Using a TS55 Profitably

[Distinctive Interiors]

Up until 3 years ago, I was working purely as a Contractor designing, supplying and installing Kitchens and Bathrooms using my home as a base, as I had no premises. All my work came from recommendation.

I had always wanted to eventually have my own Showroom, and 3 years ago the opportunity arose to take over premises that had, up to that time, a different Kitchen company as a tenant.

I looked at all the overhead costs and thought long and hard about whether to give it a go. My whole mindset had to change from choosing which jobs to take on and the work schedule to running a Showroom and paying all the bills at the end of each month. It has been really tough and the additional time commitment has been phenominal. There just doesn't seem to be enough days in the Month to get all the work done, pay the bills and get hardly ANY time off to play (oopps......work...!!!!!!) in my workshop.

Even using my Festool gear, although they have helped with time saving, it is still a bit of a struggle at times.

Given the chance to do it over again.............would I take on the financial and time commitment that is needed to run a Business in these circumstances...???? I'm not sure.......! There are still difficult times ahead of us. My landlord has offered me preferential terms for re-newing my Lease for another 5 years, but I'm not sure how things will be 1 year down the line, let alone 5 years.

 

[Jalvis]

Up until 3 years ago, I was working purely as a Contractor designing, supplying and installing Kitchens and Bathrooms using my home as a base, as I had no premises. All my work came from recommendation.

I had always wanted to eventually have my own Showroom, and 3 years ago the opportunity arose to take over premises that had, up to that time, a different Kitchen company as a tenant.

I looked at all the overhead costs and thought long and hard about whether to give it a go. My whole mindset had to change from choosing which jobs to take on and the work schedule to running a Showroom and paying all the bills at the end of each month. It has been really tough and the additional time commitment has been phenominal. There just doesn't seem to be enough days in the Month to get all the work done, pay the bills and get hardly ANY time off to play (oopps......work...!!!!!!) in my workshop.

Even using my Festool gear, although they have helped with time saving, it is still a bit of a struggle at times.

Given the chance to do it over again.............would I take on the financial and time commitment that is needed to run a Business in these circumstances...???? I'm not sure.......! There are still difficult times ahead of us. My landlord has offered me preferential terms for re-newing my Lease for another 5 years, but I'm not sure how things will be 1 year down the line, let alone 5 years.

So your not actually building just ordering, designing, and installing?

If thats true then I can imagine that would be difficult.  There aren't many places like that in my area.  Most are either huge retailers or cabinet shops.

 

[Distinctive Interiors]

[/quote]

So your not actually building just ordering, designing, and installing?

If thats true then I can imagine that would be difficult.  There aren't many places like that in my area.  Most are either huge retailers or cabinet shops.

[/quote]

I assume when you say "Building", you mean making the cabinets. If so, then no, I don't make the cabinets. I buy the majority of the cabinets that I use from Germany pre-built, including all the Drawer boxes and Handles pre-fitted. As we all know, from our Festool experience, the Germans make quality products, and there kitchens are some of the best available, at least in Europe.

I try not to compete with the large stores as they would normally beat me every time when it comes down to price. We try to sell what we offer as a cut above the norm and as I do pretty much ALL the work that may need doing (Electrical, Plumbing, Tiling, Plastering, Flooring, Solid Surface Worktops and general building work) in a Kitchen or Bathroom refurbishment and at a fair price.

Building or manufacturing your own cabinets on a scale to justify the expense of a large investment in machinery, is not viable for a business with the turnover that mine produces on an annual basis. It is just more cost effective to buy the cabinets in.

 

[tiralie]

No one builds a successful business or at the very least "earns wages" just because they bought a Festool.

There is only one valid definition of business purpose: to create a customer

A business enterprise has two and only these two basic functions: marketing and innovation. Marketing is the distinguishing   and unique function of a business. Any organization in which marketing is either absent or incidental is not a business and should never be run as it were one.

What the customer thinks he/she is buying and what they consider value is 'decisive' - it determines what a business is what it produces and whether it will prosper.

Tim

 

[SMJoinery]

Well said especially KMDWoodwork.
I also have a small setup, home based in old stable buildings here at home.
I previously had a much bigger set up and the headaches it generated!!
A few years ago I decided to set up something new based on quality, reliability and customer focused.
The customer may have to wait a few weeks for us to get their job done but I turn up when I say I'm coming and I do everything as if it's my own home.
I have just started our first apprentice joiner / carpenter and we don't buy cheap tools because there not bringing anything that makes all the above possible.
I have good quality portable bench saw and mitre saws but the biggest difference to our set up has been the TS 55 with tracks and midi extraction.
It's simple to use, very clean cuts and dust collection is superb.
I get a lot of requests to cut high quality veneered doors and the TS55 set up has made a massive improvement and don't get me started on its ability to break out large sheets of mdf etc
In summary, I'm happier, stress reduced and making a living.
Welsome to the 21st century...Turnover is Vanity, Profity is sanity, Customers are informed and Quality is priceless.

