New Mill Startup: research (part 2)

Are you looking to do a new mill startup in your area? This is the second in a series of posts to help guide folks in their prospecting venture. I personally think there is room in the US market for 250 mills or 5 per state on average. This endeavor to inspire new mills to join the market will take considerable effort because I want you to enter the market at your highest point of contribution. There’s much work that needs to be done to ensure that you are doing the right thing, at the right time, for the right reason.

With that in mind, we need to make sure you have access to the right resources to help you leverage valid and relevant research to your situation. So if you’re a potential new mill startup, you’ve come to the right place. If you’d like to schedule a time to talk about your specific needs and ideas you can schedule a free 30-minute consult today.

Initial Actions Steps for New Mill Startups

What are the initial steps a potential owner should take in developing their new mill startup? It’s important those steps are objective and actionable. Our time is precious and so it’s important that we are intentional with the questions we ask and the connections we make so that we are gathering accurate information, and setting realistic action items. I’ve broken down this post into the following areas: the problem I’m trying to solve, who I am, what is my specific market, tools/equipment necessary to operate my business, visiting an operational mill, monthly expenses & revenue expected/needed, branding/website/social media/marketing, and who will be my mentor.

This is not a comprehensive list for your new mill startup. It’s just a starting point. We will not cover things like investment capital, business operations, hiring to name a few. But the things listed here will be helpful for the person who is trying to develop an initial framework for discerning if this is a viable idea in the first place. We hope to continue to expand on this content and someday create a sort of “New Mill Startup Playbook”

What is the problem that I’m trying to solve?

If there’s no problem, there’s no business. Period. In a new mill startup, there are lots of valid problems that could be solved. The harsh reality that most people try to avoid is that all problems start with us. We are the ones who discovered them and decided that something should be done about them. Maybe we have been a customer who has experienced these problems first hand and we want to discover how it could be fixed. But, if we have not done our homework, trying to engage these problems can become problematic – wasting a lot of time and resources and potentially never really solving the problem.

So this is our chance to ask, “What is the problem?” Is it turnaround time? Quality? Local options? Breed-specific options? Product-specific options? Please notice that this is just a shortlist of generally stated problems. The more specific that we can be with the real nature of the problem the better off we will be at finding a business solution that fixes it. This is where employing the 5 Why technique might be helpful to drill down into the heart of the issue.

Why is the 5 Why Technique Important?

When we work this 5 Why technique correctly we will be able to really see what’s the root cause of the issue and not just deal with the more visible fruit we’ve initially discovered. Building our new business idea around solving the presenting problem instead of drilling down and solving the root cause will severely limit the scope and effectiveness of your business – this is a major contributor to most business failures. As was stated in an earlier article on New Mill Startups, if you’re looking to establish a great value proposition with your business, make sure it clearly and simply solves a difficult problem currently in the marketplace.

Let me state one last thing while we are on the topic. It is important in the brainstorming process to come up with a wide variety of ways solutions that solve that same problem. This will help you to become better acquainted with all the various angles of the root cause. As Martin Zwilling states in the Business Insider, ” The quality of the solution seems to be in direct proportion to the quantity of solutions considered in problem-solving. “

So just as a recap and give us a solid call to action:

  • 1.) make sure it’s a real problem.
  • 2.) identify that we know the root cause of that problem.
  • 3.) research a multitude of possible solutions to that problem.
  • 4.) purpose to be the business that provides a great value proposition to customers who are experiencing that problem.
  • 5.) ask yourself, “what kind of time am I willing to invest in solving this problem?” (think realistically – number of hours per week)
launching your new mill startup is a natural process

Who Am I?

I’m sure you’ve already wrestled with this question, but it doesn’t hurt to ask it again, “Am I business owner material?” Being a business owner is full of truly awesome opportunities, but it comes with a powerful set of weighty responsibilities as well. You will constantly be tasked with making strategic decisions about the direction of your company. Not between what is good and bad, but between several great options but only being able to choose one. It is very easy to fall into what Jim Collins called “the undisciplined pursuit of more” in his book “How the Mighty Fall“. The bottom line is this, if you don’t prioritize your life, someone else will – and in business, there are plenty of people who will try to tell you what your priorities should be.

How comfortable are we with making decisions that involve risk? Life is full of obstacles. Everyday we are faced with things we didn’t expect to happen. It is during these times that we are called upon as business owners to make tough decisions. During those times, are we able to identify and stay focused on what is most important? These are realities that are a part of the daily life of a business owner.

