Advice on Starting a Cabinet Shop

      A young craftsman asks for advice about going out on his own. April 29, 2013

Question
I know that this topic has been posted at least a dozen times on the forums here. Believe me I've read them all at least three times in an attempt to answer my questions, but alas my thirst is never quite quenched.

Anyway, I'm a 24 year old and have been working in cabinet shops for the last eight years and am the foreman of a high-end residential cabinet shop in Minneapolis, MN. I've worked with just about everything and on just about every job site. I've been kicking around the idea of starting my own shop for a while now and I would ask my co-workers the things I'll ask in this topic, but the family I work for doesn't exactly take kindly to their own planning on leaving. They're still trying to get me to sign a contract saying that if I quit I won't compete against them in anyway (basically won't work for another cabinet shop) for 365 calendar days. The son recently took over for his dad and I feel it's just not worth it to continue for this company in the long run.

To get down to it, I could run my own shop with maybe just a part time helper here and there. I feel like the market is just too saturated and construction in the Twin Cities is definitely picking up slowly. How do you fellow cabinet shop owners feel about this subject?

I honestly know that for the person looking for tons of money picking a different career would be a better choice. Letís just say that's not an option for me. I'm comfortable not being rich and I love this trade too much to leave. With that said, is there any advice others can share with an experienced cabinet maker?

Forum Responses
(Business and Management Forum)
From contributor D:
Opening a new shop in any type of market is difficult at best, but in an already saturated market this can be darn close to impossible. To enhance any chance of success you must be very careful with money, keep your overhead low, and not use credit for anything - at least until you can sustain a cash flow with some confidence. While you still have a job I would recommend preparing yourself for this new life of being a business owner by taking classes in accounting, marketing, bookkeeping , business management, and etc. as these are at least as important as your experience in the shop.

I would also recommend (while you still have a job) starting to accumulate tools (large and small) and if you have not already done so begin to save as much money as you can so that you have something to live on while you get your business going.

Decide who your customers should be and begin to formulate a plan to market to these people. This is a very difficult task you are thinking about doing so prepare as much as you can and your chances of success will be enhanced. Good luck with this and keep asking questions.



From contributor G:
I have done the opposite of what you are talking about. While it may sound cool to have your very own shop, with your own customers, you also get to deal with all the headaches, deadlines, taxes, 80 hour weeks, and when a machine breaks down who's going to fix it? You - all by yourself. You may think that you will make more money on your own, you won't! You will work more and make less. You will be stressed about where the next job is coming from, or if it is coming at all. You will end up taking on jobs for less money than you should. The customers who are willing to pay, won't buy from you, they don't even know you exist. Keep your day job! Make some furniture in your free time. Enjoy the fact that you have a job and that it gives you a steady paycheck!


From contributor P:
Congrats of thinking of taking on your own business. Itís funny how cabinet shops say do not get into this business because there is no money to be made. There is money to be made if you do it right. Will it be hard? Yes it will be and long hours required as well. The main thing is use your head on what you buy. Try to stay out of debt and keep overhead as low as you can. That no-compete contract - have them sign one with you so when you leave they cannot go after your clients.

The one thing you need to do is set up the way your business will run. That means how you take deposits, what your delivery times are, and how many samples you make, etc. You must never go against these rules you make for your company. I don't care what any designer wants you to do, it is always done on your terms. Make sure all your terms are fair, but if you ever operate against your business terms your business will fail. Never put all of your eggs in one basket. Too many guys on here work for only GC or Interior designers. Mix it up - get your own clients, do your own designs, and work with them. Set your pricing so you make profit, not break even. Acquire an accountant Ė youíre a cabinetmaker so let them do the numbers game for you so you make money. Remember every job you go on to bid you must make money and that must always be in your head, every day.



From contributor S:
Here is the thing. The business end is a free-for-all. Everybody does what they please. Homeowners, contractors, designers, architects, plumbers, electricians, counter top fabricators, on and on. You will spend your time fighting for your turf. As much I love the work, the craftsmanship, the challenge, etc. it's sometimes more trouble than it's worth. You work on your projects at your current gig and you have no idea what your boss is dealing with all day. You need to know within yourself if you are really cut out for the business ownership side.


From contributor M:
If you have the means to do side work first, do it. As said above it's tough out there. Side work is a good way to determine if there is a market for what you bring to the table.

You are the youngest person to admit their age I've ever seen post on this site. If you have the passion and wherewithal to start out on your own at your age then do it, but keep in mind what you have to lose:

1. Current employment (steady paycheck).

2. Somebody else with liability (you might mess up).

3. Do you own anything that might be lost if you fail with your business plan (house, kids, wife that dislikes that you work many hours)?

4. Do you have any capital whatsoever to get started? A financial cushion is like a feather pillow that lets you sleep at night.

