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Close the doors, move on?

2/20/15       
humpty dumpty Member

4 years along, my business is doing "OK". It operates in the black (barely), I have a few good employees and a lot of happy customers. Getting up early is easy, I like (most of) my work. Guess that's better than some can say.

However, I work long hours for relatively low pay. Stress and aggravation follow me home. I wake up at 2 AM thinking about how I'm going to fix a mistake and keep a customer happy. No retirement fund or college fund for the kids. I don't see any of this changing anytime soon.

As they say, "the best way to make a small fortune in woodworking is to start with a large one." I have watched the veterans and their lot isn't much better than mine is now. None of them are getting rich, that's for darn sure.

I have an opportunity to use my experience to work as an outside rep for a vendor whose product I like. A regular paycheck and a better income are looking mighty tempting.

Should I quit while I'm still young, or stick it out and hope I don't have a heart attack before I'm 45?

2/20/15       #2: Close the doors, move on? ...
cabinetmaker

Why give up ? Get some procedures in place delegate and go get the work. Charge a real dollar amount to every change, add, etc. sky is the limit.....

You can do it....

2/20/15       #3: Close the doors, move on? ...
David R Sochar Member

I have had a few good mentors of a sort over the years. Whenever I made the same remarks to them that you posted (my rant #17-B, by the way), they offered the same advice. Raise prices. A lot. A whole lot.

I rarely had the nerve to make 50% or larger jumps in our prices, but raising prices helped.

There are two reasons why so many of us experience what you are experiencing:

Inflation or Cost of living - At just 3% per year, a 75.00 per hour shop rate becomes 87.00 per hour in just 5 years. If you don't keep up with that, then you are falling behind, even if all else is equal.

The second reason is a bit harder to pin down. Words fail. For some reason, many of us take great pride in a good product, good service and even a fair price (whatever that means), but we do not value ourselves in the process. Self-depreciation is fundamental. While most companies are spending money trying to figure out how to ignore customers more efficiently, you are walking the floors at 2am. We are often the last person to toot our own horn, to use a dated phrase. Or as Pogo once said, "We have met the enemy and he is us!"
We simply do not add what we are, our heart and soul, our lives, into the calculations for pricing. We treat ourselves worse that we do employees in many cases, right? This is your life you are selling, little pieces of it. How much is your life worth to you?
You have unwittingly created a job, not a business. And maybe not even much of a job. Only you can change that.

2/20/15       #4: Close the doors, move on? ...
Sam

Knew a guy who had his pricing program all worked out and honed. One field in the spreadsheet was a markup field, and he gritted his teeth and bumped the value up to where he knew it should be, but was always afraid to set it.

Then he password protected that field... the only way he could change the markup was if he entered the password "my-kids-futures"

I sure like that story

2/20/15       #5: Close the doors, move on? ...
mike

well I think this is an honest question to ask. I have known for a while I enjoy the work more than the business so 15 yrs ago I accepted an offer from a contractor turned kitchen showroom owner and was his 1st employee. I enjoyed working there and had some opportunities that I did not have on my own. Unfortunately it only lasted 5 yrs until the recession hit us hard and I voluntarily left and went back into business. There is no shame in working for someone else. Business writer/consultant Mark Richardson in his book "how fit is your business" is one of the few people I have seen who seem to tackle this same question honestly. He writes many business owners could work fewer hrs and enjoy higher pay if they went to work for someone else who had developed a profitable business. I am sure they would be grateful to have a seasoned worker making money for them. Certainly there is no answer right for everyone and there are pro's and cons to each employment situation. Hope you are happy whatever you choose. mike

2/21/15       #6: Close the doors, move on? ...
Jim Member

Everyone here can give you their point of view, however you are the only one in control of your situation. I could give you all of the good (in my opinion) advice that you would care to hear. I can tell you how great it is working for yourself. I can tell how great it is working for someone else.

