"I was an idiot until 1998."
That's Brad Phelps' blunt assessment of his business acumen, looking back on a career that began as a one-man shop almost three decades ago. Today, however, Phelps is at the helm of Phelps Wood Designs Inc., a thriving cabinet shop with 18 employees in Cedar City, Utah. He is a past president of the Cabinet Makers Association and his talks on marketing and small-shop business skills are a popular draw at trade shows around the country. What happened to transform him and his business?
"If I could put my success on one thing," he says, "it's that I changed my attitude that I don't know everything. I can learn from other guys."
What he's learned and freely shares with other shop owners includes a long list of skills ranging from buying equipment and marketing to working with customers and delegating work.
Phelps did not set out to launch a woodworking business on purpose. He started doing woodworking when he was still in high school and continued part-time while he pursued a college degree in construction technology. The month before he graduated from college, he landed a project for 10 condominium kitchens in the nearby ski resort of Brian Head. After that, it was just one job after another.
But that was the problem. Working as a craftsman from one project to the next, he realized he wasn't really building his business. "I liked to work with wood," he recalls. "But I had created a business. I was focused on the making, not on the business."
His third year in business, he says he didn't take one dollar home. His wife was working as a school teacher then.
"I used to focus on getting a joint just right," he says. "Now, we focus on whether we made that customer happy and still made money. Now, it's not just getting the joint just right, but it's getting that job just right."
Two things happened in 1998 to change Phelps' outlook. One was taking a night school business class. The other was the founding of the Cabinet Makers Association.
In the night school class, Phelps spent 14 weeks developing a business plan, something he had never done before. He says the process forced him to think about "what do you want out of the business and what do you want from life and what can you expect."
At about the same time, Phelps became a charter member of the CMA. Through the group's online forums and face-to-face regional meetings, he got to know other cabinet shop owners who were willing to share their successes and failures. "I realized there are people out there who are smarter than me," he says. He made the effort to travel all the way from Utah to attend CMA roundtable discussions in Atlanta and Greensboro, N.C. "I used to go to trade shows for the products," he says. "Now I go to recharge my batteries and be with these guys."
For any shop owner who thinks they don't need outside advice, Phelps has this to say: "Tiger Woods has a coach. He's always working to improve. Even Donald Trump has advisers. The most successful people surround themselves with other successful people."
But if all your time is spent trying to get cabinets built and installed yourself, you're not likely to have time to listen to advisers. Phelps quickly learned he would have to let go of some of his operation so it could grow and prosper.
He can point to key moments that marked his transition from craftsman to businessman, including in 1993 the first time he sent two employees to do an installation by themselves without his being there. Then there was the first time his company installed a job, and he didn't see it. He met a customer in the grocery store who was complimenting his shop's work, and he didn't know he had built her cabinets.
To some, those might be signs of losing control or being out of touch, but Phelps realized it was just physically impossible for him to control everything.
"It's a whole progression of giving up more and more of the business," he explains. "You've got to be able to let go to get bigger because you can't do it all."
Phelps' latest act of letting go was to hire Charles Wilson as general manager for the business. Wilson is the current CMA president and had previously run his own shop for many years in Little Rock, Ark.
Wilson leads a team that Phelps has built over the years, emphasizing people who Phelps can rely on and be confident they'll work with the best interests of the shop and its customers at heart. That gives Phelps the confidence to take the business to new places, like its recent entry into nested-based manufacturing with a CNC router.
Originally, Phelps was reluctant to invest too much in equipment and was fearful of borrowing for such purchases. "In 1996 I found out it's OK to borrow money," he says. That's when he went to the IWF show in Atlanta for the first time, and his eyes were opened.
Although he had never borrowed money for capital improvements before, he called his banker from the show and told him what he'd seen and what it would cost. The banker was fully supportive, and Phelps came home with $26,000 worth of equipment, including a Ritter line drill and Cabnetware computer software.
More recently, at the 2003 AWFS show in Anaheim, Phelps encountered a closeout deal on a Northwood CNC router that seemed too good to pass up, and everything seemed to fall in line. He talked to his wife, and then he talked to another CMA member with lots of CNC experience. Finally, he called the banker. They all supported him. The tax laws were in his favor, and cash flow was good, so he made the deal, even though he had not planned to automate so soon.
Rethinking the business
Adding CNC manufacturing has dramatically changed Phelps' operation. In the past, the shop cut all parts on a Striebig vertical panel saw, drilled with a Ritter line borer and cut toe kicks with a band saw. Face-frames were built with pocket holes drilled with a Castle machine. "Everything had a chance for human error," says Phelps. "That router just makes perfect parts and it makes 'em real fast."
Still, he describes going to CNC as a fundamental change. They still build face-frame cabinets and still use the pocket hole system for the face frames, but the cabinet boxes are now dado construction. "We changed the way we build to fit the CNC machine," he says.
Phelps sees CNC automation as an inescapable industry trend. He compares it to how hammers have been all but replaced by nail guns in the construction trades. "CNC is going to become the standard," he says.
As Phelps' approach to business has gotten more sophisticated, he's also become more focused on customer service and marketing aspects of his business.
"Customers know what they like, but they don't necessarily know what they want," says Phelps. He gives the example of the customer who asks for dovetailed drawers. Phelps normally uses a Grass Zargen drawer system. In the past, Phelps might have just offered an outsourced dovetailed drawer to satisfy that customer. But now Phelps has learned "when a customer asks, ask why."
In the dovetail example, Phelps would ask why they wanted dovetailed drawers. Typically the answer would be something to do with perceived quality. That gives Phelps the opportunity to point out features of the Zargen system, which many customers may not be familiar with. Phelps says most customers are then quite happy to select his standard drawer.
Still facing challenges
The philosophy of constant improvement continues to drive Phelps' business. His current biggest challenge is one of logistics and scheduling with a little diplomacy mixed in.
About 95 percent of the shop's work is residential. Of that, 80 percent is work for builders and 20 percent directly for homeowners. The area is in a building boom, and builders aren't keeping to schedules. Phelps finds he has cabinets built and no house ready. "The problem is we don't make money unless we install product," he explains. He says the challenge is how to apply pressure on the builders to keep to a schedule or pay on a different schedule or pay for storage without driving those same builders away as customers.
Phelps hasn't solved it yet, but he's confident he'll find the answers, probably through talking to other shop owners and relying on his team.
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