Your product is your business. It will either make you or break you. Sheds are not a one-size-fits-all product.
Most consumers will fall within one of three categories:
- Price Focused: These people are looking for a low-priced building. They are often willing to sacrifice quality to save money.
- Quality Focused: These people are looking for products that aren’t your average shed. They want something that stands out among the crowd, and they are willing to pay for it.
- Value Focused: These people are looking for a good-quality building at a fair price. They are price conscious but understand that you get what you pay for.
Very few shed companies offer products geared toward all three of these consumer sectors. Most are either price focused or quality focused. It is important to know which category your business falls in.
Your finished product must meet/exceed your customers’ expectations. Regardless of the quality level/price point of your sheds, the goal should always be to satisfy your customers. Consistency is the key.
Building sheds is complicated. This is why many companies choose to purchase their buildings wholesale. The manufacturing process needs to perform like a well-oiled machine to optimize profitability.
MANUFACTURING LOCATION
Your manufacturing location will play a huge part in the success of your business. You want to manufacture your sheds as close to your customer base as possible. The farther you are from your customers, the more it will cost you to deliver.
You also need to consider the labor pool in your area. It is important that you can find quality employees that are willing to work for a fair wage. Areas with lower population densities, and lower costs of living, are typically more conducive for a shed manufacturing location.
MATERIALS
Material costs vary greatly across shed companies. Economies of scale definitely apply.
Regardless of the size of your business, is imperative that every shed manufacturer knows the cost of materials for each shed that they build. This number is so important that many companies formulate their retail pricing as a multiple of their material cost. Most companies aim for their material costs to be 40 to 50 percent of their retail prices.
High-quality shed manufacturers will typically build fewer sheds and have lower material cost percentages. Price-focused manufacturers will often have a 50-percent-plus material cost and will make their money off volume.
LABOR
Shed builders are the backbone of the industry. Unfortunately, finding quality builders is becoming increasingly difficult. Jobs are plentiful and wages are high.
In this environment, you may need to hire/fire many people to find the right fit. This can be time consuming and costly.
It can be tempting to settle for someone, even though you know they aren’t a good fit. Don’t make this mistake. Once you have the right people in the right positions, your business will thrive!
I will conclude my four-part series on running a successful shed business in the next issue. The topic will be shed deliveries.
ALSO SEE:
Running a Successful Shed Business Part 1, March 23, 2022
Running a Successful Shed Business Part 2: Selling Sheds, May 18, 2022