK. Maybe … just maybe … this will open other doors and shed light on other problems … some you want to see and some you don’t. But reality is what it is.

#3 – Manage Your Cash Flow


The Problem :

Bad cash flow will sink any size business. The work might be flying out … but if the money isn’t coming as fast or faster, you can’t fund the process. It’s that simple … and it’s that important. It’s a job nobody likes … but has to be done. PERIOD.

The Solution :

Think of innovative ways to get paid faster. Discounts for early / quick payment … but build these into your quotes and estimates … we don’t want to effect the bottom line.

CREDIT CARD PAYMENTS. This is the first and best alternative. Be proactive on this … and clients who choose this method are your #1 clients. Let the bank or CC company worry about dept collection … not your cash flow. Sure the “big companies” will have an issue … but there are plenty of smaller players that can fill the gap.

ONLINE STORE. OK I shouldn’t even have to mention this … but I will. Your shop MUST HAVE a web presence. NUF SAID. If you don’t … get one … period. And if you manufacture any kind of product that can be sold online … a web presence with an online store that accepts credit cards is ESSENTIAL !! I can’t emphasize this enough. IT’S HUGE. No cash flow issues here … no collection issues here … no chasing orders here … the web site does all the work … 24/7. Even getting real innovative … accept RFQ’s through the site and have clients accept and pay through the site. There are really too many points and roads to point down here … but your business mind should be scrambled by now with all the innovative and new ways to grow your business and better manage at least a portion of your cash flow.


OK … it’s a start. Just some initial ideas we have experience with … and some solutions we found effective over the years. But hey … you’re a business owner. You’re an entrepreneur. You just need a shot in the arm. Hopefully … we have provided some food for thought … some stimulation … some energy. NOW GO GET ‘EM !!

Kenney Skonieczny – President

Kentech Inc.

Kipware® software is one of the fastest growing brands in machine shops around the world because it solves REAL WORLD problems.




CAD/CAM is ONLY ONE option for CNC programming.



Stop Guesstimating and Start Estimating.



Let ALL your CNC’s operate seamlessly.