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Creating a Job or creating a Business

11/13/18       
Bill

There are a lot of smaller shops on this forum. A theme I see repeated is making things you should buy, at least in the beginning.

Looking at things long term if your goal is to not have employees you are looking at a long difficult road that I believe ultimately leads to burnout. You are not creating a company you are creating a job. This is covered in detail in a book called the E-myth. If you are new to owning a company or considering starting one you should read this book.

I believe your goal should be to grow the company so that you are not involved in its daily production. You need to get above that so you can work on its sales, planning and strategy. I realize this is a controversial thing to say because most cabinet companies are started by someone who likes to build things.

What do you call a company with the greatest product in the world and no sales?....Out of Business.

As an example I believe you should buy doors. Take the time and money that you would use to make doors and increase sales. Build your company, create business relationships. If you do this and you are successful you can reach a state of financial independence. If your company is so small that you make good money in the peaks there are going to be some valleys that wipe you out financially, physically and mentally.

I didn't want to bring this thought up within someones specific thread but to just open it up as a discussion.

11/13/18       #2: Creating a Job or creating a Busine ...
David R Sochar  Member

What do you do if you just like to build doors?

You have good equipment, good process, and your people are good at making them, and you take pride in that work. This pride will show when you show your doors, your product to likely buyers. If they sense your pride, your passion, then there is a good chance the customer will recognize this and be far more likely to buy.

The other guy (Shop X) buys his doors, and they are nice doors. But what does he talk about to clients? His passion for sourcing a cheaper door? How much he has saved since he started buying doors?

Everyone has to find their way in this business. I am one that has enjoyed over 40 years of making things. I can point to them all over my area, and even Nationally. I remember all - or most - of them. A great source of satisfaction.

Not all made money. Most did, and that is part of what I had to learn - how to price things so I could continue.

I have never bought a cabinet door. I don't necessarily remember buying this or that. Purchasing, while necessary, does nothing to enrich my day. Save $0.17 a b/f on that Cherry? Great. But does that sustain you? If so, you will burn out before too long.

100% my opinion.

11/13/18       #3: Creating a Job or creating a Busine ...
Bill

Doors are just an example. David you are describing building a job not a company. A company's goal is profit, pure and simple.

I would say if you really enjoy building doors start a company that builds doors.

If you are selling on pride of having built the door I find that unusual. People don't leave the house going cabinet door shopping they go to buy a dream kitchen. Perhaps they don't want the 2-3 styles of door you make. A door maker has 100's of styles. If my goal were to build a company and the goal as I stated is profit buying equipment to make doors is likely not the best investment I could make. Creating a showroom would be a better investment, getting a bigger building. Hiring employees so you can work on selling. Increasing your customer service. Those things lead to long term sustainable profit.

If you are a one man show making doors is not productive. People do it because selling and putting yourself out there is uncomfortable.

Not trying to cause an argument here just trying to have a discussion.

11/13/18       #4: Creating a Job or creating a Busine ...
Alan F.

Every company can choose what to make, what to outsource or when to outsource things they have the capability of making.

1) Determine the market and products you want to make

2) Determine market pricing

3) Determine if you can a product within 10% of market price and make money or choose another end of the curve and determine what it takes to serve that market.

4) Determine structure of business including exit plan, buy sell agreement, financing and ownership.

5) Do a cash flow budget for the first two years, anticipate little or no revenue for 2-6 months depending on the sales channel.

Advantages of "buying" a job.
You may be able to come and go when you want
No employees

Fewer laws with no employees
Sales limited by production and outsourcing capacity.

Business probably won't have much value when you want to retire so develop a plan to build your retirement income stream early on.

Pay the government
Pay yourself
Pay your vendors

Take care of your family
Take care of your customers

Shake and stir to taste and market.

11/13/18       #5: Creating a Job or creating a Busine ...
Jim Member

Amen to Alan on ''buying a job''.One man shop for 35+ years. Do a good job and be honest about your time requirements.
No employees, time off when you need or want it. Love the work and look forward to every day. I admit I am not a business man per say but I'm a happy man.
The part about saving and planning for retirement is the most important. I'm 71 now but when the time comes I'm ready for it.

11/13/18       #6: Creating a Job or creating a Busine ...
rich c.

What's your background Bill? Are you burnt out? Curious about your post. Not everyone wants to grow a company to leave production. I hate sitting at a desk.

