The Ultimate Guide to Grow Past Your Cabinet Shop Thresholds
About 20 years ago, I started my journey into learning how to build cabinets. It began in a very small shop right behind my house. The building was about 25 x 40 feet and I created a ton of products in that little shop before moving to a larger space. Through that journey, I hit different growth thresholds and each of those phases presented new opportunities as well as new challenges. But what kept me going is making sure that I was always focused on the future of my company and avoiding getting stuck in the normal way of doing things.
By keeping your vision toward the future you can be on the accelerated path. The goal I have in mind is to get you through these thresholds as quickly as possible, in order to position your company in a strong way to handle the next threshold or project that comes your way. My hope is that this becomes a snowball effect, and that your company grows from a strong position, to one that’s even stronger.
Growing Pains $0 - $250K
I specifically remember my journey from starting with nothing to hitting the $250,000 mark on an annual basis. Although it was a rather quick journey, as we hit this threshold at about the 4 month mark of being in business, initially it was a tough time.
Looking back, we had zero systems in place and it was only by brute force and awkwardness that we got product out. During each job, we learned through mistakes. At the time there was not a single person that worked with us who understood how to build cabinets efficiently or effectively. Our cabinets had no consistent quality, we were just focused on banging out orders as fast as they came in.
Owner duties were split between myself and my partner. I handled the sales, drawings, and cutting the plywood. He handled the back end of assembly, doors, outfitting, drawers, and other tasks. It was a tough time!
The Normal Path
Normally, when you’re growing through this phase, one of the first things you learn to set up correctly is your books. Then you begin to look for a drawing software that can handle your cut list; because up to this point you’ve been doing most everything manually. In fact, you might not even be drawing your cabinets on a software.
One of the downfalls of the normal path is the ‘yes man’ mentality. By this I mean that you’re a person who says yes to any project that’s even close to what you’re doing. As long as there’s some semblance of the project resembling a cabinet, you say yes to doing it. Even going so far as to saying yes to anything that has to do with wood!
We all understand, you have to do what you can to pay the bills, to grow your business, and to get your name out there. But the yes man phase is definitely something I do not miss!
Many people also refer to this threshold as the ‘friends and family network’.
If you’re starting your business from scratch then you definitely know what I mean. During this time you lean on support from your family and friends who may have a project going and allow you to come in and do the work for much less than you would like to charge. However, that’s one of the normal parts of growing in this business, doing work because it seems familiar.
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The Accelerated path
STANDARD OPERATING PROCEDURES
On the accelerated path, you need to start by identifying standard procedures. Companies don’t normally spend a lot of time on their SOPs at the start. Often they’re handwritten, fluid, and change on a daily basis.This is fine for the start, however, you should get in the habit of identifying a process that needs to be standardized so that you set your company up for success in the long run. Standard procedures may not last very long and change with your ever growing company and for this reason you shouldn’t spend an extended amount of time creating them.
BUILD YOUR TEAM
Start regularly posting ads for holes that your company needs to fill. Positions like: a new operator, draftsman, or laborer. Whatever the job may be make sure you are posting in advance so that you’re ahead of the game when the time comes. If you’re unsure how to build your team, check out our guide on hiring employees effectively. Even if you don’t need to fill roles immediately, make sure that you’re collecting people’s names and information in a spreadsheet. That way, when the time comes that you need to be making hires, you’re not scrambling around for new applications, rather you already have a pool of people to contact.
COMPILE THE QUESTIONS
Pay very close attention in this phase to the questions that customers are asking about your product. Questions like: What are the current design trends? What are the materials you use? There will always be redundant questions which you’ll hear time and time again on every project. At this phase, you won’t be doing too much with these questions, but you need to make sure that you have a solid answer for each of these questions. I suggest that you collect the most frequently asked questions in some kind of google document or sheet so that you can refer to them later when you begin to create marketing materials to send to customers.
PLAY TO YOUR FORTE
In the early stages, identify what your strong suit is. Try to focus your efforts on that particular task or product as much as possible. In the normal path, we have the ‘yes man’ mentality that I referred to earlier, however that’s the brute force and awkwardness method.
