How many customers does one need.

[genek]

I have a simple formula to determine how many customer one needs too have to survive in the arts and crafts business.
Here are the questions to answer for your self. Then simply do the math

How much money do I want to make example $5,000.00 per month
What would a reasonable repeat order be per month per customer. (I use $50.00)

$5,000.00 divided by $50.00 = 100 customers x 2

You would need 200 customers. That amount of customers is not hard to find and to maintain. It just takes time developing your sales skills and time finding the needed customers. Some customers will not order every month, however; other customers will order way more than the minimum I use as my base. Why did I double the customers: this is to allow for cost of material and machine time.

[genek]

I hit the wrong button here is a example of what I mean some customers will order over minimum.

[joe]

Good formula.

I'd try for one.

[mark_stief]

Two really good ones that's all I've got

[genek]

[QUOTE=mark_stief;159307]Two really good ones that's all I've got[/QUOTE
Go after more really good ones the more you have the better. But don't stop looking for customers./

[gerryv]

I guess it depends on how you define your market and just as importantly, how your market defines value in their own eyes.

You're obviously very good at what you do in your market niche and your clients obviously like what you're doing so hats off to you. I'm particularly impressed that you're able to find a way to make a profit on items selling for a bit under $4 when averaged, which appears to be the case with the order you posted. Wow. Volume is obviously critical, just like with big companies like GM and Dell and you're doing it.

That said, one shoe doesn't fit all and I'd be the first to admit I'd not be able to keep up that pace if it was the only way to succeed as a maker. Also I'd have to admit that part of my failure would be because I'd not want to be doing that. Not a thing wrong with it; it's just not where my personal inspiration lies.

So let's look at a very different example where there are success stories as well. This person is a high end custom furniture designer/maker who has increased their productivity by 25-30% by embracing Shopbots capabilities to make the necessary custom templates and jigs for otherwise pretty much hand built, one-off pieces that sell for $5k to $8k apiece and more based on their being exclusive. Then why not go that small additional step and embrace the Shopbots ability to boost his production to make perhaps even five times as many? Wow for these artisans too.

In a nutshell, these higher numbers would equate to the loss of exclusivity and, along with it, the associated bragging rights that is a reality for a good number (but not all) of the deep-pocketed clients who buy these items. Doing so would can quickly destroy this makers reputation and business in his chosen market niche. One reason would be that the now non-exclusive product's value would drop dramatically, very likely more than negating the 5X volume gain benefits. The doors would now be opened wide to the knock-off makers with "big iron" as well. And, this maker would no longer be doing what he enjoys.

I think each of these markets is valid in its own right but I further suspect that the vast majority of us fall at many points in between. I'm thinking of some of the folks on here who are as near as one can get to being the perfect blend of these extremes; the true artists who produce highly customized cabinetry while also maximizing their use of the automation opportunities their Shopbots provide. I'm thinking of guys like Brady Watson, David Buchsbaum, Andrew Coholic and others who have found a way to build in the costs associated with the many long "design and R&D hours" needed to give their customers what they define as good value even though, technically speaking, many of those hours went into developing and fine tuning the process and the product even though there might only ever be one, a few or a few dozen ever made in some of those instances. Wow for them as well. Yep, Wow for these can-do folks as well.

I think I'm envious (in a good way) of you and them equally. I dream of being the second guy but have a long way to go :-)

[kevin]

Gerry its a good point
To answer a few years ago it was getting tough doing one of a kind I looked at selling only cabinet assembled aI had a price at 30 inc .4 draws etc .
I even made a display got paid for the display

I was called by the owner the following week he ask if could go lower I didn't sleep well that night I said pi.. off .But I realizes that when you do knock off there always someone willing to do it cheaper .How low will you go to call you self a boss.
Trying to be unique is a long road there are no short cut if you make it there is very little competition because most people want the safe way out
This is the kind of company I envy doing it on there own terms
http://www.shopenkebolldesigns.com/showcase.html

[Ajcoholic]

If you read Gene's post, he did qualify the this is for "the arts and crafts business"...

Obviously if you are doing $30,000 kitchens, or $10,000 dining room sets - you dont follow the same "formula".

For me, I have traditionally been working months behind - up to 8 months for larger jobs. But I never stop trying to drum up new business... or thinking of new opportunities, ideas, etc all based on what I do (mainly custom residential cabinetry and furniture)

If you want to succeed in business, you are always better to have too much work, than not enough :)

[gerryv]

A valid point Andrew but he started an interesting topic that kind of opens itself up to expansion in a good way - also obvious?

