Boss Life (7 page)

Second: the design. Traditionally, a person moving and assembling furniture is presumed to have specialized tools and some skills. Our clients have neither. Detailed instructions won't help. Our tables are all different from one another, so a universal instruction book won't work. We'd need a new one with every project. I tried this a few times, and it took huge amounts of time. The clients ended up calling me for help anyway. I decided to rethink our construction details with ease of assembly as a primary goal. All tables would henceforth consist of components small enough that one person could pick them up and move them, but big enough so that there weren't too many pieces. The parts would self-align so that they could go together only in the correct position. Hand knobs would join all the pieces together: no tools required. Even an untrained person could see at a glance exactly what to do. We adapted this system to everything that we built. As it turned out, this also speeded up construction considerably. In order to build a table, it needs to be put together and taken apart multiple times. So thinking about assembly from an ignorant client's point of view had benefits for our sophisticated workers as well.

Third: the packaging. This must do more than just protect the goods. It has to communicate to everyone on the path from our shop to client. We want to send a different message at different points in the journey. The packaging has to intimidate the warehouse worker, convert the installer from neutral actor to enthusiastic champion of our product, and delight the customer. After a lot of experimentation, we have settled on a two-layer strategy: wrap every part, crate the whole order. Every piece of the table gets wrapped in foam, then in cardboard, and is clearly labeled to show exactly what it is and how to open it. Then all the pieces are bundled into a custom-made crate with wood sides but no top, so that there is no temptation to stack another load on top of it. To the truckers, the shipment looks heavy, strong, and expensive—something that is worthy of extra care. When installers break down the crate, they find nicely packaged, clearly labeled, and easy-to-handle pieces that are a breeze to bring into the client's premises. We've heard numerous times from clients that the installers told them that we made the best table they had ever worked with. Good packaging converts the installers into our ambassadors and puts the client in the right frame of mind.

Designing tables for easy assembly ended up saving me money, but crating and wrapping is expensive. My shipping manager, Bob Foote, needs a full-time helper to keep up with shop output. It's interesting to break my whole crew down and see what proportion of the workforce works in the different parts of the operation: out of fourteen workers, four are doing design and sales, six are on the shop floor building the furniture, two are in the finish room applying coatings, and two are handling logistics. In other words, the people doing the woodworking, which is what most people think is our primary activity, are outnumbered by people adding value at other points in the supply chain.

It takes two days to package all the components of the Company S table and to build custom crates for the oversize top sections. After it ships, I keep my fingers crossed, and the crate arrives safely at the installers, and a day later we hear from them that the install has gone well.

I send the final invoice, for $7,551, to my contact at Company S, along with care instructions. I don't hear anything back, which is slightly unsettling but not unusual. I presume they're busy with their board meeting. They have ten days to settle up. They've made all the previous payments without delay, so I turn my attention to other matters.

Emma Watson has been talking to the government. The U.S. Department of Commerce is eager to help us. She's also found that Pennsylvania has its own export assistance program and maintains trade missions in a large number of foreign cities. Both of them contract with a third outfit, the World Trade Center, to provide manpower. Emma makes an appointment with the WTC to come see us. Two guys show and give us three cards each.

Like everyone who visits us, it takes them a little while to wrap their heads around the concept of a cabinetmaking shop that makes nothing but conference tables. These export guys have been in lots of factories, and ours does not compare to bigger entities. In some areas we are very advanced—our robotic machines and our marketing on the Internet—but in lots of others, we look like what we are: small and undercapitalized. The government guys don't seem to care about any of that. Their job is to promote exports, and to do that they need American companies to work with. They wax ecstatic about our inevitable triumph on foreign shores, aided by their services. While they are gassing on, I'm looking at them and wondering what their day consists of. How hard do they work? Do they ever wonder if they won't get paid? (I suspect not, since the guys who print the money are issuing their checks.) Would I ever want a job like theirs, where I put on a suit every morning, do something entirely predictable, and then go home? Where I knew exactly how much money I would make today, tomorrow, and in the future? Would I be happier if my life had more security?

