
You are not logged in. Consider these WOODWEB Member advantages:
A personal "member history" that displays your posts at WOODWEB
Your forms at WOODWEB will be filled in automatically
Create your personal "My Favorites" page
Numerous automatic notification options
Learn more about WOODWEB Member benefits ...
Interesting conversation with employee -- 0 -- 
3/8

Website: http://www.carpentryassociates.com
I am entering my 5th year of operating my business after 25 yrs. managing big woodwork companies. I would characterize my business as struggling. I own the building and most of the equipment and lease a second building. We do both commercial and residential arch. woodwork, cabinets and furniture. Last 2 years we did just north of $500,000 in revenue with avg. 5 employees in shop and me in office. First year was a disaster that really crippled my capital base. (Too anxious to get work for new company. Took work at market in depressed market. Way too cheap!) We have been in recovery mode ever since with revenue rising each year and improving results. Last 2 years have shown (very) modest net profit - but - I have been drawing only modest compensation. Lowest paid man in shop makes more than me. Gross margins on projects before S,G & A are consistently hitting 35-40% and more, which seems on target. Particularly since I am always told that my prices are among the highest in the area. The downfall is that every year we hit a period where sales fall off the cliff. Last year we had 2 large projects cancelled after award and 2 delayed 6 months. Killed a very good year. Seems like that added 20-30% in revenue would translate into my missing paychecks.
Anyway, talking with my most productive employee, he tells me I pay my people too much. This from a shop guy! I am in Texas and pay my 2 top guys and finisher $19-20 hr., $ 10 for a newbie, no benefits. ( It's in the business plan, but can't afford it yet) My feeling has been that I want my guys coming to work focused on giving me an excellent product and efficient performance, not worried about paying the rent or keeping the kids fed.
So I know that that many of the shops in the area pay their employees less. $16 for a top guy $12-14 average. And the work they produce reflects that in some cases. Always surprised by what passes as acceptable. ( Do the G.C and builder intermediaries care?)
So what do you folks think? Is my business model naïve? This forum always brings out many different and passionate responses. I'll enjoy your feedback.
3/8 #2: Interesting conversation with emplo ...

Employee retention is a major issue for any company that does not have its head in the sand. It costs money to locate and train an employee. The old saying "it's hard to find good help" is true but it is even harder to keep them. $10 to start is to low in my area as that is just barely above fast food and less that warehouse entry that has more future. Not many of the younger set look to get into woodworking due to the lower wages, to tell the truth I wish I had known what I know now as I would have made a different choice. You pose a damn tough question.
3/8 #3: Interesting conversation with emplo ...

Working backwards, a productive custom architectural shop with 5 people in the shop should be doing about 140,000 per man per year in sales, or more.
Figger 1500 billable hours a year, at $70.00 per hour x 5 = $525,000. Add in the materials at their selling price, about 1/4 of the total - $175,000/yr, and you have the capacity for $700,000 per year, easily.
If you are only selling $500,000 per year, you have too much labor, no matter what you pay them. It appears that they are not as productive as need be, or you are way underbidding, or both.
3/8 #4: Interesting conversation with emplo ...

Yes, our capacity is underutilized. Hence the holes in the schedule. A failure in sales and sometimes bad fortune as last year. No doubt on me. And rather than lay off, I keep my employees which does indeed result in a too high percentage of labor cost. This is why I am moderately hopeful this can be turned around to a good living. But really, that isn't the question is it?
3/8 #5: Interesting conversation with emplo ...

Peter,
The marginal difference in what you pay your employees versus other shops in the area has nothing to do with the success of your business plan. Success boils down to marketing, selling, and specialization. You've already told us you're not doing the best job at marketing and selling. And based on your website, you're doing a terrible job at specializing in a product niche or two.
So if I were in your shoes, I would pick a niche of work to focus in, then work hard at marketing and selling it. Success will follow, and the employee situation will work itself out.
3/8 #6: Interesting conversation with emplo ...

