Developing shop into business

Adding employees to a small shop, and developing a business plan. September 24, 2002

Question
I have been making, finishing and installing custom trim and a few cabinets for seven years. Three months ago, I hired one full time and one part time assistant to help keep up.

What I'm working on now is a structure of the different responsibilities each should have. Until now I've had no business plan, so that's on the list also. I've considered using SCORE to help set up my business, but have not really looked into it yet. I would appreciate any tips on getting this done successfully.

Forum Responses
First step: Meet with and hire a good CPA. Not just someone to fill in the boxes. We can all do that ourselves. Someone who will give advice and act as a "backseat driver". Then lay down the law now before you get too friendly with your employees. And if one should happen to be a family member... You have my sincere condolences. As a small businessman, you are the key man.

Get things your way right away. Being the key man, you will be the first to take the blame for any and all mistakes and most likely last to claim any glory.



1st step - get the CPA. 2nd - make a plan, not the text but the budgeting. The cost of employees is high - with the budget you'll be able to see how it affects your break even level. You may find that you have to up your volume more than you want to compensate for the expense. Your CPA should be able to help make sure you've accounted for all the costs in your budget. And remember, the plan must be flexible and needs to be updated as you go along or it becomes worthless (like mine is rapidly becoming after a short 8 months actually only 5 since the last budgeting revisions).

The big thing to keep in mind is that you are increasing *your* work load to have employees. Make sure that you have good self starters who know what they are doing because you aren't going to be in the shop nearly as much now. You've got to go sell more jobs so that the work keeps flowing and you can keep the guys in the shop busy. I've got the same setup, me running the business and shop with one full and one part time in the shop. I spend way too much time in the office. My next employee is going to be an office assistant so I can at least make my presence felt in the shop occasionally.

And remember - no employee is going to be as productive in your shop as you are. You know the tools, you sold the job, you know exactly what the customer asked for, you engineered it, and you don't have to take time away from production to go ask questions. To double your production, figure you need 1 1/2 to 2 employees. If you get good ones you'll be able to beat that figure. Bad ones and you may reduce your production from just doing it yourself.



From the original questioner:
I just contacted SCORE, and they have a workshop for writing business plans. The counselor also mentioned an accountant to help.

I guess that on a job that would take me 2 hours, I spend 1/2 hour planning (simplifying), 1/2 explaining, then they take four hours to do it. I still gained an hour unless they mess it up and I have to redo it. Okay, so I gain 1/2 an hour.

As I set some structure in place, I believe the guidelines we come up with will help me and the employees to know what to expect from each other. I'm trying to simplify and standardize as much as I can. I guess not everybody eats, breaths and sleeps sawdust. It's like they just don't care.

Do you guys have much documented as far as shop rules, positions, etc? I'm at the very beginning stages so I don't have anything but a bunch of ideas of what to do, except for a partial outline of an operations manual.

I don't have any relatives helping, but almost as bad is that one is a friend. I consider him to be the perfect training for me in disciplining the business and documenting how things are to be done.



If you have not already taken a safety class, take one at a local technical college. Specifically, a class that provides the 10 hour OSHA safety certificate. You will learn a lot about safety.

If you can swing it, get the safety video "Remember Charlie". The downside is the nearly $500 cost! You could use this video as part of your safety training. Definitely develop a safety plan.



You said a mouthful when you said you did not have a business plan yet. This is the major cause of failures in our industry. Don't do anything else until you do that!

Tom Dossenbach, forum technical advisor



From the original questioner:
The local SCORE chapter has a workshop on writing a business plan. I intend on going. A cabinet built with no plan usually doesn't turn out exactly as planned - I think my business is close to that.


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

Comment from contributor A:
I bought a book called "Anatomy of a Buisness Plan" by Linda Pinson / Jerry Jinnett. They also wrote "How to write a Buisness Plan". There is a lot of information in theses books. I agree on a good CPA.