Managing a One-Man Shop for Income
A solo operator's question about reasonable income expectations kicks off a long discussion of wise management practices. October 3, 2006
I have a question for those of you doing the one man shop thing. What is an average income someone could expect to make in the cabinetmaking business? I know that is a broad question, but is $1,000/week out of the question? I left a good paying job to do full time woodworking and maybe I'm just having the "just got started blues". I normally do custom one of a kind work. Everything is high-end. I have a large shop and all kinds of tools.
Vertical panel saw
36" edge belt sander
22/44 drum sander
36" wide belt sander
Radial arm saw
Line bore machine
24" band saw
Williams and Hussey moulding machine
Tons of hand tools
Basically I took a hobby to the extreme. Over the years I accumulated a lot of tools and got tired of the day to day corporate business life. I seem to have trouble making a decent income. I don't know if I am rushing things and just need to be patient. I don't expect to get rich doing this, but I would like to make a decent income so I can enjoy working from home and doing what I truly enjoy.
(Business and Management Forum)
From contributor A:
It depends on how you pay yourself. Do you draw a salary like a normal job or do you have one account that pays everything? It also depends on the times. I've had very slow times where I'd go weeks without much work. Other times I'd be running around like a madman trying to get things done.
From contributor B:
I am in a different economy to yours so can't help with a number but I have my own standard of measurement. I, too, left a corporate well paying job that was going to kill me one way or another if I stayed at it. I was well paid but hated every working day. I now work on the basis that if I can pay the bills, eat every day, not get into trouble and enjoy myself that is a good reward for my efforts. Whenever somebody asks I tell them that I make about as much as a bus driver does. Bus drivers generally eat every day. I bet I have more fun than a bus driver though. I am sure that it is quite possible to earn good money and in another 5 years I hope to be there myself. In the meantime I don't worry about it and just enjoy myself.
From contributor C:
I've been at it in CT for a while now (7+ yrs) and I have done some 100K gross years which turn out to be around 55K net after all my bills are paid. So yes, you can make $1000/week. But I'm not saying that I worked 40 hr weeks, because that's just not the way it works when you work alone. Plan on 50-60 hr weeks, some late nights (I mean mornings) and working 6 days a week, if not 7.
From contributor D:
It is reasonable to expect $125,000 gross a year in a one man shop setup. That is with about 45 hour weeks and 2-3 weeks off a year; about 36-40 hrs a week in the shop producing, and the rest as sales, or administrative. I did it for 9 years, but the first two to three years were less until I got a clue. If you set yourself up for unreasonable hours, you will never get away from it. Same with tax obligations - if you cheat to start out, you will never be able to get legit. Mark up your materials at least a third, never go buy stuff - have it delivered, and think of your time as $60.00 per hour and charge it out at that rate. If the type of work you do won't support those rates (competing with Ikea), find another area to develop expertise in. You don't have to suffer to do work you enjoy. It is okay to make a decent living.
From the original questioner:
The hours are not a problem. I left a job working 80+ hours a week. At home I am in the shop working about the same amount of time. I don't mind working because I enjoy what I am doing now. I was just curious if the $1,000/wk sounded normal or maybe I was having a flashback from my teenage years doing too many drugs and was just delusional.
From contributor E:
I would say that it is difficult to quantify your salary rate. This is a number that you have to determine based on the financial health of the business. In a nutshell however, 1K/ wk is possible. I was working 50 -60 hr/ wk, 5-6-7 days. I have recently started working 4 -11 hour days (M- Th). I have a three day weekend now, and I am more productive than before. Would you mind telling us how you only spend a small percentage of your time administratively? I would like to tweak that area of my business. I am interested in new ideas.
From contributor F:
Success is (or should be) defined by quality, not by quantity. It isn't how much you make but how well you make it. It's the reason there are so many unhappy, suicidal rich people - they have a lot, but they have nothing. I pay myself a modest salary, about the same amount I pay my shop leads (I'm not a one-man shop anymore, but I used to be and my pay scale hasn't changed much). But my company pays most of my bills - half my mortgage, IRA, truck, gas, insurance, etc. My wife makes a very good living and has excellent benefits so I clear almost everything I bring home. It's not enough to brag about, but the vast majority of it is mine to do with as I please. As new as your business is you might have set your expectations a little too high too soon. It does take time for things to stabilize – it took me a year or so. It's a simple matter of redefining what success means to you and then going for it. The journey is a reward unto itself. I strongly recommend against defining success as the amount of money you pay yourself. If you do, it will never be enough.
From contributor D:
I now run a larger shop, employees, security, retirement plan, etc. And I'm up to about 50 hr weeks. Now all I do is administrate, sell, order, and play with paper. Not many splinters, but I still love every day. I also have the pleasure of working with some of the finest woodworkers I've ever known, and we are making a few more. What I did learn when I was solo and what I still do is to get others to do their work instead of me. Building contractors will have you drop everything and run to their project to match a detail when they have a drawing of it in their files 18" from the phone they are calling you on. Get them to fax it or e-mail it. For those builders who see this as a power game, don't play, period. They don't want your work, just your compliance. I was over eager to show how over eager I was and spent 2 years just running around. Try to bill for that time and see how far you get. If they see you will comply, you will lose their respect and become whipping boy #6. If you stand your professional ground and assume they will provide the required info, then you stand a better chance of gaining equal footing. Impress them with your work, your professional estimating and billing and demeanor - not your push-around ability.