11/13/18       #8: Creating a Job or creating a Busine ...
Family Man

Do what you have to do, and if at all possible what will make you happy.

I've been a one man shop and had up to a dozen employees. I'm back to a one man shop. Could not be happier. Wouldn't trade it for anything. Production, sales, quality and profit has never been higher.

With enough organization, efficiency and outsourcing one man can out produce twelve. The stress is so much less and there is so much more of the pie left at the end of each month. Are there a few downsides? Sure, but the upsides are by the dozens.

But I know guys who would be miserable doing it my way as I am their's. That is what is great about being an entrepreneur. The "job" I created is my dream job. It's in the location I want, with the stress level I want, doing what I want, with the music I want playing in the background, I show up when I want and shut the door when I want.

God bless you guys that want to run large companies. Most folks are employees. The world and those employees surely need you. I admit it, even while never wishing to trade places with you and in the small still voice in my head thinking you a sucker!

11/13/18       #9: Creating a Job or creating a Busine ...
Bill

That's a fair question Rich. I came out of a large corporation. Did the corporate thing for a while quite successfully. Decided I wanted to do my own thing and started a company. It was a company of one for a while. I started in 2001, not a great year to start a company. Made it through and now have a small stable company. I went through the ups downs, growing pains all of it. I learned quite a bit along the way. I was hoping to share a little of what I learned.

I posted this because I did not want to jump on someone's thread so I figured I start a new one.

I read many threads where a very small company is agonizing over buying a piece of equipment and it seems in my opinion to be the wrong thing. Doors are a classic example. Hard to do well, takes some equipment and tooling is easily outsourced and is labor intensive.

If your company is small it is easier for it to be damaged by outside forces. To stay alive you need sales and money put aside. Buying shapers and tooling helps with neither of those. Spending time on sales and banking the money you want to spend on equipment and tooling is a better investment in your future. You can't build more kitchens because you make doors. Ultimately it may limit the amount of kitchens you can build.

I'd prefer to see investment in space for a showroom, marketing, equipment to make more boxes or employees. Time spend generating relationships has more value then sanding doors with a DA all day.

That's my point. Can you do a one man shop, I wouldn't but sure. If you are not outsourcing it will be a difficult journey.

11/13/18       #10: Creating a Job or creating a Busine ...
cwwoodworking

I dunno. I guess I largely disagree with most of what you said.

"Not having employees leads to burn out"-

I guess it could. Probably bigger underlying problems though. There is a few one man bands out there. I'll admit, kitchen cabinets by one person, start to finish, seems incredibly hard. But there are other things made out of wood other than kitchen cabinets.

"Growing the business big enough so your not involved in daily operations"-

What if that is what you excel at? What if you are a lousy salesperson? Lousy at payroll, bills, ordering supplies?

If there is one place to outsource a job, if you are wanting to grow, sales is it.

"buying doors(or blanket statements about single components)"-

I dont make cabinets for a living, but I live in the middle of cabinet country. The biggest cabinet company in North America is in my back yard. Along with a ton of other smaller companies. I dont know this for certain, but almost 100% of them make there doors.

For me personally, I could continue as a one man band and make a decent living if sales were more consistent.

They are not so I have a commishion salesperson in the works. With that will probably result in more sales than I can produce. So I will start with part time help(already have), and move into a full time person.

I will never leave the manufacturing process because that is what I love to do. Shaking hands, wooing potential customers, sitting behind a computer is why I quit my desk job. I love making stuff.

11/14/18       #11: Creating a Job or creating a Busine ...
gsxon Member

Better advise would be demonstrating how to monetize your skills not diminish them

IMHO we need to retain the traditional skills in the industry that means providing opportunity for apprentices to work alongside master craftsmen/women
we still work with a problematic material that is unusual in that it is not only used for function but for art and design

But the industry can be conflicted, often inexperienced posters ask questions here only to be shot down as we are the experts and this is a professional's only site, and we complain that no one with a passion is coming into the business anymore?!!, we dismiss them.

There is no reason doors or any other component cannot be made for profit in a small shop they are generally simple processes but needs to be learned, the advantage to both the cabinetmaker and customer is the opportunity to produce genuinely bespoke designs.

If we abandon the traditional skills then we will all be poorly paid assemblers for the hardware and outsource component companies (the ones making the money) assembling bland and repetitive designs

We would be better to formalize the industry work together to build a future workforce and wrestle back our industry from the standardized generic offerings that the big boys can only produce, we actually have the advantage but we are so trapped in a cycle of competitiveness that we are all going to lose out

Maybe Woodweb needs an ask the experts corner where those willing to offer business and skills advice can pass on useful knowledge to those looking to start up, from there we need to look at how we approach our market more generally but that is a much bigger job.

