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The Business of Knife Making A forum dedicated to all aspects of running, managing and legal operational issues relating to the custom knife making and custom knife selling industry.

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  #1  
Old 05-13-2008, 07:40 PM
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Knife making buisness question #1

Just wondering what folks think the biggest business mistake that knife makers make?

Thanks in advance
R/S


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Old 05-13-2008, 07:46 PM
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Quiting their real job.
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Old 05-14-2008, 05:59 AM
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Taking deposits for orders, then spending it before the knife is delivered.

There is a growing list of custom makers that have done this, have gotten in trouble with their customers when they can't deliver, and with the speed of communication on the Internet, have been slammed into disrepute by those customers and other naysayers.
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Old 05-14-2008, 10:55 AM
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Les,

First Les, let me thank you and the rest of the great Armed Services members around for your service. Now that is a dedicated knife maker that makes and carries his own knife in a combat zone! I don't know where this country keeps getting you guys, but I'm d**n glad we got you!

Now to your question about mistakes, which I suspect you have posted just to help others. Looking at your web site I figure you've already got this stuff figured out, but here goes.

1. Never spend money for bigger, better, faster that wasn't made from actually selling knives made on the equipment you have know. (Hobbies are money pits, business is business. If the business can't sustain itself, how can it sustain you.)

2. See Moon's post above. (At least until you make enough money on your worst months to pay the bills.)

3. Never, ever, ever take a deposit to build a knife. (Unless it's from kin folk and you want to make sure you get paid something!) ;~) I guess this applies to Armory's post above. There ARE legit reasons for failing to deliver a knife you took money for, but there is NO legit reason for not refunding the money to it's rightful owner by the due date. Being overly ambitions, enthusiastic, optimistic...what ever...with other peoples money is a character flaw and NOT a business strategy. It's called robbing Peter to pay Paul. Not good! If someone wants to slam a maker for over booking, fit/finish or whatever then so be it. People like that can always find a reason to hate something. Don't give them an excuse.

4. Never, ever, ever make a knife you would not want to keep...cause you may have to sell it to someone else. The reason someone ask you to build a knife is because they like your style. If you are cordial and patient enough you can guide the buyer toward a knife you and they would be proud to make and own.

5. Never, ever, ever ship a knife until you get paid and the check clears! (You said business mistakes...Not hobby mistakes.) Try taking that new TV out of the store without paying for it and see what happens. There are some, but very few exceptions to this rule.

6. Never, ever, ever be optimistic about delivery dates. If you think it will take 4 weeks to deliver a knife. Double it. Tell the buyer 6-8 weeks just to make sure. If it takes 8 weeks for some unforeseen reason, they can't make you out to be a lair. If you get it to them in 4 weeks they will think you pushed their work up front and go all warm and fuzzy inside.

Those are just a few of the things I could think of off the top of my head. I'll bet there are a bunch more.

I also bet there are a bunch of makers out there that are just chomping at the bit to tear me apart over the list as well. So what are you waiting for. Let's hear it.

chiger,
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Old 05-14-2008, 12:31 PM
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Those sound good to me, chiger.

Here is one I've heard attributed to Bob Loveless.

If attending a knife show, consider ALL the expenses for the entire trip. You know that your table is going to cost your knife business. But so will the hotel, the plane trip, and the fancy dinners. As Loveless was supposed to have said about a knifemaker at a show who ate expensive dinners out with his wife--"He may have sold some knives, but he's going broke and doesn't even know it."
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Old 05-14-2008, 02:36 PM
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Sound advice Mr. Stricker.

A lot of small business owners tend to let the little nickel and dime things drop through the cracks when figuring overhead. Nickels and dimes make dollars. You don't want to eat up all the profits like in your knife show example.

Makers shouldn't forget to add things like unrecoverable materials drops into their overhead. 20 or 40 or however many a dollars a month in waste is cost that should be reflected in the cost of the knives just like the electric bill or grinding wheels.

chiger,
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Old 05-14-2008, 06:56 PM
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Chiger,

Following along those lines, I will add this. If you are not wealthy, and especially if you plan to make knifemaking a business, even part time, keep track of all those little costs, and keep those costs separate as much as you can from your family's expenses.

Especially when you get started, realize you like knifemaking, and realize that you can make a little money at it, there is the temptation to start buying tools, equipment, and supplies. You have to ask yourself, where is that money coming from?

