Hello, New Member, Starting A Closet Shelving Business

shelf guy

...........

Metrojoebarbs

Check Direct Buy. If they offer the type of shelving you will be working with (not limited to wire) make the membership investment. I used to pay $4000.00 for 3 years and $199.00 a year after that. I think??????

dougchips

I would re think under cutting your competition, you will only bring the market down. If the market price is 5-7 you have no business selling for under 5. While $1000 a week looks good now, once you figure out how much of the $1000 is gone with overhead you will be poor.

Quick thoughts on overhead.

van payment
van insurance (commercial policy)
gas, oil changes
van lettering
business cards, flyer's
ads--the cost will blow your mind commit to at least 3 months
fax machine
internet monthly fee
work uniforms
warranty service fund
liability insurance
workers comp insurance
tools
cad program
fees to attend training (have to keep up on the industry)
state license fees

this list alone can eat $1000 a week, what $ will you eat with?

__________________
To get the best replacement windows, or sun rooms contact the replacement windows experts at FHI Vinyl Window Company.

shelf guy

hi, thanks for your response.

every single thing you listed i have accounted for. that is all in my business plan.

regarding lowballing prices, what better way is there to get business? nothing wrong with having the best price, having said that if the competition is averaging 5, if i sold for $4.75 then i would be the cheapest, and not "ruin the market." any thoughts on this are welcome.

there is something i am going to do, standard, that every competitor either doesnt do or charges extra for. that is: angle cut shelf to fit the wall perfectly.

say you have a pantry with a 30 degree angle halfway across the back wall. standard practice is to run the shelves across the straight part of the back wall and cut them off at the angle, and put a support pole there. i will cut the shelf to fit the entire wall and use a modified wall bracket on the angle side.

i worked for an outfit in destin, FL who did this and it really set him apart from the competition.

but please, any further thoughts on pricing are welcome.

dougchips

Shelf, share your projected operating expenses, I am interested in seeing what is left over.

In regards to "lowballing" as your marketing approach, I have nothing positive to say so I will refrain.

__________________
To get the best replacement windows, or sun rooms contact the replacement windows experts at FHI Vinyl Window Company.

shelf guy

sure!

these are my confirmed monthly expenses:

van ins - $110
general liability ins (1,000,000) - $150
shop rent - $100 (i am using a storage unit, for my needs it will work)
gas - $300 (thats being a bit liberal, but safe)

i will have no employees so no payroll or WC expenses.

i already own a van, and i already own all tools i need. cell phone, internet, fax, all that i already have, and i already pay on, business or no business.

i plan to do no marketing at first. it wont be neccesary to get started. once i have made some decent money then i will.

so my projection is to make a BARE MINIMUM of $2/ft on shelving, and i can bring in $4000 a month. this is pretty conservative. again, you gotta take my word that i know the market better than just about anybody, and i know the competitors weaknesses.

but regarding pricing, whats wrong with being a little bit lower than the competition? a few cents isnt lowballing IMO.

also i want to add, i am currently making $13/hr. if i work 40 hours i bring home like $360/week. if i can merely double that then i will be happy. im not looking to make a fortune here, just trying to get ahead.

so while clearing 3k or so a month doesnt sound like a fortune to you, rest assured it does to me!!

boman47k

Just want to say hi to another neighbor ( almost) from this area. Thats 3 now..4 counting me. 2 in Huntsville and us two in Florence.

I would like to say, if you are in the industry now, might not want to burn any bridges before you get agood understanding of expenses. Sometimes we do not think of all the reasons rates seem high. Not trying to discourage you, but you know the saying, be careful whose toes you step on o n the way up. They may be attached to the...feet you have to kiss on the way down! Good luck!

ruskent

It does not matter if you own your van or have payments on it. You still need to consider it in your overhead!!!!! Same with the tools!!!! Without charging for them in the overhead, what happens when the van breaks down or you need new tools?!?!
How you going to pay for them.

1000 bucks a week in labor is NOTHING. I bet when its all said and done you would be lucky to clear 500 a week. If your lucky.

Chris G

When you're working for someone else, it's easy to put in a 40-50 hour week.

When your on your own, you're lucky to be working 30 hours a week. The rest of the time is spent driving, and meeting, and talking, and shopping, and e-mailing, and......

Not trying to disuade you, I just hope you've considered that.

dougchips

Shelf, If you have two competitors in your market and you want to low bid, what prevents them from under pricing you for a few months and making you go under?

