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Making a living band sawing letters9/6
I have a small part time wood working business mainly making rustic pine furniture and wall decor. Big chunky letters to be exact.
My letters have been selling really well. I can wholesale them or retail them at a local vendor mall. I am also exploring other wholesale options-wineries, breweries, home decor shops, furniture store, etc.
I am wanting to go full time. I guess my question is this.
Can I really make it band sawing letters and the occasional bench, bookcase, etc?
I can make roughly 20-40 letters in a day. I have my finish down. While my bandsaw isn't the greatest, it works(grizzley 15".) My overhead is very cheap. I have a wife who is a graphic designer so I could have a kick-azz website and catalog.
I know this sounds a little crazy. Maybe that is why I am a little hesitant. Anyone doing something similar?
I'm sure your could. But someone else will see your idea, get a CNC and make 150 letters a day for 1/3rd the cost and put you out of business.
CNC companies already exsist. While they they don't make exactly what I do, they are similar. I'm competitive price wise with them. I just can't make as many.
When you say your overhead is cheap, I'm assuming that's because you work out of your garage with no other expenses such as rent and additional utilities.
Honestly, you're probably on thin ice. First and foremost is the need for liability insurance. You're selling consumer goods and you have to consider the need for product liability. The letters aren't an issue, but any of the furniture you mentioned puts you in a different category. Ever make anything that could be used for children? You're in even deeper. Using part of your home for manufacturing? Your homeowner's insurance won't pay for any claim relating to damage caused by that venture. In other words, to do it right your overhead WILL grow.
Do an honest assessment of true overhead (insurance, utilities, work space, equipment), determine exactly how much it cost to produce each piece including material, labor, delivery, etc., and how much real profit you make off each piece. Then decide how much money you expect to make in this business. If you want to make $2500 a month and your true profit is $1 per piece, you'll have to produce 2500 per month.
Thanks Bill. Yes, ins sucks. The health ins side of it scares me more than anything. I have it available through my wife's work, but its crappy and costs more. I do have a rough estimate on all of this, but planned on doing a full evaluation before going full time.
And just to be clear, I do plan on making more expensive, furniture peices as well as the letters.
The reason that you compete well with the CNC letters is that you are too cheap. By Bill's estimate, you are 1/3rd the price you should be. Don't feel bad, that is where everyone starts.
It is better to get the reality dose before you take the leap.
Single man shops can only thrive with a niche - usually a skill or something that can't be done in China or by a CNC. A shop that tries to beat Home Depot cabinets or Ikea furniture will die quickly.
Another thing that happens is the local cabinet stop lays off, or someone flunks a drug test, and the next week he is 'in business' - competing against you. He may be dumb, but if he is cheaper - can you outlast him?
With all do respect, how would you know? I havent posted prices or my competitors prices. I maybe too cheap on a few things, but i havent made too many things that i could charge 6x's materials on a very easy peice. This is a serious question- If you have a 200 dollars in materials on a very simple cabinet, can you charge $1200? I know the analogy is not linear but you get my point. And no I do not price that way. And if you can charge that much, good for you.
I dont think you get anymore niche than rustic letters. Not really competing with the really cheap letters at Michaels and such. Mine are a little different and solid wood. And people like that its cut by hand. I guess they like the idea of somebody doing it instead of a machine.
Worrying about if someone is cheaper is kinda silly. There is ALWAYS someone cheaper.
And again, I will be making other stuff. Just finishing a $850 dollar table for instance.
Thanks for all the advice guys.
Maybe a dose of reality if you use the table for $850 as an example ,, figure out how much in materials went in including finish and calculate your hours spent and whatever overhead costs and any others .
Most people just starting out vastly understate their real costs. After a few months of making minimum wage, they wise up and either get out of it, or learn what needs to be done to make a living wage. Just saying'.
As D Brown says add up all your direct costs, all your materials and labor. Materials are to be figured at replacement cost, not the stuff you had just laying around. Then something for consumables - sandpaper, etc. Then utilities and phone and rent and insurance, and about $30 per hour for your wage and taxes. Round up if in question. The trip up here is what you omit - you don't know what you missed, so be thorough.
