New Business Idea...HELP!!!

[Gary Campbell]

Paco..
Over the years I have used many estimating and accounting packages that say they can do it all. Of course none of them can. The database programs all work on canned unit prices... /sqft, /linft, yd..etc. you still need to put in a local price multiplier. As a specialty contractor I may never do the same project twice. I have not been able to find any estimating software that is anywhere reasonably priced that will work as we need it in non production based manufacturing. I use a spreadsheet for estimating that will allow me to enter all my material costs, labor hours, freight, profit and overhead. I have reference cells that allow me to enter different rates, markups and P & O percentages, so that I can vary the estimate price with current conditions. To succeed, you MUST mark up all materials, you MUST make a profit against your labor costs AND you MUST have a charge for your overhead costs. And if you want to be here next year you MUST include a profit figure. Figuring out what these charges and percentages are is the hard part. Overhead is a product of time. A job that takes 6 months needs to cover 1/2 of your total years fixed costs. One that takes a week should be 1/50th etc. I like to enter all items in an estimate as my real cost. Just what they cost me. Shipping etc is cost. Labor is more complicated to develop a cost when you are self employed. Lets say your prevailing rate is $50/hr and you are shooting for a 25% profit margin. Your building, utilities etc. (overhead) is $12,000/yr. Your labor "cost" for estimating purposes would be $50/1.25 =$40 less overhead. Which if you are a one man show would be..$12,000/12 mo =$1,000/mo, by 20 working days = $50 per day /8hrs=$6.25/hr Which gives you a bare cost of $33.75 for estimating purposes. Here would be how I do it: (no details)

Plywood, lumber (itemized on bid) $350.00
Required Tooling $80.00
Fasteners $12.00
Refinish Mtls $65.00
Sub Tot Mtls $507.00
Labor Setup,cut assemble etc(itemized)
24hrs @ $33.75/hr $810.00
ShopBot 1.75 hrs @ $85.00/hr $148.75

Shipping, postage etc $8.00
Misc Shop mtls, rags etc (not itemized) $4.50

ESTIMATE COST $1,985.25
Overhead 24@ $6.25 $150.00
SUBTOTAL $2,235.25
Profit @ 25% $533.81
Estimate total $2,769.06

Because all of the rates and percentages are in cells that can be modified, you can make changes depending on how busy you are. Or give a discount to a favored client. There ya go! thats just my opinion, and I could be wrong. Just remember one thing.... It is much better to be sorry that you didn't get the job, than to be sorry that you did!!!!
Gary

[harryball]

OK, this got a little long and rambly and I started to just delete it, but as I read over it I thought someone might find something useful and maybe avoid some of the holes I managed to find.


My least favorite part of business, pricing. I try to keep things simple.

For custom work I charge $75/hr for bot time, $35/hr for shop time which includes me and overhead. I add $15/hr (so $50/hr) for any finish work like sanding and painting. I add $20/hr if I have extra labor working. I add a markup for materials and add it all up in a spreadsheet. Once I see the number I adjust it based on local knowledge and that's my estimate.

With Habitat For Bats doing better and better I've been taking less and less custom work and liking it more and more. As a result my prices for custom work have been going up. I don't look at them the same way anymore. Now I think about it this way "what do I have to charge to do this the way I WANT to do it?" instead of "what should I charge so I can get the job and pay the bills?"

I've worked hard to simplify my life lately and one thing I've come up with is "if I don't like doing it, if it causes stress... don't do it because I won't do my best" I HATE custom pricing, I hate delivering quotes, I hate valuing my work so I do better in a "price once sell many" model. Realizing that and making adjustments toward that end have really improved my outlook on things in the last two years.

However, I like to be creative and feel a sense of accomplishment and purpose. This is more difficult to do in production than one off customs... what was I to do? I first tried creating "custom - production" products. These are similar products customized for each buyer. This was working but then I was able to combine my passion for bats with my passion for woodworking. It had just never occurred to me before and it was NICHE time! Habitat For Bats has been growing for coming up on 2 years now, where has the time gone! I was able to buy the bot a year ago and I keep making more bat houses and bat products than the month before.

The point I guess is this... find something you love, do it for passion and let the money follow. Finding something that you can make money at figuring you'll learn to love it is a hard row to hoe (southern for "makes for a hard life").

I see threads on business ideas where it seems everything is so focused on the dollars it seems some people have forgotten you should enjoy what you do. Worse yet... some people may never have realized you CAN enjoy what you do but rather thought work was something you endured at the hope of living better later. That was me just over 2 years ago when I was laid off from a very good paying job. Something clicked as I started job hunting... I was asked "So, why do you want to come to work for us?" I gave the guy a blank stare and suddenly realized the truth... I told him "you know, I really don't". I don't think he expected that answer. :-)

But I realized I was miserable and the happiest time of my life was walking out of corporate america. My wife and I discussed it, it meant HUGE life changes. I sold practically everything I thought meant success... the 6 digit $$ boat, the toys, the 5 cars were sold. You know... when the Porsche Twin Turbo drove away with its new owner I realized that car had owned me. It was liberating.

