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What did you think of the results of the workroom survey in the last three issues of Draperies & Window Coverings? I hope you found some worthy information in the results, but mostly I hope you were inspired by the fact that some people are making outstanding incomes in the workroom industry.
As you could tell from reading my comments in the last three articles, I was deeply saddened that 67 percent of the total survey respondents were not happy with their incomes. What is worse, 63 percent of those in business between five and 46 years were not happy with their incomes! The fact is, I am just as confused as I am concerned.
Entrepreneurs own businesses to make money-more money than they could make working for someone else. At least that is, supposedly, the premise for owning your own business. As a business owner, you and only you have the power to determine your income and to control the hours you work.
NUMBERS ARE IMPORTANT!
Unfortunately, readers could not see the actual numbers as I did while compiling the survey results. Even the numbers I had were not quite sufficient to completely analyze any one business, but they did give me enough material to pass on to you some actual cases to consider. The submissions were anonymous so I do not have names to go with the cases.
I've taken some random examples, and I want to pass along the analysis I did for each to help you see how you can work with your numbers. It is my hope that you will be inspired to analyze your own business and discover ways to improve your income.
Workrooms that are strictly wholesale offer the purest set of numbers to work with because we know that in the majority of cases we are dealing only with labor. Workrooms that offer a retail business are impossible to evaluate very well because I have no idea what their profit margins are on the merchandise they sell to consumers and what their margins are on labor. They should be different for each. In fact, margins should be much higher for labor alone than for merchandise that is bought wholesale and marked up to sell to the consumer.
READING THE NUMBERS
Because we do not know the location of these businesses (the area's population and whether it is metropolitan or rural are important), we cannot determine if their incomes are appropriate to the local cost of living. However, we all are familiar with minimum wage and that you can make more than the minimum working at a fast food restaurant.
Because the incomes on the survey were reported as a range, we cannot get exact figures for income per hour. Therefore, the hourly wage also will be reported as a range. We also will assume that everyone is working 47 weeks per year. This allows for vacations, holidays and sick days. These cases were taken from wholesale-only workrooms.
My only comment on Case 1 is that this workroom owner's business formula seems to be working quite well.
My first thought on Case 2 was how could someone punish herself so much for so little! The thing that strikes me most is her product mix. Without the proper equipment for making draperies (beyond industrial sewing machines), she probably is not making a very good profit on these treatments. In most areas of the country, drapery fabrication offers only minimal profit that cannot support a business. Generally, top treatments can command a very high profit margin. If she were to reverse the percentages of her business in those two areas and do 75 percent top treatments, I think she would see a nice change in her income, although probably not what she needs and deserves.
This workroom owner probably is doing so many draperies because she is not charging a high enough price. She obviously is not charging nearly enough in any area of her business because she isn't coming close to making even minimum wage. Ten years of experience certainly deserves much more than a fast-food counter clerk! She definitely needs to raise prices immediately. I suggest she acquire additional education by attending trade shows and seminars at least once a year and do lots of networking while there.
If at all possible, she should try to develop a local chapter of the Window Coverings Association of America (WCAA) with other workrooms, decorators and designers. The networking and programs offered there will give her greater confidence and value. She also should consider investing in a computer to get on the Internet where there is a wealth of information to boost her skills, knowledge and quality. She even could go to the library and use its computer until she can afford to buy one. Once she increases her value, she has good reason and good qualifications to market to higher-end clients where she can ask substantially higher prices.
Remember, if you are not losing 15 to 20 percent of your business due to price, then your prices are not high enough!
At the present time Case 2 is not beginning to make enough money to support herself, which not only is hurting her but everybody else in her area and in the industry. If she cannot make the necessary changes to increase her income, then she should consider working for someone else. At least she would be paid minimum wage or better.
The workroom owner in Case 3 is investing wisely in her business with equipment and education. It is very rare for new businesses to make a satisfactory personal income in the first three to four years. The fact that she has two additional employees tells me she is moving too fast too soon. If she has that much business, she should have raised her prices to reduce her customers so she could effectively handle her business by herself for at least a couple years.
Slipcovers are a very labor-intensive profession and, in my experience, it takes quite a bit of hands-on work to achieve quality and time-saving techniques. Because each item takes so much time to complete, the prices must be profitable. In her case, she has only installation to make up any losses. It is essential that she be able to train employees in quality and efficiency so she can get the most from them for her investment in their employment.
Good quality slipcoverers are even fewer in numbers than window treatment fabricators and therefore even more precious and valuable. It would be my suggestion to raise her prices to reduce the workload and concentrate on perfecting her skills to better train herself and her employees.
FOOD FOR THOUGHT
I wish I could give you more actual cases with comments like these, but room does not permit an in-depth study. However, I want to give you a little additional information for you to think about. All three of the following cases are making between $250,000 and $500,000 gross sales per year and the number of employees includes the owner.
It is a good exercise, and a fun one, to examine such numbers and speculate, but we have two big questions that keep us from drawing any concrete conclusions. We don't know the locations of these businesses and we don't know which end of the very broad income range they are at.
I attempted to find some correlation among the categories to be able to say that if you did certain things, you were likely to make more money or be happy with your income. Unfortunately, I could not find any such verification. I did learn that 34 percent of our respondents could not give their net profit margin, which means they are definitely not reading their numbers and learning about their businesses.
Therefore, I can only speculate that it depends on your business education and your level of self-confidence to be able to charge what you think you are worth. I do know that the more education you have and the more personal contact you have in the industry, the greater will be your self-confidence and value. I also know that there are too many workroom people not making enough money for what they are worth.
Your numbers offer you a crystal ball to see where you've been and where you are right now. They also tell you where your problems are, which is where you begin to make adjustments so you can improve your future. Now, what changes are you going to make?
If you have any questions or comments about this article, previous articles or any topic of interest to workrooms, please contact me at:
Workroom Operations
Draperies & Window Coverings
666 Dundee Rd., Ste. 807
Northbrook, IL 60062-2769
Fax: (847) 498-0231
E-mail: kstein@workroomconcepts.com
Web site: www.workroomconcepts.com
Kitty Stein, WCAA, is a 20-year veteran of the drapery workroom field, having owned and operated her own business for 18 years and having taught classes on window treatment construction. Until 1990, Stein and a partner owned a workroom with nine employees. She since has opened her own smaller workroom, Workroom Concepts, that has just one employee. She also does workroom consulting, seminar speaking and is the author of Order in the Workroom available through Draperies & Window Coverings.
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