Running it like a business

[Glenn]

What do you do to keep your cost affordable? How do you run your smithy in order to keep costs under control?

Take your next project, what ever is next in line, and track every item that is used in making that project.

1. Time on the computer finding the idea for the project you want to build, (30 minutes),
2. Design time figuring out how you want to build it (the sketch etc), the materials needed, etc (60 minutes at least)
3. The trip to town to get the materials ($0.50 a mile)
4. The cost of the materials
5. The time on the road and the time to unload the truck and put the materials in the shop.

Now comes the actual labor part.
7. The time you worked on the project, from when you opened the door to the shop until you closed the door of the shop (lights on to lights off). This may be several days so keep count.
8. The cost of the consumables you used, welding rod, sand paper, grinding wheels, abrasive belts, all the consumables. Estimate the cost of each item and write it down. (welding rod at $2/pound so $2, grinding wheel $1 each, etc.) Use the cost total replacement cost of that one item, and yes I know you did not use all of the abrasive wheel but still count it as if you did.
9. The trip back to town to get something you need or forgot, the cost of the item, the time and the mileage.
10. What ever you used to finish the project, paint, wax, oils, etc and the cost of the rag or brush you used to apply the finish. For our purposes, purchase the roll of paper towels, box of rags, etc. and use that cost.
11. Now that we have the project finished, add the cost of packaging, shipping, and the time involved in getting it ready to ship (lights on to lights off). Add the cost of the roll of sealing tape, the cost of the box, the cost of the foam peanuts, etc.
12. Add the cost of the trip to town to mail or send the package out, mileage at $0.50 per mile and your time. (No you can not count the time you have to wait till you receive the check in the mail)

Minimum wage is about $6.00 per hour so multiply your total time by 6.

Now all up all the numbers. Calculate the mileage cost, miles times $0.50 per mile. Calculate the total time, drive time and actual shop time, times $6 per hour. Total up all coats on the project. Your total for this project is ? (enter your total here)

Sit down for this one, the total you just calculated is the COST of the project. You have not paid rent on the building, the electric bill, the phone bill, the computer internet bill and a whole bunch of other bills that you will receive in 30 days. This does not include the cost of the tools, replacements for anything broken etc. That cost will have to be added in also.

What do you mean "You can not charge that much for that item, or people will not pay that much". Sit down again as that is YOUR COST, you are not making any money, just paying costs, and not even breaking even as most likely we have overlooked something in the process. IF you only charge the amount calculated, you are taking money out of your wallet and giving it to the fellow buying the item.

Now that we know the true cost of that one item (project) we come back to the original question.


What can we do to keep your cost affordable.
How do you run your smithy in order to keep costs under control?

.

[Glenn]

Eliminate waste
Design or redesign projects to use multiples of the total length of the stock size.
For instance 20 feet of steel can be cut to
5 feet (4 pieces)
4 feet (5 pieces)
40 inches (6 pieces)
30 inches (8 pieces)
24 inches (10 pieces)
20 inches (12 pieces)
16 inches (15 pieces)
12 inches (20 pieces) etc.

When you cut multiples, there is no waste. This has the advantage that if you need a 12 inch piece you can use a 24 inch cut, or a 4 foot cut and still have no waste.

If you need a 16inch piece, cut a 4 footer and get 3 each 16's.
If you need a 15 inch piece, cut a 30 and get 2 each 15's.
If you need a 8 inch piece, cut a 16 and get 2 each 8's.
If you need a 36 inch piece, cut a 5 foot piece and get a 36 and a 24

Combinations of cuts should cover most lengths you need, with zero waste.


Make life easier
Clean off the work table so there IS a place to work. Put the tools back where they belong. Build storage racks for hammers, tongs, etc, build a point of use holding table for tools or whatever that gets in the way on the work table. Turn on some music, the kind of music you enjoy.

[RegionalChaos]

Making several versions of the item you are making seems to make sense to me. If you make 5 or 10 or 20 at the same time it seems like it would not take up as much time then if you just make 1 every once in a while.

