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Forum topic by Jerry posted 05-14-2012 03:46 AM 3902 views 0 times favorited 24 replies Add to Favorites Watch
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Jerry

2249 posts in 2298 days


05-14-2012 03:46 AM

Just wondering how things are going for fellow cabinet makers. We are doing well so far this year. We have turned away some work here and there due to being busy. This is just our second year in business so we are learning quite a bit. I imagine our more seasoned peers probably have things pretty well figured out but I am sure even the more seasoned cabinet makers are still learning.

Well, one thing I feel that disturbs me is the price of manufacturing cabinets is much higher then what even I had expected coming into this thing. We are a small shop, I have 2 full time guys who work for us and both me and my wife are full time. My wife is actually one of our best as she is great at building doors, applying finish (stain / lacquer), thorough sanding techniques, dovetail drawers and glue up drawer faces and most anything woodworking. Since she is my wife, she is a great value and is not demanding her worth in the business. I am fortunate as both my wife and I are very skillful wood workers, and I recently hired a fellow who is also a woodworker enthusiast and he also possesses great skills and comes at a fair price. My last guy has all the necessary tools and skills to be very talented but tends to lose focus at times and has been known to take some short cuts in the past which upsets me at times, plus he can tend to round things to his favor. What gripes me more is that I pay him better than any of us make at this business. He has been with us the longest, for about 15 months now. He also is not dependable as he either gets sick, his children gets sick, one of his dogs gets sick or some other drama occurs. I have often wanted to fire him but lack the nuts as I am just not very confrontational. I have laid him off for a week in the past because he upset me.

This being our second year in business, we are collecting draws at a rate of more then twice the amount than what we did at this time last year. We are flush with work and we are getting jobs finished but we do not seem to be making any real money at what we do. We are keeping our bills paid. I tend to run behind on most of my work because I don’t like turning away work and then we end up working between 2 to 4 jobs at a time that are at varying stages of completion, which tends to make us run thin some. I feel like we go from draw to draw. I pay shop rent, electricity bills, one modest car payment, our personal land payment, water bill, car insurance, labor cost (which is always a large set back), materials (another large cost) and then we are broke again.

Now, I am not trying a get rich quick deal, but I want to get to the point where we are not going from draw to broke, back to draw, then to broke again. Our first year of draws, last year, totaled 160,000.00 and this year we could be on pace to collect more than 300,000.00 in draws and I feel as broke as ever.

This all leads me to my pricing. This is always the main issue. With my web site ranking high in google I tend to get a steady supply of leads, so I have raised my prices steadily since going into business. When I first started out I used to charge on average 125.00 LF for custom cabinetry. Now I am around 175.00 LF with a recent customer paying around 185.00 LF. I actually had one customer bring me a bid from Lowes, I broke the bid down and discovered Lowes was going to charge him 225.00 LF for his project.

A bid I am doing right now, the lady told me she has a bid from a custom shop and home a rama (rama is a very cheap manufactured cabinet). She even told me, to her amazement, the custom shop bid was lower than Rama by about 3,000.00. I am not sure how my bid will fair in her evaluation because my goal is to be higher than Rama because we offer a much higher quality cabinet. Another recent bid, in casual conversation with the married couple I mentioned their small kitchen will likely run in the ballpark of 10,000.00, the lady of the house seemed purely shocked and thought I should be around 3,000 to 4,000. Another bid I did recently, they owned a newer model BMW and lived in a nice home, the husband spoke as though he was “cheap” and wanted a “good” price. I gave him a very fair price and never heard back from them.

So, I am trying to see if I am just under market, maybe an issue with over paying in labor, which I doubt since my wife and I make very little ourselves, or maybe it has something to do with myself and maybe me being inadequate as a manager. Maybe I am not managing properly. I am constantly busy, either writing bids, visiting customers, building cabinets, completing punch lists, driving here and there, on and on… I feel I am just under market. But I also do not think most people I am dealing with are willing to pay a fair market value. Some are willing to pay fair, most are not. I do not deal with any customers from CL any longer because of leads generated from SEO marketing. I am planning on doing some other marketing techniques in hopes to pull more leads. I do believe the more leads I get the better my chances of getting customers who are willing to pay decent. There are lead sources I am currently not even trying to tap into yet.