Get every penny you can and maybe a few extra. How about being $30 more expensive each job and showing the customer what they get "extra" for the $30?

As far as your list of expenses, you can run a business as a hobby or as a business. When the truck breaks down and you are without a plan, you will be without a hobby, not out of business. (you can never be out of business if you were never in business).

Your list should look something like this:
Van payment $300 (save the money now for when you need a new one)
Van insurance $110 (make sure you have a commercial policy)
Gen liabilty $150
Shop rent $100
Fuel $300
Upkeep $50 a wild quess
Car washes $20
Van lettering $20 (total job 200-600)
Site signs $30 (leave one on every job)
Business cards/handouts $20 (maybe door hangers)
Cell phone $100
Fax line $35
Office supplies $30 (ink, paper, pens)
Office equipment $50 (laptop, software)
Professional fees $50 (accountant, state license, town license,bbb)
Work uniforms $30 (shirts with logo's, pants iwth logo for write off)
Warranty service fund $25 (once in a while crap happens)
Tools,bits,blades $20 (20 is way to cheap!)
Training $35 (you should attend some classes at least a few times a year)

Just these items add up to $1500 a month, I am sure that I missed a bunch.

__________________
To get the best replacement windows, or sun rooms contact the replacement windows experts at FHI Vinyl Window Company.

john elliott

SG, why are you so sure you need to undercut the competition to make sales? Why not charge as much as they do, and make sales by being quick, efficient, offering more and better options etc etc.

Only price low if you absolutely have to, and you haven't shown any reasons yet why you would have to.

John

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Ed the Roofer said "John too, in his crass and blunt demeanor.............."

PressurePros

This crap kills me. All I have read thus far is a great indicator for yet another well meaning but impulsive would-be business owner becoming a statisitic. Shelf, I don't know you and you may be a great guy but a spade is a spade. First off, a thousand dollars a week is chump change. After expenses (you have no idea what they are) you'd be lucky to walk away with the same money you are making working for someone. You're singing the same song every new guy sings. I have no overhead, blah blah blah...

You say your numbers are conservative but you have got to be kidding. Your income projections are a prayer. Expecting to have the same output every week and leaving yourself no margin of error is another sure sign of disaster.

Where is your marketing budget factored? You do realize you will have to spend at least $1 for every three you want to gross your first year in business? You do understand that after they pay themselves most companies make about 10% net? How are you going to fund materials? Are you counting on customers paying for everything up front and floating deposits? How will you grow if the company takes off? You need capital reserves for that.

One man shows can only go for so long. Who is going to handle your taxes? Do estimates? Call for materials or reschedule when materials don't come in as planned? Who is going to work on and design your advertising? If yuo get hurt, who makes the money? My man, the list goes on and on. Please stop trying to rationalize or get guys here that KNOW what a business costs to run to validate your ideas to enter a market as the price guy. IT DOESN'T WORK.

Take some business classes and really learn what it takes (it ain't just hard work contrary to what you may think). Enter your market a quality guy that offers something different and next year you won't be filing bankruptcy worrying that the IRS is going to put a lien on your home. Take some sales seminars so you can close deals and value your company and your business.

Sorry man, I know this sounds harsh but I have read this book, I know how it ends.

__________________
Ken Fenner
Pressure Washing PA
Roof Cleaning Services PA

shelf guy

so much good info! thanks guys dont worry i dont take anything personally. i came here looking for good info from experienced businessmen, and thats what i got. thank you all for reading everything so far! let me address some of your points.

first off, i am not "betting the bank" on this endeavor. i have several months living expenses saved. if my business is not profitable in a few months, then i dissolve it and go back to a **** job making what im making now.

also my father is a retired executive who now runs a business, and he and i have talked in great detail, and he believes i have a decent plan. he is very shrewd and calculating, and i trust him to steer me along. he WILL NOT however give me a handout.

regarding my income predictions: i have been doing this job, in this market, for TEN YEARS. i KNOW the trends and customer demands. the 2 competitors that i have worked for (one of which i currently do) have some marginal practices and are still inundated with work. neither of them do ANY advertising, outside of a simple yellow book listing.

i have a huge circle of contacts in the industry. i wouldnt be going into it blind.

regarding my low overhead, yes it IS low, all the competitors have large shops, multiple vehicles, several employees, etc that i WILL NOT HAVE. the business will only grow as big as i want it to at the time. i am extremely hard working and will have zero problems putting in whatever hours it takes to get the job done. i will not sell a job with promises of quality only to send someone else out to do a shoddy installation. i WANT to do it myself.