After the trade guys depart, we contemplate the pile of beautifully printed, expensive brochures that they left. Our first decision is whether to sign up with the federal program, run by the Commerce Department, or the state program, run by Pennsylvania. The local contacts are the same guys we just met with in either case, but the staff in our target countries is not. Emma has no doubt that the feds are the way to go. Her argument: every person on Earth will take a call from the U.S. ambassador, while nobody has heard of the Pennsylvania trade delegate. Go with the people who can open doors. I agree. That decision leads us to the various levels of services offered by the Commerce Department. We settle on something called the Gold Key Matching Service. (Who thought of that name?) For a couple hundred dollars, a Commerce Department office located in our target cities will call around to local merchants to see whether any of them are interested in meeting with us. The process starts with a questionnaire, in which we describe what we make and what kind of foreign business we are after, and continues with a phone interview with the trade rep. I'm still only half committed to the whole idea of exporting, but Emma is enthusiastic, so I agree to sign up for the Gold Key Matching Service. I have to spend money at this point—three hundred dollars—but I feel like that's not too much to see what happens next.

On March 9, our new folding tables are ready to ship. I take a number of photographs of one of them, both raised and folded, to add to our Web site. I can't get a good picture of it under our glaring lights, so I generate a nicer image with a rendering program. I only post renderings of pieces we've actually built and always include some shots of the table on our shop floor, even though those are often terrible photos. I want to prove that we actually do the work we show.

Photos are easy; pricing is hard. What should I charge for this new product? What should I charge for any product? It is a surprisingly difficult question. There are two ways to think about this: first, what is the customary market price? and second, what does it cost us to make it? The first approach doesn't work for us. We have almost no information on what our competitors are charging because they don't publish price lists. We have some idea of what factory-made tables cost, but that doesn't help us price a custom project. So we work from internal cost projections.

Our pricing spreadsheets predict the costs of each project, but when I check the actual build data, I find that the forecast was often wrong. Errors and differing skill levels of the workers on each project make for wide ranges in build hours, even for very similar tables. And the actual material costs are murky, too. The spreadsheet predicts how much wood we need to buy, but the area calculations are very imprecise, and we haven't updated our cost data for the different woods since 2007—I haven't had time to track down hundreds of (volatile) prices. I'm assuming that the recession has brought demand and prices for wood down. Given what happens on the shop floor, inaccurate cost data may not matter. Wood comes in random sizes, with some defects, so yield is inconsistent. Sometimes we can use scrap from earlier work in a subsequent project, sometimes not. Errors and rework require duplicate material orders and extra time. In order to give ourselves a margin of safety, we mark up the theoretical material costs by 40 percent to cover uncertainty. Then we add that number to our labor costs, calculated at $78 per hour, no matter which worker, with associated pay rate, is working on the project. The sum of those numbers is, theoretically, our minimum profitable cost. We then mark up that number by 7.5 percent as an additional safety margin and add 2 percent for the sales commission. That's our theoretical price for any of our products.

I have told Nick and Dan to get at least the calculated price out of the customer, but sometimes we need to cut a deal to make a sale. We might also change the price if the spreadsheet kicks out a number, say $10,032, or $40,151, which is just above an obvious pricing cut-off point. I'll gladly give up a couple of dollars to bring a number from five digits to four, or from one decile to its lower neighbor. I've read enough about retail pricing to believe that people really do respond to slightly lower numbers in those situations.

In aggregate, this system works. Our material costs are lower than what we charge for them, and we use about 5 percent fewer shop hours than the spreadsheet predicts. This system has produced positive cash flow and profit in the past two years. But in a particular case, I am wary of the time-cost predictions. They are wrong as often as right, sometimes in our favor and sometimes not.

Which brings me back to my modular table. I'm putting it up on our Web site and I want to put a number on its page. I have the build hours from the Old Style job. We had predicted that it would take sixty-nine hours to build four tables, and it had come in at fifty hours—28 percent under. The material costs were predicted to be $2,234, but we had ordered only $841 worth for that job. (But we might have used up materials we had on hand, so that $841 is not our actual cost.) Based on that data, I offer a lower price for future iterations than we charged to Old Style. They paid $9,210 for their set of four walnut tables, two of which had data ports. I rerun our pricing spreadsheet using the actual build times, and find that the new number is $1,594. Per table in a set of four, that is, and taking advantage of the efficiencies inherent in producing multiples. I expect that we will get orders for more than one table, and that the actual order size will be more than five thousand dollars.

I set up the product page so that you see a picture of the four tables arranged in a U configuration, with pricing per table of $1,594. If you read the body text, it's clear that I am talking about the per-table price in what will be a multiple-table order. I like the idea of featuring a low number, as I figure it will grab the shopper's attention. We'll sort out the particulars when a potential buyer calls us.

We now have 182 tables on the site, sorted by shape, features, and price. This makes it easier for buyers to find the kind of table they are looking for, and easier for Google to serve an exact match when people search for specific terms. We run different ads for a wide variety of table types: large, small, round, custom, boardroom, and so on. We haven't been pushing modular tables, so I write a new ad intended to drive traffic to that page. I check to see what kind of traffic the keyword “modular tables” will generate, and Google assures me that this is a heavily searched term, but without a huge amount of competition from other table sellers. I write a catchy headline, set an amount I'm willing to pay each time a viewer clicks on the ad ($3.50), and set a schedule. It will appear from seven a.m. to ten p.m. every weekday. This ad is just one of 126 we're running. Each is tightly targeted, so no single ad generates a huge response. In aggregate, they produce a steady stream of calls.

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IN THE THIRD WEEK
of March, I get a call from Nigel at Eurofurn. He has spoken to his superiors at the home factory, and they have agreed to host me for a couple of days. I have to buy the plane ticket, but they will pay all other expenses. The trip will cost me about fourteen hundred dollars. I'm happy to lay out that cash if I get a peek into their factory. I have never had such an opportunity before—my domestic competitors have no reason to let me see their operations, so I haven't tried to set up any visits. And, frankly, I'd think long and hard about letting any of them into my shop.

We settle on the last week of April. I'll fly on Monday and return on Friday. Also, he wants me to start design work on a table to be placed in their New York showroom. It's to be an upgraded version of their current table, which doesn't have up-to-date wiring capabilities. They won't pay me for my design time, but do agree on a reasonable price for the table itself: $6,523. This will be our first attempt at combining the Eurofurn look with our own design details. The table will be challenging: the top will be an equilateral triangle with radius corners, made in three identical pieces. We will be integrating power/data lids into the top, and the wood grain needs to run across the top and lids without disruption. I have a good idea how we will produce it, but I want to get a better sense of how Eurofurn would approach a project like this first, just in case they have some special tricks that will work better than our methods.

The next Wednesday, I get a call from my contact at Company S. My stomach drops. If we don't hear from a client after an installation, all is well. But if they do call, it can be good news, or bad. Sure enough, they're unhappy. After the board meeting, they found scratches on the table. Not big ones, the executive assistant tells me, but she could see them from a certain angle. She is convinced that there is something wrong with the finish. That seems unlikely; I carefully examined the top before it shipped and everything looked good. Sometimes clients scratch a table, but they almost always take responsibility for it. Anything other than laminates (commonly called Formica) and granite—including glass, marble, metals, and wood—can be easily scratched if a sharp object is dragged across the surface. Every wood table eventually picks up a lot of tiny scratches, mostly from users' jewelry and laptop bottoms. It's an unavoidable consequence of normal use.