You have to know deep in your heart what is the best course for you and your family. I suggest you do a pro / con sheet listing the pros and cons of both sides of your decision. Once that is done, flip a coin. Heads is that you continue on your path. Tails is that you take the job offer. Whichever way the coin turns up, what is your first gut reaction?
That is your answer.

2/21/15       #7: Close the doors, move on? ...
Charles Wright  Member

Website: http://www.northcreekwoodworks.com

Being an owner is not for everyone. Ask yourself "what makes me happy" and go for it. If being an owner is your dream, keep going. 4 years is not a long time, and in many ways it's always a struggle. So if you get all twisted up and can't sleep, it better be your dream, otherwise it could be a nightmare.

2/21/15       #8: Close the doors, move on? ...
Alan F.

Lots of good advice, if you stick with it you need to be able to raise your prices, lower your costs and define your scope of what's included and what isn't, then when you want to make them happy and its not in the scope you cheerfully give them the cost for what they want. As you raise your prices you will find more customers that are willing to pay a fair price for a quality product.

If you get more than 30% of what you bid your prices are too low.

Profit is what's left after you have been paid more than a "wage", after you have contributed to your 401k or Roth, after a bonus at the end of the year in good years.

Good luck in whatever you decide.
A-

2/21/15       #9: Close the doors, move on? ...
Pat Gilbert

I would like to expand on what Dave said.

I think the key to success in any business is to emulate what successful business do.

The main factor in that regard is their position in the market.

Since we are all custom cabinetmakers we have to sell to people that have more money and in areas that have construction going on.

Captain Obvious? You bet but the obvious is only obvious to those who are looking. Us cabinetmakers are by nature introverts who tend to look through a magnifying glass instead of binoculars.

The factors affecting the cabinet making business IMO:

Demographics, people buy cabinets at certain ages E.G. kitchen remodeling between the ages of 50 and 60. Also areas that have older demographics like Southern Calif do not have as much activity as once people reach the age of 60 they quit buying.

Construction activity, this is different in different areas. This was hugely skewed from 2000 until 2008 because the Fed reserve bank made more money available for housing, which has been occurring since as well but in a different manner. So we have been experiencing a "recovery" for the last 6 years in areas where "investment" makes the most sense, high end retail, big commercial buildings mostly in healthcare, high to mid high residential, apartment building.

By reading this forum for a long time I have seen certain areas have done better than others:

The Seattle area because of Boeing and Microsoft,

The North East because of commerce manufacturing and Wall street,

Tennessee because 60% of the US population is within a 600 mile radius which makes it ideal for distribution and other industry,

The Bay area because of high tech.

Areas where there is growth in the population have more construction. E.G. Texas.

Growth in population is due to jobs. Areas that create more jobs are areas that grow. E.G. Calif is negative in this department. Texas is positive in this department.

Usually if you look around there are only a few pockets of success in your area so you have to emulate that success. If there are none then you have to move.

Technology is the reason for the advancement of the economy since the beginning of time. This is a 10,000 year trend, use it or become as irrelevant as a buggy whip manufacturer.

Lean manufacturing is also a discipline that is essential to combat the coming inflation.

To gain a macro point of view (which is what you need) I recommend this book.

http://itreconomics.com/product/prosperity-in-the-age-of-decline

2/21/15       #10: Close the doors, move on? ...
rich c.

I lasted 8 years, when I got an offer to be the project builder/designer for Woodworkers Journal Magazine. I closed the doors pretty quickly. But that job only lasted 3 years, so I went back to a corporate job which turned into a model maker job. I didn't care for the corporate BS, but am now retired with a pension. So worked out pretty darned well. Moral to the story? Don't be afraid of change. Any job can come back around again latter. Biggest trouble with closing will be the huge hit you will take on the assets of the business. Used commercial machinery just won't bring much money. Plus, your opportunity may not be any more secure than mine was. Only you can decide, just don't leap until there is a net under you!

