View Full Version : Question for Business Plan


Mike Routen
05-15-2003, 10:15 AM
I'm putting together a business plan for a knifesmithing business and I have a question for those of you who are either full-time or are headed in that direction....

What kind of per-item time do you use for production planning? Doesn't really matter if it's items per hour, day or week. (Or if it's hours per item.)

I'm beginning to work on the financials of the plan and have no idea what times to use. This will be a "bootstrap" operation, using any profits from sales to purchase more supplies and equipment. I'll be selling off some personal items to generate some start-up cash. I'm planning on starting slowly while the learning curve is still steep, then as I gain proficency at the forge and with the finishing of the knives I'll plan for increasing production rates.

One idea that I think I read somewhere on this forum was to put away a certain percentage of the knives that I make as a "retirement fund". I really like that idea.

Any help would be appreciated!

- Mike :)

Chuck Burrows
05-15-2003, 11:21 AM
Mike check out this link. It is a previous discussion on business plans.


http://www.ckdforums.com/showthread.php?s=&threadid=11815

For all newbies - remember that not all threads are by default listed in any forum. Go to the bottom of each forum and use the drop box to change the parameters to "from the beginning" and you can then browse back through an entire forum. Often times the answers are already there for you. Still any new info or qualifications are welcome.

Mike Routen
05-15-2003, 11:29 AM
Wild Rose,

Thanks for the link. I have read that thread in the past and plan on getting the books that are referenced. However I'm still at a loss on how to figure starting production rates, and future production rates.

I've read some posts here in CKDForums that some makers take weeks to finish one knife. I've also read that Charlie Ochs once completed 14 bowies for a show in two weeks. It would make sense that the average is somewhere in between those two extremes.

Thanks again,

- Mike

SVanderkolff
05-15-2003, 11:39 AM
Mike
I think that there is no right answer to the question you are asking. It depends intirely on what type of knife you are making, what embellishments you want, the degree to which you are going to finish a knife adn what equipment you have to work with. If you haven't been making knives and are planning on starting it as a business I would strongly suggest you make some first. The learning curve you talked about is not easy. Once you have made a number of knives you will start to find a style that you like and then you can see how long it will take you. If you want to know how long it takes me to make a knife using stock removal it is around 8 hours per knife asuming it is a pattern that I have made a number of before and there are no major embellishments. Hope that helps.
Steve

Mike Routen
05-15-2003, 12:11 PM
Steve,

I agree that there is no right answer. I was hoping to get a sampling of different makers using different methods and try and come up with a reasonable guess. :) I plan on forging my knives and getting them as close to the final shape as possible. At first, finishing will be by hand or small power hand-tools. As sales accumulate and I can afford it, I'll be adding a Coote grinder. Eventually I'd like to build a JYT (junk-yard treadle) or even a JYH (junk-yard power hammer). Obviously this will speed things up, so I'll be expecting my per-knife production times to drop. I don't recall his name, but the gentleman that was giving the forging demo at the OKCA Show in Eugene said that if he was in his shop and "really getting to it" he could complete the forging in about 15-20 min. I understand that the forging is just the first step so I'm curious to see what some of the average times are for the other steps in the process.

The information that you gave is exactly what I'm looking for. I probably didn't phrase the original question very well.

There is another thread somewhere asking the question "how long to make a knife" and most of the responses would lead me to believe that it takes a lot longer than I thought. Then I read the article about Charlie Ochs. So I figure that there is a middle ground in there somewhere.

The reason that I'm "putting the cart before the horse" here and not just waiting until I've got a number of knives made is that a member of the church that I attend is putting on a "business building" class and the current assignment is to put together a business plan. This is not going directly to the SBA or anything like that. And I know that if my numbers are wrong on the first draft I won't end up homeless and in huge debt.;) I'd just like to get as close as I can on the first pass.

Thanks again!!

- Mike

Tim Adlam
05-15-2003, 12:37 PM
Mike,

Knifemakers that I've discussed this with seem to average about 8 hours per knife.
I would probably set that as my "ideal" production time for multiple pieces with similar construction.
Depending on tooling and materials used, I would double that number with an eye on stream-lining my process.
The more variety you offer, the greater the time variable.
Generally, before one is established with a good client base and following, you put more time and effort into each piece for less monetary return.
This may not sound fair, but it's one of the routes you may find necessary to get your work out there, while building a name and reputation for quality.

Tim

Mike Routen
05-15-2003, 12:43 PM
Tim,

The numbers you give sound very reasonable. I'll plan on 16-20 hrs per knife to start with and with increasing capabilities on my part and on the part of the equipment, I'll figure on reducing that to around 8 hrs per knife.

If anyone has any additional information, please let me know.

Thanks again everyone. I knew that the answer was in here.:)

- Mike

Geno
05-15-2003, 12:44 PM
Mike, I'v made knives from 4 hours to 40 hours, price must reflect something.You won't be able to figure XX dollars per hour, or you will depress yourself.
Find a design you like and want to sell.(maybe 6 designs to start)
Make some batches and devide your time by how many knives you made.This will give you averages.

Make some standard knives to show at shows and take orders from them. If you sell them there, you can't show them anymore.

Plan on selling a third.2/3 may wind up in inventory and sold at a later date.

Educate your customers.This will do more for sales than blowing your own bubble.Show them why your product is worth the price.

Price is still the hardest issue, so figure what you can make in a given time, and devide that by number of knives and see where the price falls. Make adjustments as neccessary, and repeat.

Mike Routen
05-16-2003, 08:11 AM
Gene,

I like your approach as it sounds very practical. While I don't want to turn into a production line, it does make sense to do some batch work and keep an inventory of standard models. Then when the shelves are stocked, I can take some time to experiment or work on an art piece.

Thanks for the tip!

BTW: I love your business name. I'm struggling to come up with a similar double entendre. If you have any suggestions please forward them.

Shalom!

- Mike

Geno
05-16-2003, 05:23 PM
Mike, Give me a call sometime, I'v helped several find the right logo for themselves.817 451 8243;)

JimmySeymour
05-17-2003, 10:58 PM
The craft based business book in the post suggested above is a great help and I highly reccomend it to anyone. The problem with the business plant I have been writing, is prices. Until your actually selling your knives, or attending shows and comparing your knives there really no way to accuratly price and project how much your knives are worth. I hope you can find something to help you. I know I am still struggling with this one.

SVanderkolff
05-18-2003, 08:20 AM
Pricing was a major issue for me and what I found was that if I took the pricing on a comparable knife by a known maker (your basic known maker not one of the famous ones) and cut your in half. This will start to get you some sales. From what I can see so far it will take about a year to 2 years before my prices will be equal to a known maker because by that point I should have become a known maker. I needed to be very realistic on what I was comparing to as well. I make your basic nice looking working hunters so that was what I priced to use as my comparitor.
So for me that meant that the knives I felt I was comparable to were selling for around 200 to 300, I started my pricing at $100, six months later I am now up to around the $150 mark, a year from now I should be settled in at the 200 to 300 range.
Hope this helps
Steve