by Anthony Noel
Regular self-evaluation to ensure that you understand your shop's products and markets can help you stay competitive and profitable.
What does your shop make?
What does it make best?
What does it make money on?
These may seem like simple questions. But are they really? If your custom woodworking business is profitable, it's probably because you've been able to find answers to these questions, as well as a couple of others. Like: 'Who are our customers?' 'How do we distribute (or ship or install)?'
If your company is not profitable, or is sporadically so, a lack of attention to such questions could be partly to blame.
My favorite book on management was written by Robert Townsend more than 25 years ago. Called 'Up the Organization,' it was written in 1970 but contains common sense advice that is truly timeless.
Townsend was the man responsible for making Avis, the rental-car company, successful. He took over in 1962, after Avis had failed to make a profit for 13 years. Three years later, the company had made successive annual profits of $1 million, $3 million and $5 million.
Now, you may be thinking, 'What does that have to do with woodworking? For one thing, rent-a-car is a service business, woodworking isn't.'
True enough. Well, sort of.
I believe that the sooner we begin to think of our shops as service-oriented ventures, the better off we'll be. While we may be making a product, we should always remember that nobody is going to buy it from us if we give them crummy service, whether it's before or during the pricing process. And poor service after the sale? Adios, referrals.
While Townsend's book is written for corporate situations (his area of expertise), it includes much basic, thoughtful wisdom that you'll find can get you thinking about the ownership experience in new ways.
For example, Townsend urges an annual review of what he calls 'unaskable questions,' like the ones mentioned earlier, as a method of improving a company's marketing approach. For woodworking shops and other small businesses, this exercise also fills an equally important, and more basic, second role. It helps us identify our niche.
Now there's a phrase we've all heard before. What does it mean?
Well, to me it means finding out what you do best, while bearing in mind that whatever it happens to be must also be in great enough demand that your business can turn a profit doing it.
After all, you may love to carve decoys. But loving to do something doesn't mean you should base a business on it. Work for someone else, gain the experience you need, and then, maybe, try it on your own.
The real question for an existing business is: 'What does your shop do well enough to be competitive?'
Some of you may remember my article, Contracts Versus Cost-plus. In it, I mentioned that I had done a slate roof a couple of years ago. That job was considerably far outside my niche, which is generally high-end custom furniture. Constant examination of which jobs are the most profitable for me produced that answer again and again.
Of course, a niche may be more than a product. It can also be a geographic location. The custom work which has been most profitable for me has been work for clients in Philadelphia's affluent 'Main Line' section. Your niche may be providing a variety of products to a specific customer group in a specific area.
Which brings us back to marketing. With which designers do you think I'm most anxious to nurture relationships? In which newspapers or magazines might I be most likely to advertise?
The answer in both cases is, of course, those which cater primarily to Main Line residents. A simple classified ad in one particular paper, strategically placed under 'Custom Woodworking,' yielded more Main Line prospects and resulted in more work than a month's worth of ads in a general circulation paper would have. Which is the smarter choice?
You can have similar success. All it takes is a determination to decide what jobs you do best and a willingness to ask yourself a few questions - and, next year, to ask them again.
(Note: Townsend wrote a revised, updated edition of his book in 1984, appropriately titled, 'Further Up the Organization.' It was published by Alfred A. Knopf, New York, ISBN: 0-394-53578-2. Since both books are older, they may be difficult to find, but are well worth the effort.)
Anthony Noel writes, consults, and teaches woodworking and journalism, along with doing an occasional custom job in his shop in Macungie, PA.
Have a business related question? Visit WOODWEB's Business Forum. The Business Forum is co-sponsored by ISWonline and is moderated by Anthony Noel. All business topics are welcome, from sales and marketing to dealing with difficult customers.
This article is reprinted by permission of Custom Woodworking Business Magazine.