The classic problem. I remember one owner told me that he didn't schedule enough work in the last month of the year which cost him all of the profit for the year. His profit was more than your gross.
If you have a break even month your profit is 1/12 less for the year than it would have been otherwise. If you loose money in a month that money comes right off of your bottom line for the year.
The key to profitability is control the key to control is prediction. The key is to get good at prediction. This means scheduling is important, prediction of hours is important, marketing is important.
In other words sales is the most important job you have. If you are trying to do both that and pushing work out the door that may be your problem?
3/9 #7: Interesting conversation with emplo ...

If the question is "are you paying your employees too much?" then the simple answer is yes.
Or more accurately, you are paying people to be unproductive. Or, you need to lay off to suit the exact current work flow. If this is true, then I guarantee that when there is work, they drag feet and make it last to alleviate any layoffs. Human nature.
Yes, one answer is more sales to fill the schedule and keep all hands busy, but if there is no work, you certainly cannot afford to keep them on.
3/10 #8: Interesting conversation with emplo ...

This is a good post. I will ask you this question. 'If the schedule was full would you show good profit?' If yes, then a good full schedule is the solution to your problem. If no, then you are not making your hourly shop rate. If your answer is 'no' then you have a compounded problem of not enough work on the shop floor, and on top of that you are not making your shop rate on the work you do have. A good full schedule with big jobs in the pipeline, and small jobs to fill the gaps, I think, is what I would try to achieve first, then go after your shop rate by pushing the guys to stay on schedule. $100k per man is not enough gross sales.
3/10 #9: Interesting conversation with emplo ...

RE - full schedule
In the construction business (my type of business), the rule of thumb is to allow for one day of rain a week. When I make my schedules, I base them on 4 day weeks, leaving Friday open. You'd be surprised how well that plays out in the long run.
Granted, cabinet business is different, but the point I'm trying to make is that IMO, it's foolish to think that you can have a full schedule work out in reality ... s**t happens. Way better to leave a cushion.
In this poster's case, a month "hole" in the schedule ..... profit should meet minimum standards if you only work 11 months. That leaves a cushion for the s**t that happens. Note I wrote "minimum" ..... you shouldn't be able to be able to buy that boat if you miss a month's work, but that shouldn't put you under either.
3/12 #11: Interesting conversation with emplo ...

You may have too many things you are responsible for and not devoting enough time to sales. I would lay off one person in the shop and hire a sales person. When sales pick up bring back the laid off employee or hire a new one.
3/14 #12: Interesting conversation with emplo ...

It might sound like a flippant response but if my production was pretty full I would raise prices.
As for paying too much for labor, are those finishers top notch and do their results make the job, like most good finishers should?
BTW, do you have a good handle on your job costs and how do you arrive at pricing?
7/28 #13: Interesting conversation with emplo ...

