Of course thats true. But Wade was a self-professed one man operation, no?
You guys are (maybe?) older and more life-experienced than me, so I pose this hypothetical, since any mention of the economics here are as a "side business."
Why do you not think it could be a full-time venture? Is the demand not there? I was assuming that Wade / Dr. Bass / etc. did this full-time, 40 hours per week, and had the demand and orders coming in to actually fill 40 hours per week. Were they doing this part-time, as secondary income? Or was the slow-down just due to inefficiency of taking on custom builds?
I'm truly curious, is there enough demand to run a full-time boutique business?
(definition of "boutique business" being high quality / high price / low volume)
96K in revenue sounds like a lot. But once you consider the costs, it'd be tough to really get by on that and grow your business as well. I'm not a trained business guy, but I've got a fair grasp of what a successfully run business looks like, so bear with me if I get some of the terminology wrong.
First up, you have fixed costs. You need to have a place to work and the tools to build your cabinets. This would probably be your garage at first, or something similar. Tools have wear and tear, so you need to to upkeep on those. You have to pay for things like website hosting (and design if you can't do it yourself).
Then you've got research and development costs. You will probably need to build a few prototypes of just about anything before you'll be able to start selling them. This takes a bunch of time and potentially thousands in materials cost.
So say you've got all that behind you. You've got a place to work, the tools to make cabs, and the plans to make cabs that people want to buy. Assuming you're starting out with a small pool of cash, you take an order, use the cash on hand to buy materials, and then ship out your product. If you did it right, you've traded your time and expertise for more money than you started out with. You take what you need from that additional money to live on, and then funnel the rest back into the business.
Problems start to arise if there are unexpected costs. What happens if there's a manufacturing problem on that line of pre-amps you just sold? You're losing money there. All of a sudden you're dipping into the pool used for buying materials for the successful part of your business to bail out the part that just failed. At a certain point though, you can't bail yourself out without losing the ability to keep buying materials to put the successful part of your business going. So you have to stiff people on one end, and then drag out the cab making process on the other, hoping that your revenue stream can recover.
Every time you start a new product line, this is what you're doing. Any time something goes wrong with one order, you have to have the cushion to fall back on to make it right for your customers, or you can't. This is where I think most of the wade's/Dr. Bass's of the world fall down. They take risks in growth that come back to bite them in the ass.
The other big problem with custom cab making is that the profit margins are pretty slim. By the time you work in materials, speakers, construction time, and shipping, the price on a custom cab is pretty steep. You have to have some serious mojo cooking for that to be worth more than going to a local store and picking up a brand name cabinet for half the price.
In short, I think this kind of thing can be done. But it's hard work and it keeping it profitable while growing is a Herculean task (that'd be a good name for a song/album/band). The safe way to start it is to do it on the side until it's healthy enough to support you (and probably at least an employee or two).
