Now that you've got customers to your woodworking business, you're busy all the time. Your machines are working non-stop, orders are going out and materials are coming back in. But for some reason you are still struggling to pay the bills.
Answer: you need to be more profitable! Easier said than done however.
Here are a few ideas on broad business topics to help you get started:
A very important improvement that you can do for your bottom line is to price your work for the market you are in. You might know your costs reasonably well to be able to estimate properly, but this only tells you what your costs are. Without knowing what your market can bear for the product you are selling, you might be loosing out on profits. Simply put, you can produce a cabinet widget for $100, but maybe your buyers are willing to pay $120.
Once you’ve gotten a hang of your estimating, and you are placing your bids for contracts and winning jobs, do you ever go back and see why you didn’t win a certain contract? It is a good idea that you do. Wouldn’t you like to know if you over bid by 1% or 10%? Maybe your price was lower, but someone else offered better terms, or or a better guarantee. Make sure you find out the reason why you didn’t get a particular job.
Maybe someone else won the bid because they underbid by too much and won’t be able to complete it. Your follow up call to the client might be that extra reminder for them to call you back if something goes wrong with the initial winner. Remember, you are not only a woodworker, you are a business person, and business is about good contacts.
Talking to the Competition
Your competition are not the enemy. They are in business just like you, trying to make a living. Sometimes it's good to call them up and have a conversation. They can learn things from you, just as you can learn things from them. Maybe visits to each others shop, talk about common clients, quality of suppliers, etc.
Reduce Your Overhead
One of the best ways to become more profitable is to reduce your existing expenses. There are many ways to do this both internally and externally to your company. You can try to find lower cost suppliers, ones that sell the same quality of product that you are already using. You can find a place with lower rent. You can reduce staff... Each business has its own set of constraints to work with, but there are always ways to reduce overhead.
Increase Efficiency of the Workshop
There is always waste in woodworking, lots of scrap pieces of wood to be discarded after a contract, sawdust that needs to be removed that used to be a solid product that was purchased. We get used to the fact that there is always waste, and for that reason I think that many woodworking companies are the most inefficient producers of anything.
For that reason I want to point you to something call Lean Manufacturing Principles. Any size shop can benefit from implementing these practices, from a one man shop to a one thousand person factory.