I remember quite clearly when I asked my wife "what am I going to do now, what is my passion, what would I do if I had no fear?" She took me to my workshop and said "You were building furniture when I met you and I don't know why you ever stopped... you want to find your passion... look around." There it was all the time, sitting in my workshop. Why had I felt it so important to spend so much money on a workshop full of tools that I spent all day at work wishing I could come home and use? It was a passion I'd wanted to follow but never did for reasons too lengthy to discuss here. Let's just say I thought I was following the money which as we all know is what is expected of us if we are to be all we can be.

Think about what zaps your energy, what brings you down, what destroys your drive and build your plan to avoid those things. The first step to making a good choice is realizing you HAVE a choice. If, like for me, the choice between pricing custom jobs or being shot in the foot leaves you wondering which to choose... you'll never be happy if your business plan requires you to be constantly making estimates. If you don't like finishing, don't build a plan that requires you to do finish work.

Wake up each day and live your passion... oh, and bot on!

Robert

[nick]

Excellent Robert...Excellent

[ed_lang]

Robert!

You said exactly what I have been trying to do for the last year!

I sure am glad you didn't delete the post.

ed

[myxpykalix]

Robert,
You should be a motivational speaker or a preacher...just don't ask us to "drink the kool-aid"! lol

[edp]

Great post Robert - Many thanks for sharing.

[harryball]

I must have struck a nerve here. Thanks for the kind words, I've received emails as well as a few phone calls. I must say, however, I find it disturbing that many of you guys think I have it all together! I assure you, I'm just like you guys struggling with the same issues. Perhaps I found a way to express myself where others have not but expression doesn't mean solved.

I wouldn't want anyone to think you solve the problem once with a "magic bullet" to quote Ed. I solve these challenges daily, over and over. I've been through the fire of a kiln that some of you are trying to enter. After going through this fire I can simply tell you from the otherside what I learned and maybe keep you from following me or changing your direction sooner than I did. I wouldn't want anyone else to work 22 years following the money in a profession that didn't fit them. After 22 years all the degrees and training mean very little for me now in what I REALLY enjoy doing. That is a high price to pay to learn my lesson. Don't base your career on what can make money and forget about what brings you fulfilment.

Bringing that a step closer to business ideas, don't entertain business ideas that entail you doing things that drain you or you find unfulfilling. Focus on what builds you up and fulfils your sense of life, it can be done. This does not mean you won't have to do things you don't want to do, it does mean you can have hope as you focus on your plan that these things are a means to a fulfilling end, not just a daily drudgery to earn cash.

Key words for me are PASSION and FOCUS. Find your passions and then focus on them. Take a minute and think about those you think are successful either and infuriatingly happy. Then ask yourself two questions. Do they seem to do it just for the money or is there some mysterious force that seems to drive them? Do they do 100 different things and anything they can grab at or do you wonder how they can make a living only doing that one or two things they do? These people have Passion and Focus. Then the question becomes... How can I get that?

There are a couple of books I'd suggest everyone read, "Who Moved My Cheese" and "Do What You Are". The first book is a quick simply read, you may think it childish at first but I encourage you to read and reflect on it. The second book seems thick and daunting, but it is really not that bad. You end up reading about 1/3 of the book if you follow it from the beginning. It has an IF/THEN reading format. IF this THEN only read this.

Finding your Passion can be tricky, took me 22 years and it was hiding in front of me and still continues to change shape a bit. As for focus... I say to myself daily "It's about the Bats". I'm drawing, cutting, building, painting, teaching, hauling and so on, but it's all about the Bats. When I have to take a job that is not about the bats I must have a good reason... "It's about paying the bills so it can be about the Bats until it is ALL about the bats" and it's getting there.

To illustrate how passions may not be so straight forward. My core passions upon which my business plan is based are Project/Process Design and Accomplishment, Environment/Nature and Teaching. Be clear here, Woodworking fulfils my first passion, it is not the passion itself. I love to design, problem solve and create real tangible objects that express me. I suppose if I'd been exposed to metal working instead of wood working things may be different. But I found wood working and it fulfilled that first passion so well it never left me. I built a shop and filled it with tools. Environment and Nature is fulfilled by working with Bats and their conservation. I do love bats but again... maybe if snakes had infested our house instead of bats those many years ago the story would be different. Lastly there is teaching. I found myself teaching engineers at my previous job even though it technically wasn't my job. I enjoyed it, conveying knowledge is a passion. Our workshops fulfil that passion.

Maybe Jack is right, wonder if Shopbot could use a motivational speaker or motivational news column? LOL.

Robert

[harryball]

I must have struck a nerve here. Thanks for the kind words, I've received emails as well as a few phone calls. I must say, however, I find it disturbing that many of you guys think I have it all together! I assure you, I'm just like you guys struggling with the same issues. Perhaps I found a way to express myself where others have not but expression doesn't mean solved.