 

[Guilliaume woodworks]

In simpler terms.....if your ts55/ts75 ain't making you more money, send saw to be repaired, because it must be broken!

 

[Jalvis]

So your building cabinets with a TS55 and making more than the average income in your area?

Is your billable to break down sheet goods equal to or greater than the hourly rate for a plumber or mechanic in your area? 

 

[kmdwoodwork]

Jalvis, i know that you feel a panel saw is more efficient than a track saw to break down sheet goods and i think that you are right. But, only if you are pushing out a huge volume of cabinets. I just finished a large custom kitchen that took close about 45 days to complete in the shop, out of those 45 days one day was breaking down plywood to size, the rest was drawers,doors, drawer fronts and face frames and finish and assembly. I use a table saw for everything but plywood so the track saw sat in it"s box for 44 days unused until i did the install where i used it for a few hours. If i had a panel saw instead of a track saw it would have taken up a lot more space sitting idle than a box does.

Making money has nothing to do with using a track saw or not it has to do with your overall quality, marketing to the right people and your sales ability. If some one can make money cutting plywood with a butter knife then he has better marketing and sales skills than the next person. I don't  know if the wage question was aimed at me but i do charge more than the so called skilled trades in my area but they also generally have a lower overhead so they may or may not make more money so that is not really relevant.

 

[Guilliaume woodworks]

So your building cabinets with a TS55 and making more than the average income in your area?

Is your billable to break down sheet goods equal to or greater than the hourly rate for a plumber or mechanic in your area? 

Sometimes it not all about the money...I do custom cabinetry because I enjoy woodworking and get great satisfaction from improving the homes of my clients. I'm not  really concerned about the wages of plumbers or mechanics. I make enough money doing what I love to support my 4 young children & stay at home wife. We own a home and live a modest life in s.calif.
  No one is saying just because you buy a track saw ,that your instantly gonna be making more money. It just makes it a little bit easier.
 

 

[Jalvis]

I'm not directing the question to just any one person.  I know there are lots of guys reading this now and in the future who will benefit from those questions.  In fact those questions were asked of me while reading a book on contracting and profit and helped put pricing in perspective.

Most people really don't understand what billable rates are necessary to run and maintain a business.

This thread was started because I don't think track saws are the best way to maintain a high enough billable to get past average/typical wages.  That might not be true in every case but the climb is much less likely.  Eventually the progression will require more space and better equipment.  The track saw is a start but certainly not the finnish.  For if it was the finnish then every shop would forgo the expense and just duplicate the procedure.  

Everyone pursues a task differently.  Some would simply invest in marketing and sales to increase profit and billable rates.  To me this is better defined as inflated rates do to branding.  Production remains equal but perceived value is increased.

Others would invest in equipment to lower the time spent at a given task therefore increasing profits and billables.  Perceived value is equal but the production time decreased.  

One is really essential to the other; therefore, a blending is the best method to build strength within a business. 

 

[gkaiseril]

How profitable a tradesman is depends upon first his/her skills and then his/her equipment. Using a TS55 alone might not improve the profitability of custom cabinet making. When using the TS55 along with one of the Festool routers with the LR 32 hole drilling system can certainly speed up the work for creating cabinets 32mm system based cabinets. But this may mean the tradesman will need to learn a new approach to building cabinets and using the metric measurement system. It might also mean careful thinking about the purchases like buying the 32mm system rails from the start, control purchase expenses and use a tool for multiple purposes. This would mean one could get a system to cut, and drill the stock for a little more than a panel saw. This would save having to purchase a bench saw and drill press and other special jigs. This does not include having a shop large enough to hold non-portable equipment. And then one might even need enough tools for mobile construction of on site construction.

The tradesman will also have develop skills in creating cutting layouts to have the least waste when cutting sheet goods. At prices nearing $100.00 USD for a 4' x 8' 3/4" plywood stock, waste can be expensive.

In the end the profitability of a tradesmen will depend first on his/her skill, having the proper tools and knowing how to use them efficiently, meeting delivery schedules, and how to deal with customers. The purchase of equipment is might not be largest issue in being profitable.

 

[tiralie]

Most people really don't understand what billable rates are necessary to run and maintain a business.

That's true.

This thread was started because I don't think track saws are the best way to maintain a high enough billable to get past average/typical wages.

If you are making average/typical wages (whatever that is) you are doing well.

