DIY as a business? (1 Viewer)

[Tim Brewers]

Ok, I think I might have some different views. First off, I do have a couple friends that own an a/v store, custom HT's, and one that just does the audio portions of custom HT's. So I might have some good outlets right off the bat.

Let's look at it again from a buyers perspective. You walk into a store looking for speakers, or HT gear in general. you are looking at speakers in the $1500 range, and notice the set that is finished in cherry, or oak, or maple, and find out the sound quality is as good if not better than comparible speakers in the same price level, and the nice hand rubbed oil finish is much nicer than the big black boxes. Your wife is more likely to go for these since they match your nice custom entertainment center than the black ones would too so that is a plus.

Also keep in mind I do this (carpenter) for a living already, so I have more air compressors, saws, nail guns, routers, etc than I can even fit in the shop. Next, since this would be a part time extra cash thing right now, I don't need to make $70 an hour.

Ok, just for an easy example, use the adire 281's.

$400 for kit,
$100 for box materials,
$200 for finishing materials
-----
$700 for materials this is probably high considering due to work I can get the wood cheaper plus if you buy in quantity everything is cheaper.

Then sell it for $1000 $300 profit for 6-7 hours labor isn't too bad. I am using 7 hours since after you build a couple time will be much less, plus in one day you could have the boxes cut out for 50 pairs of speakers by cutting all the flats at the same time. Set up time is what kills ya. I realize about the taxes and such like that, but this is just a basic example, plus if it ends up being a popular idea, you could ask more.

Talking about bose, if people are that dumb to spend $1000 for a couple plastic boxes, don't you think there would be some people who would buy some much nicer speakers custom finished to match what ever they want for $1000? I really feel like it could be done, and done for a wage worth the time.

I am not doubting anyone's opinions here, but IMHO I think it could work. And I do really appreciate the help you guys have been giving me. Keep the advice coming.

Brew

 

[AjayM]

Ok, just for an easy example, use the adire 281's.

$400 for kit,
$100 for box materials,
$200 for finishing materials
-----
$700 for materials this is probably high considering due to work I can get the wood cheaper plus if you buy in quantity everything is cheaper.

Then sell it for $1000 $300 profit for 6-7 hours labor isn't too bad. I am using 7 hours since after you build a couple time will be much less, plus in one day you could have the boxes cut out for 50 pairs of speakers by cutting all the flats at the same time. Set up time is what kills ya. I realize about the taxes and such like that, but this is just a basic example, plus if it ends up being a popular idea, you could ask more.

You have $300 of gross profit built into these kit 281's. Ok, now you have to pay for your tools (because sooner or later they are going to wear out and need to be replaced), so you have to deduct something off of that. Now we have to build in the cost of all the stuff that needs to be replaced on your tools, like router bits, saw blades, sand-paper becuase you can only build x amount of speakers before those need to be replaced, for instance if every 10th speaker you build you need to buy a new router bit for $100, you need to add $10 to the price of every speaker, you will use 1 package of sandpaper for a couple of bucks, etc.

So let's go with say $50 to pay other expenses, so you are left with $250 to pay yourself assuming you don't have any other expenses (like a storefront, website, salaries, phone bills, etc). $250 for 7 hours of work (which I think may be a little optomistic, but let's go with it). You've made $35/hr for building them. But first we should build in some more time to sell them and after-sales support, so let's say 4 hours to sell them and set them up brings our hourly total up to 12 hours and we're down to $20/hr. Which certainly isn't a bad salary, assuming no other business expenses (and assuming you can build and sell 5 a week, which will get hard to do). But as you can see, if you have to start paying expenses for operating a full time retail business, that $20/hr is going to fall VERY short.

Having all the wood cut first, then doing all the assembling, then doing all the finishing isn't going to save any meaningful time, you are just moving the time around a bit. If you started doing lots of business you could buy a pallet of MDF and deliver it to a CNC machinist and have everything pre-cut, including driver holes and flush mounting, etc. That will save money by buying in quantity with the wood, and saving you labor as the CNC machine will be able to cut and route the wood faster than you can.

