Financial Success in Woodworking

      Philosophies and turning points on the path to $100K a year. January 6, 2005

Question
As a small to medium shop (under 10 employees), how did you get to be successful? I know that success has different definitions to different people. I am looking for the monetary success stories.

Outside of the standard work hard, pay your dues, etc., what did you do? Did you get one big customer that turned the corner? Did you take risks and go into a market you really didn't know? Did you automate? Did you grow the business before you took out a dime?

There are lots of shop owners that make a good living (say $50,000 or so take home). I know both small and medium shops that fall into this category. What separates them from a shop owner that takes home over 100,000?

Forum Responses
(Business Forum)
From contributor K:
It may sound old... and it may sound simple... but it's true: Success is what you perceive it to be. It is usually the most profound and elusive measurement a person can take. Let's say I make 20K per year, have a nice wife, and three great, smart and healthy kids. I can pay all my bills, can't afford that 6K plasma TV, but own a 27". I love what I do (woodworking), my marriage is good and I'm well respected by my peers. I call that successful. Then there's a guy who makes 100K per year, has three boats, a second house, a private theater room in his house and goes out for dinner five nights a week. However, his marriage is about to end, his kids hate him because he's never at home and he's a pompous jackass around his friends. I call that a loser.

Sorry to go philosophical on ya, but that's my 2 cents.



From contributor L:
Some years I've been successful, some not. I think the monetary success you are talking about is not in being a woodworker but in being a businessman. Until I started treating it as a business, I never made good money. Now I hire only people with potential. I'd rather have one $20/hr man than two at $10/hr. I'm not in it for the money. When I make money, I feel I have to put most of it away for the times when we don't have enough work to pay the bills. I keep my employees and pay them even when there is nothing to do. This business goes through a lot of cycles. Two years ago we had our best ever year, last year we lost money, and right now more work is coming in than we can do. Best advice: know your costs, never buy work.


From contributor H:
Your question is a good one and should prompt some good debate. Although contributor K makes a good point, his response has nothing to do with your question.

A top notch cabinetmaker today in Montreal with some supervisory capacity gets 20.00/hr or more plus regular perks and goes home at 5pm with no worries or paperwork. At a 40 hr+ workweek that is 42K.

If an owner has employees that are earning a little less than him, and there is a backlog of orders, he is doing something wrong. Perhaps his expenses are too high or the many small things that we get used to are eating into his profit without noticing it. Is high speed internet necessary at the shop and at home? Do you really need all those phone lines, and how about those cellulars and the extra hours? I have always upgraded my machinery when a big commercial job came along that would help pay for it. I would buy it to do the job and cover the loan in 30-45 days when the job was delivered. I buy materials and hardware carefully and in bulk, if I see that they will be used within 30-45 days and same on the volume.

Perhaps most importantly, I think of myself as a professional and charge accordingly with confidence and a smile on my face. People respect a straightforward attitude and will pay for a service and product from a company or individual that exudes confidence.

I was at a dinner party recently where there were many wealthy professionals as invited guests. As conversation went around the table, people were often asked what they did for a living and when I was asked, I answered that I ran a custom cabinet shop. All the surgeons and lawyers and especially their wives turned their conversations to me with admiration. I was surprised but did not take a blue collar attitude to the many questions they had on quality and form and design. I discussed my trade no differently than the heart surgeon spoke of the newest advances in his field and my wife also showed a confidence that we were their equals. I know of four man shops like my own where the owners make 100K plus. They work hard as I certainly do, but they don't feel apologetic for asking a good price with a healthy profit for a top notch product delivered on time and according to the client's desires.



From contributor J:
I am a one-man furniture, production and custom shop. I have been self-employed full time since 1979. My success has been through good priorities, church, family, business, and time for myself.

Growing up I worked for my dad building houses, and he would say "that is good enough" as we tried to work with two-for-a-dollar hammers, lumberyard clean up lumber, and other assorted bargains. If you say "that is good enough" around my shop, you will get tossed out - I fired my own brother. To be successful, you must always evaluate your products and procedures and make them better. What you do is never good enough (but do not get excessive, either). Also, keep good records - bookkeeping, time records, and shop notes.

My skills, product, and business has constantly grown, I enjoy my work, I have a great family life, and I have time for myself. In my book, that is being successful.



From contributor S:
Okay, here begins the debate. I also would like to know what others have done to have a successful business and make money. I am single with no kids, and I am not into the meaning of life at this moment in time. My concerns are to grow my business and learn from others that have done it before me. Some of the things posted here are good. I have summarized them into the following list.