I would be keeping my eye on the inflation rate on supplies, services, etc, whereas our prices tend to be fixed.
"X"
0 -- 
Buy & Sell Exchanges | Forums | Galleries | Other Resources | Site Map
Buy and Sell Exchanges
Job Opportunities and Services Exchange
Employment opportunities and services within the woodworking industry
Lumber Exchange
A worldwide buy/sell exchange for lumber and wood products
Machinery Exchange
A worldwide buyer and seller exchange for woodworking machinery and equipment.
Classified Ad Exchange
Classified advertising for the woodworking industry (for advertisements that do not include machinery, lumber products and employment listings)
Forums
Adhesives Forum
Discussing topics related to adhesives within the woodworking industry
Architectural Woodworking Forum
Discussing quality standards and production of architectural wood products
Business and Management Forum
A forum for the discussion of business topics: from sales and marketing to dealing with difficult customers.
Cabinet and Millwork Installation Forum
Discussing all aspects of installation issues encountered by cabinet and millwork installers.
Cabinetmaking Forum
Discussing 32mm and face frame cabinet construction including fabrication, casegoods design, and installation.
CAD Forum
Shedding light on the all-too-often shadowy world of CAD.
CNC Forum
Discussing CNC (computer numerically controlled) woodworking equipment, software, and automated product manufacturing.
Dust Collection, Safety and Plant Operation Forum
Discussing topics related to maintaining a safe and productive working environment.
Professional Finishing Forum
Finishing issues for the production environment
Forestry Forum
The science and art of forest cultivation and timber management, planting, surveying, tree diseases, silviculture and timber harvesting
Professional Furniture Making Forum
Helping professional furniture makers improve quality, save time, and increase profits
Laminating and Solid Surfacing Forum
Issues related to laminating and solid surface materials and processes
Commercial Kiln Drying Forum
Discussions covering issues faced be commercial drying operations that process at least 750,000 bd. ft. of lumber per year
Sawing and Drying Forum
Discussing topics related to primary processing and drying of lumber
Solid Wood Machining Forum
Discussing topics related to the machining of solid wood
Value Added Wood Products Forum
Learn how to improve your output, find new markets, and boost sales of your lumber products
Veneer Forum
Discussing topics related to veneer processing, manufacturing, and fabrication
WOODnetWORK
An electronic discussion group for woodworkers throughout the world
Galleries
Project Gallery
Where professional woodworkers can post examples of their work
Sawmill Gallery
Professional primary processing companies display and describe their sawmill facilities
Shop Gallery
Professional woodworkers display and describe their shop facilities, products and equipment
Shopbuilt Equipment Gallery
Professional woodworker's jigs, rigs, and shopbuilt equipment
Other Resources
Industry News
Late-breaking news from all sectors of the wood industry
Video Library
Index of industrial woodworking related digital videos on the web
Auctions, Sales and Special Offers
Advertisers offering woodworkers discounted prices on good and services, and announcements of upcoming auctions
FORUM GUIDELINES: Please review the guidelines below before posting at WOODWEB's Interactive Message Boards (return to top)
WOODWEB is a professional industrial woodworking site. Hobbyist and homeowner woodworking questions are inappropriate.
Messages should be kept reasonably short and on topic, relating to the focus of the forum. Responses should relate to the original question.
A valid email return address must be included with each message.
Advertising is inappropriate. The only exceptions are the Classified Ads Exchange, Machinery Exchange, Lumber Exchange, and Job Opportunities and Services Exchange. When posting listings in these areas, review the posting instructions carefully.
Subject lines may be edited for length and clarity.
"Cross posting" is not permitted. Choose the best forum for your question, and post your question at one forum only.
Messages requesting private responses will be removed - Forums are designed to provide information and assistance for all of our visitors. Private response requests are appropriate at WOODWEB's Exchanges and Job Opportunities and Services.
Messages that accuse businesses or individuals of alleged negative actions or behavior are inappropriate since WOODWEB is unable to verify or substantiate the claims.
Posts with the intent of soliciting answers to surveys are not appropriate. Contact WOODWEB for more information on initiating a survey.
Excessive forum participation by an individual upsets the balance of a healthy forum atmosphere. Individuals who excessively post responses containing marginal content will be considered repeat forum abusers.
Responses that initiate or support inappropriate and off-topic discussion of general politics detract from the professional woodworking focus of WOODWEB, and will be removed.
Participants are encouraged to use their real name when posting. Intentionally using another persons name is prohibited, and posts of this nature will be removed at WOODWEB's discretion.
Comments, questions, or criticisms regarding Forum policies should be directed to WOODWEB's Systems Administrator