Enough rambling, thanks for reading, I look forward to any feedback from others in similar situations. Thanks, Jerry

-- Jerry Nettrour, San Antonio, www.topqualitycabinets.net


24 replies so far

View Loren's profile

Loren

7825 posts in 2399 days


#1 posted 05-14-2012 05:42 AM

Good for you.

From my POV you should be looking for more profitable jobs. They
tend to be high end and you won’t be dealing with homeowners,
you’ll be dealing with architects and contractors.

The trick is to figure out how you are going to offer a higher-end
product without taking on a lot of debt for something like an
edgebander with 3mm capacity. The good ones cost a lot but
clients are impressed by the quality of the edge.

One way to go about it is make up some samples with the higher
quality banding and shop that around as your premium product.
Big box stores offer nothing in that quality range so you
nullify their price-point competition when you go to a higher
grade of banding.

Now how are you gonna make it work without a $50k bander
bought on credit? I dunno, but there are a couple of
ways around that hump that don’t involve taking on that
debt. You can sell the jobs and outsource the banding
to a shop with the machine is one way to go.

This is just an example but a relevant one. If you aren’t
reading WoodWeb discussions you should be. Those guys
really know the business end of it.

-- http://lawoodworking.com

View TopamaxSurvivor's profile

TopamaxSurvivor

15088 posts in 2427 days


#2 posted 05-14-2012 05:51 AM

Welcome to the world of small biz in a poor economy.

-- "some old things are lovely, warm still with life ... of the forgotten men who made them." - D.H. Lawrence

View RussellAP's profile

RussellAP

2966 posts in 1038 days


#3 posted 05-14-2012 05:54 AM

I wish you lived closer, I’d love to work in a cabinet shop, plus I am really good at organizing and getting things done on time.

-- A positive attitude will take you much further than positive thinking ever will.

View Joseph Jossem's profile

Joseph Jossem

412 posts in 1019 days


#4 posted 05-14-2012 05:55 AM

You should be happy you have that income in that little time in business.Dont know about other places but jobs are very limited here if you break even you are doing good.Watch the overhead and labor main issue do as much as possible with what you got.

Long cycle pay bills and try to start agian evey month I try not to add it all up just keep going and keep products flying out the door.rent shop mortgauage electricity supplies day care leases labor water phones food never ends..
The clients that live on 20 acres have boats luxury vehicles etc. and ask for a deal walk away from worst ones to have.As long as your quality stands above the rest you will do fine.

View miles125's profile

miles125

2179 posts in 2757 days


#5 posted 05-14-2012 08:57 AM

Your issues are quite common and stem from producing a product that never reaches a fixed design with known cost to you beforehand. Welcome to the business of custom woodworking.

Two things off the top of my head. Accept that you need to be better at selling yourself to people than you are at working wood. And pay your people too much for them to quit but not enough to fire them.

-- "The way to make a small fortune in woodworking- start with a large one"

View nate22's profile

nate22

433 posts in 1626 days


#6 posted 05-14-2012 11:08 AM

Jerry I am in the same spot your in I am busy but there are some months that it doesn’t seem like I am making enough or anything. I know I am it just doesn’t seem like it sometimes. I don’t make cabnets but I do make indoor furniture and I know what you mean when you give a quote to a customer and they want it for little or nothing. It can get frustrating at times. And if your cabinets are higher quality than other places give it time people will start noticing. I get people mainly ladies tell me that store bought furniture doesn’t last or it isn’t sturdy enough. If they come and look at mine and relize that it is sturdier and looks nicer than store bought they are pretty much sold on it. So just keep working at making your cabinets better and it will pay off in the long run.

-- Gracie's wooden signs. Middlebury, In.

