Question
I am looking for any suggestions or advice on how to be a one man shop and function efficiently. I work entirely by myself for the most part. I do have a friend that I pay if I have something that I can't deliver and install by myself.
Here is a brief description of what I do. I mainly do unfinished built-ins for a builder and that usually leads into custom stuff for some of the homeowners. Sometimes the items are small and not very profitable but I do them to keep a good relationship with the builder. There are a few times when it is a somewhat profitable project. I find that I have to price things conservatively so that the builder doesn't pull someone else in to price against me. I have to meet with the homeowners (at the jobsite which is 30 minutes from my shop) to discuss details, come up with sketches, pick up my supplies, build the items, paint or stain them, deliver and install them. I try to do every phase of the project so I can make a reasonable profit but sometimes it is too much. I also do some finished built-ins and an occasional cabinet install for a cabinet company that I used to do installs for.
I work six and a lot of times seven days a week to get things done. I never can seem to catch up. Don't get me wrong I am happy to be busy. I just need to figure out how to run more efficiently. I almost forgot to give a short history of my experience. Fifteen years with a custom cabinet shop, four years after that as a subcontract cabinet installer and have been doing this for about three years on my own.
Forum Responses
(Business and Management Forum)
From contributor E:
All of us who have owned small shops have been in your shoes in the beginning, and the good news is you can survive and eventually enjoy life. You mention one issue that could have a tragic repercussion - one source of work. Forget about how efficient your shop is, how well the layout works or any other issue, find some other customers fast. The GC you work for can pretty much dictate terms, prices, schedules etc, because to lose his business you in the bread line because as a sole proprietor you don't even have unemployment insurance to fall back on. With all the extra hours that any business owner puts in without the benefit of OT pay, you are probably netting less than you would as an employee, yet you have all the problems and responsibilities of a business owner.
Once you have some additional sources of work, you can raise your prices to be compensated for all the extra work and time you put in as a business owner. The current GC may be you biggest, but he also needs to know that you have others. At that point he will cease to run over you or threaten to price you out. With three years under your belt, you started business just before the crash and I'd say you are doing pretty well to still be alive in this economy.
I can understand where you are coming from in this. Since I retired five years ago, I work for only one guy. He's a spec builder who happens to have a GC license. This allows some us to work as employees on the job site (installs) and have both insurance and a lack of licensing problems. He offers payment even before it is due. We have a great relationship. I do whole house jobs for him and have made it to the point that I don't even have to bid beforehand. He has admitted that it is the cabinetry in a new (and otherwise vacant house) that sells, and that I won't gouge him on price. He also knows that I continue to work on only a limited hobby basis so I don't need the income. This creates a bit of a balanced relationship that works for both of us. The problem with most one customer situations is that the GC thinks the supplier needs him more than the GC needs the supplier and that leads to a losing proposition for the supplier.
When you have added to your customer base, hire a college kid to do a lot of the gofer work such as pickups, delivery, material runs, etc. It will free you up for added production. A certain amount of the leg work such as bidding, hand holding etc just goes with the territory, and try as we might it is pretty hard to turn this lost time into cash.
This would in turn allow me to find more potential clients and to diversify other aspects of my operation. “Try it for a few months” is what he said, what do I have to lose - a few grand on salary and insurance? If I can’t afford that how can I afford to stay in business? I also set up appointments with marketing consultants through the small business bureau. I am attempting to reach my target market with only partial success so I’m hoping this helps. Perhaps similar moves could help you. I also wouldn’t rely on only one source of income, it’s just too risky especially in today’s financial climate.
We have two part timers who work just weekends. Today's economy has decreased the lead times we have available for our projects. Keeping the ball moving an extra eight days each month helps a lot right now. Training part timers is harder but that just helps identify the real weak spot, which is a deficit in training programs. If you can develop a decent way to train (or choreograph) then you will have an advantage in the marketplace because everybody you compete with insists on passing the tribal elder method for passing the baton (inconsistent, sometimes stingy training).
A few years ago ('07) I believe, I did 50% of my total sales to a large home builder in my area. I was constantly busy with work for them, but realized the train wreck that I was setting myself up for. So I reached out. I advertised and made time to do projects for other homeowners so my name would get out there. Thank goodness I did because the following year, the train wreck happened. This builder went from 50 some houses in one year, down to 15 the next. My schedule was still full with work from other clients (new clients). My income increased, even though the amount of work I did for this builder had decreased significantly. This year I have done a total of eight orders for this company, and that is going to be it for this year. I avoided the train wreck by taking the advice of others on here. Raise your prices so you can make a fair living, and reach out to other customers. It is ok to lose a bid, and it is ok if the GC wants to put the bid out to some other poor person who will lose trying to do the same thing you are doing.
The entrepreneur who employs contingency planning has already defined what constitutes a yellow flag so he is very quick to recognize them when they show up. This same entrepreneur also has a plan worked out for if this yellow flag should pop up. When he sees the first one he goes over to port side and keeps an eye out for the second yellow flag. If that one shows up he is already standing next to the red lever and he knows what he is supposed to do.
I was wondering what you guys consider to be average yearly sales or net profit for a one man operation? What is a good hourly shop rate for southeast region? I have read many posts on here about these topics but after reading so many they all become a blur.
If you can't compete with the other local prices and make a profit through better management or efficiency, you won't be in business long. This is why so many shops close. When work gets scarce, price cutting sets in, and in the end the only ones left standing are the best financially managed shops and the most efficient ones. We all pay about the same for materials and labor. We all want a profit. The size of that profit is determined by how well we manage our use of labor and material. The amount of that profit in the end determines whether we remain in business or whether we are satisfied with the returns the business produces.