By the way there are just as many large scale component facilities ending up on IRS auctions so its not a guarantee of success, perhaps the owners would have been better learning the traditional skills first, it may look like a great business opportunity sitting in front of your investors
telling them how your automated plant is going to turn out a million units a year till it goes wrong and no one knows how to do it without the machinery.

when my cnc has a melt down i can still produce

11/14/18       #12: Creating a Job or creating a Busine ...
gsxon Member

How to build a woodworking business from the ground up

Buy cheap machinery from home depot

Do work for family and friends evenings and weekends

Make lots of mistakes but continue to learn everything you can about wood joinery, finishing etc

Feel confident enough in your skills and work to advertise

Get enough work to pay the bills each month, A JOB that's a milestone

Work like that for the next 5 years (average time to build a business)

Build a solid reputation and hire some help
YOU HAVE A BUSINESS

Sit and count your money all day, hire more help buy better machinery, play golf and retire at 45 ;)

11/14/18       #13: Creating a Job or creating a Busine ...
Pat Gilbert

A company is better off out sourcing where it cannot produce the product competitively.

Even if it can produce the product competitively it is better off putting it's resources into the most profitable areas of it's business and out sourcing the less profitable areas of it's business.

Another factor to consider is the opportunity cost and the payback on that opportunity cost.

This is apt

11/14/18       #14: Creating a Job or creating a Busine ...
Bill

I certainly do not disagree with what is being said and I am glad I brought it up Great information, great discussion. Many of the people that shared their story of success in being small and even one man have shared that they outsource to do it successfully.

A few interesting pieces of information. I know of very large companies that buy ALL there doors. $100 million companies on down to 10-20 million.

Can doors be made profitably, absolutely, that's not the point. For the record I make doors. I did not in the beginning and at a certain point I was forced to. The last time I did the math I was not able to make doors for less than I was buying them for at that time. That was a while ago and I was buying at a great price. Once you reach critical mass it may very well be time to make doors.

Here is an alternative method to start cabinet company. I am not saying it is right or for everyone but it is a different path.

Get a showroom. Put in displays in it from Conestoga's (or someones) knockdown program. Assemble them in a small work space in the back. Get momentum, get some money. Buy equipment that allows you to add custom pieces to the Conestoga (or whomever's) knockdown kitchen. Get more momentum. As you grow you stop buying parts. First cut your own box parts, keep buying prefinished frames and doors. Then start doing the finishing. Then make the frames. THEN when you have the mojo, the money to get good equipment, nice insert carbide tooling, have the dust collection... then make doors if it makes sense. From nearly the beginning you would be making custom pieces to add to the kitchen to put your mark on it and satisfying your need to "make things" to be creative.

Should you have a company of 100 people? No. But if you are a company of one and you get sick or hurt what do you do? So a company that can run without you for a period of time is important to me. I am risk averse, I like to hedge my bet.

I am not involved in making things although I do go out and get into different projects. BUT I feel I am more challenged creatively then when I was building things every day. I am just challenged in different ways. That includes new products, new processes, new equipment and many other things.

I think ultimately wanting to build things is really wanting to figure out how to do things. Solving problems. That has never stopped for me.

11/14/18       #15: Creating a Job or creating a Busine ...
CWWOODWORKING

This is a little off topic, but why is doors subbed out and not panel processing?

When people start in Woodworking/cabinets, generally they have tools to make doors(table saw, router table, sanders, etc). They almost never have cnc, vertical panel saw, slider, bander, line boring.

Granted their tools for making doors might not be enough to be competitive. But trying to process panels with a table saw and whatever else they use seems just as ineffective as building doors with subpar machinery. Probably more.

I sell a tv stand stand uses plywood. It uses exactly one sheet. The panel processing takes a couple minutes on my vertical. Can’t imagine trying to do it with a table saw and remain competitive.

11/15/18       #16: Creating a Job or creating a Busine ...
rich c.

I subbed out the doors because they would arrive about the same time I was done with the boxes. Made for seamless flow in the shop. Who is "they" who don't have a panel saw, or sliding saw to process plywood? I thought everyone had one. Simple buying for even the smallest shop, for decades now.

