Small Shop Struggles

      A one-employee cabinet shop owner gets wide-ranging practical advice on managing his fledgling business. The voice of experience, from pros who have been there. August 29, 2005

Question
Recently I had to lay off my brother because he was to expensive for his experience. I hired a kid with no experience and now I have to keep an eye on him and build. He's a lot cheaper, but with my brother I could at least rely on him to do his job without me teaching him. I am the main builder, so whoever else is there is a helper.

But I also have to get the business, go on bids, etc. So my production is almost too slow now. What should I do in this situation? I have a few ideas.
1. Work alone and keep the bills low and produce the same amount anyways.
2. Re-hire my brother and hope he gets better.
3. Keep this kid who has some sort of learning disability it seems, or hire someone with good experience and shell out the bucks in hopes that I can double my production.

Any suggestions are appreciated.

Forum Responses
(Business and Management Forum)
From contributor W:
Make your processes very simple to follow so even low skilled workers can be productive.



From contributor J:
What does 'too expensive for his experience' mean, and what does too slow mean as well? Needing too much supervision, or something else?

There's no doubt that finding and keeping good employees at rates that are economic is probably the second most difficult thing in this business (the first most difficult being getting the sales you need).

Sounds to me, though, that if your brother is unsuitable, and this new employee is unsuitable, then you either need to set things up so you don't need an employee, or you need to go out into the labor market again and have another look to find what you need.



From contributor B:
Take a good look at Contributor W’s post. A good system will reduce the learning curve and force any employee to produce their quota.


From contributor A:
“He's a lot cheaper, but with my brother I could at least rely on him to do his job without me standing there teaching him". I would say re-hire your brother and take care of him and look at other ways to make production run smoother and produce more cabinets. I would never lay my brother off to put a few bucks in my pocket even if I had to starve to death. A hired hand is a hired hand and he will never ever take the place of family.


From the original questioner:
The major problem is that I started my business only six months ago. I got real busy and needed help so I put my brother on. Then I started to drain my accounts to pay for him. I know that I wasn't charging the customers enough and that is why I needed to lay him off. I am learning the entire thing from scratch except how to build obviously. I am good at that. My brother can build if I stand and point out how to do it until he fully understands. It's not a bad thing, but that two hours could have been spend building it myself. I only laid him off but I also got him a job with a contractor friend. I could never kick him to the curb with nothing.

The new guy seems to want to learn but kind of brushes me off like he knows what he's doing. I'll show him something and I don't know if he forgets what I said or just decides he knows a better way. I welcome personal methods, but you have to know what the outcome is first. This usually comes with experience. I wouldn't second-guess someone who was teaching me how to build a boat, because I know it will sink.

It's just a tough thing to do - all the work, the business aspects, and run around installing. We are in southern California, so we seem to get a lot of work at once and then slow down for a little while, then pick back up. I know I cannot do it myself; the question is who should I get to help?



From the original questioner:
The thing about setting up my processes so they are easy for low skilled workers just won't work. My process is simple. Cut the material, put it together, sand, finish, install. That's it. We have a small shop, and if something isn't getting built, there’s no money.

We don't live somewhere where we only have $4,000 in bills a month for personal and business combined. Heck that's only a few built-ins. In that case I would do it my self. My shop costs $1800 a month itself. That doesn’t include employees, utilities, materials, vehicle and personal. Think more like $9,000. That means I need to produce upwards to $40,000 worth of projects a month. This could be a big kitchen or a whole lot of entertainment centers. No matter how you look at it, worrying about what someone is messing up or not doing in their process, doesn't cut it. On the other hand, paying someone 1$8 an hour because they can build is tough too.



From contributor T:
To the original questioner: My observation is that; you should stay in the shop and build and train your helper being that it seems that is what you are best at. Hire someone else to handle the selling (or bids), which they are best at and you concentrate on your building processes. You cannot wear all of the hats. Stick to what you know best.


From contributor P:
To the original questioner: Look at the post below on managing verses woodworking. I agree completely with the organize/system points. You can't wear all of the hats. True, but you have to, trust me your not going to hire a salesman worth his wages at the level your at.

