What Are You Going to Do When You're Old?
Shop owners discuss their exit strategies from the working life. October 20, 2013
Question
I’ve been thinking about the future a bit and I suppose that the body's not going to hold up forever, so I'm wondering what other folks are planning. Presently, I'm ten years in and still doing the one man show routine. I partner with others for large jobs and have a few helpers that don't want full-time gigs for installs and such, but I'm far from the growth model. In other words, I haven't built myself a desk job yet, and it probably won't happen. I live the life that I've chosen and it's good, but I only have another 10 or 15 more years before I just can't keep up anymore.
So, what is everyone’s plan? Apprentice, next generation, teaching at the technical college, digging in and making that cozy redundant position for yourself, or is everyone still under the illusion of retirement?
Forum Responses
(Business and Management Forum)
From Contributor S:
The real question is do you have a retirement fund? If you have enough saved, or if the projected value of your investments will be enough when you need it you can. If you are like me and have no savings (I’m 36 so I need to get started soon if that is my plan) you named some good options (I like the teaching idea). There is consulting if you are knowledgeable enough to set up production and engineer a product line. There is the ancient method of improving your skill until you are a sought after master craftsman like Sam Maloof.
From contributor R:
I closed my shop after eight years and went back into an industry woodworking job. Luckily I can operate a CNC because I'm not worth two hoots for the physical stuff anymore. I turn 60 next month, and what I have subjected myself to in those years has not rewarded me very well. I'm lucky enough to be able to spend most of my time in the chair, at the computer. Also, I'm fortunate enough that my company still has a pension plan for the older guys (newer guys are on their own) so I plan on retiring next year. I do enough woodturning and wood jewelry making to keep me in spending money when I retire, so if I can just hang on a while I can enjoy my time. A bad thing about the one man shop is that the business is you. You walk away and there is not much to sell - pennies on the dollar for machinery and materials. So don't plan on cashing in on that!
From contributor O:
I've been gifting the max allowed by the IRS for several years to my best employees with the understanding it is for this year's buy out. As everyone here knows the value of a woodworking business isn't a lot. We have priced in no blue sky, just value of used iron. I've been backing away from running the business now for the last three years. At this point I could disappear and they could run it pretty well. It requires a considerable level of trust. When it becomes theirs they could just sell the equipment, take the money, and run. They can also use the equipment for collateral for additional operating money and lose it. I will sit in on the monthly management meetings but not run them.
From contributor C:
To contributor O: A bit of advice on selling to an employee/employees. When I sold my first cabinet business I carried the paper, but the equipment was
pledged as collateral. Because I made the proper U.C.C. filings, when the person I sold the business to sold some of the collateral without my consent, he became liable for criminal proceedings. For me it was a full payoff because he had too much money to file bankruptcy. This was a battle that was easily won just by filing the correct paperwork. I hope this information helps some of you!
From contributor O:
Contributor C - thanks for the info, but given the plan I won't be needing it. I intend to gift the entire operation. Hopefully I'll live long enough to make it all under the tax free gift provisions. If they make it fly, the rent on the building will be enough income along with some other investments in real-estate for me to live happily ever after. There is a method to my madness. There is no point in trying to accumulate more money than I need.
From contributor M:
My plan is to stay small enough so that if I need to get out of the business I can keep my tools and equipment and setup a hobby shop. The irony is that if I did that it may turn out to be a bigger and better facility than the commercial space I lease. I would even have time to build some nice shop cabinets and a proper assembly table. I would feel helpless without the ability to make items.
From Contributor A:
I’m 35 now and started my cabinet shop around ten years ago. During the ten years I haven’t exactly made a million, but I have been able to expand my shop with some pretty decent tools, a few company vehicles, support a comfortable lifestyle, and I am now in the process of building a small house.
I am adding a showroom to display, not my kitchens but kitchens manufactured by other companies (ready to assemble kitchens and then hire someone young to install them). The way I look at is we do some pretty mean cabinets here but as the back aches get worse and cuts and bruises take longer to heal I reflect and ask myself ''will I have to be doing this when I’m 70?" How do i secure an income without the hard work? The only thing I have come up with is to use my knowledge of building/designing kitchens to sell them and not build them! I’m also in the process of trying to open a stone fabrication facility.
The way I look at it is that I can hire someone to do everything in a retail cabinetry store but I can’t find much people to do what I do when I’m hands-on building the cabinets. I know some of you will say I’m selling out but as of now it’s the only thing I can come up with that will keep my mind on kitchens but my hands off the tools. I will keep my equipment to build for clients who only want the customs.
From contributor J:
To contributor A: If you’re just going to manage a business, why cabinetmaking or re-selling cabinets? There are plenty of better businesses that would earn you more money in the long run. You should find a niche where people need your product or service and you don't have thousands of other businesses that do the same thing you do. I'll be making cabinets still in eight years when I turn 70 . I enjoy working in the shop, but if I could go back to when I was in my 20's I would not become a cabinetmaker. The work is great, however the competition is tough.
From Contributor A:
When I’m 70 I don’t want to be pushing plywood because I have to but because I want to. My thought was by selling cabinets and having a stone fabrication company I could incorporate my cabinet skills into helping clients with their layouts, colors, and countertops without the actual physical work that keeps me tied down in my work shop, unable to be out on the road getting work. Yes there were times that I did say “wait, why run a kitchen sales business when I can open any other business and probably make more money?'' I couldn’t figure out what that other business would be.
From contributor J:
To contributor A: That's where the hard work comes in, finding a business that pays off better than every other clone business that most of us do for a living. There are special niche business models and I believe that there are some still in cabinetmaking and furniture, with the aid of CNC and software. If your area supports what you want to do go for it. It always seems like when a woodworker finds a niche a salesman will tell one of his favorite customers about what you’re doing and then they copy or go after your business directly. That's what I like about the Internet direct sales, you can find customers all over the country and most often they can't find what they want in their area. Best exit plan when the time comes, turn off the lights, and walk away.
From contributor Y:
I started my business 30 years ago and closed up when my wife and I were able to draw our SS. I'm now 65, house is paid for, children are out on their own (and doing well) three lagged collie healthy, and no car payments. We have no bills other than taxes, insurance, and utilities. I now have come full circle and I make the country cute stuff that I started making at the time that I discovered that wood working was in my blood - whirligs, woodpecker doorknockers, and a host of other things, quite a far cry from walnut libraries, kitchens, bars, and the day to day operations of running a five man shop. Money is nothing more than pieces of paper with pictures on it, the only reason for its existence is so people don't kill each other to get something to eat. By the time you get to be old and ready to retire you should have by now figured this out. It makes the transition real easy.
