Start-up Automation Control Panel Shop in Texas

BrutulTM · Mar 20, 2014

Accountants are well worth the money IMO. There is just too much legal stuff for a normal human to understand and you didn't get into business to wade through tax bullshit. If a basic LLC means that all profits are credited directly to the owner then that seems undesirable to me. You would like the option for your company to keep some money in the bank, especially since there are two of you. As others have said though, your accountant will have better advice for you on this stuff than we do.

The good news is that you are in Texas. From what I've heard it is the most business-friendly state in the country.

The Master · Mar 20, 2014

BrutulTM_sl said:
The good news is that you are in Texas. From what I've heard it is the most business-friendly state in the country.

This is absolutely true. I know half a dozen tech guys who moved to Texas to start their businesses for just this reason, saved them millions in taxes when they (inevitably) ended up selling a part interest in the company.

Aetos_sl · Mar 20, 2014

I take it you will be buying from independent electrical distributors? Not really sure how that portion of the business works, but I'm guessing supply cost isn't much of a concern?

Word · Jun 10, 2014

Hows the business been going for these first few months?

Curious as I'm an automation engineer. I also might be able to provide some answers to questions you might have, although I specialize more in the software side instead of the hardware.

Blazin · Jun 13, 2014

On the pay issue, as an LLC your salary is called member guaranteed income, it is the portion you are paid for your work. You don't need to set it up with taxes as an employee (you can) your K-1 at the end of the year is going to list your member guaranteed income plus your business profit. It is often easier to avoid being set up as an employer saves a lot of paperwork.

Didn't see you mention insurance and for a lot of start up business this can be a greater hurdle than financing. I've only ever done large industrial work and I can tell you that insurance levels can be significant. I don't know if you will only be doing work in your shop or if you will then go the plant to install (assuming you will). This will require you to meet insurance requirements of the plant you are entering. This can cause some problems for the above discussion about being an "employee" of your company, because of W/C. You don't need workers comp. on yourself as the owner but the plant won't give a shit and most large companies won't let you step foot on the plant without coverage. I have always carried W/C even when I didnt have employees to cover and just paid the policy minimum to that I could satisfy insurance requirements without putting up any red flags.

Would also carry at least $3-5 million gen liab. umbrella. (adding a few million umbrella is not normally that expensive maybe a few grand a yr)

Erronius · Sep 9, 2014

Aetos_sl said:
I take it you will be buying from independent electrical distributors? Not really sure how that portion of the business works, but I'm guessing supply cost isn't much of a concern?

I'm not sure exactly what you're asking here, but material cost for this stuff can be astronomical (depending on what exactly you're doing). Most people will deal with a single supplier/wholesale house and get a discount from them, but the material is still quite pricey. Stuff like conduit or unistrut isn't much (comparatively) but there is some stuff out there that looking at the pricing makes me uncomfortable. Like $250-$350 for a 6' stick of corner slotted panduit seems expensive when you compare that to sticks of standard slotted duct, but when you start looking at stuff like Allen Bradley products or industrial fiber optic banks and ducts the $250 piece of plastic starts looking like a sweet deal. It's absolutely mind bottling how much price can skyrocket depending on what material and products you decide to use.

dak_sl said:
I'm starting a panel shop as a side business that specializes in conversion of industrial automation control systems from relay logic to programmable logic control (PLC). We will also do general magnetic and PLC control panel services including: design, layout, wiring, I/O controls, programming, troubleshooting, and turnkey fabrication of customized panels.

My partner is a licensed electrical engineer with over 35 years experience in industrial automation. We already have a couple customers lined up for conversion of their manufacturing plants.

I'm not sure what the margins are but something to think about might be building stuff like PLC trainers for colleges. For us we were looking at $10k+ per PLC trainer, so we're building an additional lab from scratch. We couldn't really justify $200k+ for an entire lab, but if we could have found something slightly cheaper we may have gone for it. The deal with schools isn't really money though, it's time: few schools have the time to prototype and build training equipment for lab use, so then it's a matter of looking through all the different promotional material from multiple companies to see what you can afford. And even then it seems like the common outcome is"Well we can't afford 16 of those, maybe we can buy 4 and get more later...". For a PLC trainer you could prototype something w/o an enclosure with DIN, terminals, PLCs and I/O.

It would be difficult to compete with some of the established companies for the large, complex setups (like process control or mechatronics perhaps) but I can't tell you how awful the training equipment is that some schools have. There is a market for it as I'll bet you there are schools in your area looking for new trainers.

One random pic from the interwebs that made me lol and might be somewhat typical (might have to take pics of some of our trainers):

1936-vfd-pushbutton-stations-contactors-relays-time-delay-included-3-phase-motor-starter-dc-control-ac-circuits-plc-comes-after-completing-rest-wall-its-mostly-about-programming-through-its-ancient-interface-plc-model-least-35-years-old.jpg

Aetos_sl · Sep 16, 2014

Erronius_sl said:
I'm not sure exactly what you're asking here, but material cost for this stuff can be astronomical (depending on what exactly you're doing). Most people will deal with a single supplier/wholesale house and get a discount from them, but the material is still quite pricey. Stuff like conduit or unistrut isn't much (comparatively) but there is some stuff out there that looking at the pricing makes me uncomfortable. Like $250-$350 for a 6' stick of corner slotted panduit seems expensive when you compare that to sticks of standard slotted duct, but when you start looking at stuff like Allen Bradley products or industrial fiber optic banks and ducts the $250 piece of plastic starts looking like a sweet deal. It's absolutely mind bottling how much price can skyrocket depending on what material and products you decide to use.

Right that's why I was trying to see how important shopping around was for your components. Often times so much of the marign is made on assembly that getting the absolute best price isnt as much as a concern as to say, a contractor buying tons of emt. Im in the electrical distribution industry, which is why I was wondering

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Start-up Automation Control Panel Shop in Texas

BrutulTM

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The Master

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Aetos_sl

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Word

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Blazin

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Erronius

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Aetos_sl

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