Be a businessman
Have a business plan (goal)
Hire experienced workers
Watch your expenses
Buy equipment as needed
Good quality product
Keep business records

I would like to hear some more specific examples of when your business turned the corner and started to bring in more profits and money. We who are following in your footsteps need a pep talk sometimes so that we can maintain our energy to make it in the business of woodworking.



From contributor G:
In response to contributor K's happy woodworker making $20,000 a year with a wife and three kids versus the unhappy guy trying to make more money... I know of several cabinetmakers who make over $100,000 a year, drive new trucks, send their kids to school, can afford medical insurance, have hobbies, vacations, etc. - all the things we middle class would like to have but can't with the Happy Woodworker making $20,000 scenario. There are systems that can take a one man operation to that level, and the wife won't leave you, and the kids will like the fact that you're home on weekends while you're making money during the week. There is no easy, quick fix, but plenty of people are doing it. I'm still working on it myself.


From contributor K:
Nobody is saying that if you're making 100k, you'll have a lousy marriage, distant kids, never be at home and be a jerk. It was just a possible scenario. Simply stated, folks need to assess their own success, and they need to do that not based on how other folks live.

I have several friends that earn well in excess of 100K per year (they're not all woodworkers) and have a lot more stress than I do. They're always worried about making the 500K house note, coming up with school tuition, paying the mooring/docking fee for their "big boat", etc. The fact is, many of us live and spend beyond our means no matter what income level we have. It's all relative in the scheme of things.

By the way, I do a lot better that 20k, but I've been there too. The way some people measure success... I associate stress!



From contributor D:
"There are systems that can take a one man operation to that level, and the wife won't leave you, and the kids will like the fact that you're home on weekends while you're making money during the week. There is no easy quick fix but plenty of people are doing it. I'm still working on it myself."

From your experience, what are the key points to making this happen? Surely, it doesn't happen by accident. (At least not to me.) Was it a single big customer that paved the way, or a slow growth type of approach? Was this driven by an aggressive marketing approach of some sort? Was the growth driven by a 'good old boy' networking process? If you had to pick out the key points, what would they be?



From contributor P:
ďOther than the usualÖĒ There is no other than the usual. The usual is work hard, do what works, stick to the straight and narrow. The guys I have talked to in this industry that are successful work hard, sometimes unbelievably so. They are not on drugs, they are not alcoholics, they donít badmouth everyone they know, etc. When they get something that works, they stick with it - they donít reinvent the wheel every week.

Beyond this, they have found out what is needed and wanted (they didnít assume anything) and they promoted what was needed and wanted and produced it exactly the way they said they would. This has been done and can be done in every possible situation imaginable. When I have not been successful, I have not done the above and when I have been successful, I have.

I will also say that money alone is a piss poor motivator. For sure, you need to make enough to live. How much? I guess that varies from person to person, but once you have hit the 100k goal, then what? I like doing this kind of work for the creative aspects of it, but I also have to balance this against the financial aspects of the business. If money was the only goal, I would shoot for owning a credit card company, a bank, etc. But I would be willing to bet that if you interviewed guys who are successful - really successful - that money would not be the goal. For example, Steven Jobs, Bill Gates, the Google guys - they would probably say something like "I wanted to change the world", etc., but I will lay you odds that making money for the sake of making money was not the only goal. Part of the goal? You bet.



From contributor J:
The key is to honestly know your capabilities and honestly know your market. Know what your profit per piece or job is, know your profit per hour per piece or job. When you are always busy building what you do best, and making a reasonable amount per hour, you have turned the corner.


From contributor N:
Out of about a dozen responses to the original question, not one has claimed to make $100,000+.

As a new (2 years) cabinet business owner who brought home half the target amount of 100k last year, the original question is one that's very important to me. I don't wish to be rich and don't measure success by dollars alone, but would like to be able to make a house payment, pay the kids' medical and dental expenses, put a little away for retirement, and work less then 60 hours per week. Where I live, this would take approximately 100k annually.

I would love to hear from owners that make 6 digits and hear the specifics of their business. How many years in business? How many employees? What type of work do they mostly do? What part of the country are they from? What kind of equipment do they use? How many hours do they put in per week? And as asked, is there anything specific that brought you up from the 50k level to the 100k level?



From contributor I:
I have been going at in this business for a while now and always wondered the same thing... My first response is the following - if you're going into cabinetmaking for the money, you're probably going down the wrong path and I would suggest you consider alternatives. This is a very difficult business - usually "feast or famine"... You have to be able to weather some storms, be it a poorly bid job you have to eat, a slowdown in work, a big holdup from a job though a GC, etc. I suspect most would agree that slow and steady is what wins the race here. You need to focus on doing things well everyday, week, month, etc., and things will fall into place. It takes time to get established and develop a reputation - several years, easily. In that time, hopefully you gain a good clientele and possibly come across a few good contacts that call upon your services regularly (i.e. designer, AV, GC, etc.).

