Is there Any Money in the Cabinet Industry?
When you first start out in the cabinet business, excitement and possibility fuel you, but soon a reality hits: It is actually really, really hard to make money. With that reality comes the question we all hate but can’t help but ask, “Is there any money in the cabinet business?”
This is a question that I have asked myself on more than one occasion and if you would have asked me in the first couple years of my business, then I would have answered with an emphatic, “No!”
How could we ever make money in such a capital intensive business? It seemed that every time we made a few bucks we had to take the next step and invest in more equipment or space.
If you have been in business for very long at all, you too have learned that everything costs alooooooooot of money. That new piece of equipment, a new motor on an old machine, new computers, insurance - we could go on and on! You too understand the feeling of never being able to get ahead, and if you can get ahead, you can’t seem to stay there for very long. We are all left wondering how we can actually make it in the cabinet industry.
I am here to tell you that even though these are legitimate challenges for our industry, there is still a way to make money in the cabinet business, but it will require an open mind and some grit to get there.
In this article we will discuss a few of the things that I learned, the hard way, that may make your journey to consistent profitability in the cabinet business a little smoother.
failure turned success
Early in my business we landed a contract with our area’s largest builder. We did over 150 homes a year with this builder but never could seem to get ahead. Then, the recession hit. The builder approached us for a price reduction and we had no choice but to walk away.
At the time it was a punch in the gut, but looking back it was the springboard to success. By losing that contract we effectively put our business in a position where we could go after the kinds of work that were truly profitable for us.
Position yourself for profitability
Business is a Vicious Cycle. The trick is to tame it and learn that cash is king while growing your business. Use these next 3 tips to tame the cycle and put your business in a position to go after the kind of work that is truly profitable for you.
Systemize Early and Often
I did not learn the importance of standardizing until a couple of years ago. I have tried several different ways and finally settled on using Trello to make and update standards.
Regardless of how you document them, the important thing is to get them written down ASAP. If you will do just one standard a day, then you will be amazed at how quick you will have them in good shape.
Standards dictate what you as an owner expect in terms of quality, efficiency, and order from your employees. It also serves as the guide for employees to fall back on when you, the owner, are not available and according to Delegate or Die, your business is better off if you are NOT available on the shop floor very often.
Once you truly grasp the power and function of great standards you will jump into them with both feet.
Now, I just want to clarify that standards are not to turn employees into mindless robots. Standards should be fluid and changing. When employees are engaged in helping create and modify the standards they will be much more powerful for everyone.
For an in depth look into how you can standardize your systems, check out this article.
Make a Key Hire as Soon as You Possibly Can
When starting a company, it is very hard to spend the money on making a great hire. The natural tendency is to hire cheap in the early years. However, from experience, I will say that you get what you pay for.
You also get a not so great hire if you have a not so great great hiring process. We have improved our hiring process by moving to a set of working interviews. When we are trying to fill a position we will interview several potentials and then pick the top three.
We will then setup a working interview for the prospects and narrow down to two and then do it again. When we get our final candidate, we do one last working interview.
This does not always ensure you get the best employee every time, but I will say that the odds are more in your favor than just hiring on interview only.
Do Less To Do More
In my business, I figured out that what we are good at is what we actually made money doing.
Look at your shop and find the things you excel at and focus on those with laser intensity to hone your niche. Maybe you are great at assembling boxes and not the manufacturing. Maybe your strong point is commercial, not residential or vice-a-versa.
What ever your strong point is, try to make it the majority of what you do or the only thing you do. Once you know what you are good at, you can then craft a growth plan that focuses on those strengths. Listen to Marketing and Sales Strategist, Khalil Benalioulhaj, on this episode of The Push Thru Podcast to learn more about crafting a sales plan based off your company strengths.
At one time we were a “Yes” company and did anything and everything under the sun. Don't make the same mistake we did. If you focus on nothing, then how do expect to excel and be the best at anything?
Chances are you already know what you are good at and what makes money in your company!
Our company’s strong suit is milling cabinet box components. That’s what we do well so that is where we have laser focus.
However, if your company is better suited for assembly, design, install and customer service, then you can stop spending time on your weak points and instead outsourcing your box components. This will free you up to focus on your assembly, design, install and customer service strengths. Take a look at the benefits of outsourcing with us.
push thru to financial stability
So by standardizing our business, making key hires, and doing less to do more you will put your company in the position to make money and reduce the fluctuations caused by the Vicious Sales Cycle. Push Thru the challenges in our industry and achieve the financial stability you desire for your company.
What is your achilles heel? What is holding you back from making money in the cabinet business? Would not doing that activity anymore let you focus on what you are good at? Let us know how you've overcome the obstacles of our industry or if these tips have made a difference in your company.