If you know it is only going to be a hobby, then make yourself happy with that and accept that it will be an expensive hobby. It will not pay for itself--and so you and your family need to decide (like any other hobby) what is an acceptable amount to spend on it. If your are lucky, you will make a few bucks back once in a while, and that is nice. You have to be exceptional to make the hobby pay for itself, and you will be the exception, and not the rule, if you manage to make a living at it full time.

The biggest business mistake a maker can make, is to not realize and accept what their selling potential really is in the custom knife marketplace.
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Old 05-14-2008, 07:41 PM
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Excellent replies all, I thank you all for your time! Please keep them coming!

Chiger, I am have recently separated form the Marines (took away too much knife time!) and just haven't got everything updated to reflect my new status, thank you for the kind words none the less. For the record I am not asking just to stimulate discussion, while that is great, I ask because I have not figured it all out and the more I learn the more I find that I don't even know all the questions much less have all the answers....

I have found in my reading that, as we all know, the vast majority of small buisnesses fail very early one. The flower shop does not fail because their flowers suck and the muffler shop doesn't fail because their pipes fall off (those 2 examples are just generalizations, I am sure that sometimes it's just that simple...) they usual seam to fail to handle the business end of their business.... Quality knives are only half the battle.

It is my intention to work on the quality of my work as I also work on my understanding of business. I will be putting my GI Bill to play in that regard soon. Until then I will just be soliciting the free advice offered here.

Keep them coming gents, see you at Blade!

Thanks!
Les


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Old 05-14-2008, 08:20 PM
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Les,

I'll steal some of the info from Wayne Goddard (from his Wonder of Knifemaking book) about "Pitfalls for the Knifemaker" I'll copy the quick and dirty, you might want to look up the book for more discussion.

1) An unrealistic shop rate. . . the knifemaker working alone is head janitor, maintenance, foreman, bookeeper, delivery person, (my additions--public relations and marketing, customer service), and in his spare time makes knives. THE VALUE OF A KNIFE MADE IN ONE DAY WILL HAVE TO EQUAL THE HOURLY RATE YOU EXPECT, PLUS PAY ALL EXPENSES NECESSARY TO KEEP THE BUSINESS GOING (emphasis mine).

2) Do not take things in trade for knives that have to be made in the future.

3) Don't try to work beyond your skill level.

4) Don't take deposits unless you are very careful.

5) Do not promise out more work than can be actually done. (My note: This seems to happen to a lot of knifemakers, especially when they get their first big article in a knife publication. The collectors line up, a 2 or 3 year waiting list develops, then many of those collectors move on to the next new featured knifemaker before their knife gets around to being made. See the comment about not taking deposits.)

6) Lack of business training. Put as much thought into building a business as you do into building knives.
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Old 05-14-2008, 08:38 PM
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maybe under pricing their knives at first and then over pricing them later...
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Old 05-14-2008, 09:25 PM
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Good one Tracy!


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Old 05-14-2008, 09:53 PM
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Communicate with the customer. A customer will forgive you for being late, but not for your silence. (I've chewed on a really outstanding knifemaker for that.) Be clear in explaining pricing, payments, delivery dates, customizing, etc.

If you go to shows, communicate with customers and potential customers. I can't tell you how irritating it is to walk up to a table and have the seller reading a newspaper or staring off into space instead of talking to his customers. If you're not there to sell knives, then save the cost of the table.

Protect your reputation. Really good knifemakers have had knives that went bad - sometimes for reasons beyond their control or understanding. The ones with great reputations made good on the deal, fixing or replacing the knife. It is FAR harder to get new customers than it is to keep existing customers. Lose your reputation and you might as well fold the tent.

IF A DEAL SOUNDS TOO GOOD TO BE TRUE, IT IS TOO GOOD TO BE TRUE. Nobody in {name the 3rd world country} really wants to buy 20 of your most expensive blades.

The definition of quality is delivering exactly what your customer wants in an agreed upon time frame. That's all. If you don't know what your customer really wants, how can you possibly deliver that? By the same token, you can polish and preen to museum quality, (spending huge amounts of time and materials), but if the customer wanted something to cut open hay bales, you've wasted your time.

BE PROFESSIONAL! Let me give an example: I bought (stole!) a knife in one of our Worthy Cause auctions. It arrived, well packed and protected, with a sheath and a storage pouch, and there was a very nice certificate with a description of it's construction and guarantee by the maker. The extra effort didn't cost him much, but it really made his knife stand out by his professionalism. Another example: look at the guys who hire Coop or one of the other pro photographers to shoot their high-end knives. It really adds to the value.