Now I'm not trying to be ultra-negative here, but trying to give you an idea of the realities of running a business. Something like 80% of all startup business's fail in the first year, out of those a good majority of them have good ideas and good products to sell, but they still fail...and most of the time it's because they haven't fully figured out the financial side of it. Before you have a go at it, I'd certainly suggest at least picking up some books on opening/starting a small business, they will give you a very clear idea of what it's going to take to do it all.

Andrew

 

[Phill O]

Andrew brings out some good points. You must know what the cost is to sell your product. They call this "Cost of goods sold". That means that a $50 widget costs you X$ in manufacture, X$ in marketing, X$ in fixed costs, X$ in variable costs. Your profit after all expenses for the $50 widget could be less than 5%.

I agree again with Andrew, in that get some books on small business management. Do not walk in to this endeavor blind and ignorant. That would only cost you allot of money. Do allot of research. Then if you decide to continue with you plans, you will have a better chance of success. Good Luck.

 

[AllanRW]

Well I agree 100% with Brian and Frank.
As i know all about UPS shipping charges from Canada to the UAS or the USA to Canada.
I alway use USPP only.
Using UPS just kills the rate with the broker fees they charge.Enough on the UPS bashing for now.

Next on the finished cabinets another 100% in agreement.
I to have had lots of customers and say the same thing,just lost another sale to the WF yesterday.
She said ya they look beautiful but can you make them in the wall.
Well off to the Audio line of in-walls they went.
So I have a few lines I install for those wanting the in-wall for the WF factor.
But no one wants to pay for cabinets to be finished when all they see is the MDF for $19.00 Sheet.
But once they get threw the hauling home the MDF,Cutting up the MDF,fitting the cabinets together, cutting the holes, not flush as they have no tools for that ,but they will still sound ok right.
Then put some paint on them.And asssemble them.
They are happy they spent $19.00 to finish the cabinet that they just built and look well!!!!!
But I am not knocking the DIY just the way some people look at the cabinets and say, I am not paying that for that when I can build them for well $50.00 at the most.

Try selling CNC cabinets ready for assembly.Still not happening.
I to am one that have almost walked out the door.
After a few years of getting nothing for lots of my time and money it just makes no cents.
Oh ya we love this hobbie.

Have fun and enjoy.

 

[Aaron_Smith]

Some casual observations:

- Of all the people I know, I would say that very few are even remotely educated on what constitutes good audio gear.
- The few I know who have even a basic interest in audio gear tend to be "label snobs". They clearly enjoy telling people about the expensive-name gear they bought more than they enjoy listening to it.
- Of those same people, I know even fewer that have an eye for beautifully constructed furniture and cabinetry.
- Now that I think about it, the only people I know that have an appreciation for both are already trying to build their own gear.

I guess what I'm saying is that your target market may be rather small. Like so much else, the few people out there who will shell out big $$ for audio stuff are probably more interested in buying a brand or a mystique than finding the best value for their dollar. What a shame.

I hope I'm not being too sour on the whole deal... I guess I just wanted to reinforce that to make a business prospect out of this type of endeavor will probably take some significant marketing efforts. It seems that good branding is as important (or more important) than good product.

 

[Hank Frankenberg]

Allen, who is Frank?

Andrew has some insightful business views. I'm in manufacturing in the real world. Manufacturing costs X 4 = average price tag to account for plant and people overhead, admin, sales and distribution costs, etc, etc. Naively taking costs and adding less than 50% adder to come up with a selling price does disservice to yourself and to others who are trying to make money for their hard work. It hurts people like Brian and myself when someone is willing to build cabinets and add on such a low gross margin for profit just because it is a hobby/part-time business. You should consider the costs that Andrew alluded to and more if you're going to be reasonable.
Aaron, your observations about snob and label appeal are also right on. The WAF with it's unbelievable anti-speakers-in-my-decor attitude is the number one problem, followed by the label snobbishness thing that well-heeled people seem to have.
All in all, pretty bleak for speaker builders trying to make money.