Instead, identify what you want to focus on early so that you can move your company toward that niche. Picture that strong suit as your specific island and move in that direction. It doesn’t mean that you can’t take projects outside your niche, just don’t lose focus of the ultimate goal.
In the early stages, identify what your strong suit is.
SALES
Start changing your mindset away from: I only need to sell when it gets slow. On the accelerated path, you have to make sure it’s a continuous effort to be successful. During the busy times as well as the slow times, you have to be continually selling in order to be successful.
Starting a cabinet business can be a daunting task and at times it can seem like you’re running on pure adrenaline! But starting with a strong foundation is essential to sustaining your growth. The $250K threshold is one that will go by quickly, so enjoy it while you are in it!
Brute Force and Awkwardness
$250K - $500K
I remember this stage of growth very well. We were still in our small backyard shop, just getting to the point of looking to hire another employee. But then we bid off a job that there was no way that we could handle!
It was a 62 duplex project in a town that was about an hour and a half drive from our shop. We thought we should bid it and much to our surprise we won the contract! All of a sudden, we had way more work than we could have possibly imagined; it was an adrenaline rush.
This phase of growth was totally brute force and awkwardness. Looking back we could have made our life easier if we would have done several things differently.
Normal Path
On the normal path to breaking through this threshold, your business starts to acquire recurring customers outside of friends and family. These customers may be builders, architects, or a developer that you’re working for who is feeding you some recurring jobs because you’ve built up a level of trust with them.
Meanwhile, monthly volume has increased to about $30-$50k a month and you’re starting to find out that it’s enough work to consider hiring some extra help around the shop so that everything gets done. At this point, you’re considering buying some machinery or equipment to help in the production process. Additionally, you may be looking at finding and leasing a space of your own.
It seems at this phase that you’re growing faster than you’re learning. Mistakes are common on almost every job that you send out from the shop which can be a frustrating process. Unfortunately, this is the point where most smaller businesses fizzle out because it can be such a frustrating time as you aren’t able to learn at the rate you’re growing your business.
Accelerated Path
BECOMING TRANSPARENT
The most important thing that separates a business from the normal path is learning to be transparent with your numbers.
This is a hard thing to do without coming across as either: we’re making a killing or we’re going out of business. But you have to find a way to convey the right numbers to your employees so that they have an understanding of how the finances of the business are working.
If you aren’t transparent with your employees and tell them the numbers, they will begin to generate their own.The accelerated path also includes finding an implementing a solid drawing and cutting program which produces lists and order files for cabinets you’re going to buy.
IMPORTANCE OF OUTSOURCING AND FRUGALITY
Looking back, when I was at this phase I wish I would have considered outsourcing for just about everything other than design and sales. Today, with our world being as connected as it is, there are many niche providers of outsourcing that exist for things like: drawers, doors, and box components. It’s hard not to consider using outsourcing as your primary means of manufacturing.
Be very frugal. I learned this from Warren Buffet in his book The Snowball. Buffet recounts that at the start of his first business he evaluated every dollar as if it were ten. A dollar invested now is going to be worth ten in the future. If done correctly, this is how you get on the path to 'The Snowball' with your business.
Learning to be frugal with a small budget teaches you and your employees the value of efficiency and sets the groundwork for good practices so that when you have a large budget you know that your company will be responsible with it.
Alongside this line of thinking: Be debt averse and risk heavy. Hoard what little cash you have an watch it grow with you. This stage is very important and you might experience times where it doesn’t feel like you’re growing. But always remember":
Don’t give up!
It’s okay to let your company simmer as you learn the lessons on how to control growth in a healthy manner and implement good business strategies. You are still early on in the business journey so don’t underestimate the power of SOP’s in your company. Quality SOP’s are important every time you make a new transition.
INVEST IN YOUR BRAND
Start working on your business and not just in it. I wish I would have learned these lessons 10 years earlier because they have huge effects. Carve out some time in the week where you’re not working on the shop floor, not producing product, you’re working on something that can make your business stronger. Whether that’s accounting procedure, SOP’s, efficiency standards, whatever it is, set aside a few hours a week for working on your business and it will pay huge dividends later on.
