Woodworking Business

You are not logged in. [ Login ] Why log in
(NOTE: Login is not required to post)

How calculated are you on capital improvements?

4/9/15       
Mel

Be it a restructuring, a shop space rebalancing, a new machine, a new employee--what goes into you thinking "this could be good" to actually investing/doing?

Where do you balance in terms of gut vs preemptive measurement?

4/9/15       #2: How calculated are you on capital i ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

I'm a novice but desiring to build a specific size of business so this is a constant question for me. My main concern is always
what will it do to the cash flow. My current method for preemptive measurement is a cash flow spread sheet we made that we make as accurate a prediction as possible to the inputs and look at the results. If this is favorable we feel we can go to other considerations. But here's a thought. Every decision is a presumption on the future. Are you a "risk" taker? Are you "conservative"? No decision should be made solely on gut but it's a factor in our decisions at times. No gut decision is every totally without some hard circumstances. I'm very interested in the subject and hope there's many more responses.

4/9/15       #3: How calculated are you on capital i ...
David R Sochar Member

Stable and accurate cash flow predictability is important to have for all sorts of good reasons, and it plays half the role in looking at capital improvements. This more of a 'known known'.

The other half is trying to determine what the considered change will do for labor/material savings. This is a 'known unknown' that will involve more guesswork and a bit of intuition that one could ever tolerate on the cash flow side. Adding an employee is accurately predictable for us (cost-wise), a machine or process is less predictable.

It is difficult to read or hear about someone doing things in what appears to be a Neanderthal method, when it is obvious that an investment in some basic equipment would transform the process for the better. Often, the equipment has already been 'paid' for - in lost labor costs - but the individual does not have the equipment.

I have a long list on my desk that has the next top items I think we would need. This list is constantly changing as things wear out, or other things take precedent. We'll go this way if we need to grow, we'll do this if that old table saw gives out, we wil be forced to replace the mortiser if/when it gives out, probably with little or no warning.....and this would always be great to have....

4/10/15       #4: How calculated are you on capital i ...
Mel

This reminds me a bit of the "talented musician" debate.

I am at the point where I can hear a person play any instrument and tell you if they are classically trained. That said--don't forget the Jimi Hendrix's of this world.

I worked for a guy a while back that was the best salesman I have ever met. Physique? Short, scrawny, bug-eyed, looks sketchy, arms loaded with tattoes, greasy hair. But man alive, could that man ever run a business. From sales to quote to deliverables to set-up--almost all of it. (he however forgot the humans--they revolted, unionized, and ran his company to the ground in less then a year).

4/10/15       #5: How calculated are you on capital i ...
Pat Gilbert

The general consensus is to know what part of the business cycle you are in and invest into a rise in the business cycle.

You would have to know your market and where it was at, in the cycle. Also knowing the demographics of your market helps, and what that demographic buys.

The Fed has made low interest loans available that help, that will not be there forever.

Another is to look at your own business' sales and look at a graph showing YOY going back a few years. On the same graph look at the 3 months of sales using a rolling average. The idea is to calculate the rate of change in your own own sales. as the rate of change is presient. So if your graph is going up steeply or down steeply or slight decline or incline it is predictor of the future. This from ITR economics, the Beaulieu brothers.

I generally look for a steep uptick in sales and production. And then investigate very thoroughly to determine EXACTLY what caused the steep uptick.Then if you have extra cash, IOW paid all of your bills, invest in only that thing that caused the steep uptick in sales. BTW this is a make break for a business, do it wrong and you will shoot yourself in the foot, do it right and you will stabilize that uptick into a sustained floor for your sales.

4/10/15       #6: How calculated are you on capital i ...
Mel

My goodness Pat, I am a PIA...

So Beaulieu Bros is good and all--but it forgets one thing. Comes back to the Elliot principle you were mentionning in another tread.

So you can grasp a general trend for sure and keep to it. But what about crimes of opportunity? And fallacies of enthusiasm?

If the general attitude about economic health infuences your dollar bill vallue, what about a mirco level on this one? Where you are selling a good for a somewhat sentimental value despite what the economy is doing?

