What comes first, the expansion/profitability or personnel to accommodate it? entrepreneur how earn by blogging blog

Company Info

I own a manufacturing company that deals primarily in high quality, custom made window shutters. We are about 18 months in and just recently (early 2017) expanded into custom cabinetry (the time frame of this expansion was sooner than what we anticipated). We became cash flow positive about one year from startup, but profits are very slim at the moment. We sell to both residential and commercial, including developers and contractors. The consistent and large revenue comes from contractors - this is where our greatest efforts have been spent.

Setup

Our production team is broken into two units: shutters and cabinets. Our shutter crew is consistently able to stay ahead of production when they are able to focus fully on that task. However, we often have to supplement the lack of experience on the cabinet side with one of these guys in order to maintain adequate production. Due to demand for local work, skilled cabinet builders have been difficult to find for hire. However, this has changed in recent months and we believe we could find someone fairly quickly. The obstacle is that skilled individuals (what we need) are very expensive.

Additionally, we recently lost our primary contractor salesperson as well as a shop hand. Our residential salesperson is handling both workloads at the moment. The shop hand was fairly new and the impact on operations was far less than the loss of the salesperson. We have decided not to rehire for these positions (1) to reduce overhead associated with what I believe was an overkill sales force and (2) to run "slim" until we can figure out the next step.

The Obstacle

We have contractors that have expressed a desire to give us cabinet business. To put it in perspective, supplying all cabinets for a single, medium-sized contractor's homes would double our annual revenue. The opportunity is there for several other contractors as well - our previous business interactions and relationships have set the stage for this. In order to gain this business, however, we need to (1) refine our production process and, most importantly, (2) have one or two skilled cabinet builders on staff. We have a plan in place for (1). For (2), the question is this:

• How do you determine when it is the best time to hire additional staff to accommodate an expansion?

TL:DR See question above (bulleted point)

Side note: Short to medium-term cash flow is our biggest obstacle. Gaining large amounts of new business would take approximately 12 months to get to a point where it is consistently generating healthy cash flow.

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