2/22/15       #11: Close the doors, move on? ...
Paul Downs

If your truest inner desire is to be a craftsman, and you are a boss in order to make that happen, then the answer is maybe. If you are a good craftsman, but you realize that the most fascinating challenge is building a successful business, then you should keep going. Charles Wright has it right. 4 years is barely scratching the surface. I've been at it for 29 years now and I think I'm past the awkward stage, finally. Being in charge is difficult, but rewarding. I'm not suited for any other role. Are you?

2/22/15       #12: Close the doors, move on? ...
Harry DeVrieze

At 4 years you haven't even got your feet wet. It's too soon to quit. Work for someone else? As soon as their business takes a down turn your out of a job and back where you started. I've been at this now 32 years on my own and 8 prior. Been thru good times. Been thru bad times. Lately bad. Make adjustments. When I had 4 employees all I did was quote and fix their mistakes nights and weekends. got down to 2 guys and myself and got out of the office and back hand son in the shop and things were better. Less money but I kept more of it. Think about that.
Few of us go into this business wanting to be managers. We want to be craftsmen. So be one.

2/22/15       #13: Close the doors, move on? ...
Pat Gilbert

FWIW the 2 worker scenario Harry talks about is the sweet spot with most small shops.

2/22/15       #14: Close the doors, move on? ...
humpty dumpty Member

Thanks all for the thoughtful input. I had a particularly bad week with a couple of difficult customers, so I won't make any decisions until my outlook is clearer.

I set off on my own over 10 years ago because I wanted to be the boss, make my own schedule, etc. Well, the schedule thing was a mirage, all I see when I take vacation is overhead dollars down the drain.

I'd call it more a case of burn-out than greener grass. Contracting, let's face it, is a screwed up business. It's an accountant's nightmare and a lawyer's dream.

Woodworking has always been a more rewarding hobby to me than a business. I haven't had the time to make a piece of furniture for myself in years. That's one thing I could do again if I worked for someone else.

2/22/15       #15: Close the doors, move on? ...
Pat Gilbert

One other thing to consider:

Often advise comes regarding your purpose and what you are passionate about.

But I found out drinking alcohol was not a good way to make a living.

I think a better way to think about this is what are your goals and how do your various activities align with those goals.

E.G. If your goal is to have a comfortable life and a happy family, then what job would better align with that goal? If on the other hand your goal is to have a successful business what job better aligns with that goal?

2/22/15       #16: Close the doors, move on? ...
Austerity doesn't work

Mr. Dumpty,
I would strongly advise closing up shop and taking that steady paycheck. You will have a much better life because of it. Not having to work weekends. Not having to sweat making payroll or this month's rent. Work is a means to an end, not an end itself. If you stick with this business, you will be miserable for another 15 years and then die of a massive heart attack.

BTW, California has a great economy. People who hate California are unpatriotic and should go live in Cuba. Hillary Clinton 2016.

2/22/15       #17: Close the doors, move on? ...
Pat Gilbert

"BTW, California has a great economy. People who hate California are unpatriotic and should go live in Cuba. Hillary Clinton 2016.

You may have a point, odds are that the economy in Cuba will improve sooner.

2/22/15       #18: Close the doors, move on? ...
Larry

I've been @ this a very long time. At one time I was in your spot, long hours, poor pay. Looking over the results I decided that I needed to truly track costs. It didn't matter what my customers wanted to pay. It was a wake-up big time. I was afraid I'd lose my customers if I raised my pricing. I had also developed a niche that wasn't something smart shops would do. Turns out there is no standard price for non-standard items! Kitchens tend to be commodities with various price points. Almost everyone claims to be "high end." Few customers know what that is! Your PR department has to do that, & you have to charge for it or the customer won't think they are getting more than what they bargained for. Don't give anything away. If the customer is unwilling to pay for it then they don't value it. I've seen too many small shops come & go because they all competed in price.

There are two kinds of people on this forum, craftsmen and business men. I had to make the choice long ago. I set my desired profit @ 14% in my pricing program. That is above what my "wages" are. I'm an expense, not cheap help! There always seems to be some slippage so the actual profit turns out to be closer to 10%. That is $ you can use for your kids college or to build the business.