From a purely monetary aspect, this is the wrong business. Quality of life does come into the picture, and I would say again that there is probably more stress in this industry than most would ever think or care to believe. If you lose a job, you get another one... If you are going bankrupt, you lose all your assets, then look for another job! I balance employee morale, material inventory, cash flow, happy and demanding customers, for less money than my two previous jobs. I ask myself why, but when I think and talk amongst my friends, who might have it better? They all envy me and want out of their jobs. Grass is always greener on the other side. I guess. I love the work and the challenge. For now, I can live with making a little less money to not get CC'ed on 100 useless emails a day, show up to work when I want to, leave when I want to, and at the end of the day, know we made our customer happy with our service.

A little off the track, but I think it is all relative. I have done a few big jobs where a new machine would have helped and could have paid for itself, and within 3 months, I have been sitting completely idle paying guys to do tool maintenance waiting for the next job to get underway. I look at it month by month, then quarter by quarter, and look for constant improvement. Things just fall into place more and more as you stay on top of them with records and learn your business and how it runs. I think we're all waiting for the big "time and materials" job from that 15,000 SF home going up down the road, but I'm planning to wait for that job my entire career, and if I have to take pre-emptive measures and move out of "plan" mode and into action, all the better.

I think people also get tied up with the "one tool" notion that it can make all the difference in the world. In may instances it probably does, but not always. I was at a big show recently and saw so many CNCs I was bored of them halfway through the floor. I couldn't help but think how much time it would save, but you don't see the learning curve involved. Those computers never malfunction at the shows, and you sometimes forget that increased productivity with the CNC will lead to more administrative work. I am already bogged down with paperwork. Double the jobs, materials throughput, and I would have to hire someone else, as I am already working near every hour of the day, seven days a week to stay on top of things. Of course, you have to spend money to make money, and I am always looking at the next tool, but I want the work for the tool to do, rather than the tool with no work to do.

I'd love to make 6 figures, and I plan to, but I know it will be a struggle to get there, and then stay there. I also know if my only goal was to reach that six figure mark, I wouldn't be here in my shop typing this on WOODWEB right now - as my last job was just shy of six figures and I would likely have eclipsed that mark in a short period of time. For now, I monitor our expenses, compare our opportunity cost (shop rate * billable man/woman hours in the shop) to our actual revenue each month, then try and find ways to get those two numbers closer or figure out why we're way off some months.



From contributor G:
"Out of about a dozen responses to the original question, not one has claimed to make $100,000+."

I certainly don't, but do make a decent living, and 17 years ago, moved to a state where the cost of owning a home and land is affordable. Most of my goals have been met, and it's still a work in progress (believe me - lots of work). There are shop owners, some small, that make over the $100,000+ mark and they post here all the time. I doubt they will come forward and give you their secrets easily. They had to work smart to get there, but it can be done. There have been some very good suggestions here already. Keep pushing - maybe they will chime in.

Contributor K, I grew up in a very wealthy town in S.Cal. in the 60's. By today's standards, everyone living there was way above the 100,000 dollar income amount. I'd say 1/3 where very happy, 1/3 wondered why money didn't make them happy, and the other 1/3 where drunks. Most were very smart and worked hard - doctors, engineers, business owners (like the Bell's who started Taco Bell), real estate investors, stock market players, etc. Others got their money from family. None were cabinetmakers!



From contributor E:
There have been a lot of philosophical answers to this thread so far. I would like to offer a more practical answer. I started out offering custom furniture of all types, and had very little interest, few customers, spent lots of time with them, made very little money.

Then, a customer asked if I could make a kitchen. I thought about it, said yes, got the job, learnt lots about kitchens. Now people pay £100 just to get on my waiting list. The fact that many kitchen-making tasks are repetitive means that I can specialise, speed up and make decent money.

So that was the turning point - getting into the right line of work, one where real money is spent and is available to be earned. It might be different in other areas, but here the money is in kitchens.



From contributor O:
Well, I guess I'm close to what was described in the original post as someone who (nearly) takes home 100k - over that when you include the company vehicle (4 year old nice truck), and other allowable perks.

We are a five man shop doing all custom high-end. I quit a nasty 25 man shop management gig 13 years ago to work in my backyard shop. Being a recovering abused employee, I resolved that if I ever had employees, I'd treat them right - at least as well as customers. Within a couple of years, I hired my first helper, and 5 years ago moved to 5,000 s/f.

I also resolved to do the best work I possibly could, and to continually reexamine my reasoning for the business, the work ethics and the whole picture. I approached it from the very philosophical side - against all the rules.

