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Business Estimating Guide for Cabinet Companies

Do you know what all of your business expenses are that relate to your cabinet company? Have you assembled a business plan that includes all of the costs related to your overhead? Use it as a guide to help with estimating kitchens, bathroom vanities, countertops and installation bids.

  • Tip: Remember that your time is equal to money. Every hour you are away from your family is very precious and valuable time that you should get paid for.

Do not ever do any guess work and never quote prices to customers without sitting down and knowing exactly how much you need to charge for a job. There’s no need to give them any type of upfront figure prior to assembling the information for the cabinet estimate.

Assembling Information for a Cabinet Estimate

What are your fixed expenses?
Calculate how much these expenses amount to for a month.
1)    Electric bill
2)    Water and sewer costs
3)    Cell phone
4)    Internet access
5)    Accounting
6)    Book keeping
7)    Rent
8)    Insurance
9)    Vehicle Payments
10)    Advertising budget
11)     Business licenses
12)     Vehicle registration
13)     Shop rent or mortgage payment
14)     How much do you want to put into savings in a month for future growth of your business?

What are your variable costs for the cabinet business?
Estimate the cost of things that fluctuate for a one month period.

1)    Gas bills
2)    Taxes
3)    Office supplies, printer paper, ink, pens, pencils, pads, etc.
4)    Shop supplies, glues, cleaners, staples, screws, etc.
5)    Machinery repair
6)    Auto repair
7)    Building maintenance

Combine the two totals and figure out how much it costs your company to operate per day or even per hour without figuring in any labor.

How much money do you want to make per hour? How much does your employee labor cost per hour? What percentage of the sales do any subcontractors get?

What are the Hourly Wages

1)    Come up with the hourly rate that you as the owner want to make for your time invested in the cabinet company.
2)    Determine what your hired labor costs are and if you pay using an agency make sure to include their percentage as well. After all you do have to pay the additional.
3)    Have a percentage calculation for subcontractors or get them to bid jobs individually.

How to do Business Estimates for Cabinet Jobs

Now that you have all of the above costs down on paper how can you use these calculations to estimate cabinet jobs for your business? Here’s a fool proof method that will allow you to always make a profit, if you get the job.

1)    List all of the materials that will be needed for the job and calculate the total  materials cost. If you pay sales tax on materials make sure to figure that in as an expense as well. Calculate a little extra in case mistakes occure.
2)    If you collect sales tax from the customer and have to pay and report monthly, make sure that’s included somewhere in your expenses. Perhaps in book keeping.
3)    Estimate every single hour that you will dedicate to finalizing the project. From the start of meeting with the customer to collecting the final check, doing follow-up and taking care of all of the paper work that is involved afterward. Don’t cut yourself short here. You should not work for free. Every hour you work and every hour you give away cancel one another out and you will end up working for a lot less than you planned. If you are going to remove cabinets charge for disposing them. Trips to the dump or dumpster fees get costly, you must think of every expense.
4)    Estimate your employee’s total hours on the job.
5)    Estimate the subcontractors costs
6)    Add in your fixed and variable expenses for operating your business. You should have an hourly calculation for this.
7)    Add everything together
8)    Multiply the figure by the amount of profit that you want your business to make and there you have it.

I’m sure that you have thought of other expenses that aren’t included in the lists. These are only provided as a guide to help you get going in the right direction. Business estimating is the very heart beat of your cabinet company; take sufficient time to cover everything when assembling the estimate. Oh, and don’t forget to pay yourself for the time it takes to complete the task of figuring up the manufacturing costs for cabinets. Always double or even triple check your figures. This is the most important aspect of your business; you cannot afford to make costly mistakes here.

Categories: Business Planning
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