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Growing the business6/29
I have a small shop 4000sqft , we have plenty of work and good customers , builders , etc. Some I have worked for 15 years . I have the woodworking end covered , I am a horrible business man .
If you want to grow the business, you've got to be the one at the top. You can hire someone to be a foreman or project manager. But if you hire someone to do sales, estimating, and administration, then you're basically handing over the fate of your business to this person. So, if you really want to grow, then put the processes and systems in place that allow you to hire someone to take over your project management duties and allow you to focus more time on sales, estimating, marketing, and business administration.
If you're not comfortable letting go of being in tight control, then you're better off sticking with your current model.
Oh dear Lord, don't get a business partner! It's like getting married, but WORSE!!!!!! I did that, it was a disaster. I wanted a business partner so I didn't have to work 80 hour weeks. When I started working 8 hour days, he wanted me to work more. I wanted him to do more marketing or selling. About all he did was maintenance around the shop after his day job. And don't get me started on how badly his wife messed up the accounting. I bought him back out, and then paid higher taxes for years because of his wife's screw ups. It was a mess from day 2. Day 1 felt great since we both thought the other was going to make life better. I'd suggest a part-time accountant with lots of small business experience. They could give you some good advice, and take the paperwork load completely off you. Then I would look at more outsourcing of parts to send more final product out the door. Order doors, drawers, and even cases if you want. Have the doors prefinished. Use prefinished plywood so the cases go faster. Maybe look at sending your finishing out. I say work smarter, but stay small!
Great advice. If you have managed this long without a business partner why worry now?
Stay at the top and BECOME the "Director".
If you aren't ready to let go of the woodwork yet I'm sure you could squeeze in a day a week or a fortnight to satiate your calling. You might find that the business side takes over as your passion for work rather than the woodwork. When your running the show your really just woodworking by proxy, you get to design, direct how things are to be made and then look at them when there finished and call it your own. Without even getting dirty!
It's very easy to fall into the trap of growing and not earning any extra money. The right people is VITAL, Hire slowly....fire FAST!
Also look at the whole picture. Sometimes it feels like you are growing and not earning any extra money but maybe your paying off a truck and cnc that you couldn't have afforded on a smaller scale. in 5 years you have them payed off and you reap the benefits, If you decide to scale back after that you have a high output shop without the overheads.
I agree - no partner.
I would advise you to look at what it is you really enjoy, and what you really dislike, and place them at either end of a continuum and draw a line where you are comfortable or happy with doing just that bit/type of work. Then find a way to make that happen. Spend your days with work you enjoy.
You can also work to keep the shop working smartly and profitable - don't let that slack. Continuing that effort will help attain all the other goals. Better equipment (capital investment), cross training, improved systems, new website etc. are all things that will add value to your business beyond their up-front costs.
Your goal should be to increase the bank account, increase capital investment, and develop an exit plan. I have seen shops that appear successful, but when the owner wants to sell and retire, he paid the help so poorly, they have no money or will to buy the business, whereas they are the best candidates to buy the shop, with the most interest in it. Smaller shops are hard to sell beyond a pile of used equipment, so your best bet is your employees.
Today sounds nice and rosy, so don't rock the boat. Plan for tomorrow.
I concur with Git Palbert.
Really just determine what you spend the most time doing and get someone to do that/those tasks.
Think of yourself as a temporarily understaffed corporation. In that light create an organization chart that illustrates the functions that need to be performed by this corporation. Hint even if you are a one man shop you are performing the same functions that GE, Apple, Google are performing. The difference is in the volume of these various functions.
You first have to:
IOW YOU are wearing ALL of these hats, ignorance of how big your hat rack is, will not excuse you from the negative ramifications of not wearing these hats.
It is MUCH easier to stay small.
If you are going to grow a business, why does it have to be a woodworking business?
Hi. Let me share my opinion with you. I believe in friendship, in partnership, but I don't believe in poor management. What is poor management? It's lack of attention, ideas, correct actions and self-strategy of development. This way I'm sure that own business is your own business, you must appreciate your time, get as more experience as you can and build your reputation. Rely only on yourself. If anybody would like to connect with you, he will do the best to become your partner.
Don't go the partner route! Delegate some job functions within or hire if you don't have the internal help. Make sure you are careful in selecting people and then train them to do what you want. be very specific about what the result is to be. Methods are variables.
No to the partnership, as 98.5%don't work out.
I can't say for real life experience but in business school they kinda paint it like only people without a choice get a partner... and results aren't very attractive, statistically.
Could be true could be not! Just saying it's out there in the curriculum, FWIW.
Just re-read some of this. Tim's comment about "it is much easier to stay small" is interesting. Define "small." I have a "small" shop, currently 15 employees. At one point I had 24. I had passed my level of competence, needed supervisory help that I could not find. Needed a human relations person, actually needed lots of help. I now limit it to a max of 18 employees. Would have that many today if I could find them. Have spent a lot of $ trying to increase our output/profit per employee and it has worked. Machines are much more reliable than people. Give "ownership" of each machine to one person & one backup. Delegate to a shop foreman. Set out the goals of his job clearly. Then you can run the business. Again - no partners!!!
"it is much easier to stay small" is interesting"
As in a peculiar way of interesting?
Would you contend that it is easier to get bigger? Either way it is relative.
With all of this investment did your sales per man increase over that time period?
BTW this isn't Tim this is the other supercilious one.
Yes, our sales per man including all office personnel are $171K. I feel such measures need to include office staff because they affect the productivity of the shop floor. Such #'s should not be used to compare businesses of highly variable natures. I think our # is in line with the norm for well equipped small shops. I suspect Alan's #'s are much higher.
I also take such measures with a grain of salt since the real measure that counts is the bottom line. Not the profit per man or per hour but the total bottom line. Those other measurements may have some use for internal comparisons. Our profits have also increased but much of that # is controlled by the amount and timing of the available work. The added investment in equipment allows more of the peak work to be taken on. As long as you don't over extend yourself, prudent investment in your business seems totally reasonable. I've often struggled with trying to figure IRR for a choice of investments.
Getting bigger is easy when work is plentiful, getting smaller when it is not is painful!
Anybody ever tell your grandparents they could have fixed that at Ellis Island?
"Yes, our sales per man including all office personnel are $171K."
So your sales per man is commensurate to your investment in machinery?
"Getting bigger is easy when work is plentiful, getting smaller when it is not is painful!"
That is an "interesting answer". Growth means dealing with inadequate infrastructure, machinery, man power, cash flow, software, etc. I have not heard anyone say growth is easy.
"Anybody ever tell your grandparents they could have fixed that at Ellis Island? "
They did fix it, before the good folk at Ellis Island helped me out I was saddled with the name of Tim Schultz