Right away, customers thanked me for returning their calls (?!?). I thought of that as basic. I always gave them more than they counted on - exceeded their expectations - even when we made no money. I always try to give credit where it is due - to the gentlemen in the shop that now make everything so well, as well as the person paying us to do it. I'm just the guy in the middle. I want to make the employees as financially able as I am - our last major goal.

I've made mistakes - bad estimates, favors, stupid moves, and I've learned from them. The worst mistakes were bad hires and being slow to fire same. These bad hires were usually good people that were as philosophical as me.

I am gifted at thinking in 3D, and enjoy problem solving as a mental exercise. I demand the shop guys also learn to creatively solve problems. I have spent a lot of time looking at good architecture and art to develop a sense of what is correct and what is not. I encourage that in both employees and customers.

I survived a heart attack at 50 years old (family history), and while I was recovering, the work went on in fine style. I now see my job as facilitating - a bridge between people of means and our abilities. I am still way too philosophical according to all the advisors one could ask. My CPA laughs and says we are definitely doing something right. I am very happily married, I have a great relationship with my two kids, the dog likes me and my customers are loyal and respectful. Doctors and other professionals introduce themselves without the "Dr." and envy what we do. I have even had a few ask if I could teach them, so I now do that at a local woodworking school. I still love what I do, although there are days...

So what is the secret? Love what you do and do it like a madman. Keep true to solid principles and always excel, no matter how hard it is. It is that simple, but it is not simple.



From contributor A:
I got quite a cushy job about a year and a half ago, managing a company for someone else without ownership. My first year, I personally made around $100k. My focus is high-end custom cabinetry. I find that most of the competition doesn't really know what high-end means. I feel my company is successful because we provide a better product, and provide better service.

We are also creative in the materials and designs that we provide. We create a connection with most customers who quickly understand that we bring a passion to what we do, but are not egotistical about it.

This comes from knowledge and experience (which are not the same), but also flexibility and creativity. Think outside of the box - pun intended. Provide your customer with a product and service that cannot be provided by other companies. If they are shopping for the same old stuff, nicely tell them that is not your market. In our market, the "same old" happens to be unfinished red oak face frame cabinets with raised panel doors.

If there are secrets, they are:
Make sure you love what you do.
Don't try and be something you're not.
Honestly evaluate your strengths and use them.
Hire good people, who share the same vision you have.
Have a plan.
Follow the plan.
Be flexible, and constantly evaluate the plan.
Provide more than the customer would expect.
Be professional in everything you do (estimates, drawings, communication, product, etc.).
Keep a sense of humor.
Embrace the challenges of the job, which include tough customers, employees, and deadlines (learn to love stress).

By the way, I have always been in this business because I loved it. If I were doing it for money, I would not be successful. But if I didn't plan on making money in this business, I wouldn't. And if I didn't expect to make $100k, I certainly wouldn't.



From contributor H:
I posted my feelings at the beginning of this thread and am in the 100k category using the philosophy of the last two posts. Love your work, do good work, respect your clients and respect yourself! The rest will follow.


From contributor N:
Your responses are encouraging to a new shop owner who shares your business philosophies and understands the concepts of customer service and custom. You all sound as though you love what you do, but also understand that because of the quality of your product and service that you deserve a good wage. Many who responded sounded as if, because they enjoy what they do, they shouldn't be compensated well. No wonder why plumbers and electricians consistently take home more then cabinet makers!

Contributor O states that he has 5 employees. How many do you have contributors A and H?

I'm a one-man show and expect to take home 60k+ this year, but am having a hard time making the jump to hiring an employee. I'm in California with a 65%+ workman's comp fee. How long does it usually take before an employee becomes profitable? I work 60 hours per week just to make ends meet and fear that I won't have the time to train an employee to my methods.



From contributor A:
I currently have 6 employees, plus me and my wife.

In my opinion, it is more profitable to hire employees than to try and do it all yourself. There will be an adjustment period for them to get used to your way, but if you find a qualified cabinetmaker, it shouldn't take long. And that process is ongoing. I prefer to find younger guys with passion for the work, and minds that want to learn (but can also figure things out on their own). They should have some experience (3-5 years), but I find the more experienced guys think they know everything and aren't very flexible or open to new ways of doing things.

I didn't mention this in my previous thread, but I think good equipment is very important as well. I have not been disappointed in any of the quality equipment I've purchased. But I have kicked myself for cutting corners on some things. It's important to know what you will be producing, and purchasing the right equipment to make your guys efficient. Fighting machines makes for very irritable cabinetmakers. They need good tools to do a good job.