Spend part of your day selling you have to, you don’t have another option. You are going to be your best possible salesman anyway. Spend a lot more time on organizing so that the training time is easier. If you are organized with a system, then your worker will have to follow your system or can easily be made to follow your system. If he is so recalcitrant (difficult to manage) get rid of him fast and find someone who will work within your system fast. Join the cabinetmakers association so you can some see what the ideal cabinet shop can be and learn face to face from other guys in your situation.



From contributor M:
I've been through a similar situation recently and am just now coming out of it. Employees have to produce at their salary level, period. I let a high-pay, low production employee go when I found a relatively green but smart employee to replace him. Much of what we do is not rocket science. If you find someone with an interest in learning and good math/problem solving skills, hire him and treat him well. You can figure this out pretty quickly. These people are out there.


From contributor G:
If I read your post correctly you are a 1-2 man shop. If so, you need to find a way to drastically lower your overhead. An income of $40,000/month equals $480,000/year. A young business with inexperienced help is an uphill battle with those numbers.


From contributor W:
I am curious about your overhead as well. If your expenses are $9,000 including materials and overhead and your target revenue is $40,000; where does the other $31,000 go?


From the original questioner:
The $40,000 was over exaggerated. Right now for this month we have close to $20,000 worth of jobs. But they are a bunch of little ones that take up all of my time. I also design all of the jobs for individual customers and would definitely prefer to work directly with the designers.

The problem is that that means that I'm not in the shop. If I hired someone who can build off of plans how much would I have to pay them - $18-20 an hour? If they work for as many hours as it is needed to do all of this work they will be working 60-hour weeks at least. That's $1,200 a week or more. Times four is $4,800 a month.

In this case he would have to build enough work to earn $9,800 after materials are paid for. If any one can do this, I'll start you off at $18 an hour. I guess I just need someone to tell me what I'm doing wrong or what I should do. It's not about the money it's about making my quota, staying on schedule, and making sure that the customers and the employees are happy. But then too how can anyone be happy if I'm not?



From the original questioner:
To contributor T: My company doesn't need a draftsperson. I don't know exactly why that came up. I design the units I build for my customers - built-ins, kitchens, baths, everything. I am a custom shop. I design it and draw it up on KCDW. Then I sell the design and build it. We don't require fancy drawings or CAD. The designers use that. Then I draw it up anyways for shop drawings.

When I say I design, I design the unit to fit the space. If they want an entertainment unit I design it to fit their storage needs, TV size, etc. But then add arches, keystones, corbels, fluting, or anything that they could want. I do much of this on my laptop at home. It's almost like you're saying that a shop needs a designer or draft person. But I also design and build custom furniture. It wouldn't exactly be my work or design if I paid someone to come up with it for me.



From contributor W:
To the original questioner: We are all here because at one time or another most of us have been in your shoes. In order for you to keep some of your sanity, you need to retire some hats. Lets see what different jobs occupy your time. Cabinet designer, cabinet maker, finisher, bookkeeper, purchasing agent, office manager, salesman, repair and maintenance engineer, delivery truck driver, installer, and last but not least, customer service rep. There is no way you can do all of these jobs well and still manage to get enough work out of the door to make ends meet.

There are many things you can do, to better manage your time. One way I managed when I was working solo was to only meet customers between 5 and 7pm. I usually worked until that time anyway. It was a good way to control interruptions in work. Take your phone calls at prescribed times during the day so you are not constantly bothered by phone calls. Don't give you cell phone number out too readily either. Hook up a good answering machine or get a service. Check your messages at 11am and 4pm then return your calls all at once.

Another suggestion is to consolidate your regular hardware and lumber suppliers to a few. If they have delivery service, use it. For the time it takes to go to the lumberyard to hand pick lumber for a job you could order 20% more than you need and still save money. All of these things point toward a common thing - the efficient use of your time.

You may find yourself doing things that do not produce profitable revenue; like building your own cabinet doors. I was building my own until I did a cost analysis and found that I could outsource them cheaper. Just by doing that one thing I was able to almost double the amount of product going out of my shop.