View bluekingfisher's profile

bluekingfisher

1107 posts in 1731 days


#7 posted 05-14-2012 11:57 AM

Hi mate, I’m not in business but from what I have read in your post you are only just starting out, unless you were very lucky it will take time to build up a client base. It may take you a few years to become known for your quality work. Don’t worry about the guys who want it all for cheap, walk away (unless perhaps you are short of work and the cheap price keeps your head afloat)Once established with regular customers who can confirm your excellent work by word of mouth or otherwise your business will pick up.

I wouldn’t under price your work too much either, if people are paying under price they will assume under value work, which is the last thing you need when starting out. First impressions last a long time.

As far as the loafer goes, get rid asap, He will not improve and should be sacked right away. He should be an asset not a burden to your embrionic business. With a small workforce his lack of good attitude will become very wearing and stressfull, not really what you need at your stage.

i would compile a diary on his slack work practices (evidence) over a period of time. If you don’t feel comfortable confronting him on your own then arrange with your wife to hold a meeting where you guys arrange the room and hold the high ground as it were. Put all his bad work and time keeping practices to him (as evidenced from your diary) he won’t have a leg to stand on as far as an excuse goes and should he take legal advice on employment rights you have it ibn black and white (day date time, reason ) of why he failed to turn up for work and meet reasonable standards.

The guy is a bad influence, if you don’t mind me saying, he takes advantage because he knows he can and you won’t front him out.

I assume you are a young couple, trying to make a living from something you both enjoy while providing a little local empolyment? You deserve better. He could be the differnce between you succedding and going under.
If it were me I would have him in by the collar then out on the seat of his arse.

Good luck to you and your wife my friend.

-- No one plans to fail, they just, just fail to plan

View Jerry's profile

Jerry

2249 posts in 2298 days


#8 posted 05-14-2012 11:58 AM

All great input. Thanks guys. It is always encouraging to know others can relate.

-- Jerry Nettrour, San Antonio, www.topqualitycabinets.net

View americanwoodworker's profile

americanwoodworker

184 posts in 1125 days


#9 posted 05-14-2012 01:15 PM

First off, congrats! It is great hearing about people starting up small businesses in this unfriendly business culture we have today. One of my dreams is to quit the oilfield and become a prowoodworker. So it gladdens me everytime I hear someone taking the step.

Now, please take what I say for whats it’s worth. I have no experience, so I offer no solid facts. Only opinions based on my preparations for the future. I am also a manager where I work and can feel your pain when it comes to employees.

1. No matter what, do not be afraid to fire people. If you plan on owning and operating a business you must learn now! Or eventually you will have a whole crew who makes more than you and YOU do all the work. It’s not fair to you or the others who work for you. It is a poison that will kill your business.

2. Read, read, read. Go get the book e-myth by gerber. Boundries by henry cloud. Gureilla marketing by conrad levinson. How to win friends and influence people by dale carnegie. The 7 habits of highly effective people by stephen Covey.
The average millionaire reads one nonfiction book a month. So READ, READ, READ.

3. Think about how you pay employees. Can you change from hourly to incentive based? Some sort of a commission type wage? Or profit sharing?

4. Offer something extra with your work. Make it standout. Tell your customer after a year you will come and inspect the cabinets and make any necessary adjustments or repairs, if possible. But make sure you add that cost into your bid. Point is ask yourself, “What is my unique selling point?” My Buddy was selling outdoor furniture at a craft show once and this lady came up to him asked how much. He told her and she said thanks and walked off. I told him about an exterior finish I was reading up on and all the benefits of it and that he should use that as his selling point. The next day he saw the same lady and he told her he forgot to mention that he finishes his projects with so an so finish and told her about the benefits of it. Guess what, She bought AND asked what else he makes.

5. Make sure your personal expenses and debt is under control. I personally do not borrow money. I do not own a credit card. More stress in your personal lives can overflow into your professional lives.

6. No matter what, Hug that beautiful wife of yours and say Thanks! Family first my friend.

7. Ask the opinions of your employees what they see might be wrong and how they think it could be fixed. You could learn alot from this. Believe me I know.

As far as pricing all I can say is that you need to do book work. Keep track of every job. What did it cost you to make it? How Long? What sort of problems should you watch out for on that type of project? Do this enough and you can start to make better quotes and more profit.