From contributor Y:
I'm a two man shop. I consistently earn around $200k per year and have done so for the past couple of years. I've been in business a little under five years. We can discuss philosophy until the cows come home or we can talk about controlling costs and charging a fair price. Either way, you will miss the boat. The bottom line is don't try to be everything to everyone. Specialize and niche market. It's that simple. If you don't know how to identify a niche market, then it's time to break out the books and learn. Some will generalize about "high-end" work or "production work". The truth is that if they are successful, they have found a niche and have capitalized on that niche. Once you have established a niche and built a reputation around that niche, then the money will follow.

My niche? We do everything! (grin) Actually, we build huntboards, sideboards, podiums, and gavels using reclaimed hardwood or trees with historical significance. For example, we recently turned twenty gavels for several prominent judges out of an old hanging tree. We built the presentation boxes out of the same lumber and based the gavels on a style that was popular during the civil war. We netted $10k on that job that took a little over 6 days to complete. I expect that we will receive more work from these customers in the near future because they are happy.

Finally, work on your skills to make you unique. Our byline is "In The German Tradition". Start marketing yourself with a story that will separate you from the pack and stick to your guns. Lastly, don't wait forever to see if it's working. Test your market and keep on testing until you hit on the right mix. Don't rely solely on word-of-mouth or it will take years to make a profit. Good Luck!



From contributor U:
First, read the book "The E-myth." Then read "Who Moved My Cheese."

I have a 5 man shop less then three years old and make well over 100K. I took nothing for two years. I buried all the profit into marketing and equipment. (I am blessed with a wife who could support the family for that period of time.) In the beginning, I built everything. Now I build nothing but sales and relationships. We have no CNC equipment but all our equipment is top shelf. Every day I work on my business, not in my business. The more successful we become, the more reasonable my hours become.

If you want to build cabinets, go get a job as a cabinetmaker. If you want to own a cabinet company, that is a different matter.

Here is a concept people donít seem to get. Your price should not be based on materials and labor. That is your cost. Your price should be based on the maximum you can sell your product for. If you price on labor and material, you are a job shop. If you are trying to compete with Home Depot, you donít get it.

Anyone not making over $100K should go over to www.true32.com and read and listen.
Then you should take the training - the whole thing. Donít read the book and think you got it. You are selling the wrong product to the wrong market.

To have the risk involved in owning a company with poor return is bad business. Figure out how to increase your profit or get out. Get a job, enjoy your life. Heck, Iíd probably like to hire you. Sorry if this sounds harsh, but if it's not working, fix it. If you can't figure out how, find someone to help you.



From contributor N:
Contributor U, thanks for the input. Your post proves that there is more than one way to be financially successful.

The previous several posts recommend loving woodwork and the business, and also advocate doing custom work. For your recommendation to work for me, I'd have to move, get divorced and marry a rich wife, none of which is happening.

Though I have gained some valuable insights from True 32, I could not and nobody else could make their system work in my neck of the woods. I live in a very small community that mostly consists of very custom homes with customers that demand truly custom cabinets. Not euro stock cabinets with trim enhancements. They immediately know the difference between frameless and FF construction and usually demand the latter.



From contributor R:
After 20 plus years, our company is just under 7 figures gross. I take home a nice comfortable income, and yes, the perks are also very nice. We do all types of work -cabinets, furniture, builtins, etc. In our area you have to be able to do it all, as there is not enough support to have a niche.
.
We have 5 employees and take care of them, also. A happy shop is a productive shop. We have no CNC, but the best equipment.


From contributor P:
The first thing to look at is what you want to do and what is needed and wanted.

I have seen a lot of businesses get off the rails because of unethical activities, i.e. drugs, alcohol abuse, illegal business practices (especially the kind that get the government agencies involved), laziness, etc. This occurs with the owners and/or the employees and is often overlooked, but is very often the biggest problem that a business has. Until this is handled, the rest is a moot point. This is often assumed to be handled but is not.

After the above, you need to look at the technical side. Do you know how to make what you are making? This seems obvious, but more often than not a business that is not doing well doesn't know what they are doing at a technical level (the first barrier to learning something is not knowing that you donít know), i.e. their product is not up to acceptable standards or they are not efficient enough to produce their product in a viable manner. There are some good places to go for training for the technical and business side: Cma, Awi, Wic, Tru32, and Nasfm.

After the above, you need to look at the business side - operation estimating, policy, organization, legal rudiments, planning, marketing, etc. If this portion of the business is not handled, you will not make money. But this portion does not have a solid foundation until the first two are handled.



From contributor W:
Goodness me, that was a lot of reading. Took me a whole cup of tea to get through it. What a mighty lot of top chaps you all are getting in there and giving it out.

However, there has been one rather odd omission. Nearly everyone has been focusing inward. Tweaking and getting better at things which are under your control in your business, your shop, your employees, your self. But I would rather say that there are only modest gains to be made here in take home revenue and all the other benefits of success.

