“We each have the same amount of time, but some make better use of the time they are given.”
There are a great number of individuals who know that they would rather move to a semi-automatic press but are waiting until they believe they can afford it. The truth is that are lots of shops that start out with a semi-automatic press, rather than wait. You may think that those who do have deep pockets full of cash to spend. That is not entirely correct. In many instances, they started off brokering the work out until they had the revenue and sales to support the investment.
Those that hustle in a market that can support an automatic can easily afford to make the move quicker than what most believe is possible. If there are already four shops in your target market area that have at least one semi-automatic press and are busy year-round, you are probably a candidate for a semi-automatic. If each of four shops is bringing in USD$1.3-million for a total of USD$5.2-million, and you invest in an automatic then there is the opportunity to create an equal sharing of USD$1.04-million each, without anyone getting seriously hurt financially.
What is the Investment
It depends on the size of the press and the cost, but you can count on investing between USD$20k to USD$60K. You will also need to invest in flashes, compressor, chiller, air lines, power, dryer, larger screens, which can give you a grand total of USD$35k to USD$90k. The monthly payments are easily affordable depending on the details of the plan and the amount of work you have coming into the shop. You will probably be looking at a monthly payment of USD$1,000 to USD$3,000. There is a rule of thumb that you should have 3 times the monthly payment in net earnings coming into your shop on a regular basis before you make the leap. And, you will want a contract that allows you to pay off the loan early without penalty.
The reasoning for an early payoff is that once you get the semi-automatic, you will open up your shop to more revenue and it is not unheard of for a shop with a single semi-automatic to bring in $110,000 a month in revenue. You don’t want to have to finish out a five-year payment plan if you can pay it off in one-year and forego the interest payments. An early payoff allows you to keep more money in your capital fund, and perhaps to buy that second semi-automatic quicker.
This Microsoft Excel Spreadsheet is set up to show you the difference in Time-Based Revenue Opportunity between 1 manual press and 1 semi-automatic. You can plug in your own numbers to provide a more accurate hourly production number for your unique shop, change the number of production hours per day, pieces per hour, net revenue of each, and days of production per year. Keep in mind that if you have two manuals (or more) you can quite simply increase the number of pieces per hour to fit the number of manual presses that the semi-automatic will replace.
Here we are only discussing the opportunity of time. It will be different for each shop, but in the example, if you can keep busy 5 hours a day, producing items that will net you just $2 each, you have the opportunity to earn an additional $783,000 USD. Remember we are talking about $2 net in both scenarios, so if you want to absorb the cost for extra personnel, utilities, etc., you will have to increase your pricing accordingly a few pennies higher. If you do not, then those costs must come out of the $783,000 USD. Your choice!
You can use the spreadsheet to compare many other things. For instance, if you have two presses and want to see the difference in revenue between the two presses just plug the numbers in. If you want to know the difference between the revenue brought into by two employees, just plug the numbers in.
I also use the spreadsheet to check production against net earnings to find discrepancies.
Related Article: http://billhoodconsulting.com/
Bottom line, get the Time-Based Revenue Opportunity Spreadsheet and start planning on your investment now.
Format: Excel v16.17
File Size: 16 kb
Print Length: 1 page
Publisher: Solutions Publishing
Sold by: ScreenprintBooks.com
Author: Bill Hood
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