That might not be true in every case but the climb is much less likely.  Eventually the progression will require more space and better equipment.

For me this is where problems start. While most people don't understand what billable rates are enough to run a business, there are those that do but are also unable to scale the business acquire enough customers to support their infrastructure which leads to unmanageable overheads (interest, payments etc.) The concept that bigger is better or greater inefficiencies to lower prices to attract more customers is not the only way. It's more important to understand what kind of business, how much money you want or think you need vs. having the business run you. Bigger is not necessarily better.

The track saw is a start but certainly not the finnish.  For if it was the finnish then every shop would forgo the expense and just duplicate the procedure.  

That depends on the type of business and product or service you are offering and how you build value into your offerings.

Everyone pursues a task differently.  Some would simply invest in marketing and sales to increase profit and billable rates. To me this is better defined as inflated rates do to branding.  Production remains equal but perceived value is increased.

Not sure I understand "inflated rates to do branding means. Most people think marketing is promotion (advertising). Marketing is defined by the 4P's: product, price, promotion and place or the more updated translation of solution, access, value and education.

Others would invest in equipment to lower the time spent at a given task therefore increasing profits and billables.  Perceived value is equal but the production time decreased.  

The problem with this thinking is if there is no market or mechanism for creating or developing customers for your production you are not increasing anything except debt. If the micro or macro economic conditions change or a competitor enters your market, dynamics change quickly.

 

[greg mann]

I run a manufacturing enterprise that keeps 40 CNC machining centers,at about $600K a pop, running 24/6 or 7. We provide precision ring and pinion carrier mountings for commercial trucks, at least half of all used in North America and a good number for Mexico and South America. We even ship to India. In contrast, we have a guy who makes all of our special tools in his garage with one CNC vertical mill and one CNC lathe, along with a few manual machines. Believe me, he understands billable rates. But I also understand the value he provides. He is as skilled as they come.

Guess who has a higher rate of profit. Guess who makes more overall profit. I could not do what he does at the same rate of profit nor could he do what we do, period.

KMD used his tracksaw 1 day out of 45. Ccaroll could not afford to have his pressure-beam saw sit idle for a month and a half. Totally different business models. The trick is moving from one model to the other and understanding when and how to change processes as you go. Ccaroll ate the elephant one bite at a time, although I am sure there were days he felt he bit off more than he could chew.  [wink]

I love this conversation. We are exploring the essence of what it takes to survive and/or thrive at whatever level one aspires to operate.

 

[Jalvis]

This conversation has gotten far more complicated since its not just about efficiency of a task with a tool.

Everything I've said is true.  Its not the only factors but are all moving factors in this business.  How important you see those factors will very depending on your goals, location, clientele, product, etc.

Earlier I stated that as a small business "time is your greatest asset."  Its the one variable that's the hardest to maintain control of do to the large number of tasks for a single individual.  Marketing to increase your billable is one way to achieve a higher wage and profits.  Marketing and sales take a lot of time unless you can pay that task out with salesman and/or to a marketing firm.  Thats why I stated in my opinion to upgrade equipment.  Not only will your billable increase but production time decrease freeing time for marketing and sales.  Then when the jobs come in your capable of meeting those demands rather then turning work away.  

Remember we aren't talking about all that large of a jump.  One can get a sliding table saw used for 5-10K that will be very accurate and someone building cabinets will need a table saw anyways.  We aren't talking about $100,000 CNC or beam saw.  

If making an average wage in your area makes you feel good then this conversation will mean nothing to you.  My statements are directed to entrepreneurs who are looking to be paid greater than the "average."  This is accomplished in many different ways.  To me an important step will be the evolution of equipment in a shop.  
   

 

[greg mann]

This conversation has gotten far more complicated since its not just about efficiency of a task with a tool.

Everything I've said is true.  Its not the only factors but are all moving factors in this business.  How important you see those factors will very depending on your goals, location, clientele, product, etc.

Earlier I stated that as a small business "time is your greatest asset."  Its the one variable that's the hardest to maintain control of do to the large number of tasks for a single individual.  Marketing to increase your billable is one way to achieve a higher wage and profits.  Marketing and sales take a lot of time unless you can pay that task out with salesman and/or to a marketing firm.  Thats why I stated in my opinion to upgrade equipment.  Not only will your billable increase but production time decrease freeing time for marketing and sales.  Then when the jobs come in your capable of meeting those demands rather then turning work away.  

Remember we aren't talking about all that large of a jump.  One can get a sliding table saw used for 5-10K that will be very accurate and someone building cabinets will need a table saw anyways.  We aren't talking about $100,000 CNC or beam saw.  

