Business Expenses

[baileyuph]

In general, the cost of doing my business has increased, particularly over the last few months.  Perhaps is the best guess on my mind is approximately 20%.

Fuel, utilities, taxes, and materials have increased in cost.  A good look of this happens almost daily, about the only way to overcome this is to increase output in my operation.  We are doing six days now.  A primary issue is everything we touch is related to oil and we know what the cost of that had been doing. 

I am sure this is prevalent, anyone else doing anything differently to maintain profits? 

As stated, need to increase output, but need some ideas on this.  We are in a challenging business, not alone howeve.

Doyle

[Mojo]

I am watching my waste. I watch everything now from the lights to wasting material. I am especially careful when patterning and cutting to minimize waste.

Other then that there is little else I can do but raise my prices and educate my customers on why my prices have gone up. And you can bet your bippy I will let them know that oil prices are the biggest reason many of us are getting hammered with higher costs.

I just explain that upholsterers are not Fortune 500 companies and we are bare bones outfits. They understand if you take the time to educate them on why your costs  are up and why you cannot afford to absorb losses.

Chris

[SteveMoke]

Same here, low energy light bulbs in the workshop make a difference, keeping the waste low as well and with diesel prices hitting the £1.42 a litre mark (Thats $11.50c a gallon folks  :'() I keep my mileage to a minimum even though I get 50+miles to the gallon.

[Mojo]

That is something I forgot to mention that Steve brought up.

I am trying to keep my driving to a minimum since I own a gas guzzling pickup. :)

Chris

[baileyuph]

Some good thoughts guys, reduce your overhead and waste to keep more.
That has been the game plan so far.  What I really want to do is look into ways of doing that plus increasing the net, which means increasing through put with essentially the same effort.
 
Any other ideas about doing this?

Doylel

[Rich]

Doyle, is that 20% of the expenses you mentioned that went up or 20% of ALL expenses? I doubt that it's all expenses, but no doubt about it, irregardless of what Ben Bernanke would like us to believe, inflation has kicked in.
My ways of dealing with it?
For one, believe it or not, I stopped answering the phone!
Here's my thinking, have you ever called a business and gotten a message something like this "we're busy taking care of customers at this time, so please leave a message and someone will get back to you later"? Got me to thinking-everytime I'm focusing in on a customer's job and the phone rings, I come back and have to get my thoughts back on what I was doing again. By setting aside certain times of the day to return calls, I find I can concentrate better and get the job done in less time overall. It's especially great for auto-solicitors who hang up as soon as the machine kicks on!

Another is to group orders together whenever possible to save on shipping costs.

And of course there's always the strategy of passing costs along onto the customer whenever that's possible. After all, the reason we're paying higher prices is because another business did just that to us!
Rich

[sofadoc]

I've been able to cut cost on one of a shop's greatest expenses......FOAM!!
How? By doing something that I was never in a financial position to do in my younger days. I buy in bulk from a delivery truck. No shipping fees. And much better prices on the foam.
Fabric is the ONLY thing that I will pay shipping for. All supply items I buy off a delivery truck (free delivery).
I've also been able to buy out the remaining supply inventory from a few shops that have closed in the last couple of years.
I'm way over-stocked in many supply items.
I know it's hard to let go of money for stuff that you don't need right away, but when opportunity knocks.....
Beats the heck outta the way my mother, and grandmother used to do it.
When they needed a roll of zipper, they picked up the phone and ordered ONE roll (shipped). 10 minutes later, they were back on the phone ordering something else. If they were alive today, they would easily spend $500 a month just for supply shipping.

[Rich]

've been able to cut cost on one of a shop's greatest expenses......FOAM!!
How? By doing something that I was never in a financial position to do in my younger days. I buy in bulk from a delivery truck. No shipping fees. And much better prices on the foam.

You must also have room to store it. How much foam do you have to buy that way?
Rich

[baileyuph]

Rich, I was primarily focusing on supplies needed to do the work.  However, there are other associated expenses that have risen related to the operation of the business.  For example, the local taxing body just layed a fee (tax) for the water run off on my parking lot for well over a hundred bucks a year.  

While we are seemingly doing things to cut waste, save time, and making  adjustments by passing cost on to the customer, there is another dimension to all this that can't be over looked.  That is the net must be adjusted for inflation.  What I mean by this if I typically took a buck home and then am hit with a supply cost that must be passed, as we are saying here, that isn't the end of the overall issue of making a living.  More specifically we have to increase our net because as we go to the grocery store and fill the tank, things there are costing more.  Putting this in perspective, behooves us to make more money out of the business.  That requires more thought than recovering cost on a job.  Hope this is clear enough.

Then, following through we have to look at things like you guys are saying, how we buy and making more efficient use of our time and if the market will stand it, even raise our prices more than the business cost.

Yes, phone time is expensive.  It even seems that number of solicitors, tire kickers, and other types of calls have gotten worse.  

One practice that has helped some in my business is to gang common task together.  

Inflation has and continues to be a problem.  I bought a machine sewing light bulb this week for over seven bucks.  Not long ago that was about half.

Sofa, you mentioned foam, are you able to get higher quality furniture foam at all?  Around here, in addition to foam cost increasing, there isn't as much higher quality foam even available.  I suppose the market is driving that.

