Business

[Ten Hammers]

OK folks, business changes from year to year. Couple years ago we had CHEAP steel comparitively speaking. Couple that trend (with it's associated effects) together with the fuel/energy costs we're seeing and things change a lot.

I just recently got another box of sanding belts (farm store, they order from Grainger). This has worked out in the past for me in that the farm store orders a bunch from Grainger and gets good break in price. I MIGHT end up paying a little more not much. this last box had pretty severe increase PLUS freight. Gringer had an increase and the store now charges freight on everything.

I still buy steel from this place (in that the company that has been delivering to the shop started to hose me with sub standard stuff and then argue about it). What this boils down to is I paid (6-8 months ago) $4.05 for 2 x 48 belts (Norton Norzon). Earlier this week, the same belts were $6.25 PLUS FREIGHT. It all rolls downhill and we must pass it along or eat it. This is not a doomsday thing, just a wakeup (for myself). ACE, True Value and others WILL make money.

Lets just look at the past 5-10 years. What you built in your shop sold for one price (for the sake of arguement). Today, lets look at the same item(s). Your labor staying the same. Add 30-50% increase in steel costs. Consumables (torch tips, grinder bits etc. including coal/LP) for the shop have gone up a bunch in some cases. The price of your clothing has gone up. Your shop expenses (like ins., taxes and maint. ) have gone up. Add to this the extra $12-15.00 per tank we are paying for road fuel. If your products are still selling for the same price then it's simple. You losing money. Whatever the market will stand is what you should sell for. Whatever you are comfortable with earning is your business.

This , however , is the crux of the matter. As the COSTS of our materials/consumables/expenses for shop increase, the margin we charge also must increase or we are back pedalling. Everyone has some idea of how they want to mark their products/services and this is their business. My opinion is that we must stay on top of things with a vengence. I guarantee you that the corporations that we buy from are.

We can't control what imports will do to the market (except to say that they will try to kill us). The quality of our products and services speak for themselves. This said, we can't rest on our laurels (or I can't). As years go by, it all stacks up. Successful businesses keep track of the little things and adjust accordingly or perish. We must do the same.

[HWooldridge]

Everything floated along for some years and life was good. Now, we have a huge trade deficit, high gas prices, a war, etc. Sounds like the 70's...eh?

I agree with you and the issue is to charge a fair price and get that in front of the people who will pay it. I make a couple of real simple items that retail for $8-10 and some people still just finger them at shows and walk away. Being in the "right crowd" is necessary so they'll part with the coin. Unfortunately, I think that gas prices currently are a big cut into discretionary spending because the jump came after raises and bonuses are normally given so most people are spending less on luxuries.

Imports have always been there but the imbalance has grown enormously in recent years. I once heard an economist say that open trade would allow the world to increase to the standard of living enjoyed by America but I suspect we are instead descending to their level and will meet somewhere in the middle.

I seldom lose money on what I sell but I don't always generate enough sales to keep up the cash flow. That is the main crux of my business.

[Glenn]

I have started a new topic Cost of Doing Business. It parallels this thread but offers a challenge to anyone wanting to figure it out cost and profits on one project. The best way to discuss this is with numbers from your shop. No matter where the steel comes from, you have to pay $$ to get it, or walk away.

Don't let this take away from Ten Hammers topic. After we find out how much money we are making, we will turn back to this thread to find out how to market the products better and make more money. :D

[sandpile]

Like eveyone else, it is costing more to make and ship everything I make.
I have primarily been a knife maker. As time goes by I have been making more spurs and bits. My blacksmithing kicks in a little and some consulting, along with some welding. Luckily I am not tied to one trade.
It is a fact, if you don't stay right on top of your costs and raise your prices accordling, you will be left on the side of the road.
I wish I could make $40.00 net out of my shop. A more realistic figure would be $20.00 and hour. I hear about huge amounts of production out one man shops, but when you are there to help on some stuff that takes two people. You see that you are not that much slower than the high producer. He just figures his time different than you do.
I still have about fifteen hours in a nice knife with a guard and mirror polish. The same for a pair of spurs with silver overlay. I can't average $300.00 for either of them. I started this shop deal with the thought of making it pay its own way and that is about all it does.grin
With the hammers and forges and blacksmithing equiptment I have added in the last two years I may have backslid a littleBOG.

Sandpile

[anvillain]

I'm not really qualified to talk about business since I am barely past the hobby stage. I have sold a few items and would like to sell lots if I could make a little money along with it. Luckily I don't depend on this for a living. I think HWoolridge hit it on the head about finding the "right crowd" I too have watched a lot of people pick up articles that are of good value and possibly unique and artistic even. A good number of them are other craftsmen or potential blacksmiths that are trying find ideas for themselves to produce. Another large percentage are just people that would buy, but they know the demands of every day life over-ride this item that they admire, but can do without. The occasional match of someone with discretionary income and the beautiful forged work that is just what they are looking for is rare. My goal is to find a few items that I can have fun making, that will have wide appeal, will sell under $20 and that is rare also. If I can find some items like this to pay the overhead it will still allow me to produce more elaborate work that will be there when the rich connisseur of fine forging comes along. But don't despair,I think it will just make us more resourceful and innovative. So keep that sketch pad and pencil handy and who knows what you might come up with.

Even a blind hog will find an acorn once in a while.

[bruce wilcock]

For a young man starting on his own acount,
aim to pay for ,coal ,iron, abrasives,tool shafts, and the like,pro forma,
it cuts down on paper work ,all thats in the shop is yours, then you can get on with the job no worries,

get each job to put a little extra stock on the racks,coal on the pile,
in thin times it is a comfort that the when you have kids to feed,
and money spent,

dont take deposits on jobs ,ever,

dont by machinery unless you have the job for it,

and if you have the job for it ,get the best you can and well up to the work, the next size up or two sizes,

and learn to say ,no, thers nothing worse for a young man pulling is guts out on a dead job,and even worse knowing the job is in the shop just to lose money reck tools,fray tempers, and break the day up ,just say No
that in short was the advice i got on finishing my time and setting up on my own ,and i still work that way ,i buy nothing on acount even yet i ask for a price by fax coppy it put the cheque in with one coppy and keep the other ,paper work done ,and its mine when it turns up
it stood me in good stead for over 40 years
all that i own has come of the end of the anvil
thers been thin times ,but never money worries,,,never had enough to worry about,but enjoying it still

[Bwilloughby]

I have spent so much time thinkin what to do, how to do it. Being that I am BRAND new to this, and want to start my own business. some of the things you mention here will carry well with me, "Just say no" most definetly will need to learn that. seems my ambition and my skil and knowledge get in to a quarrel sometime .
"Don't take deposits on Jobs, ever" I have always wondered what the rule would be on that. now I know.

Thanks so much for this advice, from a very new beginner.

[Alan B]

I do take deposits on special orders or big jobs. I tell my customers up front though that if they decide to back out, I will refund their money when I sell the item they ordered. This prevents a lot of window shoppers from spending my time and money on odd ball projects that may be hard to sell later. This works really well when the order is for something that has to be made to fit or requires something unique that might make it impossible to just set out right at a demo with a for sale sign. The key here is let the customer know exactly where you stand UP FRONT. All the ones that I have done this with have not had a complaint.