I do not know of any one man shop that can do anything for less than about $58 per hr, where the owner takes a wage of 50k or so. I have worked in a 2 man shop off and on for 26 years, and my hourly rate I charge is now 85 to 95 per hour. I buy wholesale, and mark up materials. We will do about 350k this year.
This is a strange business where so many starting out get defensive when told they do not charge enough. I don't know why, but many of us start that way, way too cheap, and not wanting to hear that we are not charging enough. Maybe psychologically we are protecting the fact we can generate some money, and afraid if we charge too much, that will all stop.
Sure you can make it. IF, you are willing to live on what you make. You might end up selling you home and living in one of those $15,000 little homes on a double axle trailer they like to show on TV. Oh yeah, probably have to give up the TV. You may have to drive 20 year old vehicles that you repair yourself. You may have to raise your own chickens and grow your own vegetables. Maybe that is the way you already live, I don't know. But if there is the will, there is the way!
Thanks guys for your help. As I already said, I plan on evaluating everything mentioned before going full time. For now I will enjoy being busy and keep working on my business plan.
@Rich, thanks for your input. Really helpful. I do like my 20 yr old truck. Got 300,000 on it. Although I wouldn't changed my own oil if you paid me.:)
Can you sell and produce enough to show a $75k a year profit before taxes, after paying legitimate overhead? That includes paying insurance, health insurance, business license fees and equipment depreciation?
If not, keep your day job.
David just nailed the definition of professional woodworkers illness.
I've never read such an astute description of every woodworker I've ever met. Definitely described me in the first year or two.
Adam - Thanks for agreeing with the observation I made about the mindset of beginning independent woodworkers. Those of us that have been there can easily spot it in others. You are right - most of us have spent some time like that. Recognizing the problems that attitude brings is a product of rigid self examination, and determined stripping away of non productive notions. Maturity.
Many times here on Woodweb, or standing in someone's shop, I hear the same things about overhead, misunderstanding market size, and the defense of product and prices. While the person asks for help of either general or specific types, once defensiveness enters the conversationan, reasonable learning stops.
First rule of business:
Be Ye Teachable
Second rule of business:
Don't reinvent the wheel
Hey guys, just wanted to give you an update. I decided to go 100% wholesale. I is just easier this way. I currently am have 5 dealers. I have a plans to increase that to 10 by the end of the year. 10 would pretty much saturate my area, and then I would have to move to a market a little ways down the road. I have, in theory, I shipping/delivery schedule in place to service said dealers 1-2 times a month. The second market is considerably bigger, so the potential is definitely there.
I have also developed a long term plan of "specialty" items that I could sell to unique stores. Such as special items for floral shops, kids stores, etc.
As for a making/selling enough product to make a living, I am still getting my head around that part. So far, it is very feasible.
Anyways, that is about it. Hoping to be full time soon!!!
With all do respect, and I really mean this, some of you should re-read some of the posts.
"1/3 of the price you should be"-prices still haven't been posted.
"$30/hr for wages"-This would double what I make now. and I live fine.
"75,000/yr or keep your day job"-again, doubling what I currently make.
"don't reinvent the wheel"-Well I just did that at my full time job on a project, and it will save the company approx. 100,000/yr. reinventing the wheel=innovation
I really like this forum, but maybe some shouldn't "rubber stamp" the your too cheap response so much.
Anyways, happy trails.
You asked for advice and got excellent feedback from a number of very thoughtful individuals with decades of experience. Two months later, with virtually no experience, making slightly more than minimum wage, you're riding a high horse proclaiming how misguided their responses were, yet you acknowledged your prices are already too low to cover an expense as nominal as bandsaw blades...smh.
Read rule #1. I seriously doubt you've developed some fantastic innovation in making bandsaw letters, so rule #2 still stands as well.
Happy trails to you as well. Check back in a year and let us know what your latest brainstorm is, I seriously doubt it will a bandsaw letter magnate.
Pete, The 4 things I listed above, Do you consider those excellent advise? And I am far from "riding a high horse" and have many, many doubts. I am also far from minimum wage. And yes, bandsaw blades are cheap... when you are say making an expensive veneer for an heirloom pieve of furniture. That is not what I am doing so the dynamics change a bit. I really had no clue how quick they went dull until I started making hundreds of the thick letters. I just never did it. Just wanted to give an update and had a few more questions.