The stage is called brute force and awkwardness for a reason. You just have to power through and learn as much as possible to set your business up for years to come.
So take your time, find the lessons, and watch your company grow.
The Good Old Days $500K - $1M
I sometimes refer to this threshold of growth as the good old days. I’m not exactly sure why but I do remember getting to this phase and breaking the elusive million. It was a memorable day.
Late one December we didn’t have much year left, we had a large drive in the shop to crank out some work and by the end of the month our projects just made it. Our volume had hit $1,100,000 that year! That was one of the highlights of our year and a great note to end on.
The next year we went from 1.1M to almost 1.6M, so there’s something about this threshold that once you break through the million dollar barrier, things just start to open up for you.
Normal growth
Normally during this growth phase, you start realizing that the company is getting beyond what you can handle as an individual. You become less of an owner/operator and start transitioning to more of just an owner.
This is not to say that you don’t still handle things around the shop or deal with day to day headaches because ‘you’re the boss.’ But you start to notice that for your growth to continue at a rate where you can break that million dollar threshold, it becomes more apparent that you need to focus on more owner type duties rather than still being an operator.
For my company, we stayed under a million for several years. However, once I figured out the recipe for how to grow, it became easy to blow right through that threshold.
NOT SURE WHERE TO GO NEXT IN THIS THRESHOLD OF GROWTH?
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Accelerated path
THE IMPORTANCE OF A GOOD TEAM
First, you need to find a trusty and reliable right hand man. This is someone who is invested in the business with a passion to learn and grow as your company gets larger. Hire someone who you can train to create and operate systems efficiently that the rest of your staff will listen to and respect.
During this time, you can also teach your people to learn processes and implement them on their own. Instead of hand holding and micromanagement, you can create a culture of self starting employees that understand the vision of the company and can figure out solutions to issues by themselves.
A great way to do this is to have them read resources like 2 Second Lean. We found this to be a very easy and down to earth way to implement lean without the complicated verbiage and structure of a typical lean foundation.
HIRE BETTER
Hiring is a tricky art. I say that hiring is an art because it can take years to find out what works for you. We have some resources to help you hire better and some strategies to deploy to help you find more quality employees. If $10 an hour is what you’re going to pay, that’s the quality of work you’re going to get, but you still want the best employee at the $10 range.
When you’re able to offer more, you’ll find that you have a better crop of employees to choose from. These individuals will care more about the business and growth because they are able to see the opportunity in it for themselves.
BUILD YOUR BRAND
Use this phase as a time to hone in on what exactly you want your company to be.
So many times as younger businesses, we realize that we’ve become a ‘yes business.’ We just say yes to whatever work comes through the door. In order to not get stuck at this threshold and break through, you’ve got to understand what niche you excel at and what you want to be known for as a business.
Creating a vision is a great way to really narrow down your focus. A great way to understand this is to picture your vision as a lighthouse in the distance. While it’s true that you may never reach the lighthouse, you are always navigating toward that direction. If you stray too far, you can always look at the lighthouse to steer back on course and keep you on track.
FIRING YOURSELF
Lastly, this is a great time to start automating your systems.
Your focus should be to work on systems that allow you to ‘fire yourself.’ Don’t get bogged down in day to day routines which are hindering your ability to keep the business growing. Whether these tasks are sales, design, or even cutting panels yourself on the shop floor, you need to learn to delegate and create systems so that you can fire yourself from these jobs and free up your schedule to step into the owner role.
This is such a huge milestone, because only a few businesses are able to hit the million dollar milestone. If you’re over $500k, enjoy this time and get ready to power through to become a million dollar business.
What Have I Done? $1M - $2M
In this stage of growth you notice that the gaps between thresholds get larger. I believe that there’s a reason for that.
First, your overhead absorption gets much better as you become larger. There are a few articles that you can read on this phenomena but to sum it up -- the quicker you meet your overhead in a month, the more your profitability rises and you can blow past break even points.
Things like overhead expenses and costs of goods sold become very important at these phases. Even a small savings in cost of goods sold can double your profits in the end.
