How can I tell if a furniture or cabinet shop is profitable before buying?

A shop’s financial statements show the total. They may not show which jobs made money and which lost it. For a furniture or cabinet shop, that detail lives in the job files. If you can read a handful of them beside the quotes, you learn how the shop prices, how well it builds to its price, and where the money leaks. Your accountant can help you read what you are given.

Job costing records

Ask whether the shop tracks cost by job at all. If it does, request a sample across large and small jobs, and recent and older ones. Look at labour hours, materials and outside work such as finishing or installation. If the shop does not track this, you are relying on the owner’s memory, and you should say so to your advisers.

Quoted versus actual

Set each quote beside the finished job. Where hours ran over, ask why: a poor estimate, a difficult design, a slow worker or a change by the customer. The pattern matters more than any single job. A shop that is regularly over on one type of work may be quoting that work too low.

Material yield and waste

Sheet goods and solid lumber are a large part of the cost. Ask how the shop plans its cuts, whether it uses nesting software, and what it does with offcuts. Walk the shop and look at the scrap bin. Ask how often parts are cut wrong and have to be remade, because each remake uses material and time.

Remakes, callbacks and change orders

• Ask for a list of remakes and warranty callbacks, with the cause and the cost of each.
• Check whether customer changes were written up and billed, or done for free to keep the customer happy.
• Ask how installation problems are handled and who pays to return to site.