I really do appreciate the fact that Jay does all of this for the machinist community.. he doesn’t have to do any of this. The fact that he takes his time to pay someone to document all of this and put it together for our educational purposes really makes me appreciate guys like him, John saunders, titan etc. we are all in this together
Thanks for putting your story together. You said on Within Tolerance podcast this might be too dry or boring? Nope, very informative experiential reference material.
Wow, really well done Jay. I can appreciate everything about this video. I pulled a permit for my new shop in 2019 and only the last year or so have I been able to continue moving forward. Hopefully I will have the shop complete this year 2023. It’s a lot. Especially with these wired times We are in. Thank You for sharing. It’s coming out really beautiful
Awesome video! Your transparency on the business side of things is so valuable to me as I'm trying to learn how to get my own products off the ground. Thank you!
Jay - I really enjoy this video series. I can relate to the immediate concern that March 2020 had over everybody. I had a check in hand and was ready to sign a lease. I was moving my Mini mill out of my home garage and into an industrial unit. I slammed on the brakes. I did not go through with that lease, but six months later signed a lease for a different unit. I've been here for a couple of years and recently signed another lease term. I've upgraded the Mini mill to VF4SS. I'm ready to take over the unit next to me if they ever vacate. I want to hire some help but have concerns going down that new road. That's my point Jay. If you are ever inclined, I think a video(s) of what that was like for you to bring in your first employee (John if I remember correctly). I'm here in CA so the requirements and technical insight that you have would be invaluable! Thanks for a great video!
Awesome video. But from a Cashflow standpoint I don’t quite get the negative view towards the sba loan. If you have 15% less invest upfront that’s 375k cash on the 2.5mil loan. Invest that cash back in the business with a return of 20% per year and you have the additional 2.5% cost on the loan back within a year. After that you keep making a return on that 375k you invested.
Gross oversimplification. Everything works perfectly on paper. The larger a company grows, the more the law of diminishing returns comes into play. If $375k returned 20% I'd take out a loan at 5% and play the spread.
@@PiersonWorkholding I totally see your point and of course it isn’t that simple in reality. But a 20% roi on a cnc means it pays for itself in 5 years. That is not unrealistic. Of course that growth in capacity has to be supported with the rest of the operation. Non the less really looking forward to the next episode!
Thank you for sharing your experience. I have begun the process of searching for a new location. Your video has provided me with valuable insights into the potential outcomes. I appreciate your help.
great video covering what it takes to buy your own machine shop building. I went thru both SBA loan process on my 1st building and conventional on my second. I Can easily relate to this video
Neat. We live in such strange times it's really stressful to plan and make future capital and leverage choices. If inflation stays high, the 25 year loan looks better and better, but if it doesn't getting the loan paid off does. Too bad we have a bunch of grown up toddlers running the country and also Cali fiddling with the knobs.
i really like that will dude, i would do business with him anyday, and that covid thing, i get you got nervous, but life moves on, it always has, always will .. and button down the hatches is not always the answer, sometimes you got to fight though it ... i lost my job 2 times due to covid, but i got a new job 3 times .. so just keeping moving forward
I would highly recommend going to a bank instead of a broker. For example I only bank with Wells Fargo both personal, business and investment. Your personal business banker will easily handle your building finance.
There's no advantage to going to a captive lender like your bank. They work for themselves, not you, especially Wells Fargo! Competition keeps the world honest.
...said the sleazy Wells Fargo banker, lol. @@PiersonWorkholding you're absolutely right. Why go to a bank that can monopolize your transaction without any competition.
I don't fully understand, though, it seems like the SBA path is more for people that don't have the 25% cash ahead of time right? They're different for different use cases? I get it you've got the down, and the other way sounds 'not for you' SBA's are usually for new businesses trying to get started, or very small businesses with very little capital to use for down payments etc.
@@PiersonWorkholding Maybe I didn't explain myself very well. I mean some people may not have the options of extra cash on hand you had, and that's the only option for them. I guess what I'm saying is you're very good at money management to be in a place where you have those options. I've yet to work with any government organization that's fast, efficient and well loved anywhere on the planet, but they still fulfill some needs that people in specific situations can't really get out of in more 'conventional' methods. I do appreciate all you're sharing on this, though as it's very interesting and informative.