I would be directing your attention outward. The marketplace is where you will find more answers. More results in shorter time.

If you develop a new product, then you will, I presume for a time, have a monopoly, consequently charging what the market will bear and enjoying profit. If someone matches you, then you have to develop another new product. It's not hard. It's a process - children do it every time they discover something new. You can do it, too. The methodology is not a mystery, nor is it difficult. It's very well-published. Buy the books and read.

I don't have very much confidence in claiming that a success strategy lies in being more competitive. I think you will get further by having less competitors. That is - do something unique, have the market to yourself, have a monopoly.

This doesn't mean that you don't need to do those other things that the chaps have been talking about. You should do those, too.

If you feel lost in this world of the marketplace and the future, consult a professional marketing person and get down and dirty with him/her.

I really think that 100k is not a worthy goal - rather modest, actually. For this, a whole new attitude and world view can be enjoyed - both personal, professional and social. Best not think about money at all for the time being.

I was rather amused at comments of surprise, where doctors and other 'posh nobs' were interested in the work of a cabinet shop. Why wouldn't they be interested, for goodness sake? It's a grand place to be - it's very noble, lots of people wish they could do it. Where I live, an artisan is a person of respect and social standing.

I finish by saying that timber is a remarkable material to make a product with. It has character, warmth, versatility, strength, variety, and a host more good stuff. As a choice of medium, it's a good start. But get out of thinking about the standard products of a cabinet shop and get creative.

Remember that as soon as something can earn the label 'art', it's worth more and has fewer equals. If you can patent something, it gets even better. If you can get an award from someone important, better again. Lastly, if you invent, develop, design something that everyone can use you'll never have to ask this question again. But rather...

What is there to do once you've become really successful?



From contributor Q:
"What is there to do once you've become really successful?"

Depends on whether you see life as a series of discrete goals, or as a journey.



From contributor A:
Contributor W, nice post, with some excellent points.

Where I live, most people hear the word "cabinetmaker" and don't first associate that with being an artisan. But I agree with your point and I must not have explained our company very well. You've hit it on the head - we are artisans and our clients realize that when they meet us and see our work. They understand we are not the typical cabinet shop.

We address the monopoly in a different way than creating a product line that is unique. We create a unique product for each customer, specially designed and crafted to their likes. That is what creates much of the stress, but also much of the enjoyment. It is very difficult, but very rewarding.

That is what gives us a unique market position. I wouldn't say we have a monopoly, but I can count on one hand the number of companies in my area that can create this type of product for the customer.

What I feel separates us is that we embrace technology. The artisan shop is typically very low tech - while the other artisan shops feel pride in doing it the "old way", I feel computers and equipment can make me more profitable.

As far as making a unique widget that everyone wants, I think everyone in this business has thought about that at one time or another. I don't think it is as easy as contributor W makes it seem.



From contributor W:
Contributor A, you say that you are in the business of making 'unique craftsman built' cabinets. HmmmÖ I would say that if I was consulting with you on this matter from a marketing perspective, I would scarcely agree with you.

I would say (it's only a guess from what you've told me - I haven't seem your work or interviewed your customers) that you are in the business of selling status symbols, or 'style' if you will. As such, you combine craftsmanship with design and taste to make a product which is sold not for its function, but for its instant appeal.

This is not the same thing I was referring to. Doing something familiar in unfamiliar ways is not necessarily creative. The opposite might be, but consider that you might one day see a need for which there is currently no solution. You might design and build a solution. Then we might be in agreement.

The process is quite easy. I've been through it dozens of times with almost a surety of outcome. If you need to get some discussion on the process, any comprehensive marketing text should have something to offer.



From contributor Z:
Hiring an employee was a turning point for me. Knowing that work was progressing 40 hours a week whether I was there or not was key. An employee should be able to add $8,000-10,000 a month in completed work (sales) over what a one man shop can turn out. Even with my workers comp rate at 25% in CA and payroll taxes, I think $30,000-$40,000 added income/year for the shop owner because of one employee is possible.


From contributor U:
Contributor N, you already have a business, from what you have said, so changing what you make is not going to end your income flow. Even if you don't go frameless, the concepts apply. It sounds like you won't accept frameless and you are not giving your customers a chance. From what you have said, you obviously could not sell it.

In any event, if you have a love of woodworking, build a shop in your house and build what you want.

If you want to take on the risk and difficulty of owning and running a business to make $50K or even 100K a year, you are insane. You are buying yourself a job. As an owner of a business you must expect a better than average return to justify the risk. You have a few income streams you must collect on. First, you have to be paid to run the business at least as much as it would cost you to hire someone to do it for you. Second, you must be paid a return on your investment in the business. If you have $100K in equipment and inventory you must make at least a market return on that investment. In reality, your investment is high risk, so your return should be better than market return.