(return to top).
Carefully review your message before clicking on the "Send Message" button - you will not be able to revise the message once it has been sent.
You will be notified of responses to the message(s) you posted via email. Be sure to enter your email address correctly.
WOODWEB's forums are a highly regarded resource for professional woodworkers. Messages and responses that are crafted in a professional and civil manner strengthen this resource. Messages that do not reflect a professional tone reduce the value of our forums.
Messages are inappropriate when their content: is deemed libelous in nature or is based on rumor, fails to meet basic standards of decorum, contains blatant advertising or inappropriate emphasis on self promotion (return to top).
Libel: Posts which defame an individual or organization, or employ a tone which can be viewed as malicious in nature. Words, pictures, or cartoons which expose a person or organization to public hatred, shame, disgrace, or ridicule, or induce an ill opinion of a person or organization, are libelous.
Improper Decorum: Posts which are profane, inciting, disrespectful or uncivil in tone, or maliciously worded. This also includes the venting of unsubstantiated opinions. Such messages do little to illuminate a given topic, and often have the opposite effect. Constructive criticism is acceptable (return to top).
Advertising: The purpose of WOODWEB Forums is to provide answers, not an advertising venue. Companies participating in a Forum discussion should provide specific answers to posted questions. WOODWEB suggests that businesses include an appropriately crafted signature in order to identify their company. A well meaning post that seems to be on-topic but contains a product reference may do your business more harm than good in the Forum environment. Forum users may perceive your references to specific products as unsolicited advertising (spam) and consciously avoid your web site or services. A well-crafted signature is an appropriate way to advertise your services that will not offend potential customers. Signatures should be limited to 4-6 lines, and may contain information that identifies the type of business you're in, your URL and email address (return to top).
Repeated Forum Abuse:
Forum participants who repeatedly fail to follow WOODWEB's Forum Guidelines may encounter difficulty when attempting to post messages.
There are often situations when the original message asks for opinions: "What is the best widget for my type of shop?". To a certain extent, the person posting the message is responsible for including specific questions within the message. An open ended question (like the one above) invites responses that may read as sales pitches. WOODWEB suggests that companies responding to such a question provide detailed and substantive replies rather than responses that read as a one-sided product promotion. It has been WOODWEB's experience that substantive responses are held in higher regard by our readers (return to top).
The staff of WOODWEB assume no responsibility for the accuracy, content, or outcome of any posting transmitted at WOODWEB's Message Boards. Participants should undertake the use of machinery, materials and methods discussed at WOODWEB's Message Boards after considerate evaluation, and at their own risk. WOODWEB reserves the right to delete any messages it deems inappropriate. (return to top)
Forum Posting Form Guidelines
|
Your Name
|
The name you enter in this field will be the name that appears with your post or response (return to form).
|
Your Website
|
Personal or business website links must point to the author's website. Inappropriate links will be removed without notice, and at WOODWEB's sole discretion. WOODWEB reserves the right to delete any messages with links it deems inappropriate. (return to form)
|
E-Mail Address
|
Your e-mail address will not be publicly viewable. Forum participants will be able to contact you using a contact link (included with your post) that is substituted for your actual address. You must include a valid email address in this field. (return to form)
|
Subject
|
Subject may be edited for length and clarity. Subject lines should provide an indication of the content of your post. (return to form)
|
Thread Related Link and Image Guidelines
|
Thread Related Links posted at WOODWEB's Forums and Exchanges should point to locations that provide supporting information for the topic being discussed in the current message thread. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related Link that directs visitors to an area with inappropriate content will be removed. WOODWEB reserves the right to delete any messages with links or images it deems inappropriate. (return to form)
|
Thread Related File Uploads
|
Thread Related Files posted at WOODWEB's Forums and Exchanges should provide supporting information for the topic being discussed in the current message thread. Video Files: acceptable video formats are: .MOV .AVI .WMV .MPEG .MPG .FLV .MP4 (Image Upload Tips) If you encounter any difficulty when uploading video files, E-mail WOODWEB for assistance. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related File that contains inappropriate content will be removed, and uploaded files that are not directly related to the message thread will be removed. WOODWEB reserves the right to delete any messages with links, files, or images it deems inappropriate. (return to form)
|
|
|
|