Are you running an "old school" shop or staying current with technology? If you have the potential to increase sales, technology is a winner. It can be a trap if not properly approached though! Sweet spot in shop size? good question. Mine currently is 16 employees. Big enough to allow specialization and the investment in modern equipment, small enough to not require a human relations department. I've had as many as 24, wasn't worth the head aches! Didn't produce as much profit. Our shop size, 25,000', wasn't big enough for the jobs sizes that were required.

David's quote: "This is your life you are selling, little pieces of it. How much is your life worth to you?" is dead on.

2/23/15       #19: Close the doors, move on? ...
John

If your gut feeling is to try something else do it . I've been at this for 38 years. I've had some really good years and some really bad ones. All my brothers and sisters did well during the great recession except for the one that does drafting. If I where to do it all over again I wouldn't waste my time woodworking. Unless your in a area where they pay really well for wood work your going to work your ass off for people that want your product and want to pay as little as they can for it. My brother owns a software company, he worked his very hard at it and retired young he's a millionaire. I was just thinking about this the other day , I should have done something else.

2/25/15       #20: Close the doors, move on? ...
Richard Goodman  Member

Website: lagunabamboo.com

You might consider going it alone and see what that is like. After 12 years I tried it and I couldn't be happier. When I sell a $25k kitchen, I know that after I spend the 6K on materials the rest is going to overhead and the balance into my pocket. Since I don't have employee's anymore, I don't need as many jobs, so I no longer feel the pressure that I have to get every job. Thus my pricing isn't as tight and my shop has become my studio and it feels like home.

2/27/15       #21: Close the doors, move on? ...
scott

An old guy once said to me," you never run out of money, you only run out of time."
Now some may disagree with this statement, as they may have had some tough financial times, however they usually pass. However father time marches on every minute of every day.
My advice would be if you are going to get so stressed out that you may have a heart attack at a younger age, it is time for change . All the best.

2/27/15       #22: Close the doors, move on? ...
humpty dumpty Member

Richard, more power to you, but I've never been able to understand how a one-man shop survives. I have spent a lot of time as a one-man shop, and while I generally made more money, the feast-or-famine cycle was a nightmare; when you're building, you're not selling, and vice versa. Even without employees, I'm already locked into too much overhead.

I talked to a sales rep that I have a lot of respect for, he had been in the cabinet business and finally bailed out for a 401k and a health plan. He didn't sway me in either direction, but he had figured that a shop that makes a good living for its owner needs about 8 employees. I could get there but it would take a 5-year plan that I'm not sure me or my wife has the patience for.

I have many years and a lot of money tied up in this operation. I guess if a really good offer comes along, I'll give it some consideration.

2/27/15       #23: Close the doors, move on? ...
inquirer

Your training and experience, your shop capabilities, your network of resources, and the market you operate in combine to determine what work you can get and what work you can do proficiently. Hopefully you find a niche you can produce good work in and be proud of it. But making a decent living at it is a totally different issue. I recently closed my shop after a ten year stint at mid-level residential built-ins, mainly other than kitchen and bath--libraries, home office, entertainment cabs, etc. Just one employee, owned good equipment, no debt, subbed much of the finishing, had a great shop space and affordable overhead. But I was lead cabinetmaker for 30 hours a week and business owner (sales, drafting, purchasing, everything else) for another 20-30 hours a week. For that I consistently made less than a journeyman union cabinetmaker working a regular week and leaving the job at the shop when he goes home. I really enjoyed the dynamic nature of the business, my satisfied customers, and my independence. But eventually the less than respectable earnings catches up with you--like when you get into your mid-fifties, and friends and family members even younger are dying off here and there. I'm very lucky because my wife earns a good income. Otherwise I'd have quit long ago and worked for someone else. Now that I'm seeking that route, age is an unavoidable negative factor. Working for good businesses broadens the foundations of your experience / capability matrix and will open more opportunities down the road; staying self-employed in a small-scale woodworking business will tend to lock you into that and limit your opportunities the longer you stay in it.