@@PiersonWorkholding In fact to explain that point, as a disabled veteran I didn't have enough money to buy a new home myself (many years ago) for my first home. On the other hand there are government programs for veterans that help them get funding to buy a home. VA Loans. They got me into my first home. I would never have been able to if I hadn't. This process added hundreds of extra pages of documents to my loan, and made closing take an extra couple of weeks, and required a special VA qualified inspector that are harder to get to the location BUT I still got that home, and would never have been able to do so without that federal government program. So, all the things you complained about, exist here too, but I didn't have the luxury you have of all that extra capital.
Good discussion. To summarize, if one has the cash for a larger down payment, conventional is a better option. If not, an SBA loan is an option if one cannot save up. Good financial managers would also argue that maybe one should not be considering a purchase if they cannot set aside money effectively.
"Economist" question: You borrow $1.00 and have to pay back $1.03. You used to sell a product for $1.00 but it now sells for $1.10 and you give $1.03 to the lender. What do you call the $0.07 spread?
I see that you have HAAS machines. According to all the youtube experts - most of whom on abom79s channel, have made it very clear HAAS machines are complete garbage. So, I'm curious what would be your honest assessment of the HAAS machines?
There are machines for every stage of business and every type of part just like there are cars for different purposes. I relate Haas machines to Toyota vehicles: good value, works well for 90% of parts. I'd recommend a Camry as a daily driver and a Porsche for the weekends.
@@PiersonWorkholding I think toyotas are great, or at least they used to be, not sure if anything has changed. Toyota put me through auto school back in the early 90s. I'm just going over the idea that people seem to go overboard when decrying HAAS as total pieces of garbage. I know you can spend 100s of thousands of more for better and best machines but what small business has that kind of money to toss around? So my point is, I think those lemmings on aboms channel have personal problems and HAAS machine are just fine.
My guess is that those that criticize Haas never had to write a check for ANY machine. Haas machines are a great value and light years better than any manual machine on abom's channel.
@@PiersonWorkholding You hit the nail on the head. I was thinking that. Sure I can get a great machine and pay a million bucks for it too. LOL. Thanks for the input.
You screwed up by not going with the SBA loan. When covid happened, they waived all loan fees and PAID YOUR PRINCIPAL AND INTEREST PAYMENTS FOR OVER TWO YEARS!!!! People complain about the PPP loans, but that was nothing compared to the SBA payments. Some people had 30k+ monthly payments that were erased. These payments were automatic for all SBA borrowers. No application and no special qualifications required. It was a crazy time...
@@PiersonWorkholding Nobody could have guessed that they were going to do that. Your description of the timeline of the loan made it sound like you got it after May, which is when they had made the decision to make the payments.
You are insane for staying in California, Ventura county nonetheless.. Texas and other states that don’t require income tax and are much more business friendly.
Deere literally paid for a brand new factory in 3 years by moving it from Ohio to Georgia because the taxes were that much less. I suspect Jay could easily have another 20% money for his business if he was located in a better business environment.
What's really insane is to put money as the single most important factor in business. Vendor base, skilled labor, infrastructure, weather, desirability, education, etc are far more important factors to consider than the extra state taxes.
The goal of simply saving money is know as a scarcity mindset. Living in an economic and manufacturing powerhouse like California is what top entrepreneurs value. See: Silicon Valley
✅ Tired of making 1 part at a time? 👉 store.piersonworkholding.com/Pro-Pallet-System_c_10.html
I really do appreciate the fact that Jay does all of this for the machinist community.. he doesn’t have to do any of this. The fact that he takes his time to pay someone to document all of this and put it together for our educational purposes really makes me appreciate guys like him, John saunders, titan etc. we are all in this together
That's exactly why we do this. We're here to move manufacturing forward any way we can. - JP
Great video! I appreciate how transparent you are! It's super cool to watch this, cus my shop is at a earlier stage than this
Great! That's why we're sharing our story. Hopefully it will help inform and inspire other entrepreneurs.
Hopefully the amount of Pierson gasket we purchase helps out 😅
Thanks for putting your story together. You said on Within Tolerance podcast this might be too dry or boring? Nope, very informative experiential reference material.
Good to hear. This was the second edit. Trust me, the first one was boring. 🥱
Love how the lighting works with the color you chose for the walls. Looks awesome! 👌
Wow, really well done Jay. I can appreciate everything about this video. I pulled a permit for my new shop in 2019 and only the last year or so have I been able to continue moving forward. Hopefully I will have the shop complete this year 2023. It’s a lot. Especially with these wired times We are in. Thank You for sharing. It’s coming out really beautiful
With lumber prices returning to a more reasonable level, 2023 is a great time to do a build out.
Awesome video! Your transparency on the business side of things is so valuable to me as I'm trying to learn how to get my own products off the ground. Thank you!
