Why Owning a Cabinet Shop is Tough
The more interesting dialogue centers on whether this situation (undercapitalized, marginal returns, difficulty on so many levels) is inherent to the business or a result of the businessman (woman) running the show. The quantity of posts would indicate it is the profession (if you can call it that). However, there are many, many success stories here and throughout the industry. Most of these success stories are highly individualized, with success occurring only after niche exploitation and focused product development. The garage guys trying to beat out Home Depot die daily, but there are legions more to take their place.
For the 30 years I have worked for woodshops, run woodshops, or owned woodshops, 1 in 25 of my competitors worked with an accountant. 1 in 15 joined professional organizations. 1 in 20 have developed their product beyond what their direct competition does. And hardly anyone has ever stretched the bounds of their craft in a creative, productive, progressive way to ensure their own returns. In short, few shops have done anything to deserve success.
The truth is, most shop owners are shop owners due to job loss, disagreements with bosses, or failed drug tests. The shops are started because "I know how to make stuff" with only a glance at business principles, tax obligations, market capitalization, financing, marketing... A conscious decision to do the research and then a cautious entry into a well planned venture is a rare item indeed.
Woodworking is supposedly the biggest hobby in the US. This devalues our work/knowledge/products since it is perceived that anyone can buy a saw and make a highboy. This means any prospective shop owner may also believe that oversimplified evaluation, and base a business on that. Whereas the prepared owner may determine to find elements of his work that will make him stand out against the crowd and add value to his efforts.
From contributor J:
Both excellent posts. I have had my business for 12 years, and I bet all three of us did not start out with the insight that we have now.
From contributor M:
Good insight. It seems like this should be a foundational thread that we can refer to when an enthusiastic hobbyist is testing the waters, and hasn't figured out how to search the Knowledge Base.
From contributor S:
Contributor C, if you ever decide to semi-retire or do something different, you should go into business evaluation and consulting. I am completely serious.
From contributor O:
I think that most of us have made this choice for many of the right reasons and yet go about it the wrong way. We want the pride of ownership, creating something of lasting value, providing for our families, etc. But we go into it with only the skills of our bare hands and little or no business skills thinking that cash accounting (i.e. "my checkbook") is all we need to know. Obviously that is not true for all.
I've had 20+ years experience in the industry, a college degree in business with a minor in accounting, a business plan, good credit and a vision. But none of that can cover all the bases that we will round on a daily basis.
As a startup, I figured that I would do everything myself until there was enough cash "lying around" to hire someone. But there never was because I was only working part-time(50+ hours) making product and the rest of the time trying to be the businessman. No product, no cash. When that light came on, there was no one to hire with any skills (read that real skill and knowledge). So, I pour money into machines that reduce the labor and skill requirements and now there is no one with no skill willing to work as a trainee. Then there is the guy with no skill who thinks that he has tons of skill and he's out there selling crap, getting crap money for it, and leaching good work from the market and leaving every customer/contractor believing that everything only cost that much.
We as a trade/profession invest more money into our shops than any plumber or electrician and yet cannot get anywhere near the rate that they do. Why? They have limits (health and safety) on who can enter the market. We don't. There is in Europe, through the guilds. But not here.
Many of you have found ways to improve your bottom lines in some interesting ways that are surely worth sharing. Some don't deliver. Some don't install. Some are cash only. (Did I hear no or low taxable income?) Some don't finish. Some outsource most everything. Some have niche markets. Whatever it takes, some have built very sound and "profitable" businesses.
The beauty of this forum is that there are so many well qualified "mentors" available. It would seem really dumb to start up without spending many hours on the different forums getting a dose of reality.
P.S. I did finally find a kid with no experience, drug free, willing to start for $10.50. That lasted for 4 months when he took a second shift job, making $10.50, where they insisted on full time, so I only get him 30 hours, if he's here on time.
From contributor B:
"We as a trade/profession invest more money into our shops than any plumber or electrician and yet cannot get anywhere near the rate that they do. Why?"
1. Because there are so many cabinetmakers out there that are doing it because it is what they dreamt of doing. They are willing to earn less because of this, and they drive down the market prices. How many people dream of becoming plumbers?
2. Because people can't outsource plumbing and electrical work to China - or, for that matter, to a large-scale manufacturer in the Midwest.
From contributor H:
Many of us are in this business because it blurs the line between work and play. But on occasion that line becomes a wall we must climb over. Clients gone bad for one reason or another. Core customers retiring or going out of business, etc.
Being self-employed, we get to deal with everything that comes our way face to face. The buck stops with us. It comes with the freedom. We can't say "It's not my department," "I just work here; go ask the boss," etc.
Sure there are many of us in this business, but there are also many who give it up as quick as they start. To the original questioner: I feel for your current disgust, but it hasn't been that way for you from the start or you would have bailed by now.
While it's true that outsourcing has hurt some in this business, it has helped others. I am not a big fan of outsourcing and have my own reasons why I feel that way. But as far as managing your business, you can manage yourself right out of business. I have a sign in my shop that says "somebody has to do it." The paperwork, the books, even the new high tech machinery don't do it. People do.
Good people are hard to find. Too good and they start their own shops. Not good enough and they cost you money instead of making it. It's a rock and a hard place. I credit my success, and that's a relative and subjective word, with not giving up and the grease on my elbows.
From contributor W:
All very good insightful posts. Yes, it takes a lot of thought and hard work. After 15 years of semi-success (5 million plus in gross revenue and only 15K in debt), we are revamping and setting up for real success. The admin skills are truly some of the most important and hardest to develop. I have added a new majority owner/partner with graduate degree in management and a keen sensitivity for things of high quality - furniture, cabinets, etc.
From the original questioner:
Thanks for the responses and the other points of view.
Usually I look here to receive advice and the Knowledge Base is a great tool. I usually don't post on forums, but I see a lot of requests for advice from shop owners. Don't get me wrong, I have had a lot of good times and gratification. The reasons I became self-employed were the quest for freedom to do what I want and the encouragement of potential clients. I believe a lot of the guys wanting to get into their own shops have the same desires and reasons. My experiences have been feast and famine, probably like many others. I always said that's the price of freedom. Freedom is subjective. These points have been brought up before, but here are a couple of other insights. If you're trying to build a business while your children are growing up, you could find yourself neglecting one to give the necessary attention to the other. Don't stop looking for work and new clientele just because you're busy. Self employment should not be confused with owning a business. One test is what would happen if you disappeared. Partnerships can be very difficult. Doing everything yourself can be very difficult. The ability to go home after work and forget the shop is a type of freedom employees often overlook. If you're going to strike out on your own, make sure you have your bases covered and you have the right reasons.
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