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Strategy for growth

1/26/16       
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

In growing a cabinet business what has been your experience in regards to building a team of people? In particular, skill sets each new person brought to the business.
For example-Cabinet maker, finisher, sales person, installer and book keeper. (All one person, you)
Next-Helper to build.
Next-Dedicated finisher.
Next- Second Cabinet Maker.

If your're scaling this up to 10 employees,
I'd like to know if you followed a strategy, followed a book, filled positions as necessary or maybe it was driven by new machinery that you acquired.
I'm at a point where I need to hire. I have 3 builders, 1 finish person and 1 helper to the finish person. I do everything else except accounting (I hire a professional).
I also most often outsource the installs to some great installers.

Thanks for your input.

1/26/16       #2: Strategy for growth ...
Cabmaker

Figure that different size companies have different requirements for management.

Our shop runs 7 days a week with two crews. The methods used for communicating priorities and status is quite different than when everybody that needs to be updated is in the same room at the same time.

It's a lot harder to fix an airplane while it is flying than when it is on the ground. You want to have your management systems in place BEFORE you grow.

You also want to have your company's policies in place before you hire. If you don't have a policy in place then your workers will create one. You never want someone who is ambivalent to the outcome in charge of policy.

1/26/16       #3: Strategy for growth ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

Good points. I've been in business for 2 plus years and have an "evolving policy". I understand what you mean and agree. How many employees do you have and in what order of job description did you hire each new person? Did you hire to meet demand or hire a salesman first to create business and then hire to produce what was sold? I know this is never easy to fit into steps but growing a business versus operating a business that has maintained a certain size over time requires different approaches. A growing business is a flying airplane as far as I can tell. Would you or did you start with a complete organizational chart and fill each position as required?

Thanks for your response.

1/27/16       #4: Strategy for growth ...
Pat Gilbert

Use Lean, read the E-Myth, make your policies well known.

You probably don't realize it but the person you need to replace is yourself.

The two main dynamics are someone pushing work out and someone pushing work in. IOW you might want to look at having a foreman for the shop.

1/27/16       #5: Strategy for growth ...
Cabmaker

Nick, you are onto a good idea.

Creating an organizational chart then pulling people to the position would yield much better results than pushing people to the position.

You are sort of right about the airplane always being under repair.

1/27/16       #6: Strategy for growth ...
Pat Gilbert

BTW flying an airplane is a lot easier with some gauges.

What are your gauges?

1/27/16       #7: Strategy for growth ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

On the subject of the shop foreman. I have a shop foreman by name. That being said I have another employee that does what a shop foreman should. Get in a few minutes early, wears safety glasses, thinks ahead, anticipates problems etc.
Here's my struggle. On the one hand you can hire people who inherently have the skills and grasp the big picture, people who are self motivated. On the other hand you can struggle to help a person learn to be motivated ( bad idea) or train a person to think ahead (probably not possible). I read that Warren Buffet delegates to the point of abdication. What he does do is install only the highest quality professionals in whatever capacity they need to be skilled. My shop foreman is a good man, a young man but doesn't have desire or skills to be a foreman. He's been with me for more than a year.
Anyway, my question about the nuts and bolts of scaling a business to a certain size. What is a strategy from someone who's gone from 1 to 20 people. Did you wing it? By winging it I mean you made intelligent decisions as needs came about or consulted with mentors? Making decisions on the fly or following a blueprint? Financial Intelligence for Entrepreneurs, The Personal MBA, True 32, The Drucker Lectures, Why Moats Matter, Thou Shall Prosper, Theory of the Business, and on and on the books I've read in the last year. It's hard to pull together all the information from different sources but there are many applications to the cabinet business I've gleaned. If you don't have a blueprint your're following, how about a business consultant who's built companies
in the manufacturing arena? Any referrals on this? I'll read the E Myth that was suggested asap.

Thanks

1/27/16       #8: Strategy for growth ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

Gauges?

Gauges could be the mission or the reason for being in business. I'm in business, building a business firstly because it's in my nature to build and create and I love bringing people along with their skills, which I want to be (their skills) greater than mine. I believe like Bastiat, that man is placed within the elements of the created world and he applies his faculties to the elements, thus producing property (wealth) which he then can do with what he pleases. I have an enterprise in which I produce a valuable product for customers that need my products. In this process we (the team) in this enterprise become better in our abilities and character. I can't see capping my business at 6 people. I enjoy involving new and more people and gaining market share. And of course as one said, I'd rather have 1% of the efforts of 100 men than 100% of my own.

1/27/16       #9: Strategy for growth ...
Pat Gilbert

Since I have never had 20 employees maybe you can learn me some stuff.

It sounds like you are not sure about the qualifications of your current foreman.