[genek]

Open it up as much as you want or can. This post is for helping others understand how to set goals, and make a profit with their shop bot. My formula will not work for all. but it gets all to thinking on how they can work out a formula to meet their needs. You can take the income you want and divide it by the price of what you make and that will tell you how many customers you will need each year, but double that so that you will reach or pass your needs.

[Ajcoholic]

The problem of increasing your total billed out when you are already turning away work is one of frustration.

I lose really good jobs because my backlog is long, and I can't work any more hours. Hiring a good, experienced woodworker who can work unsupervised is the answer but try and find one of those around here...

There are times when having too much work is as stressful and problematic as having not enough, almost.

[joe]

I agree with Andrew.

In my after-life, because I've not been too kind this time around, I may be assigned to a CNC doing production work with a short, demanding, deadlines. It's going to be high intensity work in hot shop with dull bits. A router that can't cut a smooth round edge no matter how slow it's traveling. O, it's gotta a old Porter Cable router that wails and howells and loose collets too.

But for now I have a nice easy schedule by sending all the production work elsewhere.

It's difficult to be creative under pressure!

Joe

[Bob Eustace]

Help is at hand and on the way! Little Joseph gets closer everyday to emulating his dad. Maybe should try for more little guys perhaps??

[myxpykalix]

Andrew,
You've already got a good start on additional help in the shop with the little one, just keep it up:eek::D

[Ajcoholic]

Andrew,
You've already got a good start on additional help in the shop with the little one, just keep it up:eek::D

Well, he's almost 3... my father put me to work - 40 hours a week during the "summer holidays" lol - at age 13, the summer after I graduated from grade 8. I remember doing a LOT of sanding... for $3/hr. I don't know if I could do that to my own son - you know they have laws against that kind of thing now!

Besides, that's still 10 years away!

[kevin]

Andrew I enjoyed your posts .I had my son work for me for 5 years every summer starting in Feb .Best time also most frustrating .He's in his last year of business administration now they go on work terms
I don't think he'll be returning it did help with business law which was a real eye opener for me
What he find going on work terms a lot of the kids in his class have no work ethic a sense of entitlement not because there young they where handed everything.
He's under no illusion that its easy to start and keep a business going. In Montreal I was getting 20,000 plus a kitchen .Here its another story
He's 18 in this photo
http://www.kdunphy.com/106_1159.JPG

[David Iannone]

I think I will look through quick books and count my repeat customers and use a formula like Eugene laid out. I am a sign shop. ( small! just me right now) I used to have 8 employees including myself, but that was many years ago, and I must have lost sight on not only keeping up with the work, but also finding new customers, equally important. I now do 70% of my business online! make it, ship it! credit card paid before ship. My profit per item is lower than retail, but the volume makes it work FOR ME. This type of work is not for everyone I know. But I don't mind repetitive jobs, and when I get real busy my wife helps, or friends with pitch in too if needed. Now, if someone comes to my storefront and wants the same sign I sell online, we'll, it's full price. If they order it online it's cheaper. As silly as it sounds it's about simplicity to me. When the online sign is sold there is no customer interaction, which is less time. You would be surprised at how much time a customer can take up buying a $75 dollar double sided real estate sign with frame. Consultation, layout, approval, payment, invoice....online, this is all done for me. I am thinking about putting a computer in my show room with my site up and just tell them to look though our online catalog first.......:eek:

Now that being said I do have a box truck full vehicle wrap, and a partial box truck wrap sold, deposit in hand and in proofing process on one, and getting ready to install the other. So, the wholesale work for me bridges the gap of the times when I get slow and would otherwise have nothing to work on. In the busy time......we'll you can never have to much work can you?

I bought the design package from Eugene. It is awesome. We'll worth the money if you enjoy doing wholesale work. Thanks Eugene for the inspiration, one of these days I will make time to give you a call.

That's what works for me anyway.
Thanks,
Dave

[myxpykalix]

I remember doing a LOT of sanding... for $3/hr. I don't know if I could do that to my own son - you know they have laws against that kind of thing now!

Andrew....you must have realized by now that it wasn't all about just sanding, he was teaching you a work ethic, a skill, and an appreciation for working with your hands and mind to make beautiful things.

I put my kids to work early in my stores, that taught them social skills dealing with people, computer skills, and how to manage money. My son runs the largest new car dealership in the state making over 100k/yr.

I think you would be doing the boy a disservice if you didn't put him to work at a early age. Besides look how you turned out.....wait...NEVERMIND!:rolleyes::eek: