# business as a cabinet maker can be up and down, hopefully fellow cabinet makers doing well!!!



## fge (Sep 8, 2008)

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


----------



## Loren (May 30, 2008)

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.


----------



## TopamaxSurvivor (May 2, 2008)

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


----------



## RussellAP (Feb 21, 2012)

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.


----------



## Pono (Mar 10, 2012)

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.


----------



## miles125 (Jun 8, 2007)

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.


----------



## nate22 (Jul 12, 2010)

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.


----------



## bluekingfisher (Mar 30, 2010)

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.


----------



## fge (Sep 8, 2008)

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


----------



## americanwoodworker (Nov 26, 2011)

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.


----------



## LeeBarker (Aug 6, 2010)

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


----------



## Tennessee (Jul 8, 2011)

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!


----------



## BillWhite (Jul 23, 2007)

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


----------



## TopamaxSurvivor (May 2, 2008)

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.


----------



## DLCW (Feb 18, 2011)

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.


----------



## cabmaker (Sep 16, 2010)

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


----------



## DrDirt (Feb 26, 2008)

To me I think the Lowes/Home depot cost guidelines are a good one to look at. There can be the rama's pricing, but lowes will often be cheap on casework but much higher on installations.

but you should not be doing custom work cheaper than big box pricing, just my 2 cents, if you are turning work away, it is time to bump prices 5-10% move from 175 to 190/foot - - typically a lot of folks will go big box because the (1) can see exactly what they will get in the 'model room' (2) are comfortale that they can change terms and get warrantee coverage as they know Lowes will be around years from now (3) timing. A lot of folks don't really plan well so the tear up/out their existing kitchen and do the new floors - then are wanting the cabinets to be available in 2 weeks or less - - that is a tough one to beat.


----------



## tenontim (Feb 24, 2008)

Jerry, I didn't read all of the threads of this post, but it sound like you're doing ok. Increase your prices slightly to slow the business down a little. As for your non-contributing employee, kick him to the curb. This business you have watch the bottom line, and cut unnecessary cost where you can. Let your wife fire him, they're usually good at that, when someone is impeding their desired lifestyle.

Also, another market that you might want to consider are churches. They are used to paying a lot for furnishings and fixtures.


----------



## fge (Sep 8, 2008)

I have read all of the posts and let me say there is some of the greatest advice and I am very encouraged. I feel like I have made a lot of good friends who share some similar struggles as I do with running a smaller cabinet shop.

Let me say with pricing, I actually believe I am on the right track and have a great way of pricing my work. My pricing has been an evolution and has gradually increased over time. I feel I am getting close to what the market will yield for my work, but I am sure I can still go higher.

What I have developed is an Excel document that has all expenses related to manufacturing a cabinet and most all features I have included in the past. If a customer requests something I have not done, I just figure my fair cost for that new feature and then add it to my Excel document in the even someone ask for the accessory/feature again in the future. Please look at the pics I include in this post as they are snap shots of my excel document.

I do encourage positive and constructive critisism as I am always looking for ways to improve.

This has been such a great post I am going to have to take some extra time and re read all of the postings as everyone had great insights.

Below example is actually of a recent bid/drawing for a larger job that I provided a bid for. Not sure if I will get it or not yet.


----------



## fge (Sep 8, 2008)

So you all can see in my post the excel document for that bid shows the total at 28,273.75 at an average price of 186.01 per LF. So in reality what I am in fact doing is providing pricing according to actual accessories / features that are chosen by the customer but every bid is also broken into a LF price. The LF price helps me out as it is an indicator to me as to what I am selling my jobs for on average. Some of my jobs might be around 160.00 LF while others going in the 186.00 LF. It is actually all of our goals to push that LF price as high as the market will yield. My current goal is hopefully begin selling in the 200.00 per LF price range.

One thing I do during my bids, and I know it may or may not be fair, is I will change the price value on line #2 up or down according to various factors I may have learned concerning the customer during preliminary conversations. I try to keep Line #2 at 80.00 per LF all the time but will change it on occassion. So for example a local customer living in a lower middle class area wanting good quality cabinets for his garage but does not have the budget for the highest end cabinets just for his garage, I might lower Line #2 to around 70.00 per LF if I feel that is where the customer is looking. At the same time, if I have a customer looking to spend in the neighborhood of 200.00 per LF for his custom cabinets, and my excel document ends up breaking his bid down to around 185.00 per LF, I would be happy to change the value on Line #2 to 90.00 per LF.

Also, for further explanation, line #2 is the price I would charge a customer for a cabinet carcass with just a face frame. There would be no doors, drawers, hinges, drawer glides, stain or clear finish or any accessories. So for example, a 36" cabinet with nothing more then a face frame and nothing else would cost a customer 240.00.

Another neat thing my document does is allows me to reduce cost when customers tell me they need to be at a certain budget. I can then provide a standard drawer box as opposed to a more expensive dovetail drawer box in attempt to meet their budget.

I do love tracking my average LF pricing from job to job, but I also recognize there are some issues that might arise when figuring soley based on LF. I attempt to add door panels and corner moldings to all visible ends / corners of cabinets. Some smaller kitchens might only have 2 finished panels and corners in the entire project, while other jobs might have as many as 10 finished end panels / visible corners. I recently did a smaller kitchen where 84" of upper cabinets were hung from the ceiling and so I had finished panels across 84" of the back side of the uppers and one finished panel at the very end that was open and visible. And while I attempt to sell customers on using finished panels / corners, if budget is not permitting then my excel document will also allow me to just figure the bid based on wrapping visible areas with 1/4" plywood, etc…

If anyone feels this excel document, which I love myself, can help as a starting point or blue print for your own pricing, just let me know and I will email it to you. Keeping in mind my pricing may be lower or higher then your price per line item and such.


----------



## DrDirt (Feb 26, 2008)

Perhaps not nice to waste their time on bidding, but I would have a friend have you quote out thier kitchen - then have a big box and maybe another company come in and bid it. see where you are in the mix?
maybe their bid would even break out install, vs Boxes vs Hardware


----------



## fge (Sep 8, 2008)

Dr I have often wanted to be sneaky and get bids from other shops on a set of plans. I have just never got around to doing this. I do think it would be a great idea though. Thanks for that advice.

Anyone view my pricing document from Excel can provide any feed back. Does anyone else price their work similar to the way we do it with the excel document. I think the excel document is the most accurate way to price things.

Again thanks for all of the feedback.


----------



## canadianchips (Mar 12, 2010)

Jerry. I had my own business for 20 years.You are right at* KNOWING what YOUR *costs are. When customers come to you and compare your work with others make certain and point out that comparing an apple with an apple is the only way. Others may provide lower quality, lowering YOUR price to match that is NOT good. As for your SLACKER worker, regardless of how good he may be at *"His times"* I suggest seeking out someone else. You want to make your carpentry your business…...*NOT BABYSITTING*. When I had my business I kept it small, avoiding having people on the payroll in slow times. I did the work, relatives helping on the larger projects only when I needed extra hands,(they were okay with part time), my mother helped finishing and designing(she was an interior decorator instructor for community college). For ME, back then things worked out well. NEVER got rich, had very little stress either.
You might include, "Handles and hinges" on your spreadsheet, these can vary in price drasticaly.


----------



## Sawkerf (Dec 31, 2009)

I would be cautious about getting too detailed with a job cost spreadsheet. Prices fluctuate frequently, and too much detail means you need to spend a lot of time keeping the prices current so your bids are accurate.

My approach is to give the customer a ballpark estimate (based on other, similar, projects) to make sure I'm near their budget, If I am, we work out the design details and I give them a price based on their specific needs.

One item I avoid pricing out is drawer and door pulls/handles. IME this is often something that is a source of disagreement. I generally give them sources for these items and tell them to let me know what they want so I can drill the doors and drawer fronts before the project goes to finishing.


----------



## roman (Sep 28, 2007)

I could write several books on this subject. Like Lee, I also took a course offered by a development bank, and have since taken more courses on managing employees, managing stress, learning how to sleep….. I would recommend it.

I've worked in many shops, from being the sweeper, to bench man, right to project management, time motion studies, cost analysis, and more. I also ran my own shop for almost 2 decades.

Costing is important, at least it is in the beginning. Keeping accurate records of labour, materials and applied overheads and then compare that "sum" to the invoice. In time you should develop a cost per foot, or cost per box, and you can tweek as needed.

A shop that is "busy" is easy, a shop that turns a profit, is not easy. I have worked in, or with, or sub contracted from where the business is virtually bankrupt. They use clients deposits to pay for projects they finished months earlier, they think that because they have 40K in the bank, that they can proceed as normal, when in fact, if the work dried up, they wouldnt last a month. I've also seen the extreme of "job costing" where employees spent 2 hous a day filling out an endless trail of paper to allocate every screw, every sheet of sandpaper. …..spending way more to track the cost of an item, then the item was even worth. Kinda like sending 3 guys who get paid $30/hr to find a $20 can of glue, and spend 3 hours looking ?

heres another that I see too often. Employees/owners searching for an electric tool, say a belt sander, then search for a new belt, then get the extension cord, then ruin a piece of wood, when a hand scraper is sitting on the bench. Being efficient is very important. Sending the best guy to go buy glue, and leaving the least skilled guy to build the cabinets.

another. Check out the competition. See how they make kick plates, how they make scribes, see what hardware they use, etc. I always made it a habit to be friends with my competition as thats a win win. We could share tooling, borrow lacquer, even borrow extra hands when needed. As the saying goes, keep your friends close, but keep your enemies even closer. Be "open" to learn.

another………….find out what your good at, what makes you money (profit ) and never loose sight of that. Woodworkers have a bad habit of reaching out in every direction, making furniture, cabinets, carvings, marquetry, turning…………it is possible to spread yourself too thin, dont be in a hurry to "fly". There are some who are masters of all joinery, but they are few and far between. There seems to be too many that want to develop their own software for CAD and job cost control. From all the shops that I have seen do this…….they are all either bankrupt, or their software sucks. There is nothing more cost effective then a pencil.

Keep your suppliers pencils sharp, get bids from several suppliers. See if they can deliver, see if you get discounts on volume. Ask for discounts for early payment. Ask if they have inventory they need to move. Check out the industrial bankruptcies………….way better to pay 10 cents for a sheet of melamine then 20 bucks. Keep the savings in your pocket, not the client. You should never "BUY" a customer.

Work hard, work efficiently, work safely, start early and end late.

My last bit of advice is probably the most important. Be kind to your wife, make time, away from work to spend with your wife . I'm pretty sure that when we die, very few say "I wish I would have worked more" : ))

Study


----------



## stillgotallmydigits (May 9, 2014)

Interesting thread! I have recently turned my woodworking hobby into a business and it is a challenge to keep the growth under control. Here in So. Cal. cabinet shops come and go all the time and it is my guess that the reason is poor long range planning and cost control. It is easy to over-purchase and grow your shop into a behemoth that will bury you with expenses when things slow down. And one truth of construction in this part of the country is things WILL slow down. I am lucky enough to have a 600sq ft. workspace on my property with no nearby neighbors who might get upset with the constant noise. I have been careful to keep a lid on my expenditures and have set a cap on how much work I really want to do. With job requests seemingly falling from the sky it would be easy to over-build, rent a shop, and add equipment and employees. My good friend has joined me in this venture and my grandson might be joining us as well, but I have no plans on hiring anyone. too much govt involvement and I am not interested in becoming a "babysitter". My Wife? She knows nothing about wood work but she makes a pretty darned good lunch which is always welcome… I am far from an expert on how to run a cabinet shop but I have many years experience running other types of business and the best advice I can offer is; don't overgrow, keep a lid on your capital expenditures, and have fun!!! It ain't worth doin' if the joy of woodworking is replaced by simply working… Good luck Jerry!!
OH, and don't underprice your work. I too am not a fan of lf pricing but the average around here is $500.


----------



## Puzzleman (May 4, 2010)

Jerry, The figures in your spreadsheet just shows the sales numbers. Where did those numbers in column price come from. That is where the magic is. You have to know what the costs are for each of those steps and add-ons. I can make up pricing numbers out of thin air but I do a monthly check of all numbers to determine my cost per unit produced. This is the most important number to me. It is my score card to see how well I am doing.

This is what you must know to determine if you are making profit. You must include you and your wife at full price into your numbers. Even if you don't really pay yourself that price. The reasoning is that you will need to replace that position and you need to be making a profit when you bring that person in to work that job instead of you and your wife.

A suggestion is track all of the labor and materials for each individual job by itself. This way you can see how much profit you make for each job. Give each person, including you a spiral notebook. Label the first page with the first job. The fourth page with the second job and so on. Whenever someone is working on job 1, they write down their start time, end time and what they did and how much they did. Sometimes it might be only 5 minutes of work for job 1 but write it all down. When the job is complete, gather up the papers, add up the times and expenses and see how you did compared tow hat you expected. Doing this for every job will help you keep your employees focused as they know that you are tracking their work log. Most importantly, it lets you track every cost involved with project 1 and will tell you if you made any profit or not.

If you set this up as a standard way of operating, you will have enormous insight into what you do.

PS: Do you include your time of meeting, getting and placing bids into your time sheets for the jobs? It needs to be as it part of your cost of doing business.


----------



## huff (May 28, 2009)

Jerry,

Sounds like you're starting off pretty strong for a new shop. Keep up the good work.

Jim (post #26) brought up some good points.

Your excell spread sheet is really broken down in good detail for pricing the jobs for a customer, but do you have another spread sheet for cost, ( what it actually cost you to build a cabinet per lineal foot in a certain wood, how much it cost you in materials and labor to build a standard dovetail drawer, a raised panel door or mitre door, to stain or paint a cabinet per lineal foot and do you offer any type of special finishes, such as glazes, antiquing, burnishing, distressed, etc.)?

The only way you can know what to charge per lineal foot (or any other method of pricing) will be able to know the true and total cost to manufacturer it.

When I first started my business, I used to keep a time card on each project. It was easier for me because I was a one man custom woodworking shop, so I was the only one to keep track of.

What it taught me was; I learned how long it took me to do each phase of a job. How long it took to dovetail a drawer box, how long to build a raised panel door,(or any other type door I offered), how long to build an average carcass, faceframe, preping for finishing, finishing ( each type finish I offered), knowing how long to reassemble cabinets or furniture after finishing, and ever other phase of the build and install.

Knowing the true cost of manufacturing is the key to being able to price your work to make a profit. Since I did all custom woodworking and was not a production shop, I could not price any of my work by the lineal foot.

As far as the big box stores and trying to compete price with them will be a lost cause. Not because you can't compete with quality, but it will be impossible to compare "apples" to "apples". They represent 4 to 5 cabinet manufacturers and prices will range from $70.00/lineal ft. to $285 +/per lineal ft.

The manufacturers not only offer most of the same wood species as you, but they will offer dozens of different door styles and literally hundreds of finish options…...............which amounts to thousands of options that changes the price per lineal foot for cabinets.

Your employee's; that is up to you to set your shop standards, the work ethics you expect from each and every one that works there and their work habits. If they don't or can't meet your standards, you will be better off getting rid of them and getting someone that is willing to work to your standards. Just be fair and reasonable as to what you expect from them.

Marketing; Time and money needs to be invested in that. Word of mouth is always the best advertising, but it can be slow and I never recommend only relying on one or two forms of marketing.

If you haven't already, subscribe to some of the trade magizines for your trade (cabinetmaker, woodworking news, etc.). They usually have articles on small business, (3 to 5) employee's and can give you some good insight how they run successful businesses. I think you will find that on the average for every full time employee you have, your gross sales should be around 100,000 per employee.

Having 4 full time people working in your shop, your goal probably should be around 375,000 to 400,000 in gross sales.

I've written a couple blog series on "pricing your woodworking" and "marketing and selling your woodworking" that may give you some ideas that may help you build your business.
http://lumberjocks.com/huff/blog/series/6413
http://lumberjocks.com/huff/blog/series/6466

I never priced by the lineal foot, but I cover in depth about understanding your true cost of manufacturing and that may help.

One other thing you may want to consider and that is out sourcing some of your work. Consider having your doors and drawer boxes done by an outside source. You can usually have them built cheaper by another company than you can in house and that frees you up to build more.

good luck with your business.


----------



## Daruc (Apr 20, 2015)

Jerry left, and this thread has been resurrected after 3 years, good points never the less



> Jerry,
> 
> Sounds like you re starting off pretty strong for a new shop. Keep up the good work.
> 
> ...


----------



## Holbs (Nov 4, 2012)

Very helpful thread. I am a hobbyist right now with wood working as a possible business venture down the road. Will keep this thread in my favorites


----------