That I do know about, and you definitely need to fix that. If you buy/accept his performance you will suffer the consequences. IOW don't kid yourself you are accepting the liability of what he may do. I had one that cost me 2 large accounts because of his carelessness and maliciousness.

It helps to have gauges, gauges are like speedometers, oil gauges, temperature gauges.

Simple stuff like sales, value of product produced, profit and loss by each job. The value of the product produced is a good one as a gauge for the foreman. (one caveat the numbers can get strange if you are doing something with high material cost or you are outsourcing part of the work) But I think the value of the information trumps the potential problems. The beauty of the numbers is that you are making decisions on facts i.e. objective information. It has been the downfall of many a shop owner to make decisions off of emotions rather than facts e.g. there is a natural tendency to surround yourself with people you like, which often times are just telling you what you want to hear.

I suggest using a graph so as to see increases or decreases quickly. And I suggest updating the graphs weekly. Otherwise you are driving down the road by using the rear view mirror.

BTW the value of the organization chart is valuable in orienting people to what their job is and how it relates to others. (not a command chart, which is useless)

I'm surprised to see a reference to Bastiat on the woodweb, that is a welcome sight. Do you read about his economics?

1/27/16       #10: Strategy for growth ...
Nancy Pelosi

Nick,
There is no magic blueprint in terms of what person to add when.

The main principle to follow is that systems allow you to scale. Looks like you're a residential shop, so I assume you're using CV? At your size, I think I would next add a dedicated draftsman, and focus your efforts on sales and marketing. Develop your sales and marketing into a system that you can then hire someone else to do. And there's your next hire - a salesman.

The bench guys, finishers, and installers you can add as needed. They should all be replaceable. Don't get me wrong - you still want quality guys - but with the right systems in place, it shouldn't matter who is doing the work. Just ask Bill Belicheck.

1/27/16       #11: Strategy for growth ...
cabinetmaker

Nick -

I would highly recommend reading Paul Down's book and reading ASAP. It's a real eye opener.

I would look @ Paul Akers info on Lean and pay close attention to the core of what he is alluding to - Eliminate Waste

Also - Juana Clark Craig- Prosject Management Lite: Just Enough to Get the Job Done: Nothing More

So, I think you are on the right path, I am looking @ ERP software, with the preminition that it all starts @ the Quote, when it turns into an Order, a schedule gets populated, and all areas of obligation are identified as perhaps constraints on getting the job out the door. The spray booth as we know can be one, the assembly is and so is the cut out of the casework. The ERP software can also give you those "Guages" to fly your plane, called a Dashboard.

I will caution you now, "Garbage In, Garbage Out" in all that you do moving forward as the owner and the leader.

I think Paul Downs book changed my life @ home and in the business.

1/28/16       #12: Strategy for growth ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

I like that, so systems allow you to scale. Right now I've created a list that itemizes every step from start to finish that defines my business. What I don't have yet is breaking out sections of the list and using it to define a "position" in the business. I do have some of the positions clearly defined and communicated with the team. I can't tell you how liberating it was to realize I could delegate everything. It was ignorance and arrogance to believe I was the only one who could do certain things the best.
In regards to the draftsman. Is that a responsibility unto itself in your opinion? How does it relate to the sales position?

1/28/16       #13: Strategy for growth ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

Pat,

The biggest help to me was "The Law". But Economics in One Lesson and Basic Economics and recently, Wealth Poverty and Politics, have been very valuable. Your input as well as all the others have been incredible, I thank you all. I've got some books read. Thanks.
What's the name of Paul's book? At home in Business?

1/28/16       #14: Strategy for growth ...
Pat Gilbert

Economics in one lesson = Henry Hazlitt

Basic economics = Thomas Sowell

Yes recommended reading to anyone who cared to know about the bigger picture of business.

I have not read The Law, I will put it on my list.

1/28/16       #15: Strategy for growth ...
Logician

Remember that all books on economics are written with an eye towards policy. Somebody starts with an agenda then develops arguments to support that agenda.

The study of economics starts with an agreement on the fundamentals. This agreement defines what is legitimate to consider in subsequent study. You never, for example, spend much time contemplating things that don't fit with your basic premise. As a consequence these subsequent endeavor always corroborates the fundamentals. They soon take on a legitimacy and become known as "economic laws".

This is why opinion pieces on any editorial page always somehow support the headline.

1/28/16       #16: Strategy for growth ...
Pat Gilbert

I don't disagree. The overview is that there are 3 divisions of economics, Keynesians, Monetarists, Austrians. It helps to know the premise of all 3.

Keynesians believe that the economy can/should be controlled by fiscal controls.
This economic theory was developed by John Maynard Keynes. It is espoused by Paul Krugman

Monetariests or MMTs believe that the economy can be controlled by monetary control. The best know proponent of MMT was Milton Friedman.