Are you willing to change or are you looking for a silver bullet solution?



From contributor N:
Contributor U, thanks for your input, though I strongly disagree with your views. Unless you have run a successful cabinet business in every type of community in America, your answers are presumptuous.

I've been self-employed for 20 years (two different businesses) and understand that there is no silver bullet (including tru32) in any business.

I understand the benefits of frameless (mainly for the manufacturer) and 25% of my work is frameless, however, if I quite doing ffs I would lose 75% of my work. If you understood how business works in a small town you would realize this is unreasonable.

If I could make 50k to 100k by woodworking out of my garage I would, but the truth is I'd be lucky to make 20k.

I feel it is foolish to take on the risk of running a cabinet shop, if your only goal is to make a huge profit. Out of all the business ventures available in this country, cabinetry is a poor choice if the bottom line is all you are interested in. There are countless other businesses that require less start-up capital, overhead, risks and headaches than cabinetry.

I realize that I am buying a job, and to me it is well worth it, if that's what it takes to live in one of the nicest places in this country. If I were to get a job at a local shop I'd be lucky to make 30k per year. I'll make double that this year, I love where I live, I love my job and I have only invested about 20K. I call that a heck of an investment.

I'll continue to look for ways to improve my cabinetry and my business and with the help of the fine folks who post on WOODWEB, I know I'll succeed in doing so.



From contributor A:
Contributor W, to limit the definition of "creativity" to only those things which are not familiar is off base, in my opinion. Could you give us a few examples of some of those "easy" and "creative" solutions you've invented?


From contributor M:
Working on your business and not in it is the key turning point. The hard part is figuring out how to find the time to do it. I will save you the long stories of all the heartache and mistakes, like almost all of us here have had.

When you have employees, you need procedures for every single thing that is done every step of the way, no matter how trivial it may seem, to keep the work flowing and questions from needing to be asked on the floor. There should be no decision making once the job starts in shop. (We are still not 100% there yet, but getting closer every day.) Fine tune everything, always. When a problem comes up, find a solution and institute a new policy so it never happens again.

Be willing to hire and pay for the best you can find. Quality does not cost - it pays. Remember, this is what you are selling to your clients - use the same philosophy when hiring. My top guys make over 50k in pay and benefits. One is close to 70k. Oddly enough, they also make me the most money. All of them understand exactly what we are trying to do here and are doing more than their share to make it reality. The ones that did not share the vision are all gone.

You will never be able to charge more for your product itself. However, customer satisfaction is priceless and the right clients will pay whatever you charge if they know they will get what they want when they want it, hassle-free, and you are consistently honest and deliver.

Think long term in your planning. It is extremely tough at the beginning, almost unbearable. But when it actually all gels together, you will be very happy you made certain sacrifices along the way.

Actually, it is very simple. You make money when you stop being a woodworker and become a businessman. You know cabinetmaking already like the back of your hand. That is why you started in the first place. Now it is time to focus 100% of your effort into the business. I am not a businessman, but a cabinetmaker who had no choice but to do something about the situation or rollover, quit and close the doors. Quitting is not an option!

Educate yourself any way you can. Since I have taken this philosophy, business has jumped 300% over 2 years ago. Operating costs haven't even doubled. I will be up to 6 employees in the next month and we outsource as many installs as possible to keep my guys on the floor. If we stay at this pace, we will do well over a million this year - close to 1.5 in custom work, barring any major problems, with 15-20% gross business profits. I will probably take half and the rest will be reinvested. We do not have any CNC and am not sure if we will be getting any, but many equipment upgrades will be coming in the next few years. Plus another couple hundred thousand in selling other cabinet companies with the same % gross profit. Only all these profits will be going into a second showroom we are working on. Up till last year, the little I made all went back in the business and in growing and moving too fast. Move slow and steady - don't live for the moment, plan for the future. After spending 80+ hours a week for 2 years straight breaking this company down to the basics and rethinking everything, I actually have time to live life and make good money. Unfortunately, being the glutton for punishment that I am, this "found" time is being spent on starting another business. My wife and I made a decision to spend this kind of time and money up front so we could retire early. I am down to 55-60 hours and that is by choice. I could sit back and work half that, but it is just not in me to do so at this point.

Two years ago I was ready to throw in the towel. I decided to teach myself as much as possible by reading as often as I could and learning everything I could from everyone, including a vast amount from the people on this site. Take time now for yourself and set out your goals, make a plan, than make a leap of faith. Time spent wisely now will pay off huge in the long run.