11/15/18       #17: Creating a Job or creating a Busine ...
CWWOODWORKING

Generally speaking when the hobbyist wants to make the jump to full time, panel machinery is not on the list of things they have. But solid wood machinery is.

At least that’s the vibe I usually get.

11/16/18       #18: Creating a Job or creating a Busine ...
Adam

Bill,

You started this entire thread by having a company with numerous employees vs a small shop model.

Your premise that the bigger companies don't fall when times are tough is stupid. Based on the recent history of the gfc companies of all kinds fail. The ones that always fail are the ones that are entirely or mostly dependent upon other companies. The bigger they are the further they fall. The owners of any size company can lose everything.

The businesses you have described are low skill, easy entry, high risk. Open a store front, sell some stuff. I guess in your town you are a genius. In my town you would close your doors a month after opening.

Profitablity is a complex animal. You can make tons of money off of quantity. You can also make decent money off of quality. The key is qty business are easily replaceable. Quality is not.

I will never forget an older friend of mine who had seen the ups and downs of the construction industry in New England. When the gfc happened he had to lay off 30 out of 35 guys of high skill. When everything had dried up, he had a memorable comment. He said with an optimist view that it would "cull the herd". He said we will be fine because we are the skilled guys. We will be the last guys standing. We will also be the first ones to make gains when it all starts rolling again.

All of the less skilled companies dropped sooner and took longer to pick backup. He was absolutely correct.

We run our small company lean & mean. Outsourcing when we can and should. We are not dependent on outsourcing.

Most people I know that sit behind a desk counting money going in and out of a business are miserable. They have poor job satisfaction. They are often overweight and have back pain.

I am happy and productive when I'm in the shop making things, designing complicated stuff(not kitchens) and problem solving.

If I'm thinking about a multivariable work problem while I'm taking a shower in the morning I know I'm doing something right.

The money comes when you realize how much your market will bear. Some people pay a lot of money for the things we build. Those are the people we choose as our customers.

11/16/18       #19: Creating a Job or creating a Busine ...
Bill

Adam I appear to have struck a nerve with you which was not my intention. My goal was to start a discussion, granted it has meandered a bit. Share ideas, spitball, brainstorm.

I am a little confused by your comments, you said

The businesses you have described are low skill, easy entry, high risk. Open a store front, sell some stuff. I guess in your town you are a genius. In my town you would close your doors a month after opening.

First I am throwing out ideas, an alternative path no need to question my intelligence. What startup business is not high risk? Who said it was low skill. Being able to design a kitchen around a customers desires is not low skill. Being able to put together a professional attractive showroom it not low skill. Understanding the complexities of Conestoga's outsource program is not low skill. Doing all of this while having very high quality SERVICE is the key to this business and every business.

I never said go make lots of cheap stuff, that is not my model at all.

Back to where all this started, a guy starting out making doors is going to have a hard time making a door as good as Conestoga or Walzcraft (or others). Will the fact that he made it make it better quality? Conestoga sells knockdown plywood boxes, cut on a cnc machine. Will a guy banging 4 x 8 sheets through a cabinet saw do better? If you pick the right stuff it has all the bells and whistles. They are using flat line finishing, that's pretty high quality stuff. Is that idea a slam dunk, heck no. Is is risky? Hell yes starting a company is high risk.

Although you are disagreeing with me on the surface I believe you are an example of getting the company larger. I have no idea how large your company is but I don't think it is a company of one, you said.

If I'm thinking about a multi-variable work problem while I'm taking a shower in the morning I know I'm doing something right.

That is working on your business not working in your business. What I am saying is time must be made to work on your business. As things progress there will be times where you can't keep up and you stop working on your business. Room needs to be made to work on your business from the very beginning. Day one. If you spend time on a menial task that can better outsourced when you could be working ON your business I believe, my opinion is that in the long term you will be more successful.

By the way I do not "sit and count money", I outsourced that! Kidding. I work all day on multi-variable work problems and more importantly opportunities. Much of that is engineering new products and production solutions. The stuff we all love to do. Just because you are not making dust does not mean you are not building something. I do also work in the shop, I build all prototypes and flush out new equipment, processes and systems. On weekends I could be out there building almost anything for both work and fun. Having a big shop is awesome. Do I know it all, I wish. I think sharing ideas is what this board is all about. Back when I started I would have liked to have some go to people from within the industry that were mentors. I had a couple but not many.