5. Get used to working weekends.

Non-competes are like demanding unemployment to give you money - it rarely works. Never sign that agreement unless you have the capital to burn for that year. If you have that capital, do as said above and take the time to learn. Honestly, it's going to be a lot longer than a year to learn everything. Even a basic understanding could take a lifetime. Some guys are great at cutting wood, some are great at accounting, but it's a rare breed that's great at both.

Most of the other respondents will tell you "find your niche". It won't be like that at first. Your "niche" will be whatever bites. Whatever bites has the possibility of becoming your core business. Be mindful of that. Bend with the wind because the economic environment in which we live and work is awfully windy these days. Hook one big fish and it'll feed you for a year in some extraordinary cases. Sneak into every crevice of their life and tell them only your product can make their lives more convenient. Deliver within your overhead with a profit besides.

I've been lucky. Over-saturation is not the case. I can't even imagine what over-saturation would incur in a market like this. Most fine woodworking shops have disappeared where I work. My one man outfit produces mostly odd stuff for odd people. I'm lucky to consider myself among the odd. At any rate, good luck with your decision. I hope that nobody here has discouraged you from your dreams of self-employment. Honestly, I wouldn't have it any other way.



From contributor K:
I was in your shoes (kind of) a year ago. I didn't work for another cabinet shop though, I was a teacher. Here's the deal - I ran my business for seven years before I quit teaching. In that time I built up my tooling, increased my client base, and honed my skills. I also did not take a paycheck for quite a few years. I put all the money back into the business. Before quitting I built a new shop, had an accountant and lawyer, had two employees, and all the insurances necessary in this line of work. Before quitting I made sure I had enough money put away to weather down times. Most importantly, before quitting we (wife and two kids) lived exclusively on money from the shop to see if it was doable. Extra income was used to pay down debt and build an emergency fund.

It was a long road but I wouldn't have it any other way! Very long hours, seven days a week. The whole time my wife stayed home to raise our kids. When she went back to work we decided to make the move to me working in the shop exclusively. She was able to get health insurance at her job (very important). I would do it again in a heartbeat. I am envious of my guys though looking at them work, watching the clock. When they leave for the day, they're gone. When I leave, I'm home researching or typing up quotes or ordering materials or chasing clients, or marketing, etc. Best of luck! Make sure you have a plan in place or it will be your undoing!



From contributor B:
On the no-compete I'm pretty sure this means you can't own a competing business, not that you can't work for another shop. They can't deny you employment to my knowledge. It has much to do with stealing the clients from your current employerís point of view. Ask your employer for a percentage of the profits as an incentive to be more involved. See how much you are worth to them. Talk to other similar shops in your area to feel out your local market to determine if the timing is right. Are the shops still closing or flourishing?


From contributor E:
If you really want to do that, take a hard look at what you can offer that will separate you from other shops - talent, technology, speed, anything. Play to your strong suit. I would suggest that you hire someone to write any of your ads or brochures, or create the copy on your website, should you make one. Typos and grammar mistakes are like blemishes in the finish - they are the first thing people see about your work.


From contributor H:
This is a much easier step to take if you are single or with a partner who is working. It is also much easier in the long run if you can start on the side while maintaining your current position - if at possible. Doing this at 24 is a great opportunity to set up your future. Of all the expenses you'll incur don't overlook (as mentioned several times above) health insurance. Also taxes are a large issue. Even though you may not owe income tax for a few years you will have to pay Social Security taxes so the old guys like me can collect when we retire (hopefully)!


From contributor V:
I say do it, and tell your boss he can eat his non-competitive agreement. It's okay to ask that you don't solicit his sales leads, but you have every right to walk and compete with him as an equal, and you also have the right to quit and work for any other shop you want. People do that every day. I'd take your boss' fear as flattery, if he's that nervous that you'll take his business you must be very skilled at your work. Unfortunately, skill has little to do with running a successful cabinet shop. You might be the best cabinetmaker in the world, but if you can't manage the business, you are dead meat.

Here's what I've learned:

1. Nothing happens until a sale is made.

2. Find a good GC or three and mold your business around what they want.

3. Manage your client's expectations. It's far better to exceed than disappoint.

4. Be flexible, but keep the options simple. Most homeowners are quite happy not knowing the differences between Blum and Accuride.

5. Learn to recognize the expensive/crazy/unreasonable customers and bid accordingly or not at all.



From contributor Y:
Read the last few lines of Contributor K's response, and then read them again. As an owner, you will eat, sleep and breathe the woodshop, and the work you have lined up. It may sound great at first. Then you get married, if not already. Your priorities change (if you want to stay married). Then you have kids. Your priorities change (if you want to be a good parent). It takes a willingness to balance life with work. Being an owner comes with so much that there are days I envy anyone that gets a paycheck on Friday and spends the weekend on the lake with their family, not even giving one thought about the nagging client that called on Friday.

Good luck. I'm 31 and have had my own shop for ten years. I started small as a hobby shop, and grew it from there after college. It has been a long, long road. I could not do it without my wife and her job with the benefits. It is your choice in the end, but look past tomorrow, next year, or five years from now when deciding to do it or not.



