It is commonly reported that at least 50 percent of new businesses fail within their first five years. Owners Dan Gonzalez and Mike Vlad of Legacy Woodwork in Franklin Park, Ill., say they came way too close for comfort to joining that statistic. The shop came within one week of either restructuring or declaring bankruptcy.
But after a couple of rollercoaster years, Legacy has managed not only to survive but to thrive.
Legacy Woodwork started with a good foundation. Each of the owners had already owned a small business and both were experienced woodworkers. Their first 18 months were busy. "We had a lot of work and things were going really well. Even after 9/11 we were swamped," says Gonzalez.
The bottom drops out
With business going gangbusters, the owners decided to buy a CNC router in December 2001. That decision grew out of the positive results they saw when they purchased a Striebig vertical panel saw, Kundig widebelt sander and Brandt edgebander. "It took the edgebander and two guys one day to do what it used to take four guys a week to do," says Gonzalez. The owners hoped to achieve similar gains with the CNC machine.
What they didn't bank on was the economy changing. By the time the CNC machine arrived in April there really wasn't enough work to pay for it. Business dropped to about 50 percent of what they had been doing when they ordered the machine.
To get work, the shop started under-pricing jobs. "When you're pricing jobs, you can't think like a poor man. But, when you don't have work, you're pricing every job that you do get way under because you have to get something. We were working, but we were not making any money," says Gonzalez. "That put a huge crunch on our profit, on our CNC machine and gearing it up." They also hadn't anticipated the long learning curve and time investment required to get the router to pull its own weight.
Unlike the edgebander, the new CNC machine was a much larger monthly payment and Gonzalez learned too late that using the router wasn't going to work in his shop. He decided that the CNC actually demands more, not fewer employees, he says.
"If you're using the CNC eight hours a week, you need a bigger shop and more guys because now you're cranking out two kitchens a week." Two of our typical kitchens a week would require a separate install crew plus the five or six workers in the shop to assemble and finish cabinets, not to mention programming and entering data into the machine, he says.
A lack of skilled employees did not help. Legacy has a good crew right now, but that didn't happen overnight. "We used to think that training employees ourselves was the best and cheapest way to go. It's not. What we do now is hire people who have experience," says Gonzalez. "Key is learning how to weed out the ones who don't really have experience."
They all say they have experience, but when you put them out on the shop floor you realize that's not the case, says Gonzalez. "Learning how to interview has been a learning experience. It's not easy to figure out what someone really knows. We've done things like test them."
Gonzalez says managing employees is very difficult. So, he's purposely limited his number of employees, and now he uses the Tractivity system of portable data devices to help keep better track of employee hours on each job.
Another part of the equation in surviving is getting customers and maintaining your sanity while you deal with them. The shop spent thousands on advertising, but found it yielded few results.
A few years before Gonzalez went into the woodworking business, he owned a grocery store. "I just didn't realize how different they were. With the grocery store people walk in, they give you the money, they walk out and you're done," he says. "Woodworking now you're talking about thousands of dollars worth of work that you're committed to, you're on tight schedules and sometimes they don't do their part. You're married to this customer for three or four months and if they're a nut case, you're in trouble."
How it is now
Today, Legacy's customer base is primarily the result of word-of-mouth with architects and some contractors. Architects send Legacy drawings, which the shop bids on. Once the job is won, Gonzalez does field measurements using the floor plan, and he draws it up in AutoCAD. Cutlists are done by hand.
Everything but solid wood is cut on the Striebig vertical panel saw. Cut parts are sent to the Delta table saw for other machining. Parts are then edgebanded on the Brandt edgebander and sanded on the Kundig 36-inch widebelt sander. Shaping is done on either the Delta or Grizzly shapers.
Boring is done using a Unique line-boring machine. A Kremlin spray gun is used for finishing, along with Chemcraft finish.
The shop uses Mepla Tandems for slides and Salice hinges, which Vlad says are the greatest. Drawers are outsourced from Cabinet Door Shops.
Although Legacy could now easily afford a CNC machine, Gonzalez says it's just not for them right now anyway. He does the books and says it can strike terror in any owner to see bills coming up totaling $15,000 and having no money coming in and all resources tapped out.
"That's your whole focus, day in and day out. You go to sleep dreaming about it. It's a nightmare living that, so when you finally get free of that there's no way you want to get pulled into it again," Gonzalez says. "Our goal is to survive and make a decent living, that's all that we want."
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