I'd like suggestions for building business after the first year

[rcnewcomb]

I am looking for suggestions for building business after the first year -- primarily ways to market.

Background
We have spent the past 15 months getting to know the machine and our software. We have done a some one-off projects and have established a few on-going relationships with a couple of cabinet shops that have brought some repeat business. So far the web site has supported our existing customers but not brought in new customers.

Our business model is business-to-business. We provide CNC cutting and 2D & 3D carving. We have had some good weeks where we said if we had that workload every week we would be happy. We have had other weeks where no work came in. The business is debt-free so at least there is no cash drain due to debt financing.

Up to now our most effective marketing tool has been multiple personal visits to cabinet and sign shops. It seems that after 7-10 visits they will throw you a project.

What we want to do is expand our customer base so the work load and cash flow are a bit more even and in the positive direction. In our town there are about 80 cabinet shops though many purchase the cabinets from large manufacturers. We are a 4 hour drive away from several large cities: Minneapolis/St. Paul, Fargo, Omaha, Lincoln

Is direct mail worth my time?
Do we need to just stick with face-to-face?
What would you do if you were in our position?

[paul_z]

At the Shopbot Camp in Maine, Bill P suggested that if your machine is otherwise idle, it should be making samples. I believe he said that he never made a sample that didn't get him business sooner or later. So far every sample I have made has snagged me some business.

I am currently engraving about 40 lap boards (for writing and such). I got the work because I carved a small piece of scrap with the logo and a sales persons name from the local lumber yard. He has it on his work desk and people ask about it. After the lap boards, there is some mill work to be done for the lumber yard.

I think Bill P is right!

Paul Z

[paco]

So far most of my work is coming from face-to-face then from Web site search then from word-to-mouth.

I wouldn't recommend mass mailing of any kind (post mail, e-mail, fax); waste of time, money and may very well get people annoyed. I do think it's worth to have some info material to give away such as PDF via Web site and e-mail. Brochure to hand at meetings with business card...

Since I'm around CNC machines, I've come to think that the best way to feed a such tool is from your own production. Sub-contract can sure be paying good but it'll still always be intermittent I guess. On the other hand producing your own ideas is somewhat more involving...

Samples, I second. It does both as keep you on the edge over new techniques and have something to show and give away to prospects.

[jhicks]

Randall,You've raised an important issue that no doubt all of us experience. I certainly have. My thoughts are as follows but it really depends on what you are trying to accomplish.
1)The Bot is so versatile one needs to try to maintain some focus and at the same time be flexible. IF you choose to market to cabinet shops, be diligent about understanding "why they would use you?" and "What value you bring to the table".
Example,: you can really do a much better job than they can on any shapes, circles, arches etc for a host of reasons too numerous to describe here.
2)Nothing replaces the personal touch. One needs to meet people/clients to fully relate what they need/do and how you can help make their "outsourcing" decision to you the right one. Samples in this regard are truly worth while but also have leave behind collatoral materials, a web site and at minumum a blog to refer to when on a phone call.
3) Outsourcing is by its very nature serves intermittent demand so your customer has chosen to hire you temporarily vs a full time employee and investments to suport a vertically integrated fabrication process. Wholesale by its nature means more middlemen and lower sell prices for you the fabricator.
The only way to achieve lower costs is better efficiency through automation and/or repetitive volume economy of scale.
Since sign shops are ONE offs, and you may have design time they don't want to do, you gain neither of these but must allow for a reseller to compete. TOUGH to do but it seems many serve this market with acceptable results.
Maybe you could use them as as a source and resell their products to your client base?
So unless they give you turnkey designs, and you can run efficiently in some volume sufficient to support your overhead its filler work and only a portion of your mix and it must be profitable. Ask yourself who else can they go to? Do they get the same local service or pay freight? Compare competitive prices and make sure you're not leaving $ on the table and raise prices gently all the time until you find the local threshold for your work.
You and the market determine the value of your work so if you want to be percieved as a high value supplier, you need to be able to sell and deliver at that level for reasons you and the customer can understand.
4) In general the ratio of ranges and curve for fabrication go between High Mix, low volume to low mix high volume. The former being the custom high price per unit items, the latter being the low price standard repetitive items. Decide where you are, where you want to be, and where you know you can make $.
5) If you desire repetitive work (as many may) try the industrial world at a few OEM's. They often have simple shapes being made either in house or outsourced at large companies that you could make. This type of customer can "keep the machine running" on locked down designs where you can dial in the efficiencies and material costs.
Running hundreds of parts at a few dollars is sometimes better than no parts at all as long as you don't sacrifice your time and lose profits or focus.
6) If you desire Artistic work (as many also may) realize the limitation for an artist is "the artist" A painter can only paint so many originals therefore they must be of sufficient perceived value and volume to keep the artist alive and fed but they won't be reproduced in volume without diminishing their value.

