Do new manufacturers create P&L projections or just say hell yeah and start making parts?
@joelmfg - start making parts - deal with capacity issues - take profit, invest in more capacity - make more parts
They start just making parts, and they are hyper competitive because their costs are low... Then they grow. Then the ERP gets installed. Then a few degreed engineers show up. Then some types with management backgrounds show up. Then the whole thing becomes the same goat rodeo of bullshit where the ratio of actual value creators to parasites becomes 1:2.75 and the whole thing becomes like the very bloated, stupid, dumb facilities you originally competed against. Owner tends to get rich tho.
@joelmfg hell yeah then panic hire someone to do p&l when you run out of money 🫡
@joelmfg “No plan survives contact with the enemy” I did it cause it’s helpful to know where your sensitivities are. (Hint it’s probably labor, capital costs, and product price)
@joelmfg Projections only get you so far. You don't know what you don't know, and real actual "money-in-hand" demand is another question. So yeah, just start making parts.
@joelmfg In your case, I would just say I start making parts. Given the cost that we talked about.
@joelmfg List out your fixed costs = A Determine your capacity (eg man hours, machine hours) = B Divide A/B to get a rate (doesn’t include direct labor wages!) Now you can budget and measure absorption, and estimate jobs, and your P&L can be constructed from job estimates. Then hell yeah.
@joelmfg b Because we know from experience, what bits only players are still learning, the projections are only interesting to those who have no building experience.
@joelmfg Just hell yeah and go. Numbers are pointless.
@joelmfg New? No. I started when attempting to get over the 1M mark, helps cut wasteful spending and helps to plan for bigger equipment purchases.
@joelmfg The projections help set your pricing, but they are also wrong the day after you write them down. Go through the exercise, make the rough cuts (see what I did there?) and then iterate from there. If nothing else, use them to get your gross margin correct. 🫡 🇺🇸
@joelmfg Ah, just a purchase order and rented machines to start with. We then figure out everything else😅