I do have to chuckle at advice suggesting you just raise your prices to make more money. Between 2008 and 2012 if I didn't lower my prices I would have been flat out of work. Now that I'm on a bit of a sabbatical (I can take on certain projects if I choose, and execute them in a different mode of operation) I have raised my pricing to more sensible levels. I no longer have to pay the rent and keep my employee busy. In my market area and in the niche I'm proficient at and called to bid on, nobody is calling back after I price the work. There is a real world out there: every market is limited, your universe of potential customers is limited and they only want to spend so much money, you have many competitors, and you are only capable of producing certain things. Sure you can adapt, make changes, expand capability, etc., but you may or may not improve your earnings in the end and won't reduce your workload. If those two things are important I would give the opportunity serious consideration. Set up a small home shop and make one beautiful thing a year for yourself, your wife, or your kids.

Tony

2/27/15       #24: Close the doors, move on? ...
humpty dumpty Member

Tony, your story is the writing on the wall. As for the raising prices question, we land about 20% of the bids we send to new customers. I just sent a bid to a new client (contractor) who begged me not to refuse the job. I had a good meeting with the homeowners, according to the contractor they were very impressed. It looked to be a highly demanding project (historic home) so I bid enough to cover some challenges, and still take a 10% profit. That one appears to have gone into the void.

2/27/15       #25: Close the doors, move on? ...
TNCarpenter Member

"Should I quit while I'm still young, or stick it out and hope I don't have a heart attack before I'm 45?"

Hope is not a business plan. You need to work on one or work on an exit plan. If "Stick it out" is your plan then you've got a tough road ahead for you and your family.

2/28/15       #26: Close the doors, move on? ...
Derrek

Website: http://closetdr.com

Humpty, yor problem isnt your woodworking its your a terrible salesman. As small business owners we have to wear lots of hats. One of the most important ones is the role of salesman. 20 years ago i was in the same spot, embarrassing myself and letting my family down as a provider. Then I learned about sales from experinced people. You have have a plan to what you do, build value in yourself and your product and how you are different. having a plan will change things. The 20% close rate is to low. I figure a third will buy no matter what you do, a third won't buy no matter what you do and a third will depending on what you do.
There are a ton of free resources out on the youtube ,search for Brian Tracy,Tom Hopkins, Harvey Makay, Zig Ziglar. You will find some Good training that will help you improve that closing ratio.

2/28/15       #27: Close the doors, move on? ...
cabinetmaker

"It looked to be a highly demanding project (historic home) so I bid enough to cover some challenges, and still take a 10% profit."
Into the void.......

Did you call and follow up and ask how things were going in their decision process ? Seriously ?

A lot of us have responded to your post, Derrick brings up a salient point. I would say you need to call them and see how things are in the decision and ask them what you would need to do to get the the job because you love historic homes and would love to help them bring their vision to lite.

2/28/15       #28: Close the doors, move on? ...
David R Sochar Member

I am back to echo cabinetmaker's comment. You need to get back to them and ask about their decision. You gave them a piece of your life of your time and professional experience, do not let it drop.

I am not one to believe you should get 20% or what you quote. You should winnow down your responses so you get 80% of what you choose to quote. Otherwise, you are throwing darts blindfolded. You spend the time to quote it, then spend the follow up time to turn it into work.

First, you need to let them know your passion for new work that goes well with historic work. You need to do a sketch or a drawing of a detail from the house that you would incorporate into the work you would provide. Send this to them with a note about how you came up with this as you were thinking about the job, finding ways to make it all appropriate, and it came to you. Make sure your name and logo are all over the drawing so they know it is you and to help prevent them from handing it to low-bid Joe down the road.

Don't think of it as adversarial - talk as if you are all on the same side, with the same goals. Let it be known that the downside of the bidding process is that it sets up adversarial lines - may be necessary - and that the adversarial part is what the other bidders are a part of. Tricky to steer them this way, but worthwhile.