The next big killer of small shops is installation. Installation puts a halt to two things in most 1-2 man shops: production and cash flow. If you are out of the shop you are not producing anything. If you are installing, it is most likely that you won't get a dime until the contractor and homeowner sign off on the install. You should either not install at all or sub it out to a competent trim carpenter/installer. The faster you get paid for a complete job the better. Our standard contract reads 50% deposit to begin work and 50% upon delivery of cabinets. If there is an install fee then it is collected when the install is complete.

The last item for today is pricing. Most cabinet shops under price their work. Do not fall into the trap of building cabinets for the same price as some factory piece of crud cabinet. Show your customer why your cabinet is better, and then ask for your price. I started a little game when I was first getting started. I would price out a job at what I thought was a good price. Before I would submit the bid I would add 10% to the total. To my surprise I did not loose any business so I raised my prices by 10%. I did this about three times until I found a comfortable price level. The sad fact is that we all tend to underrate our worth. Work on these things for now and things will improve.



From the original questioner:
To the original questioner: Do I do these things alone, hire my brother back, keep the kid, or hire an experienced cabinetmaker? I thought about hiring my brother back and keeping the kid to see if they can get more done together. But I think that that might be punching myself in the face with two fists. I really do need an installer, but I'm still in the stage of wondering who to trust.

I am having a hard time trying someone I don't know, knowing that he could screw up the job and cost me more then the job is worth. If it were up to me, I would just move to Oregon or somewhere where I could own everything for $2500 a month and have a small shop in the back yard.



From contributor W:
To the original questioner: I would suggest keeping both of them if you have enough work to justify it. I have found that when we add an employee it seemed to work better when we had an odd number. If you make an offer to your brother for some sort of ownership make sure it is commensurate with the amount of risk he is taking which is low. A profit sharing plan would be a better incentive. As far as finding an installer, we put an ad in the paper and checked references.

If you deal with contractors then talk to them about letting their trim carpenters install. You would be absolutely shocked at how much more work you could get done if all you had to do was build and deliver.

A couple of things I did not cover in my ramblings above. There are probably several cabinet shops in your area. Go by each one and personally introduce yourself to the owners. You would be surprised at how some of them will be willing to help. They will share info about bad customers, tools and processes.

Last but not least, are you using a design program for your cabinets? If not then you absolutely need to get one. If you are figuring this stuff by hand it is a huge waste of time.



From contributor B:
To the original questioner: You are in Southern CA? So am I. $18 an hour for a decent guy who can work unsupervised is cheap. There are just not many good cabinet shop people here looking for work. The good ones are making more than that working for big commercial shops. Working for a very small shop is not the most attractive thing to a guy who has the skill and can choose his employer.

The advice about making your system simple so that lower skilled helpers can be trained on each operation is good advice. I'd think about it. It takes a long time to train a person to be able to handle anything that you can through at him - and what will stop him from leaving after you invest all that time and money in training him?



From contributor R:
To the original questioner: I would suggest the following:
First I would hire an employee who is qualified and experienced to provide the type of work your shop produces. Over pay if you have to get this employee. Manage him and let him know your company goals short and long term. Let him know that he will be overseeing and training new employees. Out line his responsibilities. Work with him; manage this person so he is part of your organization. He is your second building block (you are the first).

Second, I would hire an ambitious employee who has the willingness to work and learn. Pay him based on his experience. Explain to him your company goals expectations the opportunity he will have to learn the trade and be apart of a quality organization. The experienced employee can oversee production when you are not available and he has someone to assist him. This will free up your time in order to do the selling and business end of the business. It also allows you ability to be in the shop when necessary, but not all the time. It is very difficult to run a business where the owner does everything.

The cycle usually goes like this. You have no sales, you put your effort into sales, Sales are up, production needs to produce so you go in the shop hustling to get orders filled (no time now for training), the helper is doing his best to keep up, but his inexperience is a handicap no matter how hard he tries. You go in one day realizing that you will complete the work. Since you have been in the shop for the past month no sales backlog. Now you need sales. You concentrate on sales you are looking to sign a customer to cover your costs for the next month you low ball a bid to get the work, and you get the work you try to figure how to do the job for the cost you sold it at. Then you realize you need sales again and you sell some work orders are up and your back in the shop with the inexperienced employee hustling again. The same cycle over and over.