I wouldn't want anyone to think you solve the problem once with a "magic bullet" to quote Ed. I solve these challenges daily, over and over. I've been through the fire of a kiln that some of you are trying to enter. After going through this fire I can simply tell you from the otherside what I learned and maybe keep you from following me or changing your direction sooner than I did. I wouldn't want anyone else to work 22 years following the money in a profession that didn't fit them. After 22 years all the degrees and training mean very little for me now in what I REALLY enjoy doing. That is a high price to pay to learn my lesson. Don't base your career on what can make money and forget about what brings you fulfilment.

Bringing that a step closer to business ideas, don't entertain business ideas that entail you doing things that drain you or you find unfulfilling. Focus on what builds you up and fulfils your sense of life, it can be done. This does not mean you won't have to do things you don't want to do, it does mean you can have hope as you focus on your plan that these things are a means to a fulfilling end, not just a daily drudgery to earn cash.

Key words for me are PASSION and FOCUS. Find your passions and then focus on them. Take a minute and think about those you think are successful and infuriatingly happy. Then ask yourself two questions. Do they seem to do it just for the money or is there some mysterious force that seems to drive them? Do they do 100 different things and anything they can grab at or do you wonder how they can make a living only doing that one or two things they do? These people have Passion and Focus. Then the question becomes... How can I get that?

There are a couple of books I'd suggest everyone read, "Who Moved My Cheese" and "Do What You Are". The first book is a quick simply read, you may think it childish at first but I encourage you to read and reflect on it. The second book seems thick and daunting, but it is really not that bad. You end up reading about 1/3 of the book if you follow it from the beginning. It has an IF/THEN reading format. IF this THEN only read this.

Finding your Passion can be tricky, took me 22 years and it was hiding in front of me and still continues to change shape a bit. As for focus... I say to myself daily "It's about the Bats". I'm drawing, cutting, building, painting, teaching, hauling and so on, but it's all about the Bats. When I have to take a job that is not about the bats I must have a good reason... "It's about paying the bills so it can be about the Bats until it is ALL about the bats" and it's getting there.

To illustrate how passions may not be so straight forward. My core passions upon which my business plan is based are Project/Process Design and Accomplishment, Environment/Nature and Teaching. Be clear here, Woodworking fulfils my first passion, it is not the passion itself. I love to design, problem solve and create real tangible objects that express me. I suppose if I'd been exposed to metal working instead of wood working things may be different. But I found wood working and it fulfilled that first passion so well it never left me. I built a shop and filled it with tools. Environment and Nature is fulfilled by working with Bats and their conservation. I do love bats but again... maybe if snakes had infested our house instead of bats those many years ago the story would be different. Lastly there is teaching. I found myself teaching engineers at my previous job even though it technically wasn't my job. I enjoyed it, conveying knowledge is a passion. Our workshops fulfil that passion.

Maybe Jack is right, wonder if Shopbot could use a motivational speaker or motivational news column? LOL.

Robert

[Brady Watson]

Robert,
I meant to chime in earlier, to say that it's nice to see a fellow craftsman riding the wave and enjoying his work. This is the way life is supposed to be guys...You know...getting paid to do what you love?

I'll add a couple little tid bits:

Add CONFIDENCE to your list of words. NOTHING makes you more money than confidence. Customers smell it, and respond accordingly. You'd better be able to back up your words, live & be your word, and do what you say you are going to do ON TIME if you want them to come back.

Book list & pretty much required reading for anyone getting out of the Empire Slavery & Salt Mine paradigm...a new paradigm calls for new information:

* Think & Grow Rich by Napoleon Hill <-- One of the best books for this subject BAR NONE! (I must have given away 4 copies already. It's that good.)

* Dynamic Laws of Prosperity by Catherine Ponder <-- Uplifting and inspiring about money & how to change your thinking to attract more of it to yourself.

* The Four Agreements by Don Miguel Ruiz <-- Get yourself straight and live your word

* Creative Visualization by Shakti Gawain <-- Helpful in creating what you want to 'step into' in the near future. Visualization costs nothing & gives you EVERYTHING.

-B

[harryball]

Brady, you are right, I would do nothing to down play Confidence... I personally find if my passion and focus are on track I have no problem with confidence pouring in and spilling out everywhere. I should not assume this is the same for everyone. Thanks for bringing that in, I now have 3 words... :-)

A sales rep with passion for his product, focus on what he wants and confidence to step forward rarely finds it difficult to connect with the customer and sell... loose any one of those three things and the customer can smell you a mile a way.

I've read two of the four books, haven't heard of the Four Agreements or Creative Visualization... will get and read.

If I knew then what I know now... I wonder where I'd be and if I would still know now what I know now or would I know what I knew then and make the same mistakes and end up now just a little later? :-)

Robert