Now going on 6 years since I started building residential custom cabinets. 4 employees in addition to myself. Seems to be a constant struggle to produce sufficient income. Can anyone share at what point in the game things start to level out and flow better ? Or is this a career that will never produce a high level of income ?
"B" in my experience. (never making a high level of income) But I was raised on a small family farm, so it was natural to not be driven to make a lot of money. Job satisfaction, yes, income no. I made a decision to close my shop in 1999. Made a nice living, but not great in 8 years of business. I got a great corporate job as a model maker, so have retired with a modest pension. It's enough, and that was the way I was raised.
From experience it is tough to make a nice income with that size of shop. It's too big of "a monster" that it must be fed with overhead and big enough you have to keep work coming through the doors that you knock off a few percent here or there to make sure you get the job.
But it's too small to take advantage of the overhead. Not large enough to have a fulltime salesman and marketing budget.
You are stuck in no man's land.
Other than that, it largely depends on your region, quality level, who you build for and a million other variables that without knowledge of any advice you receive could do more damage than good.
It is possible. I think it took about three years for us once we started working on the business rather than for it. The key for us was diversification and process. Know exactly how long every aspect of your process takes. Avoid the things you don't profit from and never stop improving your money making areas.
After 25 years in woodworking, I cant say that I am even now satisfied with my level of income. I am, however, very optimistic about my future. After realizing, some years back, that it is just flat out difficult to grow a small business and grow profits while doing so. I got really large for awhile, and it seemed we did do a lot more volume, but I worked a lot of long hours, for only a small increase in salary. I took the volume back down, trimmed away at expense and waste, and I started making better profits. But the smaller volume seemed to cap my maximum. The reasoning behind my optimism, is mostly due to one thing. We began selling products made by other companies. I still keep my shop busy, and we build all of our wood products. But I can also order a house full of blinds for a customer, buy them from a supplier and make a profit almost equal to what it might take us two weeks to build in our shop. The outside product may require me a 1/2 day to measure, a full day to install. Keep in mind, the blinds bringing in a profit almost equal to what our shop can return, the shop product requiring about 10 to 14 days of man hours. By using the production abilities of my suppliers, I find I can really boost my volume of sales, boost my profits, with minimal impact on my overhead, and I don't have to hire more help with the first levels of increase. I actually can see where we will be hiring another salesperson for these products, plus an additional installer. Pretty much all funded by the sales of these new products. It seems you could look to other products for a solution.
I am seriously happy with my level of income, but it did take a few years. I agree with exactly what Joe said:
"It is possible. I think it took about three years for us once we started working on the business rather than for it. The key for us was diversification and process. Know exactly how long every aspect of your process takes. Avoid the things you don't profit from and never stop improving your money making areas."
We are diverse too. P-Lam casework, p-lam tops, Corian tops, granite, quartz, solid wood cabinets, all of it. From fabrication to installation. Not everyone wants this, but it works for us.
I had mentioned writing up you numbers
on purchases and estimates/jobs in another post and others commented that the numbers had to be tracked after the fact- well, yes they do, but only to make sure what you planned turned out well or use the info to improve your planning and execution.
When you look @ Financial Statement, really look @ it and if you don't understand it, get some help. What ares can you improve ?
Look @ your schedule- how much does it produce ? Cash flow wise ? Do all the jobs you work on produce a profit and is there something left over at the end of every job to carry the shop, or are you waiting on a deposit ? This is all crucial information and it needs careful examination and consideration.
Looking at the shop is it clean and organized ? Is it organized ? Do the employees have all they need ? NOTE: most employees will work with what is set up. Efficient or not, they will generally plod along with whatever is given.
As the owner, you need to be meeting clients, delegating work and making sure it is getting done in 8 hours a day, if it is not, time to make adjustments. You need to be writing orders and sales.
Seriously, work on the business. Ignore negative people and move forward
I agree my business really made a change for the better fiscally once I got serious about running my business and not doing it all. Diversification and Automation have played a large roll in our success. I also attend as many conferences and industry trade show as possible and try to learn how others have made the transition. The CMA Cabinet Makers Association has done some great seminars and local events teaching what others have already learned. I have link attached here to a great program on pricing and profitability. It is worth a look.
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