Comes back to boats. Everyone knows boats are holes in the water that you sink your money in (did this frenchy get the expression right?).

But people buy em. All day long. They are not minor investments either. Wood boats, concrete boats, no matter the reputation, people buy em.

This romanticism has a role in buyer behavior. You can make a half-rolling shop and still sell it, if it feels good at the surface--I've seen it.

Now that's something a person does with gut. Gut has room here (not all the room, but some).

4/10/15       #7: How calculated are you on capital i ...
Mel

PS--I do like the person who goes down the rabbit hole with "I want to buy x machine. What does it cost? how long would it take to pay for itself?"

4/10/15       #8: How calculated are you on capital i ...
Pat Gilbert

Do what ever you want, but it would advise against it.

4/10/15       #9: How calculated are you on capital i ...
Mel

Hah!! But I'd argue that your anti-trust is a voucher :P

4/10/15       #10: How calculated are you on capital i ...
Mel

btw you're still invited for beers and backyard gloved brawling (kick boxing gloves--not pansy-pants boxing gloves). If you survive, maybe I'll let you look at my neuroscience textbooks... if you agree to pay attention to the highlighting ;)

9/18/20       #11: How calculated are you on capital i ...
ThatGuyAlex  Member

Website: wesellfans.com

So many variables to this. We've worked with small businesses to large corporations. They big guys have consulting teams to go over minute details.

The successful small(er) shop guys usually buy equipment and improve as they see fit.

The guys that find themselves in difficult situations over extend. I often hear their thought process is, "if you build it they will come". Which is true, but they didn't invest in something else... again many variables.

Very curious to know how your venture went, as it seems it has been some time now.

2/22/22       #12: How calculated are you on capital i ...
Timmy Evans Member

The other half is trying to determine what the considered change will do for labor/material savings.


Post a Response
  • Notify me of responses to this thread
  • Subscribe to email updates on this Forum
  • To receive email notification of additions to this forum thread,
    enter your name and email address, and then click the
    "Keep Me Posted" button below.

    Please Note: If you have posted a message or response,
    do not submit this request ... you are already signed up
    to receive notification!

    Your Name:
    E-Mail Address:
    Enter the correct numbers into the field below:
     

    Date of your Birth:



    Return to top of page

    Buy & Sell Exchanges | Forums | Galleries | Site Map

    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 Help
    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 .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)
    Sponsors
    • OMEC/Macoser Inc
      Exclusive Importer of European Woodworking Machinery Since 1988
    • Cabinetshop Maestro
      Web-Based Project Management Software for Custom Cabinet Shops - Manage Jobs from Prospect to Punchlist Through Scheduling, Task Management, Time Tracking and Communication
    • Rangate
      Woodworking Machinery, Supplies and Knowledge
    • ULTI-BOARD
      The Ultimate Spoilboard - ULTI-BOARD - Specifically Engineered and Formulated for the Ultimate in Spoilboard Performance - Not Your Ordinary Sheet of MDF.
    • Machine Bid
      Online auction site for buying and selling high-quality machinery. We offer a secure, online bidding platform, featuring CNC routers, Edgebanders, Sanders, and much more; new equipment added daily
    • INNERGY
      INNERGY is the ERP for woodworkers, by woodworkers. We are birth to death millwork.
    • Air Handling Systems
      Your Best Source for Dust and Fume Collection
    • WoodJobs.com Search Consultants
      Free Employment Service for Woodworking Related Job Seekers
    • Parts Cutter CNC
      CNC Cabinetry and Closet Parts
    • TradeSoft
      Seamless Management Software to Improve Estimating, Job Costing, Scheduling, Purchasing, Shipping, and Shop Floor Data Collection
    • TradeJobPlacement.com
      Individualized Placement Services, Specializing in Millwork Design Engineers
    • Better Vacuum Cups, Inc.
      Vacuum Cups for All CNC Routers As Well As Many After Market Parts for Your CNC
    • Impact Search and Placement
      Professional Employment Recruiting Specialists

    Become a Sponsor today!