No Easy Answers

How can small shops go from "start-up" to "established?"

By Anthony G. Noel

It has been a full year since CWB and WOODWEB launched The Business Forum on the Internet, an interactive discussion resource for owners and managers of woodworking businesses.

I have had the privilege of monitoring the forum since its inception (drop in sometime at www.woodweb.com/~industry/businessboard), and of all the topics that have been discussed, a recurring theme goes something like this: "How does my small shop make the transition from GÇÿstruggling' to GÇÿestablished?'"

Oh, it is not always spelled out in such clear terms. Sometimes it is not asked at all, but shows up instead as the merest suggestion of frustration, coloring the discourse about some other topic. Other times, it is more blunt: "Will it ever get easier to make a living at this?"

"Threads" on the forum addressing such questions invariably generate a lot of response, even empathy. Woodworkers who have been there, or are still there, chime in with their ideas, experiences and, sometimes, to register their angst.

Is it ever possible for the owner of a small shop (three or four people, max) to stop feeling under the gun, to inhabit instead a place with that most elusive of commodities known as "a little breathing room?"

The short answer is yes. With (as you might have already guessed) a host of "ifs," "ands" and "buts."

I mean yes, IF you are scrupulous about those things which most directly affect your bottom line, AND you are willing to act in whatever manner is necessary to preserve that bottom line, BUT, even then, you have to accept that by its very nature, custom work can often be described with one of two words - "feast" or "famine."

Kurt, a recent visitor to The Business Forum, said he was considering going full-time with his shop, where he did cabinetry for 12 new homes working on a part-time basis last year. He makes $55,000 at his "real" job in sales, with some nice benefits, including a generous car allowance, 401(k) plan, health insurance and profit sharing. (We are still not sure when Kurt sleeps!)

"Am I crazy," he asked, "for even thinking about doing this?"

The many detailed responses he received ranged from, essentially, "Yes, you're crazy, run as fast as you can in the other direction and don't look back," to this: "For the foreseeable future, you will work twice as hard for half the money with no security and probably a 50 percent chance of failure. Advantages are, you are the boss, doing something you enjoy. Whether or not it's worth it is up to you."

All of which is true. But there are things we woodworkers can do - and which, quite frankly, too few of us seem willing to do - if we really want to turn the corner from constantly feeling like a start-up to being an established business. And they all relate back to that very word: Business.

One thing we can do is follow Kurt's example. We should think through our decision to go into business for ourselves in the first place. This means getting plenty of input from those who are already there, objectively analyzing our abilities, the market and the realistic short- and long-term demand for the work we intend to offer.

One crucial aspect of analyzing our abilities is looking ourselves in the mirror and deciding if we are ready for the big hours that come with business ownership. I know one woman who bought a shop several years ago and has been working 80-hour weeks ever since. Whether you call that "focus" or "lunacy" says a lot about your own staying power.

This is not to suggest that you have to work yourself to death all the time. But there will be times when you will have to work extremely hard, probably harder than you ever have before.

Once you have decided that you have what it takes to do the job, no matter what, and have determined, preferably by doing some jobs on the side like Kurt, that there is a market for your work, you have one more hurdle to clear, and it is one that some woodworkers never do.

Situation: Your three-man shop has about a week before it runs out of work. You were not worried about it until this morning, when you got a call from an architect with whom you worked closely on a bid, for a project that would have kept you going for another three months.

"Sorry," he said, "but the job fell through. They are going with somebody else."

Do you: (a) Make a round of phone calls to previous, current and potential customers, to see what else might be out there, (b) Kick yourself for not doing that all along, just in case, (c) Call back that guy with a job you refused last week because you knew you would lose money on it and tell him you will take it, or (d) Advise the guys in the shop about the situation.

The answer is all of the above, except "c."

Yes, you should beat the bushes, hopefully turning something up. Yes, a little self-flagellation for not having more "irons in the fire" would be appropriate and might keep you on your toes in the future. And yes, when the situation may result in people losing their jobs, you have to let them know. (Yet even this is a matter of timing. We will come back to it in a minute.)

But never, ever, take a job you know you will lose money on.

Do you have the ability, with one week to go before the shop is empty, to put these steps into practice? If you do, it can make the difference between feeling "established" and feeling like a startup. If not, you will be treading water or, worse, slowly sinking from the get-go.

"But isn't it better to lose a little money and keep my guys working?" you may ask. The answer is no. It is never better to lose money.

How about taking a job you know you can break even on? That's another matter. But if it is a guaranteed loser, you must pass it by.

Another hard reality of doing business is the necessity of laying people off. Forget all that PR nonsense from companies who claim to have "never had a layoff." It's just that - nonsense.

The dearth of qualified woodworkers has left our industry at perhaps its closest brush with full employment for a longer period than ever before. But don't let that fool you.

One day, you will have to let people go. You will have to fire somebody or do some downsizing, as your business grows to a point where CNC tooling is a viable option. In the above example, however, with one week before the work runs out, you can't tell your employees what's up the minute you are off the phone with the architect.

Instead, you must make those calls, beat those bushes. Only when you are sure the work has dried up must you call the guys together. They are not stupid. If you do what you must, they will see you carrying prints into your office for estimating and notice how much less you are on the floor because of it.

But that's okay. What is not okay is telling them that they may lose their jobs when they still have a good week's worth of work to produce. Don't give your people something to worry about before they need to. Worrying is your job. Woodworking is theirs.

This brings us to the most salient point of all: Once you own the business and hire a person or two, expect to do a whole lot less woodworking. It is now your job to keep them busy. It is what you must do, if you want to one day own an "established" business.

If you would rather work in the shop with them, that's fine. Just understand that you will need to: (a) Hire someone to handle the business end of the operation, or (b) Accept that you will work very long hours, because you will not only be at your bench, but in the office, too.

I wish there were easier answers. There are not. But at least there are steps to be taken to increase the odds in your favor.

 

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