 

[Tim Brewers]

First I disagree with the thought that someone should charge more because you have to, or choose to. If I can build it as well for less money, there is absolutely no reason not too. If I decide I am not making enough, either I can quit, or I can charge more. But to say it is disrespectful of me to do so, is simply ludicrous. How do you think most businesses start? Keep prices low, but quality up. Once there is a good customer base, you can charge more.

I am a carpenter and work for someone else. If I decide to go on my own, should I charge the same as everyone else and not get any jobs since no one knows me, or would I charge less to get new customers willing to take the chance to save some money? Then when I am going good, start raising my prices to match the competitors? Of course, that is exactly what I am going to do.

Sorry, but to say I should worry about anyone else besides myself is crazy.

Brew

 

[Brian Bunge]

Tim,

All Hank is saying is to charge accordingly for your time. If you charge super low prices because it's a part-time gig and aren't expecting to make a lot of money doing it then you're possibly shooting yourself in the foot should you decide to go full time. Once you've made a name for yourself, your reputation will be that of a guy that does great work at super low prices. You're going to attract customers wanting super low prices because of your reputation. Now that you've raised your prices, you've just alienated your target market, whether you intended for that you be your target market or not.

Does that make sense?

 

[AllanRW]

Yes I agree.
The little Elf 1.5 I do.
I get them all CNC cut and takes littel time to router sand,paint and the cabinets are ready for assembly.
So these cheap little Elf 1.5 are just that for the cheap end of the market.
This seams to be the only market that is getting any sales at this time.
But there is room in this for everyone and with out shooting each other in the foot!

 

[AllanRW]

Yes I agree.
The little Elf 1.5 I do.
I get them all CNC cut and takes littel time to router sand,paint and the cabinets are ready for assembly.
So these cheap little Elf 1.5 are just that for the cheap end of the market.
This seams to be the only market that is getting any sales at this time.
But there is room in this for everyone and with out shooting each other in the foot!

 

[Hank Frankenberg]

Well, I'm not going to get into it with Mr. Brewers, but I don't think I'm crazy. I'll let him stew in his own agression. I obviously wasn't talking about his and someone else's costs being different. I think we all have about the same costs to build a pair of cabinets. What I'm talking about is including ALL costs, not just bill of materials costs, but overhead, like electricity, blade and bit and power tool amortization costs, sandpaper, brushes, screws, paper towels, disposable gloves, any and all advertising/selling costs, taxes, etc, etc. In other words, treat it like a real manufacturing company has to in order to stay in business, so that if you think you might go into it full time, you can make an objective decision, and your pricing will already be there. Brian just went full time - ask him if he has to count every penny of cost and then add a decent multiplier in order to make a living.
Enough. Bottom line is that I don't think you can make a living at this because of the WAF and the label snobbery. You need to expand into the installation business as Brian is doing.

 

[AjayM]

Then when I am going good, start raising my prices to match the competitors? Of course, that is exactly what I am going to do.

Seriously, you need to do as much research on running a small business as you possibly can. It's something that can be very rewarding for you, or it's something that will basically bankrupt your life, so it pays to know everything you can before you start.

The first thing you should do is sit down and create a business plan, in it put down all the financials listed quartly (at a minimum) for say 2-3 years, and then you can accuratly gauge what it's going to take to get off the ground and all the costs involved.

Andrew

 

[Mark_E_Smith]

Mr Brewers,
I am a businessman in a competitive business, though not speaker building or carpentry. Hank is right about costs, and most of the others are correct about business in general, but I think there is a part time market for a COMBINATION of custom speaker building and other HT CUSTOM work. But there is a phenomenon of low price = low quality that will cause you to loose the very customers you will need. For example how many of the builders have lost sales due to the WAF, I asked my wife, who has been VERY tolerant of my equipment, what is wrong with these nice speakers with there hand rubbed walnut cabinets, she said they don't go with anything but contemporary furniture! Face it speakers are a guy thing for the most part. Guys like nice wood and great sound, women worry how it will look with their furniture. That said what about some subs with a look of the different styles of decor? If they sound good the guys will like them and if they look good the wives will tolerate them. Then you can move into equipment cabinets that hide "the ugly black boxes". Yes there is a market, its just not the market that can be sold at the B&M stores.