With all that in mind and the versitility of the BOT, I suggest you select a focus area or areas. Once selected ask yourself if you are restricting yourself to what the bot can do or would it help to add other complimentary tools you may not have now. Shapers, moulders, laminators etc.
What information do you have to conclude this product mix, market, and profit level is sufficient to support your goals and business needs?

When you have your focus in sight, start seeking out customers you feel can provide the high volume or low customs.
I think you will find that day by day your reputation will grow, word of mouth will spread, and your vision becomes more clear.
We find the balance between our work and focus in Signs, turnings, and trim with the wild card as CNC customs that we insist are profitable or walk away so we don't get bogged down with fun but unprofitable projects.
Finally if you're not doing it now, make a commitment to spend a day or 2 every week exploring opportunities, talking with and meeting with potential clients, dialing for dollars. before long you'll find your "rich niche's"
If we can ever help, drop a line.

[mikejohn]

Small runs with a personal touch (logos, business names) or that are too short a run to interest the heavy metal guys, or worse still the ubiquitous Chinese, is one area to look at.
Local, fast turn around is another.
Making something of your own (as Paco says) where the Shopbot is only part of the process, is another way.
I can see the attraction of sub-contracting, particularly if you can find a regular soource of work.
It's been said elsewhere, if it takes 5 minutes to load the material onto the 'bot, and the 'bot then cut for an hour, your manhours are only 40 mimutes a day.
So if you can fill the seven extra hours with other profitable tasks, providing the Shopbot is making some real profit, however small, is better than the Shopbot lying idle.
In the end its looking all the time for opportunities, putting two ideas together to come up with a new third idea.
And if you hit a real good money maker, posting here how you did it, so I can copy it and also make money


.......Mike

[rick_woodward]

Gawd a mighty Jerry ! THAT was extremely well spoken ! I'm gonna print that out and hang it up. In thinking and searching to expand my work flow, this will refresh my memory and keep me from pursueing deadends. It will also help remind me where my strengths are and stay focused. I dont always remember certain areas are deadends for me when thinking of ways to increase work flow. Having it in black and white is a good thing to reference. Thanks. I woulda never written it down. rick

[harryball]

Great thread!

Face time is best, samples work well. Being involved in some group helps, I get involved with the local gardeners groups, green houses, eco friendly stuff, farmers, horse boarding facilities, visit horse shows. I wear buttons or tshirts with HabitatForBats.org on them. My niche is highly focused and an interest grabber. However, I still find the desire to reach into other areas. In your case, whatever your focus is go where they are and be there. Find out where your cabinet shop owners eat breakfast or get together or something etc... join their organizations and pay attention.

I will add some caution for new businesses with low workloads and idle machinery.

1) You're wide open for business and you go out and make promises... three prospects call you back and commit and now your shop has to run at 300% to meet demand. You're so busy you don't have any face to face time so a famine follows.

2) Your shop is idle and you feel like you have to take every job even if it's something you don't like. You find yourself spending time doing something you don't like, not getting out and going after what you do like and not having time to do what you like. Guess what... you'll become what you do and hate it. You are what you are doing so be careful. Once people determine what you are, they'll come to you for that and it's VERY hard to change that perception. I prefer not to build cabinets but did so thinking I couldn't stop. There are still people today that think of me as a cabinet shop and still call me wanting a cheap bathroom or something. I turn the jobs down even if I'm sitting here sweeping the floor for the day. If I get discouraged I get in the truck and go ask for the work I want.

3) You'll take jobs above your learning curve because you feel you have to. Be honest with yourself and a potential customer. I recently told a guy that wanted a cross I'd love to give it a shot but it'll take time as I learn and I have regular production. It took me 6 weeks to get him his cross but he knew up front it was a secondary job and was free to choose someone else. Much better than me taking the job as a first class production and beating myself up force feeding the learning curve and missing my regular production.

Just some words from the school of hard knocks.

Someone asked me once... "How did you get to making bat houses for a living?" My answer... "Heck if I know, I started building them with all the quality I could muster like the premier bat conservation organization wanted them and kept building them."

Robert

[rcnewcomb]

Thanks for the excellent input. Sure enough, the face-to-face visits do pay off. We even had one where, at the beginning of the visit they didn't have anything for us, but by the end of the conversation they were finding various project that were a pain for them but a good fit for us to cut for them.

It seems that they keys for good marketing are:
1) good relationships - they give you business because they like you (this is very important)
2) good value - they give you repeat business because you can do something faster/better/cheaper (pick two) than they can