LumberJocks

No leads, no sales #1: In the beginning

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Blog entry by closetguy posted 2027 days ago 1152 reads 4 times favorited 2 comments Add to Favorites Watch
no previous part Part 1 of No leads, no sales series Part 2: Finding a needle in a haystack »

I guess seven years as a full time woodworker qualifies me to have an intelligent opinion on the subject. Some of the blogs I’ve written, along with the occasional forum comment, have generated quite a few private emails from members asking specific questions about starting a business or looking for ideas to market their projects. I can certainly feel for all those searching for these answers because seven years ago I was in the same situation. I was clueless. I wanted to do this, but I could come up with four negatives to counter every positive thought. Some of my friends were supportive and some were not. I was just plain scared of committing money to a venture, only to fail, loose it, and be back to square one. It was just plain stubbornness that pushed me past these mental obstacles.

I started my company seven years ago as a custom closet business. After 28 years in the telecom field, and the last five of that designing data networks all over the country, I was just about burned out. I figured closets would be a good change, but it morphed into much more over the years. Closets are still the core, along with pantries, laundry rooms, and garage storage cabinets. But, I also do projects that I never originally thought about such as entertainment centers, home offices, and built-ins. I have also done a few hardwood kitchens and commercial offices. I don’t advertise or seek the latter, but in this business opportunities arise just by association. Most everything is built in my shop, but I also outsource cabinet work occasionally to a local shop when I get swamped (which use to happen on a regular basis).

I’ll be the first to admit that working for yourself is tough. It can swing from feast to famine on a monthly basis, even in good years. Two thirds of my sales usually come in the last five months of the year. The other third comes in the first four months of the year, so even with a good year the summer can be real tough. My first year in business grossed $65,000 with a significant loss due to startup costs. However, every year brought significant sales increases over the previous year. I didn’t realize a profit until the third year. By the end of the fourth year I had hit $200,000 in sales and maintained that level over the next few years. I quickly found that $200,000 was about all I could do, short of killing myself, as a one man show. Between sales calls, designing, building, installing, and administrative duties, there is just so much time in the day. After years of managing people, my desire for this business was to not have employees. Been there, done that. I never wanted those headaches again.

So what was 2008 like? It was very ugly. I started seeing a decline in the last few months of 2007 and it kept declining on into 2008. I only survived because I have such a large customer base that repeat business and referrals kept me going. I also have three Lowes stores where I have full displays that generate a fair number of leads. Still, my business finished the year off about 50%. My biggest problem was a decrease in closure rates. The leads were still there, but people just were not buying as often. The size of my average sale was also lower than normal. About midway through 2008, I noticed that I was being outbid on projects by competitors that I normally would have beat by 20%. This was reducing my closure rate, but the final result is some of those competitors have now gone out of business. You can only give stuff away for so long before it catches up with you. Cutting prices and not covering your profit or overhead makes no sense. Desperation can drive bad decisions. I’m not normally content with just surviving, but considering the current economy and the number of similar businesses that have failed, I am content to just survive right now. I am fortunate that my wife is a school teacher and has excellent medical insurance or it would have been real ugly.

This is the reason I started doing craft shows to help offset my reduced cash flow, not to mention that I have a little more time on my hands. Doing shows and selling online during the last few months was a good decision. I didn’t get it started until October, but in the last three months of the year, I sold $4000 worth of cutting boards. This was more sales volume than the first three months of my first year in the closet business. Here again, I was clueless as to what would work and I didn’t initially know how to do shows. I’m still trying to figure out what works best, but I am satisfied that I’m moving in the right direction with this little venture. I’m coming out of the starting gate with a variety of products this year looking to increase sales and not being so dependent on just cutting boards. I think Christmas sales skewed the picture a little and may not truly represent 2009 in this economy, but this is something I am continuing to explore to see where it takes me. I feel that the only way to ride this storm out is to diversify into related areas with the goal to keep a reasonable amount of cash flowing. Craft shows don’t represent the volume of sales I am use to in the casework business, but if picks up the slack, then so be it.

Ok, maybe right now is not a good time to give up your day job, but you can make decent part time or supplemental income. You get out of it what you put into it. People are still spending money. If they weren’t, I would be out of business right now. We just have to work harder to find them. The most important question is how, and to whom, you market your widget. It doesn’t matter if you do custom kitchens, custom furniture, cutting boards, or wine bottle stoppers. Marketing, or lack thereof, will determine your success or failure. There is a saying “No leads, no sales”. If you cannot generate leads, meaning “interested customers”, you will not sell anything. This is something I am very passionate about. I had to learn it the hard way, but I have also recognized the importance of it. I have to generate leads, go on sales calls, and close sales to make a living. I don’t worry as much about closing the sale as I do generating leads. When my phone quits ringing, I starve. If you generate enough leads, you will eventually make a sale.

I constantly hear woodworkers complaining that they can’t find anyone to buy their product, or that no one is willing to pay them a reasonable price for their product. I guarantee that if it is well made, there is someone, or an entire group of people out there who will buy it. You just have to find them. Building widgets is the easy part. Finding the right customers is the challenge. For example, many LJs saw and commented on that crazy walnut cutting board in my projects that was the result of the weird sapwood. I put that board up for sale on Etsy at a price much higher than I normally sell that size board. After three weeks, it had not sold and I removed it because I was going to take it to a show which I decided not to participate in at the last minute. A week later I relisted it at the same price and it sold within the week. That customer happened to be a park ranger in the Yosemite National Forest. I knew there was someone out there who would pay my price for that board.

One thing I truly believe is that marketing is voodoo magic. What works this month, may not work next month, but some of my successes and failures in this area may give you some ideas to explore. I am always looking for new angles to generate leads so I hope other Jocks will share some of their fortunes or misfortunes in this area. Let’s talk about how to find people to buy our products by people who are actually selling products.

-- I don't make mistakes, only design changes....www.dgmwoodworks.com



2 comments so far

View lazyfiremaninTN's profile

lazyfiremaninTN

528 posts in 2558 days


#1 posted 2027 days ago

Again, more great info. Thanks again.

-- Adrian ..... The 11th Commandment...."Thou Shalt Not Buy A Wobble Dado"

View Thos. Angle's profile

Thos. Angle

4435 posts in 2568 days


#2 posted 2027 days ago

Good information for all of us. Thanks

-- Thos. Angle, Jordan Valley, Oregon

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