I cant stress this enough though. The guy that works for you and keeps making excuses not to work. He must go. The other employees see whats happening and guarantee you they are getting frustrated. It will kill your business. His skills are useless if you cant use them. Your bids are worthless if you can’t rely on people to help make them. Start looking for better help and FIRE THIS GUY! Start working on an incentive based pay so the next guy you hire will not be making more than you.

Remember this phrase… YOUR RAISE IS EFFECTIVE WHEN YOU ARE.

Good luck, Bud.

-- Your freedom to be you, includes my freedom to be free from you.

View Lee Barker's profile

Lee Barker

2169 posts in 1601 days


#10 posted 05-14-2012 02:03 PM

There are some very good insights and well thought out responses here. My counsel, as a 31 year veteran of the custom woodworking world, is to get more counsel.
In my case, it was the Small Business Development Center at our local Community College. Another resource is SCORE, which is available on line. It would be better if you could find a local member.

Here’s why I recommend this approach:

First, you’ve got everything going for you. Enthusiasm, smarts, passion, but most of all, you are open. The abovementioned resources will be intrigued by your questions and eager to help.

Second, there are no one-line or one-paragraph answers that will suffice here. Your situation is fluid (thank you, Miles, for your insightful opening line in your post) and having someone spend time with you to take in all the aspects of your business and how it is working and what its possibilities are will take time. The subsection of this is accountability. Such a counselor can study, say, your situation with your employee and even help you rehearse the correct language to use to enable you to move forward. And then, at your next meeting, say, “Well, how is it going with your employee?”

I have used both of those resources and SCORE (Service Corps of Retired Executives) is free and the Community College is likewise (in my area).

I am excited for you—I can remember those years—and I hope that you can locate some good resources to help you move forward. It can be a slow process, sometimes tedious, but as the years go by and things get better you will reflect on the joys and know you did the right thing.

Quoting Theodore Roosevelt:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Kindly,

Lee

-- "...in his brain, which is as dry as the remainder biscuit after a voyage, he hath strange places cramm'd with observation, the which he vents in mangled forms." --Shakespeare, "As You Like It"

View Tennessee's profile (online now)

Tennessee

1565 posts in 1265 days


#11 posted 05-14-2012 03:45 PM

Jery:
So far, there has been a wealth of info in the previous postings. A lot of these guys are veterans at what you are doing.
I build guitars, and for me, it came down to a niche. What could I do different that others could not do at my desired price point? If you are trying to compete against the big boys by being less money, two bad things happen: Customers think your product will automatically be of less quality, and secondly, you are not making the money you should.
I once worked in a furniture factory that had 30% of it’s customers in the negative. The CFO said in a top executive meeting that if we simply lopped off all the non-profitable customers, the remaining 70% would double, or triple our profit for the year, we would work lots less, and overall make more money. The family members present thought she had just shot someone. But money talks, and BS walks. For me, I’ll take the money every time.
I know it sounds counter-intuitive, but making anything at a loss is time you will never get back. Just DO NOT do that! If they say it is too much money, they are just trying to get a good deal out of you, because they might not have it to begin with, or they just want to say “Look at the great deal I hounded this guy out of.”

When I say niche, I mean what can you put on your products that make them stand out. The edge banding idea was a good example, save you don’t have the money to invest in the machinery. So it would be a good thing for you to think of some ideas that would set your cabinets apart from all the rest, so others may find it too awkward to try and follow you. If you look at my website, my all wooden pickguards and tonal chambers are unique, and not that hard, so I’ve had over 40 orders in the first 22 months. Not bad.
Just take heart that you need something that is a bit unique, make it top quality, and price it accordingly. Maybe you don’t need to be everyman’s cabinet maker. Maybe you need to be the special cabinet maker that makes those unique ones, have you seen this guy’s work??
That’s what you want.