From the original questioner:
So basically I'm reading that it can be done and it can be done well if one applies the right amount of devotion but more importantly that person would have to have the right head on their shoulders otherwise they should just not bother.

I have a couple more questions, why not. How do you find General Contractors? How do you find GC's that you want to work for and how do you find GCs you don't want to work for? How can you tell? I understand that GC's make the world go around in the cabinet business. If you do a good job and they keep coming back to you then you're set as long as you keep doing a good job for the right price. But, how do you find them? How do you pry them away from the cabinet makers they already go through?

Another question: price. If I have a good idea of what my competitors are pricing out at, how can I beat them? Is it ethical to beat them in such a way? A lot would say that when a competition between two businesses comes down to price, both sides will lose and will always lose. I tend to agree whole heartedly. What can I do as a startup cabinet maker with little to no reputation to my name to gain an advantage? To get work coming in my doors and money flowing through my business?

In order to pull this off I'll be getting a business loan. I have a very good business plan and marketing plan drawn up with the help of friends, also entrepreneurs. I don't think I'll have a problem getting a loan and if I do then I won't be jumping into this venture leaving my already steady paycheck until I do so no harm done. With that said, what might be a good amount of money to request? I'm reading that it would be good to have at least triple what I think I'll need, to help weather the storm of a slow start up and the slow months that will entail until I'm able to get a good name going for myself.

I have a good head on my shoulders, I wouldn't be kicking this idea around and putting the work in to prepare for this if I didn't think I'd love doing it. You guys all mention the stress, long hours, and etc. I'm not trying to sound like I'm naive or that I don't appreciate your input, I'm simply saying that I've spent a lot of time considering all of that, and I believe I can handle it.



From contributor E:
First, you're going to get a lot of bitter advice. This business is difficult and it can make you bitter if you let it. Yes, the stress and long hours are rough, but if you work smart and manage your client's expectations, you will be okay.

It's hard to find good GCs to work for. My main customer started his business as mine was taking off, and we were connected through a friend. GCs who already have trusted subs are very hard to tear away, even if your prices are competitive. But, people in the trades talk (a lot) and if your name is recommended when a GC is complaining about his existing cabinetmaker, he will give you a try. So, it's all about the network. Get the word out to all your contacts, and keep getting the word out. Call people just to say hello. If they know someone at the moment with a remodeling project, they will probably remember to mention you.

Price: don't play that game. Figure out what you need to charge to make a decent living, and stick to it. Most likely, if you haven't gone overboard with the overhead, you will have a fair and competitive price. With no reputation, your website and your social media presence is all you have. Get great photos of your work and display them well. Write a blog that displays your expertise, and keep yourself in the back of people's mind with Facebook. I think social media is overhyped, but it's definitely a useful tool.

Don't overdo the startup capital. There is something to be said for being hungry--you will have much better focus on your goals if your business is do or die, and you will spend your money much more efficiently. You will need a line of credit regardless, (the cash flow in this business is insane, huge peaks and valleys) but use it sparingly.



From contributor H:
The thing we often tend to overlook about loans is they have to be paid back. My basic financial philosophy is to work as hard as possible to get out of debt as quickly as possible. I know money is cheap to borrow right now but every penny borrowed has to be repaid, even if at a low interest rate. So think twice about what you are borrowing. My advice is to go as far as possible borrowing as little as possible. If this means a slower startup it is a small price to pay for the increased freedom from debt.


From contributor K:
I personally have found that working for GC's is not the end all be all. I have worked for a handful of guys before and have rarely acquired a second job. These guys are chasing the bottom dollar, and in my area guys building houses or remodeling are skimping on kitchens so a custom guy like myself is often way over budget. Often you have to lower your price to give them a "wholesale" opportunity. I guess GC's are good during slow times. I work mainly for homeowners, in fact I am usually the guy that will suggest builders to my clients, funny how that works out. I have had really good luck teaming up with a local granite countertop company. We refer people to each other, and go to the homeshows together. We sell each otherís products in our showrooms as well. It is amazing how many people will talk to the countertop guys before talking to a cabinet maker. Best of luck!


From contributor D:
I agree with what has been said about the difficulty in finding work these days for a custom cabinetmaker. At one time in the not too distant past there was a significant difference between a custom maker and factory cabinets, but now with the introduction of mass customization the difference is getting less and less. There are large domestic and overseas companies, making a decent product with custom sizing and prices a small shop cannot compete with. Builders want mostly just two things from a cabinet company - low prices and fast delivery.

You do not want to try and compete on the low price side of the equation. You stand a better chance if you can provide superior service and a superior product with a reasonable price. I am not trying to discourage anyone from going into the business, on the contrary, I think new blood and new ideas are the life force for an industry. I believe that you need to have a very good idea of who your customers are and what you plan to sell to them. As has been said already, don't spend a lot of time trying to market to GC's, go directly to the consumer and knock them out with quality and service.



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