Normal Growth
Usually, at this point you’re ready to hire a salesperson to handle the tasks that are slowing you down as an owner. Your company begins to find the niche that you’re suited to, which is something you’ve been working on through the other growth thresholds. The work you produce is better than the competition at whatever you’ve chosen your specificity to be, and you thrive as a result.
Opportunities that did not use to present themselves before start spontaneously appearing because you hit a volume of capacity for projects that you did not have before. Unfortunately, administrative duties also start to rear their ugly head at this stage. Things like: accounting, advertising, sales invoicing, quoting, book-keeping and other tasks become a real thorn in the side of your growing business.
Learn How to Hire Effective Cabinet Shop Employees!
Accelerated path
HONING YOUR SKILL
The key to maintaining your accelerated growth is to become a beast at your specific ‘thing.’ The niche that you’ve chosen is something you need to own. If you’re a widget maker, aim to become the industry leader who is creating the best widgets out there.
As you niche down, make sure that your product is the best it can be so that way when you grow you aren’t needing to make tweaks to the product, you’re just adding effort in creating more of it to double or triple your sales.
At this stage of growth it’s important to learn the idea of scaling not just selling.
What I mean by this is that if you find a product or process that you’re really good at, you need to understand how to scale it and not just sell the product. You have to be able to multiply the growth by an exponential factor so that it takes off. Whereas if you just focus on the sale, it’s more of an organic activity, a slow burn.
Selling takes a long time to get going, you have to keep adding people and overhead in order to keep experiencing growth. So learn how to scale and not just sell.
AUTOMATION IS KEY
Automate your administrative tasks. The first place you should start with is automating your accounting. As you grow, you’ll start getting more bills and invoices from your vendors than you’ll be able to keep track of. At the same time, you’ll be sending out more quotes and documents to customers than you did in the past.
Once you figure out a quick and efficient way to automate these tasks in your current state, it’ll be much easier to scale. If you want to do some research about throughput accounting, it has proven to be effective so that you only have to keep track of one number.
Figuring out how to keep your number down to a known number that you’re forcing through your bottleneck, you can subordinate the entire business to that bottleneck and it’ll make your accounting life so much easier. As we all know, accounting is something that we must all be aware as business owners, so make sure you understand and are on top of it now, so that it can serve you well in the years to come.
Feed the Beast $2M - $5M
Congratulations if you’ve made it to this threshold!
Currently, this is the state of business that our company is experiencing and I believe that we are at an accelerated path to blow through this threshold. Some things that i’ve noticed from this 2 to 5 Million range is that it’s kind of a ‘feed the beast’ mode of operating.
By this time you have a great crew around you, lead by your main right hand person, and your sales and admin tasks are being handled by a capable team. What you’ve also found is that there’s this sweet spot in your business where things start to click; people around you believe in what you’re doing, and you’re all working together in great form.
Normal Path
During this stage of growth, normally SOP’s are the main focus because they are so much more evident and if they’re not solid and efficient then problems will arise. Mainly, you have zero time to work on your actual product anymore because you’re trying to keep up with the demand of getting it out the door.
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Sales have grown to a point where you need to add another sales person so you may consider ramping up via normal marketing efforts. A big detriment to business at this stage is that collections become a huge issue, and it’s natural because as you grow your top line, it grows the number of customers that you have to invoice and follow up with for collections.
Accelerated Path
On the accelerated path, instead of following traditional marketing efforts, I believe that you need to make use of an inbound marketing campaign with a sales and leads funnel which consistently brings in quality leads for your company. As a result, you put in less overall sales effort, because the customers that are coming to you already know about your business and product and are actively seeking to be a customer before the whole process has even started.
SCALING YOUR NICHE
To continue growth at this stage, you have to learn how to scale your niche to feed the beast. It’s the only way you’re going to come up with the efficiency you spend so much time investing in when you got your shop to the level of producing a reliable and quality product very quickly.
During this stage of growth, finding high quality employees is so important. Hopefully, you’ve learned how employees can change your business either for the best or worst. I look at it this way: If i’m trying to hire a $12/hour shop hand, I think that in the market there exists the best $12/hour shop hand. So if you don’t settle for someone who is not a good fit for your team, you can always find the best, regardless of the wage you are paying.