You should look at your primary responsibility to the company as sales and management you need to sell enough work:
- To keep your shop operating with an even work load every month try to limit the peaks and valleys of sales.
- To provide your employees with enough work so they can support and provide for their families.
- To support your overhead.
- To provide for and support your family.
- To make a fair and reasonable profit beyond your hard earned salary.

If you concentrate on sales and are willing to take the time to find and hire a qualified craftsman to over see your shop and an energetic apprentice who works closely with the craftsman you will have a company that has:
- A steady flow of work.
- A steady cash flow coming in.
- Steady growth to hire additional employees who experience can range in between the craftsman and the apprentice.

Keep in mind as your first apprentice gains experience he will also be able to pass on his experience to new employees.
.
Many companies look to make a profit off their employees’ backs pay them low wages push them constantly to produce, and etc. Keeping costs down makes for a competitive company. Having good employees make for a reputable company. Companies who have good reputations will go further than companies who have a reputation for low cost.

It is easier said than done and it will take a fair amount of work and adjustments, but you will see after you get some key employees, systems in place, and sales coming in on a steady basis that overtime your business will run smoother. You will be able to charge more for your work because you will not be selling from the disadvantage of needing sales.



From the original questioner:
It's funny the way things work out. As everyone knows I hired a kid last week to help me out. Toward the end of the week I figured that he wasn't going to work out and was thinking of ways to let him go. I've never fired anyone before. Monday morning I got to work and was expecting him to be there. He wasn't. Apparently his car broke down and he was no longer going to be able to work with me.

I am keeping my brother on part time. He comes in at 5pm and leaves at 7pm and is working weekends if he doesn't have anything to do. Everyone is right about doing all the work. It's very tough. I got a lot of work fast and am now building it all. But I don't have any leads when it's all gone. I have my fingers crossed that people will refer so I can save money from advertising. I really want to hire an experienced person, and would love to run my business, not work for it. I just don't have the money to pay someone right now as there are too many bills to catch up on. I intend on using everyone’s advice, except for letting my brother be a shareholder or part of my business. He doesn't have the brains for it and he has to many personal problems. I will always make sure that he has work though.



From contributor P:
To the original questioner: When you have doubts about an employee it is a two way street, guaranteed he has his doubts about you as well. If you don't spend a part of your day selling, you will run into phenomena of being busy and then having no work. In other words when you’re busy you don’t sell, then you get slow then go out and sell and get busy. It is hard but you have to sell part of your day every day. If you get organized it will make it easier, there is no final destination when comes to organizing you always have to do this as well.

One other thing - part of your organizing should be to get your legal requirements in order. This is often overlooked and can come back to get you.



From contributor W:
To the original questioner: Keith, I see you are using Kcdw. That is a huge help having the computer doing the cut listing. What tools do you have in your shop? Do you make doors or outsource? How about drawers, hardware? What kind of finishing are you doing? If you share a little more info, we can give you some tips on how to be more productive with what you have.


From the original questioner:
Kcdw is nice, but I only use it to get shop drawings and drawings for the customers. I like to print up the jobs and make the lists myself. It only takes a few minutes. I do make doors, but only if they are custom or it's a small job and I need them. Otherwise I use Decore-ative Specialties. I am going to look into the costs of outsourcing my drawers for kitchens and large jobs, but I will make them for the entertainment centers and vanities.

As far as finishing I could use a good finisher, we use over the counter stains pretty easily, and make custom stains when we need to. For the finish we use Varathane waterborne semi-gloss. It works out well for us and we haven't had any problems or complaints. As far as tools go, I have the basics. A good tablesaw (Powermatic m66 5hp 3ph with an excalibur sliding table), Ridgid 13" planer, biscuit joiner, oscolating sander, router table (freud), mitersaws, small benchtop drill press, delta 13 spindle line boring machine, air compressor, kreg jig, 1hp dust collector, and hand tools. I really need a bandsaw (when I get money, I want the grizzly 14"), and I would like a planer/moulder, edgebanding machine, drum sander, and these are all in my dreams.