Oh, and that employee?
Set him down, preferably with your wife for support, and explain to him your issues. He can either stay and improve, or he can take his tools and go home. There are plenty of very talented, unemployed people out there who would gladly fill his shoes, probably for a little less money. In the end, either he improves and your shop improves, or he goes, you replace him, and your shop improves. Some morning you will wake up and decide that he has caused you enough stomach acid.
Best of luck, and God Bless!

-- Paul, Tennessee, http://www.tsunamiguitars.com

View Bill White's profile

Bill White

3587 posts in 2711 days


#12 posted 05-14-2012 05:09 PM

Jerry, don’t forget that being busy and making a profit are two very different animals.
Advertising for more business won’t increase your profit margins.
Get rid of under performing employees at once.
Examine your work flow. How many times are ya handling parts in the shop. What can ya outsource to speed up your building process? There’s a local shop that builds doors much more efficiently than I can. Thereby, I can focus on the construction and finishing/installation part of business.
There is a business principle known as “INTELLIGENT LOSS OF SALES”.
Do a carefull analysis of your costs. Are you buying smart?
I applaud your work ethic. Just don’t sell yourself short.
Bill

-- bill@magraphics.us

View TopamaxSurvivor's profile

TopamaxSurvivor

15088 posts in 2427 days


#13 posted 05-14-2012 05:27 PM

I was once told by a sage estimator in the electrical business, “If you are winning the job on more than 10% of your bids, you are pricing yourself too low.” I would suspect in today’s market that number might be more like 20%. I operate in a specialty niche with very low overhead. But even with low overhead, I have found it is nearly pointless to chase work with the Wolf Pack ;-) If price is the only consideration, you are in trouble.

-- "some old things are lovely, warm still with life ... of the forgotten men who made them." - D.H. Lawrence

View DLCW's profile

DLCW

530 posts in 1405 days


#14 posted 05-15-2012 04:26 PM

Jerry,

What it sounds like might be hurting you is your pricing. You indicate you charge by the foot. Many surveys of professional cabinet shop owners have indicated this is not an accurate way to estimate.

You need to figure out exactly what it takes for you to build a cabinet – carcass, faceframe, dbx, drawer front, each kind of door you do (labor, materials, consumables, utilities, shop expenses, etc.). From this you can add in your overhead (profit and what you want to pay you and your wife). Then you can give good accurate estimates and determine if a job will be profitable or if you are being Santa Clause on a project (giving it away).

Consumers are stuck in price-per-foot cycle (very inaccurate and misleading) that the big box stores and some cabinet shops have conditioned them to. I take it upon myself to educate the customer that per foot pricing is not accurate and won’t give them a good number they can use for budgeting (loan application). I tell my customers that I price by the piece – carcass is a piece, faceframe is a piece, dbx is a piece, drawer front is a piece, drawer slides being a piece, hinges being a piece and pulls being a piece.

Breaking it out this way gives me the ability to provide several levels of cabinetry to meet many budget ranges. I can show them advantages to upgrading carcass material, hardware, etc.

Every customer I’ve approached this way loves it. They don’t all go with me but they tell me they are now much better educated and know what questions to ask as they are going around to get other bids (like we do when purchasing materials).

Many customers have gone with me even though I might be higher priced but it is because they know exactly what they are getting and there are no secrets in what I’m going to be building for them. They feel it’s more value for their money.

-- Don, Diamond Lake Custom Woodworks - http://www.dlwoodworks.com - "If you make something idiot proof, all they do is make a better idiot"

View cabmaker's profile

cabmaker

1311 posts in 1560 days


#15 posted 05-15-2012 08:33 PM

Sorry Jerry, I need to steal your thread for a moment to make a comment. Don, I can respect your thoughts on pricing but I can also say that per ft. pricing is extremely accurate. If you know your operation, your costs, etc. one is able to price a job with great accuaracy. I know precisely per ft.what it costs me to build several calibers of millwork. Prices will vary for example: standard uppers or full hgt. Stain, paint or no finish. Full ext? 32mm, etc. And for Jerry, your close my friend, but my costs went up precisely 8 bucks per lineal ft. on material the last 12 mths. You may be a little light on labor, but doable if your fast.
JB

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