It doesn’t matter the function they’re doing or what the wage is, you can find people who are motivated, looking to commit to moving up an organization, and those are the best employees. I like a quote by Richard Branson that says “customers are not the most important asset to any company, if you hire great employees they will take care of your customers.” I live by that and it’s proven to work.
FOCUS ON THE FUTURE
Stay focused on the vision and don’t stray too far off the line. This stage should be fun as you’re growing, and implementing new creative strategies that you never thought possible before. You’ll notice that all the hard work you’ve put into your company from the earlier stages is starting to pay dividends.
Lastly, If you made it to this threshold, you’re not going to stop growing.
You probably have a pretty good grasp on what’s making your company successful to this point so start mapping out your accelerated path through the next growth thresholds. Our company is constantly making plans for what we’re going to look like and how we will operate when we’re a 10 million dollar company. I believe that in the near future based off our practices we will be that 10 million dollar company mark, and with that will come a new set of challenges for growth.
Once you’re at this phase you’re just going to keep growing and you’ll start to have to look to other modes of optimizing your company. One of the main ways that we have started to optimize and niche down is by outsourcing everything in our operation that we are not experts at.
Outsourcing Your Growth
One of the questions we’ve asked constantly through this process is: What would I do differently if I was starting over now?
If you’re like me, the laundry list could be very long.
But if I was starting over right now in custom millwork or residential millwork, I would have to say the biggest change I could make would be to outsource everything that had to do with manufacturing. Starting a new business and learning manufacturing are two of the most polar opposite things in the world. When you begin a new company, it’s already hard enough learning how to perform on a daily basis in order to make things work while avoiding the pitfalls that could cause you to experience huge initial losses. On top of that, it can be difficult trying to manufacture a product that you know little about. Steve Jobs used to say that it takes around 10,000 hours to become a master at something, so if you’re just starting, you have a long way to go…
But what if you could hinge your success on a company or group of companies that had already mastered that craft?
Regardless of if you are a startup, or a growing business approaching the next threshold, here are a few ways that you can outsource to ensure growth.
A common frustration for any business is the realization that you’ve hit another threshold and it has become very difficult to grow. This is especially true at first when you’re trying to grow beyond the friends and family network and every job is a learning experience. It takes a short amount of time to learn that organic growth is difficult to control. It’s hard to go out and take business that is already in someone else’s hands. On top of that, by being a manufacturer, you are learning how to set up systems and what your most efficient way of working is. Often times, this can lead to sales being put on the back burner.
How can outsourcing improve and amplify your cabinet shop growth?
First I think we need to step back and analyze outsourcing overall. When thinking about outsourcing, what are the benefits and the pitfalls?
Some of the pitfalls can be:
Scheduling and lack of a quick turnaround of products when you need them.
Inconsistent quality each time you order.
Unreliability of ordering and delivery.
Some of the benefits can be:
Unlimited capacity by partnering with a company that can handle the volume.
Quicker turnaround with reliable results from companies that you can trust.
Consistency in ease of ordering and product delivery.
Scalability as you grow through the thresholds.
Let’s jump in with three how-to steps to start outsourcing your cabinet growth.
LOOKING FOR AN OUTSOURCING PARTNER TO CONTINUE YOUR GROWTH?
CHECK OUT ALL THAT ULTIMATE CABINET COMPONENTS HAS TO OFFER!
What do you want to outsource?
This is the research phase. Make a sample order with one or two cabinets, possibly a sample kit, then take it a step further. Ask about different assembly methods, question them about shipping and turn-around time. Investigate different materials that you may want to use in your process and evaluate how much you’ll have to bend your process to fit what the outsourcing provider will give you.
What’s the overall experience in dealing with their sales team? Be sure you know what the outsourcing company is giving you in return for letting them mill your box components. What’s the overall experience and capacity of the outsourcing company?
