I am currently working on my business plan for a one, maybe two man custom cab shop. I am a bit intimidated by the market research bit. I have worked in the industry in the town I want to operate in for several years so I have a practical knowledge of how it works in my town and neighboring counties, but I don't know much about the bigger picture such as larger market, market share, industry trends, etc. I am a bit overwhelmed by this part and I wonder, is it really necessary to get out there and survey people? I want to find my own niche, but I am unsure as to how. I know my questions don't seem to flow very well. It just shows how lost I am on this part.
(Business and Management Forum)
From contributor G:
You're going to have to sell your cabinets to somebody. How will you know who is going to buy them if you don't ask? Start by making lists of potential customers: builders, renovators, other cabinet shops, etc. Browse through the Yellow Pages as well. I'm sure others will kick in more ideas, but think about it - if you can't find anybody who is interested, there's not much point in getting started, is there?
Questions I would ask:
How far am I willing to drive for sales and installs? How many people live in that geographic area? You will have a much easier time getting started if there are several million people within your area than if there are only 30,000. Guess at how many people are employed making custom cabinets serving your area. A rough guess is good. Hundreds is much better than 3. Is this area normally economically healthy, or are you trying to start a business in Detroit? You get the idea? Take a practical view of the situation.
Make the lists that contributor G mentioned. Then get out and casually discuss what you are trying to do with some prospective customers. People love to talk about their businesses, and most will take a few minutes to do so with you.
The first cabinet shop I approached said they would buy doors from me because they had to drive 40 miles to pick up their doors. Everything else was a fit (population, historical growth, etc) so that did it for me. I was in business 15 years ago.
The day before you plan to go, phone them and mention youíll be in their area tomorrow. Donít forget to say your name. That makes twice. Drop by with samples of your work. If they are too busy right now, make an appointment for later. Now theyíve heard your name three times and seen you as well. Ask if they can refer you to somebody they might know. A referral is valuable. Youíll refine your research technique as you go and find other potential customers when you start thinking creatively about it. You may even find it fun.
Here is some useful advice: "I am a bit overwhelmed by this part and I wonder, is it really necessary to get out there and survey people? I want to find my own niche, but I am unsure as to how."
Identify what product/service you want to offer and who you want to offer it to. Be as specific as you can (i.e. a custom cabinet shop that will manufacture and install the following products: entertainment centers, bathroom vanities and built-in wall units). Our products will be manufactured entirely in-house with the exception of moldings which will be outsourced to a local millwork shop. Initially our products will be sold directly to the end user. During our second year in business we will begin marketing our products to real estate developers/remodelers, interior designers/decorators, architects and audio visual companies.)
The more specific you get the easier your market research will be. Once you have identified what you are going to sell and who you are going to sell it to you can then start your market research. While doing your market research you may find that you need to modify your product/service to meet the needs of your market.
If you are going to sell directly to homeowners you need to identify which homeowners are most likely going to buy your product. These people are your market. Your market area is simply the geographic region you will serve (150 mile radius). Within your market area you will need to know how many homeowners there are and out of those homeowners how many are potential customers (your market).
Your potential customers are the people within your market area that have the means to purchase your product. Once you have identified who your market is you then need to identify who you are competing with (other custom cabinet shops) for your share of the market. Now figure out how much of the market you will need to get business from in order to be successful.
Make yourself presentable, professional in attitude and appearance. Introduce yourself, with a smile. Ask to speak with the owner. Adapt to the situation. Ask a question that will save a lot of time. If you are not sure they buy custom cabinets: "Do you ever buy custom cabinets?" If they obviously do buy custom cabinets, state your intent: "I am starting a custom cabinet business right now, and I wanted to introduce myself."
Next is the give and take, you telling them a little about yourself, but mainly asking probing questions to see if there is any kind of 'fit' between you and this prospective customer. If the customer asks questions, this (listening) is the most important phase of your meeting. It is normally referred to as 'answering objections'. Before you ever see your first customer, write down all the potential questions a customer might ask you that you can think of. Take some time to think about your replies. 'How do you normally charge? By the foot?' 'What kind of volume are you set up to handle?' 'Are you insured?' 'Do you do frameless and faceframe construction?' etc.
They will ask you questions you have not thought of before. If you don't have a good answer, make sure you do the next time someone asks that same question. Some meetings will go incredibly well. Some seem to kind of hang. In both of these situations, you will need follow up visits. Having a new sample to show or some new information is a great excuse for that next visit.
If the meeting dead-ends, learn from it and then don't give it a second thought. Move as quickly to the next customer as you can. The more people you meet, the easier it gets. After a while you will start to like it, and may think 'I could do sales for a living if I had too!'. Cold sales is like stepping into cold water. Makes you tense up at first, but you get used to it, and can have fun with it.
As far as closing the sale - tell them you would like to make their cabinets. Ask them what it is you could do for them to close this sale. There are lots of ways to close the sale.
The Yellow Pages will aid your surveys, you'll understand why later. Pull numbers out nowhere if you have to; later, when you have some business owner experience (that business) adjust the graphs and financials. Work on that business plan for awhile, itís more important than your goods and services. It will fix your thinker when it gets broken, it will put you in a position to take advantage of opportunities that would otherwise be impossible. There is a huge difference between a person who wrote a BP and uses it and someone whoís just out there doing whatever and whenever. What you are doing is very good.
Long ago and far away I got started by providing remodeler with oddities. I made short runs of moldings to match old houses, a new panel door with true divided lights, a curved molding or cabinet. What most local cabinet shops considered a PIA. I really wanted to make custom furniture when I first started but couldn't survive on it. The nice thing about that first run of success was that I didn't have to keep finding new customers. Contractors that specialized in burn refurbs and old house restorations need the stuff I learned to make.
I occasionally did a kitchen or the like but they were never as profitable as the other stuff. With little competition I could charge enough to do ok. In many ways my business still does similar work. Lots of moldings including curves, curved reception/sales counters, and will do architectural work that many other shops still view as a PIA. We just regard it as another fun challenge. Try not to butt heads with established shops, they have an advantage!
To the original questioner: sorry I misunderstood what you wrote. There is a lot of good information in this thread and on this website. Search the knowledge base in the upper right hand corner of this website. It contains a tremendous amount of information. You will learn much more from doing the research yourself than you ever will from someone telling you the information you seek. This is your business plan and your future at stake. Form your own conclusions based on the accurate information you gather. Do not rely on someone else to give you accurate information or form a conclusion for you.
Take your time preparing your business plan. Set a "due date." You have taken the first few steps down the path of success, keep going and you will soon find yourself running side by side with the successful.