Don't become a slave to the phone. Plan your shop time to be efficient - when you are out of the shop doing office stuff, work efficiently there just as you would in the shop. Learn computer skills, type your quotes, and set up your bookeeping on Quickbooks or Peachtree and learn to use it. Work smart, not long. Do it once, right, not 3 times at 80%.
I still have builders who want me to play some sort of back scratching game - I don't know how to do that and keep it fair. The best thing is to state your business and hold to it. Once you cut some sort of deal, it will never end. As to the hours, I once heard a framer brag about how he personally made over $90,000 a year. We pumped him for while, listened to how he was "a working fool - weekends, nights, holidays - my builders love me!" We ran the calculator and figured he was earning less than $10.00 an hour after expenses. He didn't want to believe us - it was a simple calculation he had never performed. Don't fall into the trap thinking that since you are busy, you are making money.
From contributor G:
There were a lot of years where I didn't even make $1000/wk.! We now do much better at around $170k/yr. and do around $10k/month to our pockets. The most important reason for change in level of income had to do with picking a manufacturing method (for us it was True32 - go to www.true32.com for info ) and sell what you make for the most part - rather than making everything you sell from soup to nuts - i.e. from small closets to large kitchens, etc. We concentrated on a few products that we could make quickly and systematically - for us they were frameless cabinetry for kitchens/baths/entertainment centers, etc. We then completely computerized till we no longer use a pencil from sales to assembly.
We then adopted a goal which simply said "to make more money now and into the future" - till we can truly retire and have lots of time and money to do it right. We began to shoot towards a goal of $100/hr. of actual work time. It took a few yrs. but we met and have now exceeded that. Without real goals in mind you will most definitely hit nothing. We also ended up moving more towards service than manufacturing cabs. I found a large builder and found a niche where I could fit nicely and now it amounts to around 70% of our gross and only 5% materials Best of luck to you - it sounds like you have one great thing I still don't have and that is a large shop! We have always worked in a 550 square foot main shop with an 800 square foot outdoor shop under roof. Not the easiest but as you can see we have done quite well.
From contributor H:
Take a good look at True32's system. If it could work for you go for it. I know a few cabinetmakers who are doing frameless. Stick to the system (theirs or True's). They do very well with it, much better than anyone I know of. I recently got overbooked with work, and I had a high end fancy trick contemporary Maple kitchen to do. I had to pass on it, or pass it on to someone else. It would have taken me a minimum of 4-1/2 weeks to do (face frame, full overlay). The one man shop I sent it to did the whole job in one week in a nice frameless shop. I figured he made at least $10,000 net profit. His shop is state of the art and he sticks to a system like Doug is writing about. If I had it to do over again I would buy into a well thought out frameless cab system, but I'm too old to change at this time. If you’re going to do this, do it right and stick to a system.
From contributor I:
Contributor D sounds like my twin - same numbers, same attitude. I work about 45 hrs a week. That's it unless I'm really behind a deadline. Document every 15 minutes for about a month and you will see where you are wasting your time. Every time you think you need to leave the shop, think again. Use the phone, internet, etc. to buy everything and have it delivered. I really listened to a friend about 5 years back. I had to go to the hardware store for a dozen screws. He pointed me in the direction of the MSC Blue Book and directed me to buy a box of those exact screws (50 screws were cheaper than the 12 I needed). They deliver next day for $5. When you add up the hourly rate $50-60/hr., it gets pretty ugly when you have to leave the shop. I grossed 115K last year took 4 weeks off. I only outsourced about $3000 in drawers. Everything else was done in house.
Do not listen to all of these True32/Euro boys. Everbody jumped on that ship 15 years ago. In our neck of the woods they only do inset door/beaded face frames in the high end houses (1.5mil or better). I barely have any competition because everyone else has an edgebander and a boring machine versus a couple of bright-eyed skilled employees. As a one man shop you need to have connections who feed you the work. Our builders are excellent and are always looking for a skilled guy to get them out of a jam. 80 hour desk jockeys do not make 80 hour cabinetmakers.
From contributor H:
To contributor I: You’re right about one point - your marketplace. If the best thing to build is inset/bead face frame cabinetry, then doing frameless is a mistake. But if you’re in a market where frameless is sellable, a one man shop can do very well. I stated in my post that a good place to do some research is True32, and it does work amazingly well for those people who qualify for it. Most frameless cabinetmakers I know of wing it on their own, as the system is so simple. But I have to tell you - $115,000 a year in sales is what I do in a one man shop and that isn't very good at all. A one man frameless shop set up correctly should easily do 3 to 4 times that amount. I know of one local Cabinet maker who has his face frame shop set up more like a frameless shop (a well thought-out system), and his net income is more than your total sales. And I know another one man frameless shop that does at least $30,000 a month. You can't do those numbers in a frame shop.