To the useful posts, I am greatful. Sorry if I come off defensive, but so many posts turn into your to cheap, expensive, etc. without knowing a ton of factors. I just get tired of reading it.
So, If we could move on from the "too cheap topic", I do have some more specific questions now that I am into this a little more.
So I have been moving more and more expenses from personal to the business. New computer, Disposal, gas, etc. One thing I haven't really came up with a solution for is "rent". What is a fair arrangement? What do I pay myself for the building? It is small and not too fancy, but it gets the job done for now. Didn't really use it before. I live in the country and property is pretty cheap where I live compared to a more metropolitan area.
I have an Idea on how to derive a number, but thought someone could shed some light on this subject?
The second question is this- While the stores that carry my product are really neat little stores, they are just that. Little. I don't believe any of the will provide "steady" orders. The second market I plan on going after theoretically probably has a "big fish" that could provide steady orders. How should I approach them and what should I expect?
Thanks in advance.
Actually I do consider the posts you refuted to be good advice. David elaborated on the concept of pricing in a very articulate way and the others echoed a similar sentiment. There's a reason for the repetition behind the comments about pricing and knowing your costs because it's the difference between growing a business and going out of business. The only thing that's apparent is you have no clue what your costs are yet and you're not even close to scaling up your operation in a way that will keep you profitable. You're smart to acknowledge the small specialty stores won't keep you afloat, but in order to make higher volume and get your product out via wholesale channels that takes a lot of additional work outside the immediate task of making the letters. Those are hours and costs that need to be factored into the pricing structure. Want to get a booth at the NYC trade show and get in front of thousands of vendors/potential customers? The small booth is 10k plus travel expenses with no guarantee of sales. What about when sales go flat? Unforeseen overhead? Being enthusiastic, optimistic and excited about your venture is important, but if you're not grounded in the reality of your cash flow you're going to struggle...then again you think operating a business at $15/hr is far from minimum wage.
Pete, I also find Davids response helpful. Which I am greatful for. I don't know how many times I have to thank the useful posts. Please, read the 4 above. These are just silly. "make 75,000/yr or keep your day job"? I can say with great confidence, there isn't 5% of my community making this. Probably not 3%.
You guys keep telling me I don't know my cost, and I keep giving you examples of the cost I have already figured in. Insurance, utilities, travel, etc.
The questions I asked are to further determine my cost, as you know, I am not full time yet and am still developing my business plan.
You guys are acting like I shouldnt make a thing until I have enough business to go full time and have every detail nailed down to the cent. Its just not reasonable.
I have developed a customer base, delivery, website(almost done), future ways to build business, working on nailing down costs.
I have also developed multiple ways to increase yield per board, fine tuned finish schedule to reduce labor, Looked into different things I can charge more for, etc.
And the only thing this thread has focused on is that I am too cheap. Which by the way, no prices have ever been posted.
My apologies for wasting everyones time. I will seek advise elsewhere.
Have a good one.
The essence of the feedback is the same...it takes a lot more profit than one expects to sustain a business and no one can give you specific numbers based on you're location, product and salary. If your prices are already too low to offset the cost of bandsaw blades that validates every response you got. Don't get so defensive, what you're trying to accomplish is very difficult and no advice regarding a business startup will be laced with rose petals and honey. If you can make it work, more power to you.
"My apologies for wasting everyones time. I will seek advise elsewhere"
Translation: I reject your reality and insert my own. I'll just keep asking the same question and eventually somebody will tell me what I want to hear.
Find a good CPA, and actually listen to what you're being told. There are IRS guidelines for business use of personal property, that will help you understand your limitations.
Lot's of luck...........you're gonna need it.
Hey guys I looked for advise somewhere else, but it turns out we are the only one in the USA that still make stuff. LOL.
So, Pretty please, can we move on from the "your too cheap thing"? I have done time studies on every part of the process and everything still comes back positive. I have looked endlessly for a product that would compete with mine, came up empty.
My biggest thing is this- I can make enough per week very easily. How do I sell that much? I have thought about hiring a salesperson. There is enough meat there, I could probably absorb the cost. Just very leery of having someone else represent me.
Also, Has anyone done markets(gift)? I have one that is close enough, just don't know if its worth it?
Thanks in advance.