The closer your customer is to you - friend, family, neighbor - the more you need to make sure everything is in writing. Gaps in understanding will be filled with misunderstanding. Better to decide not to make the deal rather than spend your life in a feud.

You CANNOT compete with Pakistan. They can produce low-end, cheap knives by the metric ton. If you plan to get paid, your work has to have premium quality and not a copy of something I can buy at WalMart.

In God We Trust, All Others Pay Cash - or at least something to that effect. The vast majority of people are honest, law-abiding citizens. That holds true even in parts of the world where you might not expect it. But there is always a handful of slime balls and they can make your life miserable. Make sure ALL the cards are on the table at all times. If not, it's better to pull the plug on the deal and wait until another comes along.

You're gonna make a great sale - but it might not be today, or tomorrow, or next month. (I stole this from a pro poker player who said it about poker hands.) Don't let yourself get discouraged and always plan for lean times. That's just business.


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  #13  
Old 05-15-2008, 12:28 AM
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Les,

I read your about page. I knew you were out of the service. That does not negate my gratitude for your service. Besides, I think the saying is, "Once a Marine always a Marine!" You, and your wife for that matter, did your part...what ever it was, it was needed.

Back to the post. All the guys make great points. Two points really stand out to me. Mainly cause I struggle with them. Pricing and communication.

For pricing I try to break things down into their simplest terms. I love to make knives period! What is the least amount per hour I can take for doing something I love and make it work? $5, $8, $20 an hour? What ever that is, then you have to figure a way to make knives in an amount of time and with the amount of overhead you have for an amount of money that makes that work.

When I started I actually decided on a few designs that were poplar and broke the whole thing down into steps. I made a sheet listing the steps for each. Then I made those knives and timed each step accurately. No fudging. Then I decided on a price per hour and multiplied that times the hours and added the averaged overhead to get the price for each. I know it seems a long way to go, but I just had to be sure so I could sleep at night. And I gives you a good base line for the higher price stuff where you add file work or unusual handle details.

The other thing is communication. As you can tell by my post, I have a tendency to get wordy. So I have to try and gauge the customer and make sure when I'm bugging them. It seems that the men and women that have bought my 'stock designs' as I call them (knives I can make for the novice collector and avid sportsman relatively quickly out of modest materials and just good fit and finish) are usually buying them as gifts or to skin an elk and don't really want to know much more than the how and when.

On the other hand, the folks who I have made one of a kind customs for are hungry as all get out for every detail. Give it to them! Take the time to shoot them an email updating your progress. Maybe include a quick low res pic of the blade or raw handle materials. All but the most jaded collectors are glutens for that stuff. Always include a personally signed build sheet or authentication for every knife.

But I always try to hold back one or two extras I've added. Just to surprise 'um. Gives them a warm and fuzzy about the whole experience. And in the end, you have to be happy with the price and they have to get a warm an fuzzy about the knife.

The truth is, you will probably work a long time before you get what your work is worth or where your work is worth what you want. So, get what you need and enjoy the journey until you become one of the 5 or 10 smiths that get a 100 times what it's worth. I've looked at your knives and I think you have ability or I and I suspect these other guys wouldn't be wasting their time encouraging you.

chiger,
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Old 05-15-2008, 05:17 AM
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I find the per hour pricing interesting. To me a knife is worth what it is worth, regardless of how long it takes to make it. I have been looking at it like to make a profit, I need to make a knife worth 'x' amount in 'y' hours to be profitable and the knife is not going to be profitable untill I refine my skills and the process to that level.

Is that cart before the horse?


Chiger, Thanks man.


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Old 05-15-2008, 06:14 AM
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I tried the $/hr route for a very short time. Made me cry big croc tears!
I'm going to make a knife the way I want and work at it until I get it there. If I wasn't so inept and forgetful I could probably turn a nice profit. My advantage/disadvantage (point of view thing) is I'm semi-retired and work a very satisfying part time consulting job (the one I wish I'd had all my life). My forge and shop time is my artistic pressure relief that pays for itself. I like making money, but I'm not driven by that.......it's just what I have to do.
You'd have thought I'd have learned while trying out the Bass fishing game. It was very profitable when I was on - but very expensive when I wasn't. Fish got smart and I got dumb (before I got smarter and walked away). Now fishing is a enjoyable pleasure again.
In the end, I find my Grand Muddy was right. Indian wisdom - We are who the Great One made us, if we use what He gave us well, we will be what He planned for us to be.

I think most of the makers do this out of an inner passion. You could probably give anyone of us $1M and we make knives until it ran out ...... then go out get a loan to keep going! You got to love it or it's just hard work.


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