For hardware I use Wood Motion full extension for cheap customers and KV or Dynoslide for more expensive jobs. Blum hinges and plates for doors. I think that's about it. As far as production needs, I think that I need to concentrate on increasing sales and get a few good men. It would give me a chance to design and build furniture when I'm not selling.



From contributor B:
To the original questioner: After reading all of the posts made so far, you have stated more than once that the suggestions won't work in your case. You might want to rethink that position, and try to have a more open mind about some of the suggestions. Setting up a systematic approach to your manufacturing methods was mentioned over and over again (only for you to say “Oh, the thing about setting up my processes so they are easy for low skilled workers just won't work.”

Then, in the very same sentence you contradict yourself and state: “My process is simple, cut the material, put it together, sand, finish, and install. That's it.” If your processes are simple, and well documented, you can take an inexperienced employee and have him doing the vast majority of the processes in cabinetmaking his first day - the key being well documented. In the absence of well-documented processes, you go through the same steps each and every time you bring in a new employee, and the by-product is the problems you are describing.

You stated: “We have a small shop, and if something isn't getting built, there’s no money.” You say that, but do you really believe it? And if you do believe it, what are you going to do differently because of this fact? Employees do not cost you money they make you money. Again, the key is that you have well-developed and documented processes so they do not have to reinvent the wheel with each and every project.

Based on this statement “Right now, for this month we have close to $20,000 worth of jobs, but they are a bunch of little ones that take up all of my time. I also design all of the jobs for individual customers and would definitely prefer to work directly with the designers. The problem is that that means that I'm not in the shop. If I hired someone who can build off of plans how much would I have to pay them, $18-20 an hour? If they work for as many hours as it is needed to do all of this work, they will be working 60-hour weeks at least. That's $1,200 a week or more. Times four is $4,800 a month.”

You are stuck in the employees cost me money mentality rather than employees make me money mentality. Not to mention that your math does not add up. If the employee works four 60-hour weeks (240 hours) to produce $20,000 of cabinetry, you have a manufacturing method problem, your systems are not in place, and it is not the employees fault. If an employee is just lazy, your systems should reveal this (you should already know how long each and every process takes, which is simply part of documenting your processes).

To reinforce my point, your following statements clearly illustrate what I am trying to get across, first you stated: “I design it and draw it up on Kcdw. Then I sell the design and build it.” But then you later stated: “Kcdw is nice, but I only use it to get shop drawings and drawings for the customers. I like to print up the jobs and make the lists myself. It only takes a few minutes.” To not use the cutlisting feature of any design software, and then say it only takes a few minutes illustrates that you do not yet understand the value of your time, and your ability to provide your employees with information that will allow them to be successful without you standing there watching what they are doing. Paperwork in a cabinet manufacturing company only serves one useful purpose, to answer a question before it is asked.

Based on the limited information provided in this thread, it would seem prudent for you to start determining what type of product you want to provide, clearly define it on paper, then start producing documented processes (illustrated where needed, and each process time clearly defined) for future employees to follow. As far as your brother is concerned, if you think the opportunity to be in business for himself would provide the impetus for changing his life (removing the personal problems from it, or at least making them totally transparent to you), you might want to consider sub-contracting the installations to him (after you clearly document the processes as you want them done, and learn to provide clear, illustrated drawings to work from).

As Contributor M stated earlier “most employees rise to one's level of expectations.” If you truly value your brothers well being, and want to help him, teach him to fish, rather than throwing him bones from time to time. He may turn out to be the best investment of time you ever make (some of the most successful cabinet companies I have seen are ones where there are family members who are equally invested in the company’s success, and they divide the tasks, and assign them to suite their strengths).

If you don’t want him to be a partner in you company, give him the opportunity to have his own company doing your installations, and freeing you up to concentrate on selling, designing, manufacturing and delivery. You will be amazed at how much time you will free up when you take the installations off your plate, and are at the shop when you would have been in the field.



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