Doyle

[sofadoc]

Rich: Yes I do have room to store it. I have a huge building downtown. One might argue that my expense for the extra square footage offsets my savings on being able to buy in bulk. ;)
Doyle: I usually stock foam that is around 2.0 density/ 34lbs. compression. I buy a dozen 6" sheets at a time. I use the "U-Cut" foam slicer to slice any thickness that I need. This way, I don't have to stock several different thicknesses.
In addition to free delivery, the sheets are 108" long for the same price as most places's 82".
As for higher quality foam, I do have to order some for high-end jobs. I really don't get any special price on it, though.

[JuneC]

Even though it's only me in the shop, I've recently given this some thought and effort.  Particularly the grouping of operations.  Some operations - like pulling staples - I can only group to a certain point due to fatigue.  But once I start to slow down I'll start patterning and cutting.  Then when all is cut, sit down to sew.  The exception to this is large covers.  I'll work on one side of a large piece typically till that side is finished simply because the time used "changing gears" is less than the time it takes to rearrange the massive pile of fabric and figure out where I'm at. 

I also have cut waste.  I just finished a cover today that used only left-overs for the hem around the edges.  I never had to man-handle a 60 pound roll of Sunbrella onto the table to cut new strips.  For the same boat, I used left-over strips to bind the edges of the enclosure.  I'm glueing foam where before I'd just cut a new, whole piece.  Depending on where it'll be used, if I thing the seam could be felt, I'll cover the cushions with 1/2 or 1" of foam. 

Truly, I think if I were to save significant production time, I'd have to get better equipment.  I spend FAR too much time fooling with temperamental idiosyncrasies of my various sewing machines.  Knee lifters that don't work so well, bobbin winders that don't work so well, rattling oil drip pans that make me crazy, other little things that all add up. 

Like Rich, I've quit answering the phone unless I know who's calling and I want to take it.  I return calls at lunch and at the end of the day.  Some people move on to other suppliers, but I have all the work I can handle anyway.  If I were sitting idle, I'd take the calls immediately, of course.

June

[byhammerandhand]

This is a well-known "time management" principle.  Let the call roll to voice mail and group return calls when convenient to you.

Aside from the actual time lost to the interruptions, there is additional recovery time which negatively impacts productivity. Once interrupted, it takes 20-25 minutes to regain the  level of focus we had attained prior to the disruption.  In addition, close to 50% of the time, we never even get back to our original task. So a 5 minute interruption really costs you 30 minutes of time off task....and a strong possibility you'll never get it done at all. A landmark study by Basex titled "The Cost of Not Paying Attention," calculated that workplace interruptions cost the U.S. economy $588 billion a year. If the matter can wait until a more appropriate time, let it.

When I get a solicitation phone call, I note the number and add it to my phone contacts as "Spam ###"   When I see that number next time, I ignore it.

Yes, phone time is expensive.  It even seems that number of solicitors, tire kickers, and other types of calls have gotten worse.  

[baileyuph]

On grouping  common task, I do try to designate a machine to that function also, if one is required.   That is helping a great deal.

If an item is in work and likely will likely come up again, I started making templates.  That helps but I need more repeat work. 

Making templates seems to be making me more money than about anything else I do, that and grouping tasks. 

Here is a good one, I used to park my vehicles at the back so customers wouldn't know I was there, but an old fence blew down.  That blew my cover.  Interruptions can be big time killers.

There was a not to long ago post from a person who worked in a furniture factory and it was amazing what a group of few workers could get out in a day.  I believe he said they specialized in some part of the process and gained tremendous speed from knowing what to do next and how.

This stuff is important to staying on tract toward turning a better profit.

Maybe someone else will chime in on making/using templates and such.


And too,  keith those phone calls, I average at least a call per day from someone wanting to save me money on my phone bill or trying to sell something like insurance.  Usually they start by asking for the owner.  LOL.

Repetitive work and a lot of it will get you there, If you can stand up to it. ;)

Doyle

[Rich]

While we are seemingly doing things to cut waste, save time, and making  adjustments by passing cost on to the customer, there is another dimension to all this that can't be over looked.  That is the net must be adjusted for inflation.  What I mean by this if I typically took a buck home and then am hit with a supply cost that must be passed, as we are saying here, that isn't the end of the overall issue of making a living.  More specifically we have to increase our net because as we go to the grocery store and fill the tank, things there are costing more.  Putting this in perspective, behooves us to make more money out of the business.  That requires more thought than recovering cost on a job.  Hope this is clear enough.

Oh, so you want a COLA? I think that as small business owners (I'll speak for myself) when the business is run more efficiently and/or customers are paying more, there is more left over after expenses to take home. Maybe many of you are like me and are single person shops (mu wife works the office end P/T). This is probably the most inefficient arrangement since their are no opportunities to make a profit from someone else's labor. Add to that the fact that running around doing so many different tasks takes a lot of discipline to make sure we don't spend too much time doing things that really don't produce much profit (as Hammerandhand said).
Rich

[Rich]

Templates and patterns. I try to focus my work on repeatble work. OK, it leads to boredom and the custom one-off jobs are the most rewarding to the creative part of us, but it seems like such a waste to go through the trouble of taking measurements and developing a well fitting cover for something we will never see again. Developing usable patterns takes time to do, but when you do get that same (or similar job) over and over it does pay off.
Rich