Woodworker's Journal 1983-7-2, страница 15

The answer, 522, is arrived at through simple arithmetic. At $100 per chair, minus $21.45 unit cost (materials), $78.55 per chair remains to be applied against fixed expense. If fixed expense is $40,930, then that amount divided be $78.55 yields the quantity required, 521.0694, or 522 whole step-chairs.

Bill had a ready market for only 24 to 36 step-chairs, only 5 to 7% of the quantity he needed to make and sell in order to meet his goal. He contemplated step-chairs. A good item, to be sure, but not the total answer. The mere thought of making 522 of them repelled him. On the other hand, he did know how to make them, and, if he made them in batches of 20 instead of four he could make them with less labor time. If he could find three more outlets for step-chairs, he reasoned, if he could sell 100 of them at a yield of $78.55 per chair, he'd have gross sales of $7,855 or about 19% of his goal for the year.

A pretty good start, he told himself, about two months worth of what he had to come up with to make his business produce. Bill noted from his experience with step-chairs that that item in particular produced $78.55 over and above unit costs for every $100 of sales. Using that as a benchmark, he began to search back issues of The Woodworker's Journal and every plans book he could get his hands on for other workable and salable products. He was determined to develop a product line that would return at least as good a contribution to fixed expense as step-chairs do.

Working from the plans for projects that appealed to him he quickly figured materials costs and, from his experience in the shop, was able to make rough estimates of the labor that would be required. Some ideas were quickly discarded as simply too complex to make in any quantity. Some were discarded as too simple to make profitably.

Others, which looked good on paper, are discussed with the proprietors of his new-found outlets for step-chairs. When he gets an enthusiastic response. Bill makes a sample, keeping careful records of his time and making notes about how production can be made more efficient. From this he can arrive at a fairly accurate assessment of anticipated materials costs and time. And if all that goes well, Bill takes his sample around, quotes a price and takes orders.

In this way Bill is developing a product mix and a business plan based on what the market will accept and on what contribution the item will make to his personal and business goals. Both of those are important considerations. If the item won't sell it's ridiculous to make it. And even if it does sell, if it doesn't make an adequate contribution to fixed expense it's also ridiculous to make it. Gross income means nothing. All that counts is what's left...what is available to help crack the fixed-expense nut.

When Bill first added up the dollars that he felt his wood-shop business had to produce he was somewhat staggered at the total. Translating those dollars into units of step-chairs, 522 of them, made him shudder. He was tempted to just start making things, anything that appealed to him, and see if he could sell it.

But he stopped short when a tour of retail furniture stores showed him that a number of things he was thinking of making were not that much better than similar items that were mass produced. Furthermore, he was shocked at how inexpensive some of those items were. He could never come close to the price. Selection of product, he decided, was crucial to success. So he started out to find out what was marketable and then weighed what seemed to be marketable against how it fit into his objectives.

As a result you're likely to find in his shop only those things that are a good fit - two ways. And as a result, we'd be willing to bet, Bill's dream of making a living from what he loves to do, work with wood, will be a fun dream and not a nightmare.

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