Typical small shop cabinetmakers are a bundle of contradictions. They tend to be educated but are self-taught in their business and craft. They have years of experience but struggle with business basics. So, who are these people and what do their shops and businesses really look like?
To get a better handle on that question CabinetMaker has revived its annual Small Shop Survey. What emerges from the data is a portrait of the small shop owner/manager, his (yes, they are predominantly male) shop and business practices. Conducted by mail and online in January and February, the survey had 571 responses, providing a statistically significant sampling of the CabinetMaker readership.
About the person
This is a business dominated by middle-age males. Survey respondents were 98 percent male, and the predominant age range was 46 to 55 at 40 percent. Those aged 36 to 45 made up about 25 percent, and 20 percent were in the 56 to 65 age category. Only 9 percent were younger than 35, compared to 6 percent who were older than 65.
Owners and executives make up the vast majority of those responding to the survey. Some 83 percent described themselves as an owner/partner in their business. The next highest category was 15.6 percent listed as president, followed by about 3 percent as vice president. The combined categories of general manager and foreman drew only about 6 percent, and a handful of other job titles were listed to round out the total.
Clearly, these are people in charge of their businesses and in control of decision making. So, what is their background for that? They are predominantly high school (51 percent) and college educated (38 percent). Those with advanced degrees (6 percent) outnumber the few who have not even completed high school (5 percent). But when it comes to business, school is not where these people got their training.
Less than 17 percent of those responding have any formal training in cabinetmaking, which includes 11 percent who attended vocational schools and less than 6 percent who took college woodworking classes. Instead, the typical cabinetmaker is self-taught (66 percent) or learned on the job (44 percent). Note that numbers add up to more than 100 percent due to multiple responses.
When it comes to business skills, the lack of formal education is even more striking. Fully 70 percent say their business skills are self-taught. Another 37 percent say they learned the business on the job. Only percent report having college business classes, and just 4 percent said they had vocational business classes. Of course, there are a few college-educated businessmen in the industry, and 7 percent report they have a degree in business.
With education numbers like those, it stands to reason that experience is what drives most cabinetmakers. Respondents to the survey listed decades of experience. The average cabinetmaker says he has spent more than 21 years in the industry. Their typical shop has been in business more than 17 years, of which they have been in that shop for nearly 14 years.
On the job
With all of those years on the job, one might think the typical cabinetmaker would be taking it a little easier, but not so. Overtime is more the rule than the exception. More than 38 percent of those responding work between 41 and 50 hours a week. Some 25 percent report working 51 to 60 hours a week, and a surprising 13 percent work more than 60 hours a week.
Compare that to the 16 percent who work 31 to 40 hours and the 8 percent who work less than 30 hours a week.
With all of that time at work, cabinetmakers better enjoy what they do, and 36 percent say the best part of the job is working with their hands. Another 32 percent say the best part of the job is making things of lasting value. Some 25 percent said that the best part of the work is being challenged. Only 16.5 percent cited working with people as the best part of the job, and making money came in last at only 10 percent.
That dovetails with the many remarks sent in about the most challenging aspect of the job. Many complained about the difficulties of finding and managing employees, the challenges of making enough money or managing the financial portion of the business. Clearly, business management is not the strong suit of the typical cabinetmaker.
About the shop
So, what kind of a shop does the typical cabinetmaker operate? Because CabinetMaker is intended only for shops with fewer than 20 employees, it is not surprising that answers on shop size skew to the smaller end of the spectrum.
Shops with two to five people make up 44 percent of those responding, and one-person shops account for 39 percent. About 11 percent have six to 10 workers, 4 percent have 11 to 15, and only about 1 percent have 16 to 20.
Where are they putting those employees? The predominant shop is small, with 34 percent reporting only 1,000 to 2,499 square feet. About 28 percent have shops that range from 2,500 to 4,999 square feet, and 11 percent have between 5,000 and 7,499 square feet. Nearly 16 percent are working in less than 1,000 square feet. Only 11 percent have more than 7,500 square feet.
Products and markets
Kitchen cabinets dominate this industry. Fully 60 percent of those responding build kitchen and bath cabinets. An additional 27 percent also build residential built-ins. About 15 percent build custom furniture and 2 percent offer a furniture line. Only 12.5 percent do custom commercial work and 2 percent do store fixtures. About 10 percent listed a range of other products including nearly 2 percent who build components for resale.
Most of these shops are not aiming low with their products. Fully 70 percent say they target the mid- to high-end of the market, with 16 percent saying they are exclusively high-end. Only 13 percent said they target the low- to mid-range part of the market, and the number competing for the low end didn't even reach half of one percentage point.
When it comes to building cabinets, face-frame construction dominates, although 43 percent said they build in both face-frame and frameless styles. In those shops, 56 percent of the work is for face-frame construction. Some 41 percent build face-frame style exclusively compared to only 15 percent who are exclusively frameless.
With the growth of outsourcing, most shops buy rather than build at least some of their products. Doors are the most popular outsourcing item, coming in at 64 percent, followed by countertops at 45 percent and drawers at 32 percent. Other components accounted for 17 percent.
Annual sales and profit
As small as these shops are, more than half generate annual sales in excess of $80,000 per employee. Some 32 percent report annual sales between $100,000 and $500,000 per employee. About 20 percent are doing between $80,000 and $100,000 per employee. Nearly 17 percent report annual sales of less than $40,000 per employee. Nearly 14 percent report sales of $40,000 to $60,000 per employee, and 13.6 percent come in at $60,000 to $80,000 per employee.
So, how much are shops really making? There seems to be a contradiction in the data when it comes to profit depending on how the numbers are broken out. When asked to divide up a typical job into labor, materials, overhead and profit, the shops listed about 16 percent profit. But asked directly how much of their gross annual sales in 2006 was profit, less than a third measured up to that standard.
The largest number of respondents, some 22.5 percent, report profit margins of only 6 to 10 percent. About 13.5 percent fall in the 11- to 15-percent category, and an equal number report making 5 percent or less. In the more profitable shops, 11.5 percent report profits of 21 to 25 percent, and 5.5 percent of the respondents report margins of 26 to 30 percent. One out of every 10 shops in the survey reports making more than 30 percent profit in 2006, but 11 percent of those who responded reported making no profit at all last year.
And where did that money go? Typical jobs were dominated by labor at 35 percent, materials at 32 percent, and overhead at a little more than 16 percent. That leaves about 16 percent for profit.
Salary and benefits
What do cabinetmakers do with the money they do make? Well, only 54 percent pay themselves a regular salary. As for their employees, unfortunately many shops still offer few or no benefits. Of those who do offer benefits, paid vacation (64.5 percent) tops the list, followed by bonus (52 percent), medical/dental insurance (34 percent), 401(k) plan (13 percent), profit sharing (13 percent), and a pension plan (7 percent).
Promotion and competition
The lion's share of business comes to cabinet shops through referrals. More than 90 percent reported referrals as the way they promote their business. Less than a quarter use advertising. Only 12.5 percent participate in competitive bidding. About 8 percent have a retail showroom and 6.5 percent use trade shows for marketing.
While major woodworking factories complain about offshore competition, small shops are more worried about other small shops. One third of those responding said their biggest competition is other shops like theirs. Some 29 percent worry about bigger shops and 26 percent are concerned about factory-built cabinets. Less than 13 percent see home centers as their competition. And despite common grousing about "garage shops" and hobbyists cutting into the market, fewer than 6 percent of cabinetmakers see that as major competition.
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