Jay - I really enjoy this video series. I can relate to the immediate concern that March 2020 had over everybody. I had a check in hand and was ready to sign a lease. I was moving my Mini mill out of my home garage and into an industrial unit. I slammed on the brakes. I did not go through with that lease, but six months later signed a lease for a different unit. I've been here for a couple of years and recently signed another lease term. I've upgraded the Mini mill to VF4SS. I'm ready to take over the unit next to me if they ever vacate. I want to hire some help but have concerns going down that new road. That's my point Jay. If you are ever inclined, I think a video(s) of what that was like for you to bring in your first employee (John if I remember correctly). I'm here in CA so the requirements and technical insight that you have would be invaluable! Thanks for a great video!
Jay, thanks for taking us on your journey of buying and moving to a new facility. I find it very interesting in what needs to be done to do this.
Glad you enjoyed it! Lots more to come.
Awesome video.
But from a Cashflow standpoint I don’t quite get the negative view towards the sba loan.
If you have 15% less invest upfront that’s 375k cash on the 2.5mil loan.
Invest that cash back in the business with a return of 20% per year and you have the additional 2.5% cost on the loan back within a year.
After that you keep making a return on that 375k you invested.
Gross oversimplification. Everything works perfectly on paper. The larger a company grows, the more the law of diminishing returns comes into play. If $375k returned 20% I'd take out a loan at 5% and play the spread.
@@PiersonWorkholding I totally see your point and of course it isn’t that simple in reality.
But a 20% roi on a cnc means it pays for itself in 5 years. That is not unrealistic.
Of course that growth in capacity has to be supported with the rest of the operation.
Non the less really looking forward to the next episode!
Ill bet getting contractors on board that quickly wasnt easy, thanks for sharing. Charles
Thank you for sharing your experience. I have begun the process of searching for a new location. Your video has provided me with valuable insights into the potential outcomes. I appreciate your help.
Awesome story Jay. I just got my second machine in my garage this month and went with your MPS for it. Love seeing your journey.
great video covering what it takes to buy your own machine shop building. I went thru both SBA loan process on my 1st building and conventional on my second. I Can easily relate to this video
Thanks for being very clear about how bad the SBA loan option is 👊
Always great info for us new shop owners. Thanks Jay! 💪🏼
Neat. We live in such strange times it's really stressful to plan and make future capital and leverage choices. If inflation stays high, the 25 year loan looks better and better, but if it doesn't getting the loan paid off does. Too bad we have a bunch of grown up toddlers running the country and also Cali fiddling with the knobs.
Congratulations new building. Keep up good job🦾🦾
Great series and info!
Went through all this myself just before covid. Not easy kid!
good video mr pierson..hello from spain and thanks for your time
i really like that will dude, i would do business with him anyday, and that covid thing, i get you got nervous, but life moves on, it always has, always will .. and button down the hatches is not always the answer, sometimes you got to fight though it ... i lost my job 2 times due to covid, but i got a new job 3 times .. so just keeping moving forward
When I looked at the SBA loans I went running. They hold you hostage for x amount of years and you can't do anything. Go private bank for sure.
Wow, no thanks! Glad I made the right decision. Thanks for watching!
Just got done doing a 504 loan for a building. Not my my favorite but it worked for us at the time.
Congrats Mark! Moving or expanding? - JP
Awesome video Jay. Ciao, Marco.
What is the size of this building ?
Doesn’t the SBA require unlimited personal guarantee?
Love this series
I would highly recommend going to a bank instead of a broker. For example I only bank with Wells Fargo both personal, business and investment. Your personal business banker will easily handle your building finance.
There's no advantage to going to a captive lender like your bank. They work for themselves, not you, especially Wells Fargo! Competition keeps the world honest.
...said the sleazy Wells Fargo banker, lol. @@PiersonWorkholding you're absolutely right. Why go to a bank that can monopolize your transaction without any competition.
1% of your total loan ????
Yes, 1% of the total amount borrowed.
I don't fully understand, though, it seems like the SBA path is more for people that don't have the 25% cash ahead of time right? They're different for different use cases? I get it you've got the down, and the other way sounds 'not for you' SBA's are usually for new businesses trying to get started, or very small businesses with very little capital to use for down payments etc.
Yes, SBA is very much for a company that doesn't mind the extra fees, delays and paperwork.