[HWooldridge]

That depends on a few factors. A lot of this work is done by hand so it is not necessarily faster or more efficient to do multiples. However, any jig or assembly device that takes a while to setup might be helped by running more parts across it in a single run. Much depends on the part process.

For example, the per unit cycle time for me to produce J-hooks is no different to make 10 or 100 but it is more efficient to tumble 100 than 10 because the tumbler uses the same amount of electricity no matter how much material is in it.

[JWBIRONWORKS]

I have kept real good records for the last 2 years on every aspect of my shop. From supplies and consumables to Hours/Mileage. I keep track of how long it takes to make the first of something and the time to make the jig to make multiples. I include Books, Magazines, dues and donations. I keep track of freebies I give out and experiments that didn't turn out.
Last year I went in the hole but not real bad. But last year I kept track just to see if it was worth trying to run it as a business. I did not actually have an established legal Business. I am alot better at forging than running a business but I Have bought or upgraded equipment and tools this year and have kept the shop and personal finances seperate. Am I making a killing.... No but I have managed to break even this year although If I actually drew a wage it would be minimum wage.
With the cost of living continually going up I worry about next year. People just don't have money to play with. I pay cash for everything and if I can't buy it with what I have in the business account I don't get it. I do without on a regular basis.
I buy quality tools so I only have to buy once and I try to get the best price I can. I try to combine supply trips so I save gas. I don't pass up free steel but I also keep in mind that if I waste alot of time turning it into usable steel then I am better off buying new steel. Coal is cheaper than propane however I can do production work more effeciently with propane. I shop around for the best price on propane and steel. Coal I have a good local source and shopping around really isn't an option.

Sorry to ramble, just sharing some thoughts,

John

[tbrforge]

I pulled down a spread sheet from SCORE a non profit of retired businessmen how mentor start ups. This spread sheet tracks cost of doing business. Similar to quote sheets from my days in industry. I have fixed prices for all my consumables on a sliding comparison with volume of production. Process sheets for all projects typically starting out in the sketch book progressing to full scale drawing, then cut list. There is no way that I can charge what every project costs, but some I make out real well and some I break even. No losses yet. On the other hand, I can work through the night and sleep late if I feel inclined, I can stop for a coffee break with my wife, I can bend down and play with my dogs and cats when I want, No one tells me I am not "doing it the way they want it done in their shop". All in all, these intangibles seem to balance out the situation for me.

[JWBIRONWORKS]

I went to SCORE to help set up my business. My mentop is a former plant manager with a degree in metallurgy and fabrication back ground. He helped me get off on the right foot.
I would recommend them to anyone thinking about starting a small business.

John

[ThomasPowers]

I don't need another business. Business is *work*; Blacksmithing is my hobby. I get to spend US$20 a week on it and any other "fun". So I generally spend time hunting down cheap stuff; bought a used farrier file for a rasptlesnake at the fleamarket today for less than 1/2 the going rate! I use a lot of scrap metal.

My main expense is fuel and teaching a 1 day intro to smithing class at the local Community College filled my propane tank for the winter!

[oakwoodforge]

I gotta work a 40 hr week to support my blacksmithing habit. The way I figure it if I sell a knife & sheath for $250.00 I'm making about $0.025 per hour ...

Jens

[dief]

I never really consider the cost of materials. I first figure out what the project is worth to the client. Then I figure out if it is worth my time to do it. All my work is custom mostly functional but artistic. Once you enter the realm of art the cost of time and materials becomes a fraction of the job. That is why I can take a piece of steel that cost me $1.50 and sell it for $175 as a candlestick or a door pull. $60 of stock turns into a $1200 railing. I'm not a machine so I don't try to compete or price my time as a machine (pieces per hour, etc).

I started blacksmithing as a hobby and turned it into a part-time business. I have two other businesses that involve my other passion of climbing. For me success is when play and work become one.