If making an average wage in your area makes you feel good then this conversation will mean nothing to you.  My statements are directed to entrepreneurs who are looking to be paid greater than the "average."  This is accomplished in many different ways.  To me an important step will be the evolution of equipment in a shop.  
   

The first step in achieving this is to present a better value propostion to the customer. You can only charge more if the customer sees value in your offerings. It is not only about being faster to present equal quality only at a higher productive rate. You need to find a way to provide something they want but cannot seem to find elsewhere. Even if one is talking about productivity alone, a relatively simple and inexpensive shaper upgrade from a router table may provide a bigger leap in output, and higher quality than can graduating to the slider over the TS55.

If, for example, Kmd spent 45 days on a project with only one using the TS55 he could only remove one day if the slider somehow magically took the saw work time down to zero. I am sure there were some multiple-day tasks that provided ample opportunity for larger time savings. Sanding or finishing, for example. Perhaps KMD could share with us how many days he spent on various tasks and we might see which ones were the most time consuming. If he spent 7 days finishing and cut it down to 5, which might be reasonable with a rather modest investment in spray equipment, he would save twice as much time as removing the saw work altogether.

Ccaroll mentioned he does no finishing. Perhaps he decided the investment in finishing would be far too expensive, in equipment, space, and labor, to keep up with his ability to fabricate. Perhaps he did not want to compete or felt he could not compete with those around him already doing that work.

 

[kmdwoodwork]

I am also a fan of conversations like this because way to often as a small business owner you are left on your own trying to figure out just what in the heck you are supposed to be doing. There are people like me, SM Joinery and Guilliame Woodworking that enjoy the building aspect more than just running the business and there are others who would rather run a bigger business.

I have been blessed to have the chance to speak with older cabinet makers and contractors who were willing to tell me straight out what it actually means to run a large business and they all said that if they had the chance to do it over again they would have stayed as a 1 or 2 man show because the headaches involved were not worth the chance of extra income, they all said that the most profitable times they ever had were when they were smaller. Like Tim mentioned, bigger is not always better because the business will run you and not the other way around.

I have also read the books like mark up and profit but the best information i have gotten outside of what i mentioned above were from forum conversation like this because you get real life situations not just ideal ones.

I appreciate all the input by everyone and hope this topic continues with other peoples opinions because it just may help someone who is just starting out or is thinking about growing and it will give them something to think about.

 

[kmdwoodwork]

This is in response to Greg's post above mine, i did not want to go quote happy.

The two biggest time killers in that job aside from the design which i included in that time frame were the building of the drawers and drawer fronts and doors. This job had 24 maple dovetail drawers and 27 doors that were all flush inset. Processing the solid wood took most of the time, i get most of my lumber skip planed and one edge ripped so i can work out any bow or twist. I tried outsourcing drawers and doors before and lets just say there is a reason i make my own. The only finishing i do on large jobs is spraying the cabinet interiors and drawers. I have a local company that does a far superior job than i can do so i have them spray everything else and in this case they sprayed them in place after install because my client wanted everything to look seamless. I also made all of the moldings for the cabinets and the rest of the kitchen trim including the base trim so it would match the rest of the house and was not locally available.

The only way to do the job faster would be more help and a bigger shop but i think we covered that already.

 

[denrusso]

This thread is an interesting read.  I'm no professional craftsman like most involved in this discussion, but I have studied business.

When your a small business time is your greatest asset.  The earlier you upgrade equipment to allow higher billables per hour the greater your chances of success.

I disagree with this statement.  Your greatest asset, especially as a craftsman, is your skill.  I'd recommend investing in training yourself or your employee(s).

Investing in equipment has to do with economies of scale.  As individual craftsman, you produce a quality product at a price point that the market allows.  Could you produce the same quality that you do now, but sell it in a big box store and successfully compete?  There are trade-offs that you must address when producing a product on a larger scale.

Thanks,
dr

 

[Paul G]

I have also read the books like mark up and profit...

What books are those specifically?

 

[kmdwoodwork]

I have also read the books like mark up and profit...

What books are those specifically?

The ones that i still have or can remember are Markup and Profit, The woodworkers guide to pricing your work and Smart Business for contractors. I have read a few others along with a couple of marketing and estimating books but have long since passed them on to another contractor and i can't remember the exact names. The books were alright for general info when i first started out but i ended up developing my own system which for me works well and can let me estimate most jobs pretty quickly. The best advice i can give is to keep track of every job and go back over the numbers when you are done to figure out exactly where  you made money and lost money ( some times it will make you sick seeing how little you actually made ) and to keep on adapting your processes until you get it right. By doing that you get  to see what came up along during a job that you did not expect which allows you to charge accordingly the next time.