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office labor/shop labor input6/7
I have a 6 man custom cabinetry shop that puts out about 35 complete house cabinet jobs per year with an average selling price of $23,000 each. We install all of our own work as well. My question is for those of you with similar sized cabinet shops, what percent of labor is spent on office tasks? This would include all customer consulations, ordering materials, customer drawings and designs, pricing and making cutlists for shop floor. Most of our work is highly custom with a pretty large amount of planning involved together with the customer. I feel we spend to much time in the office, likely around 25%- 30%. What is a realistic target? Also, when you guys price jobs, for example a $25,000 kitchen, how much "consult time" do you plan for in your price? how do you deal with a situation with excessive customer babysitting/changes to the project?
The best way to answer your question would be to create a hypothesis.......then test it.
You might, for example, allocate 1 hour for every $1000 of project price. That $25,000 job would, under this hypothesis, take you about three days to handle the management functions.
Break those hours into phases. You should be able to ascertain how many hours were spent prior to inking the deal and how many were spent after the contract is signed.
These two primary accounts subdivide into specific actionable items. Measuring the job site, for example, is not the same as engineering the cabinets and cut-listing is not the same as engineering either.
Building a production strategy is different than cut-listing or engineering. Passing out tasks and monitoring status is different than strategizing.
To the extent that you parse these processes out formally you will be able to implement systems that can improve the outcome while lowering the cost.
It's all about mitigation. There are a million things you can't control but there are a few that you can and these should be controlled. The customer is at one level the random part of the equation but looked at from another perspective is the easiest part. All customers want exactly the same things and they are highly motivated to make it happen. These people will sit up in their pajamas till midnight poring over Pinterest. Your employees, for the most part, can not be inspired.
I would first solve your problem through the lens of your customer. You will get more help from them than anybody else.
My shop is not at that size now, but until the crash of 2009, we were about that size. We would average about $800,000 with 7 to 8 people working in the shop and we also did and still do our own installs, mostly.
In the office, I had one person doing drawings, AutoCAD etc, a designer and an office assistant. I split my time between the office and shop, doing drawings for our CNC, cut files.
So, I think your time is about average, compared to my shop. But, I know how you feel when it takes as long to draw something and sell it as it does to build it. That has happened and then, sometimes the drawings are wrong.
Paul Miller have you had any ideas on how to cut down on office time? Any thoughts of charging customers for changes even before the materials are ordered?
Are you charging for your design time? I assume you have a designer. Are you getting a deposit BEFORE your Designer does any work? If you are not, you must do this or your staff will spend too much time on jobs you don't get. Do we charge for changes? Yes, if we can without upsetting the customer. You have to explain to them the cost involved, which is really labor.
Another thing I do, I have my draftsman, if this is a man, work some of their time in the shop on the CNC. They will learn more and they will eventually see that shop drawings do not have to be like drawings for an Architect.
But, my shop has not made money of any consequence since 2008, so I might not have the answers.
Where do you know you are making money?
Install goes the same way. For a good GC who respects my time, I might be at 10 to 15% of 'X'. Others GC's who I don't have a relationship with I'll be at 25%.
I guess really what is behind me starting this thread to start with is have had a few customers recently that come in giving the impression they know exactly what they want in advance making me think its going to be a quick design with limited back and forth wasting of time. And then... they get the first draft of drawings and then there is revision after revision. I try keeping them happy by doing them with no charge just simply to let them know we offer good and prompt service to the customer. It is good and works 90% of the time, but there is always those few that after many hours of work and several revised prices that go to who knows where with all my ideas and designs... even though they were not handed out, the just have seen them in my office and off of that tel the next guy exactly what they want. I know that this happens to most shops, i've had people end up at our door coming from other shops with nice designs. I've bid on those jobs and gotten them as I can give a good price on them because the design is done. In a perfect world every cabinet shop would refuse to work off another guys design.
Charge for your time and collect a deposit up front. If you get the job, credit the deposit if you like. If they won't give you a deposit, they are not serious or they a looking to get a free design. Stand firm.
We offer to do 1 onsite measure, initial design meeting (on site with the measure) & drawings based on notes from that meeting and an estimate all free of charge. If a client calls and wants to add a bank of drawers or a couple of roll outs and maybe add glass doors to an upper, we will make those type of quick changes and update the price. Anything more than that and we require a non-refundable deposit of $300 to do anymore work on those designs.
We submit 3d pictures with no measurements included directly to the client after the initial design. At least that way if they want to get other bids, then the next shop down the road needs to also make an on site visit to get accurate measurements.