More pointedly, we should be asking ourselves, “where does my interest lie when it comes to a new mill startup?” and “how passionate am I about that, or is it just an interest? It is becoming increasingly common for businesses to identify with their customers via the cause that they stand for beyond just the products and services that they provide. This begins to drill down into the purpose behind why we believe we are alive and what we have been called to do with the time the good Lord has given us.

Do you identify with your demographic?

Owning a business is a statement about who we are. It is a sign of independence and confidence – a public display of what brings us joy. Do we find joy in serving others through business? It is also a statement about what we stand for. Niche textiles are firmly rooted in the rural agricultural community. Do we identify easily with that demographic? When we own a business our customers will seek to understand who we are and if we are someone who can be trusted. Therefore, it’s important to wrestle with these questions.

On a practical level, we need to identify what skills and abilities we bring to the table. Conversely, we have to be brutally honest with ourselves and identify what skills and abilities we simply don’t possess. There’s nothing worse than convincing ourselves we are something we’re not. It’s also important when identifying the other key members of our team in the future.

Success in business is built sequentially. We have to able to identify what is the first priority and put all of our efforts towards accomplishing that before moving onto the next thing. People who struggle with having a single priority and instead establish 5 or 10 things that seem equally important will struggle even worse in owning a business. Creating extraordinary results is directly linked to how narrow we can focus our attention and execute what is most important. Typically this inability comes from not knowing what our highest level of contribution is.

What kind of assets do I have at my disposal?

When it comes to a new mill startup we have to identify the assets we have and the ones that we need. Infrastructure is key for building a great foundation for your business. The common ones include things like: utilities (water, electric, gas, internet, phone), building, equipment, and people. But attention should also be given to computing needs, service support structures (shipping, backup data storage, help desk, vendors of consumables, etc.), network services (email, social media, website, apps, etc.), and business services (payroll, accounting, management software, etc.).

Investment capital needed…

Investment capital is another asset that needs to be clarified. You should plan for a minimum of $60k that will be needed even to start the simplest of carding mills. A full line mill purchased new from a manufacturer is going to cost between $175k-$250k. When you factor in the other needs that you don’t have in terms of infrastructure the numbers can add up pretty quick. While there’s a lot to be said for “sweat equity” it only goes so far. Knowing what the costs are and having a plan for acquiring those startup funds is very important.

One asset that most people often overlook is time. It typically takes any business venture 3 years to find its footing and become well established in the marketplace. While some of that work can be done on the front end prior to the doors being open, it’s still a cost to consider. Will you work another job to provide income for your family while you get this new business built and off the starting line? How much time do you really have to invest in this new startup?

One other asset that is worth getting clarity on is your depth of knowledge and experience of the industry. There is little upfront cost in research. It simply takes an investment of your time. There have been several cases that I’m aware of where people went and worked part-time at another mill to learn the day to day operations and see first hand if they had the skill set necessary to run a mill of their own. This is a great option if it is available in your local area and you have the time.

Specific Market Research

Depending on the specific market you are wanting to get into you’ll want to get real data about your new mill startup and the realities of that market. It’s important to get a good market sample when gathering your data. For example, if you were wanting to provide value-added products to fiber artist in your local area you would want to gather data from 75-100 potential clients that fit the following description:

  • find verified skilled artist
  • look for a social media presence with a healthy following (lots of likes/comments)
  • there is a product that they can make well
  • have clients who buy their art yarns
  • cannot create as much yarn as their market wants to buy
  • are doing all of the steps from raw fiber to the finished yarn
  • want to shorten their cycle from creation of a product to final sale
  • are within your defined target area

Tools & Equipment Resources

When it comes to new mill startup equipment there are four main suppliers in the market today. When considering the purchase of equipment you can buy used, new equipment, or some combination of the two. Niche textile equipment is often very complex in its design and if you’re not a machinist or have a mechanical background you will struggle to understand its form and function, not to mention it’s maintenance and repair.

While I understand that cost is always a factor, you must consider that the reduced cost of buying used equipment also comes with the reality of very little support in terms of designing it to fit your specific needs. Often times used equipment is not “plug & play” ready – it may have sat for years without being run, allowing parts to deteriorate. Why was it not in use in the first place – was something broke? I know of countless stories of folks who have purchased used equipment only to be tired up for months (sometimes years) before they are able to actually put that equipment to good use.