From contributor W:
Contributor A, product development is a process Ė a journey. I have been refining it over the years, as have many others who are certainly smarter than me, to be a 'DIY journey'. Personally, I have delivered the process to over 55 companies on 4 continents. I cannot list the developments these projects have yielded, as that would breach confidentiality. I suggest you refer to any comprehensive marketing text to get an overview if youíre really curious. If you want to know the nuts and bolts, you will just have to pay the fee like everyone else. I said it was easy and it is - I stand by that. You donít need to be brilliant, just dedicated, determined and curious.

What's needed to be successful is a change in mindset. If you think like a tradesman, then you'll always take home tradesmanís wages. If you become an entrepreneur, then you'll enjoy a dividend. No one will say that the tradesman/artisan has no place. To the contrary, it's obvious that such people are entirely necessary. A few, however, will feel the wave of constructive discontent and decide on a change.



From contributor A:
In my opinion, you must be knowledgeable about the materials and processes to really set yourself apart from someone else. Yes, you must be a businessman, but also need to understand the craft. Your customer will quickly pick up on whether you are just selling them, or actually know what you are talking about. A technical understanding of your product, and why you engineer your product the way you do is vital. Don't just do things because it's the way others do it.

You said you want to make money in this business. In my opinion, to waste your time trying to invent a new product will be fruitless. Possibly a process, but that usually comes from brainstorming ways to make your business more profitable. That should be your focus.

Creativity can be the ability to think and approach a problem in an original or flexible way. The problem may be familiar, but the result is unique.



From contributor M:
We make all decisions based on two points and two points only. Will it raise quality level without taking more time, or will it take less time without hurting quality? That is it. If it does not first meet that criteria, it is immediately dismissed as an option. Do not spend time or resources that will not increase productivity. Also, yes, you have to put out a great product.


From contributor U:
I fully agree with contributor M. What he is saying is contained in the book the E-myth and thought by True 32. The True 32 guys have already figured out the procedures and tested them - that is what they teach you. Can it be done without them? Absolutely. If you have been at it for 20 years, sometimes it is a good idea to get someone to challenge your paradigm.

I am in no way, shape or form affiliated with True32. I do know what they are doing and agree with it.



From contributor V:
I am in a different niche than most of the cabinetmakers that have been responding here. I make custom fitted seating for individuals. My customer base is other artisans, to let them work longer at their craft, but have been expanding my product line into furniture like rockers, arm chairs, side chairs, love seats, etc.

I am in my second professional career. I walked away from a $100k+ profession, moved to a less expensive area to live, all with the blessing of my wife. She had expected me to quit 6 months earlier.

My customer base is nationwide. Nothing is stock. I do all the work and have developed the marketing materials necessary for customers to give me the necessary measurements to make their bench or chair. Only one customer has been dissatisfied with their piece, and I took it back and refunded what they paid.

For the last 6 years, business has grown by 20% every year. This year will be the best yet and I am now having to quote Jan '05 for delivery on orders taken today.

I do not have employees to worry about keeping busy, paying workman's comp, insurance, etc. So I concentrate on making fine seating, keeping in touch with customers, improving both and never asking the question, "Am I successful?"

I stick to my niche, do not make tables or cabinets as there are too many of you guys out there to compete with.

So if there is a secret here, it is that you need to find a market where there are few providers for a significant number of customers.



The comments below were added after this Forum discussion was archived as a Knowledge Base article (add your comment).

Comment from contributor A:
Specific instances in another man's life will only be general lessons to me. My business plan does not include a shop, as that would involve too much overhead. I buy a house, fix it up, do all the interior trim and cabinetry myself (to include windows, etc.). I then have an open house and invite family, friends, realtors, loan officers, anybody that I dealt with while the build was going on (including the guy I buy my coffee from every morning), and show them my work.

I am working on one now. The money I make will pay for my tool upgrades, another house, maybe a shop (if that fits in the business plan). I've seen enough guys with space age equipment, cool truck and a nice shop go out of business because of overhead. I've been working on this for 7 years, saving money, buying only quality tools, making sure my credit stayed good. No fancy truck, no fancy positioner (reconditioned tools), you name it. Lot's of time reading WOODWEB. All of that has helped me take the next step, without hesitation.



Comment from contributor B:
Hire a book keeper for the sake of free time! I have been relatively successful (two months off a year, $60k - stress for sure but not overly stressed). My shop only costs me $1500 a month and I have one employee who is a go getter yet leaves the place in some shambles, which drives me nuts but he helps me make money so one must weigh the pos/neg.

Anyway my point Is if you can pay someone to do something for you for less than you actually make per hour than do so. Don't get so caught up in what you do that you disregard the other parallel opportunities that are in front of you.



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