Let them know that when you do this job (not "if"), you will have 3 customers to satisfy - The owners, the contractor, and the historic integrity of the house. And then you are satisfied, last.

You are selling yourself, not cabinets.

2/28/15       #29: Close the doors, move on? ...
cabinetmaker

Yes. Sell yourself. In December I saved a sale and turned into a little 25k job. I called the client and saved her from buying "cheap ass cabinets" from a box store and met her budget for the basics and got all the profit out on small unique custom pcs like a reception desk. I sent her an estimate and called her twice

3/1/15       #30: Close the doors, move on? ...
Bill

Mr Dumpty -- years ago I was at a similar cliff of decision, having spent 6-7 years doing custom woodworking; almost always busy, with just brief down cycles. Like many w/w I didn't charge enough, but raising prices solves only some problems and WILL reduce your client list. Many people have big expectations and NO concept of what it costs to produce the quality they want. Ultimately I left for another profession (both as employee and self-employed) upon realizing I enjoyed the craft of woodworking, not the business per se. (BTW, I scaled back to a nice home shop, kept all my favorite tools/equipment, and occasionally filled in employment gaps with income from shop work.) For the "business" aspects of problem-solving, helping clients, etc, you can do that in virtually ANY profession, either as owner or employee. If you have varied interests, enjoy interaction with colleagues, or just want your evenings or weekends to be more your own, just find a decent job and use the time and energy that is still yours to make a life you enjoy. I know guys that run successful w/w shops, they make ok money but they are ALWAYS 'on' and certainly are not wealthy. Getting older will complicate things even more, as physical limitations will increase and you will become less employable in the eyes of others; not fair but that's the reality. Trouble is, the new US economy is often brutal for employees and for small-business owners alike -- with no guarantees for adequate income or retirement savings. Try to do what gives you best equation of earnings/satisfaction, good work/life balance, and have a plan B (and C) in case it doesn't last forever.

3/1/15       #31: Close the doors, move on? ...
Richard Kerrell  Member

Website: http://www.rmkdesigns.com

I was at the same point as you a couple of years ago. I was busy until the end of 2008 when the economy crashed. I switched to a different product line and added other art items. It just seamed like a struggle to break even. As material costs kept rising my prices did too. You can only raise prices so much until clients think twice about investing in a nice piece of furniture or a set of cabinets. The area you are in plays a big part in wether you can charge enough for your time. I finally came to a sollution that works for me.

My sollution was to turn woodworking into a part time occupation. I invested in a couple of rentals and they pay the bills, but a job would also work. I can take on only the jobs that pay well and I like doing. I can choose the client as well. I am also following my passion of fine furniture making instead of any project that pays. It has really helped me mentally and physically. If the economy improves with the next election I may go back to full time.

Anyhow the point is if it bothers you to the point that you are sick, make a change. You can always come back to it in the future. No need to push yourself into aggravation and make it hard to love what you once did.

3/1/15       #32: Close the doors, move on? ...
Larry

So true, Bill.

3/1/15       #33: Close the doors, move on? ...
Calvin Williams

I've certainly been where Humpty's at just as many have been at some point or another I'm sure. Definitely some excellent advice on here from some veteran business owners that I will implement in my business. Thanks

3/31/16       #34: Close the doors, move on? ...
Agree

Give up because the money sucks! Realize that you can make more money as a handyman service!

4/1/16       #35: Close the doors, move on? ...
Humpty Dumpty Member

Well, the epilogue to this thread is that I did fall off the wall. Landed as a Project Manager for a large regional production shop. Sure I still have headaches with customers and coworkers, but the check comes twice a month like clockwork. Plus I have safety nets like disability insurance and health insurance for my family. My stress level has been drastically reduced.

This job could very easily be stressful if I let it, I am the lightning rod for everything that goes wrong with my projects whether it's my fault or not. It's much easier now to put things in perspective, and at the end of the day I can go home and enjoy woodworking again.

I've found that my satisfaction with being an employee is directly related to my attitude. As much as I tried to apply this principle to business ownership, it still beat me up. And that's the real difference.

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