Looking Under the Hood

At Paul Downs Cabinetmakers

A Look at Paul Downs Cabinetmakers

Who we are

Benchmarking:  The Numbers

Internet Marketing and Sales

Things that worked (and a few that didn’t)

Some examples of my work

Baer Chairs 

Lippincott Table (1998)

World Bank

The Perfect Internet Product• Everyone knows what to call it

• Everyone needs one

• Nobody knows where to get it

• Everyone knows how it works

• Nobody knows what it should cost

• It can be shipped

• High value per transaction and per cubic foot (shipping costs)

• Clients pay their bills

The Website

• We are selling a THING

• We made the website about the thing, not about the company that makes it

• We show as many variations on that thing as possible, sorted by type  (SEO Optimization)

Prices:  Show Them or Not?

0

5

10

15

20

25

30

35

40

45

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53Weeks

Inquiries per Week

2013

2014

2015

2016

The Right Sales Process• Immediate interaction with a knowledgeable person

• Responsive to client budget and timeframe

• Sophisticated modeling, manufacturing, and logistics to fulfill our promises

• Sales staff are experienced woodworkers, trained in design and sales techniques

Social Media: Domination

Social Media: What I Care About

Benchmarking:  The Numbers

$0.00

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00

$2,500,000.00

$3,000,000.00

$3,500,000.00

$4,000,000.00

Sales Vs. Revenues 1986‐2017Sales (New Contract Value) Revenues (Delivered Goods Value)

2003 to present:  InternetCNC

1986 to 1992:  I will do anything

1993 to 2002:  Print Advertising

No CNC

$18,287

$709,270

$631,674

$1,828,406

$2,368,724

$1,479,159$1,532,328

$2,628,682

$2,927,882

$2,513,293

$2,698,402

$3,306,571

($357,771)

($80,781)

$50,388 

($248,618)($160,907)

($284,512)

$179,709 

($28,749)

$75,442 $116,076 

($85,479)

($142,766)

$11,496 

‐$1,000,000.00

‐$500,000.00

$0.00

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00

$2,500,000.00

$3,000,000.00

$3,500,000.00

Revenues (Accrued), & Profit 1986‐2017Sales (Accrual) Net Profit Sales (Accrual) Net Profit

Net Losses 2003 ‐ 2017:

Total Revs 1986 – 2017:  $34,725,729

Total Revs 2003 – 2016:  $30,339,148

1 1 2 2 2 3 4 4 5 6 6 7 7 7 7 7

9

11

13

15

13

18

20

7

13

15

15

1718

21

20

20

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Revenues Vs. # of Employees 1986 ‐ 2017Sales ($100,000s) # of Employees Total

Revenues Per Employee 2014:  $162,660

Revenues Per Employee 2016:  $134,920

Revenues Per Employee 2017:  $163,287

1 1 2 2 2 2 3 4 4 4 4 4 4 4 4 46

8 9

10

7

11

12

4

10 10

8 8

9

7

8

8

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Revenues Vs. # of Bench Employees 1986 ‐ 2017Sales ($100,000s) # of Employees Total Bench Employees

$23,092 $7,534

‐$9,988

$21,100 $52,380 $64,990 ‐$81,918 $52,000$73,077 $8,357$112,160

$260,942

$113,387

$171,415

$257,054

$14,845

$231,769

$164,707

‐$500,000.00

$0.00

$500,000.00

$1,000,000.00

$1,500,000.00

$2,000,000.00

$2,500,000.00

$3,000,000.00

$3,500,000.00

Revenues Vs. Owner's Salary less Loans  1986‐2017Sales Quickbooks (accrued revenues) Owners Salary less loans Loans to PDC Inc.

Average Income 1986 – 2016: $60,945  ($27.70/hr)

Total Revenues 1986 – 2016:  $34,725,729

Total Income less loans 1986 – 2017: $1,950,254 (5.6%)

Total Income 2010 – 2017: $1,326,278 ($165,784/yr, $75.35/hr)

Total Income 1986 – 2009: $623,976, ($25,999/yr, $11.80/hr)

Current Loans to Company:  $437,098  (pays $3643/mo)

Keeping A Stable Workforce: Pay RatesMin Wage: Not for me

Nobody I want to hire will work for this.$12/hr:

Reliable, works without direction, some English.  Driver’s license.  Start of training path for those with work ethic & good hands

$15/hr:

Schooled but inexperienced woodworkers, starting pay$18/hr:

Schooled woodworkers with some shop experience, good references$20 ‐ 22/hr:

Trained by us, can build much of our catalog, productive.

$30 ‐ 35/hr: Mastered all of our catalog, manage helper, contribute ideas, or come from similar shops with good references

$40 +/hr: Foreman pay.  Energetic manager who can handle scheduling, and contribute ideas to run shop.

$25‐28/hr:

Specialized Staff Positions

Finisher: $22/hr for trainee, $28/hr experienced, lots of overtime

Engineer: $60,000 to $85,000 a year

Sales: $62,000 to $120,000 a yearSalary & Commission

Keeping A Stable Workforce: Lessons

• Baseline pay must be enough for a worker to afford a reliable car & rent. ($15/hr absolute minimum)

• I pay too much and it affects profitability.

• But the good workers stay around.

• The best workers have debts & kids:  they understand why they need money.