@@PiersonWorkholding Maybe I didn't explain myself very well. I mean some people may not have the options of extra cash on hand you had, and that's the only option for them. I guess what I'm saying is you're very good at money management to be in a place where you have those options. I've yet to work with any government organization that's fast, efficient and well loved anywhere on the planet, but they still fulfill some needs that people in specific situations can't really get out of in more 'conventional' methods. I do appreciate all you're sharing on this, though as it's very interesting and informative.
@@PiersonWorkholding In fact to explain that point, as a disabled veteran I didn't have enough money to buy a new home myself (many years ago) for my first home. On the other hand there are government programs for veterans that help them get funding to buy a home. VA Loans. They got me into my first home. I would never have been able to if I hadn't. This process added hundreds of extra pages of documents to my loan, and made closing take an extra couple of weeks, and required a special VA qualified inspector that are harder to get to the location BUT I still got that home, and would never have been able to do so without that federal government program. So, all the things you complained about, exist here too, but I didn't have the luxury you have of all that extra capital.
Good discussion. To summarize, if one has the cash for a larger down payment, conventional is a better option. If not, an SBA loan is an option if one cannot save up. Good financial managers would also argue that maybe one should not be considering a purchase if they cannot set aside money effectively.
thank you very much for sharing this
Thank you for watching!
8:40 Oh snap the first thing I thought was "He just spent all that money immediately prior to the COVID-19 pandemic." Then the video continued...
It was a nail biter!
This was a BAD ASS video! WAIT A MIN is it in the state of California? :/ You still scored big!
where did you get 2.9%
From 2020
As an economist - I’ve never heard another economist say “free money” unless we are making fun of someone thinking anything is free!
"Economist" question: You borrow $1.00 and have to pay back $1.03. You used to sell a product for $1.00 but it now sells for $1.10 and you give $1.03 to the lender. What do you call the $0.07 spread?
How isn't this on Netflix yet?
I think they heard I cancelled my membership.
@@PiersonWorkholding I hope you watched "Physical 100" before cancelling as there are some LEAN athletes
-- it is so nice of them to charge me $35k so that I let them "participate" in my business
hehehehe :D
I see that you have HAAS machines. According to all the youtube experts - most of whom on abom79s channel, have made it very clear HAAS machines are complete garbage. So, I'm curious what would be your honest assessment of the HAAS machines?
@@ShainAndrews Who is "he"?
There are machines for every stage of business and every type of part just like there are cars for different purposes. I relate Haas machines to Toyota vehicles: good value, works well for 90% of parts. I'd recommend a Camry as a daily driver and a Porsche for the weekends.
@@PiersonWorkholding I think toyotas are great, or at least they used to be, not sure if anything has changed. Toyota put me through auto school back in the early 90s.
I'm just going over the idea that people seem to go overboard when decrying HAAS as total pieces of garbage. I know you can spend 100s of thousands of more for better and best machines but what small business has that kind of money to toss around? So my point is, I think those lemmings on aboms channel have personal problems and HAAS machine are just fine.
My guess is that those that criticize Haas never had to write a check for ANY machine. Haas machines are a great value and light years better than any manual machine on abom's channel.
@@PiersonWorkholding You hit the nail on the head. I was thinking that. Sure I can get a great machine and pay a million bucks for it too. LOL. Thanks for the input.
You screwed up by not going with the SBA loan. When covid happened, they waived all loan fees and PAID YOUR PRINCIPAL AND INTEREST PAYMENTS FOR OVER TWO YEARS!!!! People complain about the PPP loans, but that was nothing compared to the SBA payments. Some people had 30k+ monthly payments that were erased. These payments were automatic for all SBA borrowers. No application and no special qualifications required. It was a crazy time...
Can I borrow your crystal ball next time to see if SBA loans will get paid by the government?
@@PiersonWorkholding Nobody could have guessed that they were going to do that. Your description of the timeline of the loan made it sound like you got it after May, which is when they had made the decision to make the payments.
You are insane for staying in California, Ventura county nonetheless.. Texas and other states that don’t require income tax and are much more business friendly.
Deere literally paid for a brand new factory in 3 years by moving it from Ohio to Georgia because the taxes were that much less. I suspect Jay could easily have another 20% money for his business if he was located in a better business environment.
What's really insane is to put money as the single most important factor in business. Vendor base, skilled labor, infrastructure, weather, desirability, education, etc are far more important factors to consider than the extra state taxes.
Key to savings is to buy a property NOT in Commifornia.
The goal of simply saving money is know as a scarcity mindset. Living in an economic and manufacturing powerhouse like California is what top entrepreneurs value. See: Silicon Valley