MAKE IT PERSONAL
Start by asking to schedule visit to tour the shop you want to see and how they are running their operation. Sometimes you can also get a virtual tour. The great thing about going and touring anyone else’s shop is that it’s fun! You get to learn from someone who has already been down the road that you’re about to go through and you get to pick their brain about some tips they may have about how the flow of their shop works. Beyond that, it gives you access to how open the company is that you’re working with. Ultimately, you’re the one who is going to be growing through your outsourcing companies extra capacity.
So you want to be very personal with who you are dealing with and meet their teams. Are the sales people reachable and educated on the product? Is their content and resources available for you to grow as you want to?
FIND A PARTNER IN GROWTH
It’s so important to find a company that hinges their success on yours. You want your growth to be so essential to them, that you feel like you’re their only customer, even though you might not be. Resources tailored to what you’re going through as a company which are alleviating your growing pains and the things you need to learn as your shop is developing. Finding a partner can be a huge part of how to outsource your growth effectively.
If you’d like to learn more about how to outsource your cabinet shop growth, check out Ultimate Cabinet Components. We are dedicated to high quality service, quick turnaround, ready to assemble Lockdowel cabinet box components. Our whole strategy is hinged on the shops we do business with, not having to invest any other capital, but being able to double their capacity and our success is only as good as our partners. Ultimately, we are only here to facilitate the growth of both of our businesses.
Grow past thresholds with UCC
I tend to look back and review my past when I plan things for the future. In fact, I do this several times a week without even thinking about it.
In our companies past, I see a lot of thresholds that we came upon and moved through which helped craft the cabinet box component company that we are today. But I always come back to this question:
How would we be different as a company if I was starting from scratch today?
The Biggest Difference
I think the answer to that question is that without a doubt, I would rely more on outsourcing. One of the greatest things about outsourcing is that it fixes your cost while providing unlimited growth potential and scalability! Today, I want to teach you how to grow past your thresholds through Ultimate Cabinet Components and buying your cabinet components. This relies on the initial question:
WHAT IS THE GOAL OF A BUSINESS?
I believe that the goal of any business is to make a profit so that you can continue to serve and provide whatever your personal or company goal may be. Personally, my business vision is to have the most efficient cabinet component manufacturing shop in the world.
Through that process, I want to build a grow relationships, networks, and I want to partner with other cabinet shops in their growth. But for that vision to become a reality, we have to maintain profitability to make sure our vision stays alive.
Looking forward in your business’s growth and toward the next threshold, regardless of if you’re beginning or you have been in town several years and you just can’t figure out the next step, I would suggest that you take time to look at what you want to be doing as your business matures. Try to look ahead to the next one or two thresholds.
Don’t Limit your Growth
If you can figure out a way to fix your costs early, you are effectively taking out the limiting factors of your growth potential. By that we mean-- if all your costs are fixed, to a certain degree your profits will be fixed.
So don’t limit your growth to what you can do in house; meaning, don’t be defined by what you can produce or manufacture today. Instead, look at the options and resources that can give you unlimited growth potential and scalability that will be necessary to sustain a growing business that can power through the future growth thresholds.
Ultimate Cabinets is the source when it comes to Lockdowel ready to assemble cabinet box components. Without a doubt, UCC can fuel your growth by becoming a partner in both our growth strategies. Our success is your success.
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Start Outsourcing Now
What’s holding you back right now?
Is it sales, service, or manufacturing?
How can you grow through your thresholds with no capital investment while scaling your operation, not just growing, taking it to a different level?
THE BEST WAY TO DO THAT IS WITH OUTSOURCING.
And why not outsource?
Now is a better time than ever to outsource! There’s online ordering platforms like Allmoxy, new assembly methods like Lockdowel which don’t require specific tools for assembly, logistics and LTL shipping make things so much easier, practical, and affordable than they were before. Everything is online and order processes are automated these days making things a breeze for you.
As you make plans to figure out a way to scale your company and begin to look for companies to partner with like UCC, start small. Ask questions that you want to know the answers to like ‘what kind of cabinets do you offer?’ and things of that nature. Also, start by creating an account online and order small sample sets or sample kits, and experience the Lockdowel cabinets for yourself.
What you’ll soon find by creating bids online for projects that you may have in the future is that you can fix your cost. This will give you reliable bottom line that your hard work deserves.
Come join the future and be our new partner!