Thanks

11/16/18       #20: Creating a Job or creating a Busine ...
D Brown

As a small shop owner for close to 40 years I mostly have been a one man band had a few employees over the years and grab helpers to load and deliver cabinets as needed. I'm located in S. Oregon which has always been a financially depressed area since the mills and logging shut down, so I really had my work cut out for me so to speak.

What I noticed there were many small shops and a few larger that all mostly did the same kind of work and basically the same thing. I needed to set myself apart and did it with quality and service.I have bought exactly one set of doors and decided never again.I match grain in my panels whenever possible and use sequenced matched veneers and usually buy the best grades available of solids and veneers.With the exception of China ply as I will not cut it. I priced my doors where I thought they were profitable and charge accordingly.I do understand how doors showing up as your boxes are done is a thing of beauty but depending on your work load and scheduling that may not be the best option.

About 10 years ago I started outsourcing all my finish work, I found out I was making pretty good money finishing and was giving a fair chunk of the overall profits away from each job by outsourcing it. So it really depends on each shops situation.I have designed and built maybe 150 kitchens and a whole lot of custom furniture and certainly created a job and career for myself without taxing the local job market we provide a service to the area. I stayed old school cut my parts on the table saw I have 5 shapers set up and I glue and clamp all my cabinets and faces and the furniture I build. So after near 40 years I have gotten so many referrals that When clients come to me they are ready for me to design thier dream kitchen.Most of my jobs only have maybe 20-40 doors and as many as 70 .

If I had it to do over I would prolly specialize in stairwells or something like that where there is not as many offering the same services.

11/16/18       #21: Creating a Job or creating a Busine ...
Bill

D Brown, I am happy for you! You carved out a niche and made it work for you.

12/9/18       #22: Creating a Job or creating a Busine ...
Brian

It's great to have pride and know that you actually built every part of a cabinet. But only to a point. If you outsource doors you have a cash outflow but that also frees up production time. The challenge is to be able to use that time to make additional profit above the mark up on the doors. If one can get his head wrapped around utilizing the time out sourcing say, doors and dovetail drawer boxes to start the next job or another project you will see that you will start to gain momentum and increase profits. Think with your mind and not your heart. I cut entire projects for other shops on my equipment as they do not have cnc routers and beam saws. This works great for them as they get ready to assemble parts with out the expense, it works great for me as it keeps the machines and operators busy. One shop we do a lot of work for has us cut and machine all the parts, they buy doors and drawer boxes, they build a lot of cabinets and seems to be doing quite well. If I were to set up to build doors on a production basis I would need additional equipment and people, would I gain? I think that unless I would set up to really get in to that end of the business the best I could expect would be to break even, I would ;need to be able to be a supplier of doors or what ever to other shops to make it worth while.
Overall after several decades in the industry would I do it again? No, no I would not. What I have learned about the whole woodworking/furniture/cabinet industry that as a whole it is too easy to get start in. By that I mean that it does not cost much to get started in the garage or backyard and with little or no overhead depress the market. The retired gentleman across town will do the project cheaper. In my area is a small 3 man machine shop, not overly equipped but up to date that started at the same time I did and I have been a close friend with the owner for ever. I stay busier and make less money because I cannot charge as much per shop hour. Outsource and use the "found" time to move on. It only make sense. We as woodworkers/cabinetmakers tend to be constantly stuck in the past always wanting to do it the old way. That works in your heart but not in your mind on in the bank.

12/19/18       #23: Creating a Job or creating a Busine ...
JeffM

As far as I can tell, no one likes to build doors...I personally hate it. Tons of work and time involved to do them the right way...and really, a lot of tooling involved for a small shop. I have a small supplier about a 1/2 hour away from me and they do a great job. If something is mismatched or discolored, they remake it. If a panel splits after glue up, they remake it. If they're running a nasty piece of maple and it tears out when doing the edge profile, it's on them to do it right and send me a good door. Just tons of benefits IMO to outsourcing them. I know there are as many benefits the other way as well, but just my feelings on the matter.

2/5/19       #24: Creating a Job or creating a Busine ...
Wideupdate Member

Website: https://wideupdate.com

Well, in response to your question of whether to build a job or a business, I will go with the option of building a business.

A business has the capacity to expand and appreciate in the long run. Jobs can only give you that which is enough to secure your monthly checks. Whereas a business can give way more than that.

Now a furniture business we all know can be lucrative but dependent on some factors that may possibly affect productivity. However, I believe building a business is far better than a job


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