Austrians don't believe it can be controlled by anyone. And when government tries you end up with bubbles like the housing bubble that was so much fun in 2008. The best known proponents of Austrian economics were F.A. Hayek, Ron Paul, Ludwig Von Mises, Henry Hazlitt.

As mentioned a good source to understand this stuff is Economics in One Lesson by Henry Hazlitt and Basic Economics by Thomas Sowell.

Either book will change the way that view the world. You might say that you will start using the binoculars more instead of the magnifying glass when trying to locate business problems.

The thing that rarely gets mentioned by any of the groups is the overarching effect that demographics play in economics.

1/28/16       #17: Strategy for growth ...
Tim Medasky

"...should I hire a finisher, a salesman or a cabinet maker..."

...well, first you need to hire an Austrian, and then a Keynesian. And then when you really start growing add in as many Monetarists as you can find...

...Yes, that's very helpful. Glad I posted...

1/29/16       #18: Strategy for growth ...
Pat Gilbert

Yea I hear ya, however it was pretty much a dead thread?

So we wandered from the OP a bit, but not as much as you might think. Besides the OP was the one who started the wandering.

My original interest in economics was sparked by the events at 2008 where I had the profound philosophical question of WTF?

Since this event knocked, I'm guessing, 50% or more of the shops out of business. I think it is relevant to a thread about strategy.

It is also relevant to having a professional viewpoint about business.

1/29/16       #19: Strategy for growth ...
Cabmaker

Pat,

I would suspect that most of the people on this forum who think they should be positioning for growth don't read the Wall Street Journal.

The world economy is in very rough shape right now and it does not look like a temporary situation. China essentially financed their way to prosperity and now those chickens are coming home to roost.

We are apparently still prosperous in cabinet land but it requires a significant amount of optimism to believe these ill winds will not hit our shore. This is not to suggest that we all start building bunkers but rather to be a bit cautious as to how far we get extended.

1/29/16       #20: Strategy for growth ...
Pat Gilbert

I subscribe to Austrian economics. If they have a caveat it is that they color your thinking towards the negative, which is a real danger as it will send you over the edge in some sort of prepper mentality.

China has over-invested big time. As per the Austrians they now have to allow their economy to readjust IOW they absolutely have to have a recession. This will allow them to conduct price discovery which is a simple thing that everyone of us do every day, i.e. what is my cabinet worth? It turns out that empty cities and empty airports are not worth much.

The US is the big kahuna and the Chinese economy will not effect the US economy.

Demographics are the overarching factor when considering economics. As I have stated ad nauseam the demographics for the US look pretty good starting in about 4 years.

There may be a recession this year or next but it will be mild.

This from ITR economics:

Markets are slumping and expectations for China are dumping

January 14, 2016
Conditions will turn around because US consumer spending is upward bound. The housing industry looks strong through the latest data (November) and December Automotive Retail Sales were robust at 9.0% higher than last December. Employment is rising at a healthy clip. Disposable Personal Income is rising. The consumer is driving the US economy higher and the US economy is 59.6% bigger than China’s economy. Long live the US consumer. We are not seeing any trends that will derail the US economy powering the global economy into a better place as we go through 2016, particularly the second half of the year.

ITR economic trends

1/29/16       #21: Strategy for growth ...
Nick Cook Member

Website: http://www.cedarrivercabinetry.com

Along the lines of what Cabmaker said, is there published systems or organizational charts or maybe software that is already created by someone and offered to us cabinet makers that shows what a business looks like with 20 employees? Are there consultants or services that offer this for a business? Would anyone on this forum be willing to meet with me and show me what they have in place. I would fly to your location and pay you for your time.

1/29/16       #22: Strategy for growth ...
Pat Gilbert

Most businesses center around production, sales, and accounting.

Like them you have to make sure the necessary functions are taken care of.

It seems to me that you have to own this yourself.

When a business starts it has to be put there, but this is something you are always doing to some degree as with hiring new workers.

The next logical thing that a business has to do is is sales.

Following that you have to do some accounting.

Then you have produce the product.

Then you have to do quality control. (BTW this is the down fall of most businesses) E.G. when a restaurant gets sold the new owner inevitably wants to save money and inevitable changes things to save money and inevitably alienates customers.

Then the business needs to get new customers.

This cycle goes around in a circle back to the production.

Finally you have to do planning. Of which it appears you are trying to do this here.

You can diagnose your business by determining which one of these functions you are not performing. This will tell you where you need to improve or grow.

1 is your shop big enough? Do you have enough people? what areas are things lagging?

2 Do you have enough sales?

3 Is your accounting getting done?

4 Are you producing fast enough?

5 Is your quality adequate to your market?

6 Are you getting new customers through referral or advertising?

7 Are you planning for all of the above or are you just reacting?


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