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Small Shed Business Success

(Photo courtesy of Andrea Piacquadio on Pexels)

Staying relevant and profitable are significant challenges for the small shed builder. 

Most are one- to two-person operations that must rely upon unique business models to maintain a competitive edge.

In many ways, these small entrepreneurs are quite similar—they typically do much of the work themselves and emphasize quality over quantity. 

Nonetheless, there are a number of risks and challenges that come with the territory, says Brandon Gray, a partner with CRI Simple Numbers LLC in Huntsville, Alabama. His company works alongside small businesses, helping them solve complex financial issues for sustainable profitability. 

“You’ve got to have a strong competitive advantage to make it work,” Gray says. 

“You must have a great reason for customers to come to you and be able to charge a premium for that service. Otherwise, it’s hard to just keep up with inflation, and all the other variables in the market. One hiccup, and you’re in trouble.

“That could be your efficiency, speed of construction, craftsmanship, or price. Find your competitive advantage and run with it.”

Quality work and craftsmanship are his big differentiators, says Calvin Huntley, owner of The Shed Man in Kalispell, Montana. 

And working in a small town, that means a lot, since much of his business is by word of mouth. 

“I was born here in Kalispell, so I know if you (deal unfairly with) one person, the whole town’s going to know,” Huntley says.

Since 1996, he has maintained a successful business by constructing standard-sized portable sheds measuring 12 by 24 or smaller. 

He does much of the work on his own, except for a seasonal worker who helps during the summer. His son also works for him from time to time. 

“My shop is big enough for me to build out of the weather, but we can only do one at a time,” Huntley says. “We’re just a small company. I only have one lot and I keep it pretty small compared to other companies.”

For Rick Himsl, owner of Himsl Building in Gravette, Arkansas, building all his barns on location has been a huge differentiator. 

He’s been building sheds for nearly 40 years in rapidly growing northwest Arkansas, mostly offering just three basic barn designs. 

“There are a lot of shed companies around here,” he says, “but they don’t build on-site. There are only a couple people doing it, but they’re not as well-known. I’ve got a good reputation, and so I don’t have to get out there and sell myself.”

He also attributes his success to doing quality work. 

“A lot of sheds look good in the picture, but when you look at the quality of the workmanship, it’s not there,” Himsl says. “I don’t take a lot of time to do the job, but I do a good job.”

Himsl does it all himself—purchases the materials, loads everything onto the trailer, and hauls it to the shop. Once there, he cuts the materials to size. 

“If it’s a barn, I’ll build the trusses right here in my shop,” he adds. “I’ll build the doorframes and doors here, and I’ll paint the doors here, take them, and hang them. Half my time is working here at home.”

When he arrives on site, everything’s ready to go. 

“I just nail it together and get it painted,” he says.

Kyron Koehn, owner of Arizona Shed Movers in Phoenix, differentiates his company through his pricing structure. 

He’s been a transporter of portable sheds in the state since 2013. Family plays a big role in the company’s operation—his brother is one of the company’s three drivers and his wife is the schedular. 

“Sheds are not created equal, but a lot of shed movers give ‘high ball’ numbers,” Koehn says. “We gather the intel; we ask for pictures, height of building, width of the skids, etc. After learning everything we can learn, we price on the actual cost involved to get their job done.”

Arizona Shed Movers also provides a “turnkey” service, whereby they factor in heavy load permits and other transportation fees into the price. 

Koehn is seeking to differentiate his company in other ways. He recently designed and developed a new shed lift jack—the EZ Shed Lift—that he plans to market to other haulers. They’re currently working on an electric model. 

“We built it around safety and precision,” he adds. “We can get precisely the height you want. It’ll go under anything.”

CRAFTING THE BEST APPROACH

Gray says there are essentially three rules for a small shed builder to be successful. 

“Number one, figure out what the market needs,” he adds. “What do they like? What do they dislike? You’re looking for the train wreck … the opportunity. 

“Perhaps people don’t like the aesthetics of the sheds in the area, and you keep hearing that complaint. Well, let’s make craftsmanship your strength. Or maybe the price point is too high, so you find a way to build more cost-efficiently, etc.

“Then, once you’ve found your niche, figure out how to do the work profitably. And lastly, go tell everybody about it through a well-defined marketing strategy.”

A good marketing strategy can serve as “rocket fuel” for the small company that wants to grow, Gray says. 

“Even if it’s ‘guerilla marketing,’ where you’re just out and about in the community, shaking hands, making connections, taking people to lunch, finding who else is in the industry you need to know … you’ve got to have a marketing plan in place. 

“Right now, people are wanting to pull back on marketing and that’s probably a sign that you need to push forward because you can stand out. Many just don’t put enough resources into growing their business from a marketing perspective.”

Himsl says his best marketing tool is a job well done. Much of his business comes by word of mouth, and he gets a lot of repeat business. 

“People will buy a house, have me build a shed, then sell the house in five years,” he says. “They’ll call me again, because they bought a new house, and I’ll build another shed.”

A SUSCEPTIBLE BUSINESS MODEL

Of course, there’s a certain amount of risk when maintaining a small business. Gray says many of these owners are more vulnerable to economic downturns than larger businesses, and the impacts of market variations are often exaggerated. 

That’s why, no matter the size of the company, a “measure of growth” is essential for a company to remain healthy.

“Businesses are like airplanes,” he adds. “They either want to increase altitude or decrease altitude. They don’t like flying level.”

Setting money aside for the inevitable slow times is also critical. 

“The smaller you are, the more that market volatility can impact you,” he adds. “Ideally, you want to have two months of operating expenses and direct labor costs set aside—at a minimum. And you’re going to want to set aside three to six months of living expenses on top of that.”

Another suggestion—keep business and personal finances separate. 

“Many small entrepreneurs don’t have clarity in their numbers because they mix business and personal together,” Gray points out. 

“They can never tell if they’re making or losing money, because they’ve got a lot of personal stuff caught up in the business.”

Maintaining a healthy profit margin is a particular challenge. To keep his costs low, Huntley does everything himself. He not only builds the sheds but delivers them as well. 

“A lot of other shed companies hire out all their deliveries, but I deliver all my own buildings,” he says. “I have a couple of trucks and flatbed trailers. Other companies will say they’re delivering it for free, but they’re not really. They’re adding it into the price of the shed.” 

He also fosters partnerships with suppliers to buy in bulk when possible. 

“I have companies that I’ll buy a semi-load of whatever I need instead of running to the hardware store,” he shares.

Nevertheless, Huntley has had difficulty maintaining profitability in 2023 due to changing market conditions and certain regional challenges. 

Much of the property in central Montana has been purchased and the demand for sheds is slacking off. 

“I usually try to maintain a volume of around 200 sheds a year, but this year I haven’t even hit 100,” he adds. “A lot of people moved here and bought up what land was left. The market is saturated.”

He doesn’t expect much additional work, either, as his work volume typically drops to zero during the winter months before picking back up in March or April. 

“I usually get enough material and cut parts in the wintertime,” Huntley says, “such as our gable end blocks and floor joists, window trim, and window headers. We make all that stuff so we can build them faster when it comes to building season.”

Himsl says maintaining profitability is an ongoing challenge for him as well, primarily because he can’t buy materials at the bulk rates given to the larger builders. 

“When I go to Lowe’s and buy siding and other materials, I’m paying what everybody else pays,” Himsl says. 

To remain profitable, he charges a bit more for his buildings. His customers never balk at the price since they’re getting a higher-quality product. 

“They’re willing to pay me more than they are those guys that bring a shed and just drop it in their yard,” he says. 

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