Equipment purchase options

If you’re looking to buy used equipment, it can be found online through All States  http://www.allstatestextile.com/ . There are also groups on facebook selling used fiber processing equipment. The list of niche textile manufactures on the market today are (listed in alphabetical order):

When purchasing new or used equipment it is always good to ask the following questions:

  • what is the cost of this equipment?
  • what is its capacity?
  • how serviceable is it?
  • what is the equipment’s reputation?
  • what was its original intended use? (carpet mill, weaving mill, wool, synthetic, plant-based fibers)
  • what is the company’s reputation?
  • what level of service do they provide before, during and after my purchase?
  • how accessible are replacement parts? at what cost?
  • find out the footprint of that equipment
  • what are the electrical requirements?
  • what amount of maintenance does it require?

Visit a Local Mill

Can I visit a “local” working mill that is doing a similar business model that I’m seeking to employ? Most mills would be more than happy to give you a tour of their facility and talk with you about your specific goals and ideas that you have. This gives you the opportunity to see things first hand, make notes of the real state, ask questions as you see them happening on the floor, and see how your body responds to being in that environment. Any time you can get face to face with your research data the better. I once had a new employee that loved the why and the how of what we were doing as a company, but after three days of working there his allergies were so bad that he had to quit.

Monthly Expenses

It’s good to consider what kind of monthly expenses this business will require. Some of the common ones to take into account are:

  • a loan for the processing equipment and support equipment (hot water heating, HVAC, etc)
  • building renovations, tools for maintaining the equipment and other start-up costs
  • consumables to run the mill
    • soap
    • conditioner/anti-static agents
    • boxes & bags for the finished product
    • travelers
    • belts
    • chains
  • administrative resources
  • utilities (electric, gas, water, sewer – or capacity of current septic)
  • business insurance

Monthly Revenue Generation

What kind of monthly revenue does this business need to generate? Does this business only need to supplement your family’s current income? Or is this going to be the “bread winner”? Is this mill based on a lifestyle choice such as retirement or staying at home on the farm? All of these types of questions will help to determine how much revenue it needs to generate. Another way to ask this question is, “What’s the trade off?”. If I stop doing this job to create this business, what am I giving up and what will I be gaining.

When considering the financial trade-off, I have always found it best to figure this as a daily production number. To do this take the total amount of monthly income needed to cover your expenses plus your owner draw, divide it by 21.5 working days per month.  This will give you the dollar amount that would need to be generated per day.  Divide that number by the price point that you believe your market would pay and this will give you the number of pounds that you would need to complete per day.  To help with a starting point, roving is anywhere from $12-20/pound based on incoming weight, and yarn is anywhere from $30-45/pound. But your local/regional market will ultimately determine this.

Do I need a mentor?

While many people who get into milling are very self-reliant and choose to do it on their own, this has historically been the case because there were very few people in the market consulting for businesses in this niche. We started The Master Crafted because we identified this as a problem and are working hard to create a solution that will change the reality of the niche textile landscape.

Our website is full of blog posts that you might find interesting. While there are many mills out there that would love to help you any way they can their time is limited. When you use our company you are leveraging our 14 years of processing experience to give you a leg up in getting started and ultimately bringing your business to maturity faster.

Here is a little about our history/experience in the industry:

  • averaged $175k a year in sales and brought home $50k
  • employed 3 people at $12/hour
  • served 500+ farms annually
  • have helped start/rejuvenate 13 mills
  • helped lay the foundation for  https://www.junecashmere.com/

The Master Crafted is a startup company, we started in January 2019. Content will continue to be added to our blog to build out a very great platform for developing your artisan fiber mill. We would encourage you to reach out and make contact with any of the dozens of mills we have worked with since January of 2019. We love working with people from the ground up and helping them put in place the design for a successful future.

If you hire The Master Crafted for a full year the cost is $15,000. We accept 6 clients per year which starts each September. You could also hire us on an hourly basis for $75.

The best way to schedule a free phone call would be to click here.

Hopefully, this is straightforward for you and not too overwhelming.  You are endeavoring to do a very noble thing and I intend to be a huge blessing to your successful startup and launch. Please let me know if there is specific content you would like us to write about in future posts.  I wish you the best of luck and will pray that God provides you with great wisdom and insight into who you are and the ways he designed you to love him and serve others well.  He is a Master Craftsman and we are His workmanship.

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