• You will need to train people if you want them to stay.

Benefits

6 personal days, 6 federal holidays to start.  + 1 day/yr of service to max 16 days. (22 total)

SIMPLE retirement plan.  Company matches up to 3% of base pay

Health insurance – company match varies with plan chosen, whole family covered.

Flex time.  Set your own schedule, as long as you are regular about it.  Call in when out.

Things that have worked well

• Sharing financial information with workers• Google Docs & Sheets• Employee Manual

• Office staff in one room• Putting the right manager in charge

• Training the manager• Sales Training

• Operations Committee• More paperwork, quality checks.

Hiring Tips (for a full employment economy)

• Develop relationships with local schools

• Ads:  Craig’s List for shop floor, Indeed for others

• Use spreadsheet to keep track of applicants

• Spreadsheet also scores applicants

• Interviews start with a test

• Standardize interview questions

•  They are evaluating YOU.

•   Millennials ‐ ????????

Hiring Spreadsheet: Pre Interview

Hiring Spreadsheet: Post Interview

Shop Test!1 2 3 0!

!- 4 5 67 1 4!

x 15

4 . 7 5 0!+ 2 . 5 0 0

1 4 2 !7 2 6!

+ 3 4 5 6 7 4!

x . 0 4

2 6 2 1 3 2 1 6 5 8 . 4 0

6 . 7 0!+ 3 . 4 0

10. Convert 0.625 to a fraction:

9. Convert .750 to a fraction:

11. 1/2" + 1/4" = !!!12. 0.125" + 0.375" =!!!13. 1.5" - 0.625" =

14. 2 1/2" - 5/8" =!!!15. 7/16" + 5/16" =!!!16. (2 1/2) / (5/8) =

1. 2. 3. 4.

5. 6. 7. 8.

17. How many 14" lengths can be cut from a piece that is 60" long?!!!18. You are working with plywood. You need two pieces: one that is 20" x 90"!

and another that is 30" x 32". Can you get both of these pieces from one sheet of !4' x 8' plywood?!

Questions 1 to 20 are math questions. Please write in the answers. You may use a calculator.!

Shop Test

29. This is a drawing of the piece of wood:!

3 1/4"

A

B

28. The sides of the piece are parallel to each other. Are both ends of the piece squto the sides? !

What is the dimension of A?!!

What is the dimension of B?!

!Use the tools provided and the piece of wood to answer questions 26 to 29:!!!26. What is the length of the piece along the edge marked "X" (to the nearest 1/32 of an inch)?!!!27. What is the the distance between the two lines marked on the edge of the piece (again

to the nearest 1/32 of an inch)?

39. What kind of joinery is this?40. What kind of joinery is shown!

in this drawing for a drawer?

16"

10"

5/8"

this distance is critical

1x4 x 1/4 dado for bottom

16 5/16"

1/8 x 1 aluminum!rail set into !1/8 x 1/2 dado

41. How will the dimension shown with the !red arrows change between the winter !and the summer?!

!!!

!42. Will the dimension shown with the green !

arrows change in the same way?!!

Questions 35 to 38 are comparisons. Look over the two lists below to determine if both lists!are identical. If word or number differs, make an "X" to the left of the line.!!Example:!!

[ x ] Center Stiles: 4 @ 2 x 30 x 15/16

35. [ ] Bottom Rail: 1 @ 6 x 56 1/2 x 15/16 Bottom Rail: 1 @ 6 x 56 1/2 x 15/16

36. [ ] Side Panels: 2 @ 14 1/4 x 22 1/2 x 3/4 ply Side Panels: 2 @ 14 1/8 x 22 1/2 x 3/4 ply

37. [ ] Door Rails: 8 @ 2 x 20 9/16 x 3/4 Door Stiles: 8 @ 2 x 20 9/16 x 3/4

38. [ ] Drawer Bottoms: 4 @ 15 1/16 x 20 x 1/4 ply Drawer Bottoms: 4 @ 15 1/16 x 20 x 1/4 ply

Center Stiles: 3 @ 2 x 30 x 15/16

Please write in your answers for questions 39 to 42.

Shop Test

34. What kind of tool is this?!!

a. combination square!b. try square!c. scraper!d. marking gauge

33. What kind of tool is this?!!

a. plunge router!b. biscuit joiner!c. random orbit sander!d. belt sander

30. What is the machine in this picture?!!

a. planer!b. table saw!c. jointer!d. pin router !

31. What is the machine in this picture?!!

a. planer!b. table saw!c. jointer!d. pin router !

32. What is the machine in this picture?!!

a. planer!b. table saw!c. jointer!d. router table!

Questions 30 to 34 are multiple choice. Please circle the correct answer.!

Shop Test

Operations Committee

Things that make me say “Hmmmm”

• Growth Strategy

• Profit Sharing

• Consultants

• Adwords

• Culture Program

Conclusion: Why Custom Manufacturing Matters• Nobody knows how things are made anymore

• Small shops are accessible, woodworking can be understood by the average person

• It is possible to make a decent living doing this while paying workers a decent wage

• Who benefits if we fail? 

• It’s up to the boss to develop the business skills to keep woodworking alive into the future.

Questions?

After the show:  Contact me at pauldowns@pauldowns.com

610 239 0142

I will send you copies of:

Shop Test and AnswersCulture StatementsEmployee Manual