Shelving Risk

Shelving Risk

Entrepreneur by Mark Gordon | Managing Editor

Engineering Change

Jim Butler embraces the spend-money-to-make-money theory: He's invested more than $5 million in a mom-and-pop cabinetry business, with big results.

Jim Butler is wired like a classic engineer. He's constantly thinking about numbers, efficiency and how to combine the pair into a neat, tidy and profitable package.

The theory served him well in Warwick, R.I., where at 25 years old he started his own metal stamping business from scratch in his garage, working until midnight after his day job. He built it into a 30-employee factory with $7 million in revenues before selling it and moving to Florida.

It was only inevitable that Butler would suffer a mental meltdown when he bought Country Cupboards of Sarasota, a Venice-based mom and pop cabinetry business five years ago. The business was everything Butler wasn't.

The husband and wife owners did all the work by hand, a slow and arduous process. Their books were somewhat of a moving target - Butler recalls one time the owner was asked to quote a price and it was literally off the top of his head. And orders and scheduling were tracked by a frequently outdated whiteboard, as opposed to a computer.

When Butler, 45, bought Country Cupboards, he was given the keys, a 20-year-old table saw and one sheet of paper with instructions on how to run the company. "We had to get into the twenty-first century," Butler says.

It's taken about $6 million of his own money - a combination of profits, personal savings and proceeds from his last company sale - but Butler has overwhelmingly succeeded in updating the firm. Since taking it over, revenues have climbed 100% or more two separate years, to an expected $12 million this year; the previous owners maxed out at about $1 million in annual revenues.

What's more, the company's gone from 12 to 70 employees and has more than tripled the amount of space it occupies, to 40,000 square feet spread over three buildings. It now manufactures and installs cabinets for kitchens, closets and home offices, primarily in Sarasota, Manatee and Charlotte counties.

Butler completed a combination of subtle and knock-them-over-the-head changes to the company to get things going. On the subtle side, he changed the name of the company to CCS Cabinetry, to give it a more professional approach. He changed the logo and updated the outside of the building and the fleet of trucks and vans to reflect the new image.

Not as subtle, Butler dipped into his inner engineer and invested about $4 million in an entire new assembly-line factory. That included buying a $250,000 computerized saw that cuts and sizes on automation and a granite fabrication machine. He also had a computer database system installed to monitor projects, from sale to installation.

'Necessary evil'

Butler beams with fatherly pride as he shows a visitor around the factory floor, stopping to point out, for example, how the saw can divide up intricate sizes and shapes and cut to exact specifications. It not only adds consistency, he says, but bulk, as it can cut five boards at a time. "I can have [parts for] a kitchen built in 10 minutes," he says.

There are several other Butler-staples to the factory. The location of tools and machines were completely rearranged and a conveyor belt was installed to improve product flow. He implemented 16 staging areas, so each part of a project can be checked over before moving down the line.

Butler's background in electrical engineering led him to install several hydraulic lifts, so the employees don't have to do any heavy lifting, literally. It prevents injuries and broken parts, he says.

Finally, Butler points out the assembly line system gives his crews time to pay attention to small details. Butler uses dowels, not staples, to hold the pieces together, for instance, and a CCS logo gets stamped to the inside of each drawer and cabinet.

Butler considers two small parts of his three-building complex "necessary evils" in the battle for supreme efficiency. In the back corner of the factory side, there's a custom workstation, where everything is done by hand. And even worse for efficiency purposes, there's a building devoted specifically to storing the kitchens and other finished products.

Still, the warehouse pays off in big ways, Butler concedes, as it allows him to stay way ahead of the homebuilders - any large cabinet-makers bread-and-butter clients. He can store up to 80 kitchens in the space while the assembly line keeps churning a few feet away. This way, there's always a finished product. "The last thing you want to do is tell a builder it's going to be another three weeks for the kitchen," says Butler.

Clients have noticed the difference. Marc Smith of the Waterford Companies, a Venice-based home builder, says he's rarely stuck with a supplier or contractor after an ownership change. But Butler came through for the builder, just as the housing boom was starting to take off.

Business instincts

Getting clients, such as Waterford or Jessup's Appliances, was the easiest part of improving the cabinetry business, Butler says. That comes from his experience owning his own metal stamping business in Rohde Island, where he learned that the customer was always right and you go out of your way to prove it. One major client he had was Readers Digest, stamping gift keys and other trinkets the company mailed out.

Butler moved to the Venice area in 1998; he previously vacationed in the area with his family and wanted to relocate, he says, before his four young kids were teenagers and entrenched in school and life.

In Florida, Butler says he found that it was easy to get new customers and appease the current ones by just doing the basics he did up north: Show up on time, have accurate prices and stick to deadlines. "I was like a kid in a candy store," he says.

Butler adds that good customer service doesn't necessarily mean having the cheapest prices. "You could be the lowest guy on the block," he says, "but if you don't have service what good are you?"

The housing boom that coincided with Butler's decision to buy the business was another factor in the rising company fortunes, but Butler took a long view on the bubble before it burst. He opened a remodeling division three years ago and built it up slowly, figuring the new construction well would dry up eventually.

Butler says his business instincts were picked up over years of trial and error with his metal stamping business. Much of that business he learned through a five-year apprenticeship he completed after high school in a machine shop where his father worked. The training was in tool and dye workmanship, an exact science of measurements. Butler also took engineering classes at the University of Rhode Island before starting his own business, in which he and his wife were the only employees for the first few years.

Future challenges

Making business decisions using more than instincts - that inner engineer in the man - is one of his biggest challenges, now that the guts of the company have been revamped.

One task Butler constantly struggles with is figuring out how to plan ahead for years down the line. He's virtually sold out on orders for 2007, but he has to keep track of trends in the industry to know what to be looking out for the next several years, including how much materials he will need and how to price his products. That task has been made harder by frequent changes in both the economy and the cabinet industry.

Another big-picture issue Butler deals with is keeping costs down, from buying wood to fueling his fleet. On the latter, the rising cost of gas has been costly as Butler shells out about $12,000 per month to fuel his fleet of trucks and vans.

Butler has other, more micro-issues to deal with, such as a lack of factory space. Even though he's tripled the number of buildings in five years, to 40,000 square feet, if he maintains his current growth rate or even slows down a little, he will need 100,000 square feet of space in five years.

BUTLER'S ADVICE

Jim Butler bought a business when he moved to Florida from Rohde Island and then set about the process of making it his own. It worked: Revenues have gone from about $1 million when he bought it in 2001 to an expected $12 million in 2006. Here's Butler's advice for entrepreneurs buying an existing business:

• Plan, then implement: Evalute right away what you need to do to meet the demands of the market. Figure out what you have and what you are going to need. Write a 10-year-plan and start making the necessary changes;

• Hire the best people: Choose people who know how to handle growth. Instill in them your philosophy of doing business. And make sure they embrace the importance of taking care of the customer.

• Share your story: Market the individualized or specific way you present your products and services to your customers. Be consistent, but make your approach to marketing fresh and inviting.

• Spend, don't hoard: Reinvest profits in the business. Spend money on upgrading and improving in the short run to reap greater returns in the long run. Says Butler: "You can't be a hog."