My business has grown pretty rapidly over the last year. I've gone from a one man shop to eight. My salary has also increased, and unfortunately so has my headaches, stress level, and waist line.
The money is great (I was making probably 60K beforehand and probably at 160K now), but I'm beginning to wonder if it is worth it. I figure I can make from 80-100K now as a one man shop as I've increased my square footage (I was so cramped before it really slowed down production). I've upgraded my machinery, and I have better (quality and price) suppliers and vendors.
I'm really thinking it is not worth it. I absolutely hate to let my guys go. They really are good guys and I feel responsible for providing their livelihood now. But I would hold on to them until they found something else and slowly scale back as they found other work.
Am I nuts? Or quitting to early? My wife and I are still young, but in the last couple of years made a move to a very rural community to slow down and raise our children - but have yet to slow down. In fact life has got just crazier and crazier since growing. I guess I am just tired and look forward to the simple days again of running my own small shop. Any advice would be greatly appreciated.
(Business and Management Forum)
From contributor S:
It's good to see that you are worried about your employees, there are not a lot of bosses out there that still do that. However, the bottom line is you've got to do what is best for you. As an alternative to scaling down your operation, why don't you try delegating some of your responsibilities to your more trusted and capable employees? You could still keep an eye on things, but won't have to actually handle all the details.
Some folks may say don't teach them too much otherwise they could become your competitors, but I say if you are going to let them go, they may have to go out and compete with you just to feed their families.
I'm glad to hear you're concerned about the future of your employees. Having them continue to work while looking for other employment is a good idea. Hopefully, you have a good relationship with each of them so they don't start stealing tools, supplies, etc. before they leave. It might be a good idea to keep a closer eye on the shop during this time. Working well with them during their transition to other employment will help in the future if you need to hire them back.
I would say keep your best worker, or the one that will stick around for years and won't quit, and work as a two man shop. One man shops don't work as well as two man shops.
In year five I let all but one person go. That was nearly 20 years ago. It was the best thing I ever did for myself personally and business wise. I made about 1/3 less net but only had one other person and his family to think about. I paid him more, had far less headaches and I was able to get back to what I do best. Now I enjoy my profession and have a life. Keep it small, keep it all and enjoy the freedom of being self-employed.
I feel like if I could just hire the right one or two guys it would be different - but as many of you know it can be very tough to find them and many of you are in urban areas. My shop is about as rural and remote as you can get. There aren’t many folks to choose from and I'm not knocking my guys. They are good guys but not one could run a foreman type position or a sales position (the two I would need) and I've beat every bush within two counties and have yet to find someone who has the unique skills and talents it takes to do those jobs in shop our size because the jobs are so multifaceted.
I'm also tired of keeping track of so many customers. There is a certain amount of hand holding that goes with any customer and it is just way too much now. I think cash flow is finally okay. It was a little touch and go there for awhile because we are a debt free shop and did not borrow any to grow, but have enough profit built up that cash flow isn't a terribly big issue anymore. Although I find customers seem to be slower and slower in sending checks over the last couple of years.
Maybe I'm just a little burned out. But ultimately, the goal is to slow down and I just can't see it at this size. I feel like I either have to grow or shrink. It is too small to have a project manager, sales manager, etc and too big for me to keep up all the various hats I have to wear.
The stress is low, and the jobs go out perfect. Maximum output per month is lower but there are a lot less fingers in the pie. My problem is that the demand for our products is very high. I turn away far more than we do each month. Good luck in choosing your path. We are in the Tampa Bay area of Florida and the work available is incredible. The admin of the business has always been the hardest for me to cover well. Good people are available but you better be able to pay $15 to $25 per hour to get the good ones.
The ability to generate and manage enough work for 8 people is quite an accomplishment. You must have a fairly substantial customer base to support this. You have to be doing something right or you would not have this many customers.
You are now in a position to cherry pick from these customers. I'm sure there are some jobs you do that go smoother and make more money than others. You probably use some of the profits from these jobs to subsidize the projects that don't turn out so good.
Just like some of these projects are more productive than others, some of your employees are probably more productive than others. Imagine what life would look like if you could only take on the good jobs and you built these jobs with your best crew. Just watching fewer jobs would allow you to become more efficient on the ones you do take on. Cutting back capacity a little bit might even allow you to raise your prices a bit.
It sounds like you have the ingredients for a pretty good company. You now need to look for somebody to help you manage this company. To attract someone like this you are going to need to make the company attractive. A profitable company that looks easy to manage is attractive. You should slow your company down for a little while and spend some time working on systems to make it easier to run.
As for your crew, they are probably all pretty great guys. I doubt, however, that they spend much time around the dinner table strategizing about your family's welfare. Providing for their livelihood is their responsibility, not yours. Keeping that opportunity alive is their job. You might want to involve your crew in this discussion. Talk with them as a group and talk with them individually. You might have an entrepreneur in your midst. This part is going to be tough.
If you are willing to assert that all of your people are good employees, then try giving them some time to also grow and mature. In case you have trouble believing it, I've got 45 employees, and worked about 10 hours last week. No managers either. Some weeks I really have to bust one and work 20 hours, but not usually. Develop your own ability to develop people.
Some good advice I got once said that if you want something in your life, create a place for it. Create a vacuum that is attractive for a motivated employee to step into. This is where the shop manuals and standardization come in. I would also start thinning my work force one at a time, after one or two you should have someone step forward to accept additional responsibility. The best description I've heard is "hogs feeding at a trough". If there is only room for five hogs to eat then the 5 hungriest hogs get to eat. I did this after a particularly stressful time and increased my bottom line with fewer employees and less volume.
It also sounds a little like some burnout; don't let the burnout make your decisions. Good luck, sounds like you’ve done a great job to get to this point and you have your priorities straight, the last piece of the puzzle is 'balance'.
For this to work you need to do what he tells you but he will also need to understand that you will be working 40-45 hours per week and when people call and ask you have them talk to the manager.
If you are going to let go of something try letting go of the day to day responsibilities and keeping some of the profits for the future. Develop a long term plan/goal to sell the business at some point; if you can develop a capable staff that can run the business without you it will make your business much more valuable.
The ultimate goal of any business - if it is truly a business - should be to increase capital and equity. This is very different from a one-man business that is really just a "job" and goes from hand to mouth forever. A self-sufficient business should be of a type and strength to stand alone, and ultimately build enough value to be sold as an ongoing operation.
As a small one or two man shop, you will be the central focus. What happens when you get hit by a bus? Or have serious health issues? Or any other nightmare scenario no one wants to consider? You and your family and your employee will suffer, perhaps terribly so. Very high risk behavior.
However, if you take pains to build a sustainable growth shop, you can train these or others to take the responsibility and continue the day to day, week to week, while you look to the year to year.
Then, a marvelous thing happens. You have a saleable commodity that you can sell to your employees or others, and then retire. This will be a long term benefit of very high value to you and your family and any employees. Far better than shutting down today for the sake of today. While you are correct to seek the correct level of balance in your life, you need to hand off some of your responsibilities.
For instance, you mention outsourcing. To me, this takes me more time than building. I have to determine the exact dimensions of whatever, with all the details, and then package it in the way the seller wants to see it. This is the hardest part of the job! Teach a guy in the shop how to figure this out (write it all down clean and clear as part of your manual), then let him do it. Then, instead of spending your time spelling out details to a supplier, you can just instruct the shop to make maple drawers. Then go to something that is productive. This outsourcing myth is rarely addressed by the sellers, but the time is significant, especially to the small shop.