and you guys are right. no need to lowball prices. if the competitors are selling at the current price, and i plan to (i.e. WILL) provide superior service, then i will price the same.

and i have an accountant i have used in the past that will handle taxes.

one last thing, i worked during the summer of 2001 for a guy in destin, FL. i am basically following his startup plan to a T. he started off by himself, grew slowly, and even now only employees 2 installers and a secretary, and makes well over 100k. i am going to mimic him very carefully. i am in a similar market situation. a few competitors, none of which provide STELLAR service and craftsmanship. i take GREAT pride and joy in my craftsmanship and it will reflect.

thanks again for the help!!! i dont dismiss any advice i get, i mull over everything!!

lawndart

What better way is there to get business? That extra angle cut that you will do standard is a good selling point. You have the advantage over your larger competition with less overhead. If they're charging $5-7 SF. People are paying that in your market. My best advice to you would to do some more research and learn how your competition is selling at the highest rate. Your wallet will thank you.

Pressure Pro's is right. Business is a very tricky thing. Most businesses fail within 3 years. Guess how many of those that failed were the guys that lowballed the market? Good luck to you, Do some reading in the marketing/sales/business forums here. It's filled with a ton of great information.

Mike Finley

#1 forget about being a sole proprietor for a business entity. Why bother with that? Do it for real, do it once, be done with it, form correctly from the start.

#2 Unless you suck ass at what you do, and from your posts you said you don't why do you have to under sell yourself to get jobs? Stand up like a big boy and go at it toe to toe like a man. Sell your jobs for what they are worth, not what you can take and get by. Why the hell make $50,000 in profit the first year if you can make $100,000? Just because you can't stand toe to toe with your compitition and the only way you can sell yourself is by being cheaper? One day you're going to be a real business and understand what it took your peers to get the market to $7.00 a square foot or whatever unit you use. Why go backwards just because you are scared to really be a business man like your peers? Buck up and pull on the long pants and go for it.

shelf guy

#2 Unless you suck ass at what you do, and from your posts you said you don't why do you have to under sell yourself to get jobs? Stand up like a big boy and go at it toe to toe like a man. Sell your jobs for what they are worth, not what you can take and get by. Why the hell make $50,000 in profit the first year if you can make $100,000? Just because you can't stand toe to toe with your compitition and the only way you can sell yourself is by being cheaper? One day you're going to be a real business and understand what it took your peers to get the market to $7.00 a square foot or whatever unit you use. Why go backwards just because you are scared to really be a business man like your peers? Buck up and pull on the long pants and go for it.[/quote]

thanks man. you guys are right, i was selling myself short. my craftsmanship will be superior, so i have every reason to charge the going rate. i was thinking about it the wrong way!

dirt diggler

shelf - it is tough

bout all i can say ... it is tough

and i swear to God it takes some dumb luck to make things work sometimes ... plain dumb luck ... like someone's lookin out for you

slickshift

Not many better ways to remain busy
Busy doesn't mean making money, or making a living, or growing a business..or staying in business
There are much better ways to stay in business and grow your business

First off
The customer that shop for the lowest price should not be your target customer
They don't make good customers..at all
In fact, they make the worst customers

Yes, you'll get most of the customers looking for the cheapest service, but the problem is, they are looking for the cheapest service and will drop you like a hot potato they second some n00b comes by with the brilliant idea of undercutting your prices by $0.25
...and there will always be someone hungrier, more desperate, more illegal, more addicted, then you...always

And don't think you'll just raise prices 'after I make my name'
You 'made your name' by being cheap
And cheapo customers won't all of a sudden pay more because you 'have a name'...it's hot potato time

What you are talking about is Using Price To Close the sale
An easy way out for sure, and a big temptation
But it's not good for you and your business...that's not a way to get loyal customers that have good loyal referals

Work on your sales presentation
Yes, for a certain amount of time each week and each day you are a salesman
Sorry, it's in the New Biz Owners Manual
Your a one-man show, your a salesman
I'm sure there is something you could do that the others don't to separate your service from theirs
Return calls, be on time, join some professional guilds...
...angle cut shelf to fit the walls perfectly

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Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr

slickshift

So, your a good tech
And you are having an Entrepreneurial Seizure

To be a good Entrepreneur, you're going to need to study up on the other parts of your chosen biz

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Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr

slickshift

You can become a Closetmaid dealer for much less
I'm one and it's a very small part of my business
Yes, there are still minimums (more like packages actually), but that's got to be part of the plan too

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Quote:

Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr