Why it's hard to make any money out of ski building!

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falls
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Why it's hard to make any money out of ski building!

Post by falls »

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COsurfer
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Post by COsurfer »

Are you referring to this:
Our manufacturing facility is located in The People's Republic of China. 15 minutes from the beautiful downtown waterways of Shaoxing, and 45 minutes from Hangzhou's International Airport. We utilize over 100,000sq meters of manufacturing space and over 100 manufacturing machines to produce your perfect ski or snowboard
I still believe there is a market for small local builders. As an example, take a look at New Belgium brewery here in Colorado. This is a brewery that started from a garage in the 90's. Now microbrews are taking a decent portion of the overall beer market. Why? IMO they provided a better home grown product. There pricing is higher then coors,bud, etc however I am willing to pay the premium for quality. I just read an article about how society is moving towards a more customizable instant manufacturing process. That is an ideal market for us ski/snowboard builders. Our advantage is front line knowledge and the ability to modify our process quickly to meet new market demand. Not to mention people are always excited about supporting local businesses that provide good products. Opportunity always exists!
skidesmond
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Post by skidesmond »

Wow, that's quite a manufacturing plant. It wouldn't surprise me if it's in China. Can't imagine what it's like to work there with all the ski presses going at once. I think they're more of a threat to the big American (are there any left?) and European ski/board manufactures than the local guy.

There's only a few companies that make dishwashers, refrigerators, washing machines etc. Most come out of the same few factories. That's what that ski company looks like. One day they make Joe Blow skis, the next day it's for Dicks Sporting Goods, or Sears, etc.

There's always a market for true custom products like skis/boards, beer, bikes or whatever the product. The hardest part is getting people to part with their money (unless it's a money making scam, then greed takes over and people through many at you... but I digress) and getting a customer base.

Their is definitely a growing "Buy Local" movement where I live. We have quite a few great local breweries, one down the street from me. Farmers Markets are growing in popularity. The company I work for sponsored a Farmers Market this year for about 3 months. It was great! Fresh roasted coffee beans, artisan breads, produce from local farms, locally raised beefalo,.... etc.

Part of it is educating the consumer the difference between a $800 ski off the rack to a $800 custom ski. For a lot of people price is the bottom line no matter what. That's why 25% of everything sold in the USA comes from China and why stores like Walmart and Kmart are so huge.
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EricW
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Post by EricW »

The way I figure it, once I can sell 100 boards in a year, I can quit my job. Not like it pays very well anyway considering how rampant the nepotism is. I think it's very possible to make a living at this, but it will absolutely require busting your butt. Making 100 boards while working full time doesn't leave room for much else. That doesn't even include marketing, demos, and paperwork.

After talking to a lawyer friend, I'll probably incorporate and run everything that way and just pay myself a salary. I'm also very adverse to taking on dept to start a business. Just think of the stress if things don't go well and you have a pile of debt. It turns a dream into a nightmare real quick.

We seriously need a business section.
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Post by skidesmond »

Incorporating is good idea, it protects your personal assets. Years a go I read a book on starting a small business. It had a section " Plan for failure". What?! Don't you want to plan for success? Yes to both. I'm sure there's no shortage of business models, philosophies, advice out there.

You're starting off in the right direction by talking to a lawyer.
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falls
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Post by falls »

Yeah COsurfer I was referring to the fact these guys have 100 presses in China. You can see why it is so attractive for companies to go off shore, because I imagine this crowd's prices are pretty attractive.
I am very much for local production and sales. I would really like to see ski sales a bit like surfboard sales where you have local shapers. My scepticism however comes out even looking at my buying habits. I am lucky enough to make a good income so am able to buy things that I can see are better value in the long run rather than buying something that is the cheapest then replaciong it if if/when it breaks. However, for a production item like snow skis price is a major factor. I haven't ever bought any skis in Australia. Most purchases are from the USA/Japan because the prices are so much better. The thing that holds me back from doing ski building is a major worry that in the small Australian market there wouldn't be enough patriotism to spends $900-1000 on a local pair of skis when you can ship some Armadas/K2s etc from America for $600-700 or better on sale. (That and as yet I can't make a product I would be willing to sell!!)

On the business front if you were looking at making 100+ pairs in a year how much do you think it would cost per board/pair of skis.
Lets say plain or screen printed base + edges + 2 layers of triax + wood core and plastic sidewalls + carbon stringer + sublimated topsheet.
Not including your own time.

Topsheets can be had for US$40 from CODA (sublimated shiny white PBT).
My glass works out probably $9 a pair from buying a 50m x 1.2m roll
Any other input.

All told what do you think the profit margin for making skis is? 20%, 30%, 40%, 50% or more?
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COsurfer
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Post by COsurfer »

After talking to a lawyer friend, I'll probably incorporate and run everything that way and just pay myself a salary. I'm also very adverse to taking on dept to start a business. Just think of the stress if things don't go well and you have a pile of debt. It turns a dream into a nightmare real quick.
Incorporating is the ideal situation however you need to be making a decent income before you incorporate otherwise you will kill yourself in accounting fees. The better alternative right off the bat is an LLC. I have started 3 very successful businesses from scratch and all of them were funded primarily by debt/loans. It is a fact of life in starting a good business. In my calculations you need about $50,000 to get a ski/snowboard biz up and running. That number includes space rental for at least a year, a bare minimum of good equipment and insurance to protect your ass. I started my snowboard business in early summer and I don’t anticipate making a profit until next season at best. I am working at this full time and I produce 1 board a week. I am sure I could easily speed up but that’s not my goal right now. For funding start with family, friends. Then work to SBA loans. Finally, seek out nonprofit seed loan companies in your area. I was able to secure $25,000 for another business from a nonprofit seed loan company pretty easily. The only way your business will be successful is if you get out and sell, sell, sell. You can’t do both the fabricating and the selling. Pay someone $10/hr to do the labor. Just my 2 cents for what it’s worth!
All told what do you think the profit margin for making skis is? 20%, 30%, 40%, 50% or more?
10%-20% is probably the average markup. Remember you will probably have to sell your product wholesale and that is typically 50% of retail.
The thing that holds me back from doing ski building is a major worry that in the small Australian market there wouldn't be enough patriotism to spends $900-1000 on a local pair of skis when you can ship some Armadas/K2s etc from America for $600-700 or better on sale. (That and as yet I can't make a product I would be willing to sell!!)
Wagner skis in Colorado sell their skis for $1,600 and lots of people buy them.
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MontuckyMadman
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Post by MontuckyMadman »

once again a standard fair manufacturing net is 25% at the best case scenario.
Its just the way it is.
In the US in the last 3 years the bottom has dropped out of this market. When skis 1 year old were going for 650 they now go for 300 or less used, on TGR.
IMO that's the lowest price on boards anywhere available to the average human.
Who the fack pays retail for $900 skis anyway? Top 2%?


As the supply goes up and the more people do this the price goes down across the board, china included.
Get on it now because in a few more years assuming the recession continues and it will, skis will be new at $500.
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falls
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Post by falls »

Thanks MM
Someone told me once you had to take in 4-5 times your costs to make something worth manufacturing. So your 25% sounds pretty right on.

I think also you guys are right that not many people pay retail prices for skis. On backcountry.com etc the skis are immediately marked down from their list price. I think there is a big decision to make if you were trying to start a business as whether you are going to go for volume (smaller amt of money from a great number of sales) or customisation (larger amount of money from fewer sales). Psychologically I think that the people in the market who pay full price or buy custom skis are maybe not necessarily the type of people who are real "core" skiers. That might be unfair, because I am sure some really keen skiers do stump up the cash for customs, but i would always wonder if I were building customs whether they were a trophy for someone rich that might use them once a year? Maybe a bit pessimisitic?
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EricW
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Post by EricW »

I disagree about debt being a fact of life in starting a small business. It's a commonly practice but certainly not necessary. Starting small, collecting equipment slowly and saving money is preferable to debt. I've met quite a few millionaires that didn't take on debt to get that way. Yes it slows things down but I think it's well worth it. It's incredible how much money you can save/make when you don't have any payments. It's a different paradigm of thinking and I'd be piles of money ahead if it didn't take all of my 20s to figure it out. If we can pay $25,000 plus interest for a car we can save that much and drive a cheaper car. Without dept you can also start making a profit right away. Dept has never made me feel good or successful and never really helped me in any way. Screw debt.

If the product is good, people will pay the price. You just need to find the people. My target demographic will be people who appreciate their gear, not 10 year old kids. I have a buddy that I'll pay a % of the profit per board that he sells. It gives him a feeling of ownership in the company without having to bring on a partner and it's all commission so there's no wasted salary.

In my mind $10 doesn't get much of a craftsman. I think it's possible to make boards and sell them. It takes long hours, probably 80 hour weeks, especially if you're already working a job. That's what it takes though.
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Post by Jekul »

An LLC is definitely the way to start out. It requires much less legal paperwork, and any money made in the business can go directly into your pocket (if your business can actually generate a profit ;) I'm with COsurfer, I did the math and you're looking at about 50k to get a solid business started. Plust whatever you want to spend on marketing/sponsorship and the like.
skidesmond
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Post by skidesmond »

I looked into LLC a little bit. Seems like a good way to get started. The philosophy of "Plan for Failure" was about borrowing money. The idea is to use just enough of you're own money so that banks (or whatever) sees you're serious about starting the business. But you don't want to use all you're own money in case it doesn't work out. Better to declare bankruptcy of the business than personal bankruptcy. I know it has a negative tone to it but, it's just another philosophy.

Starting out acquiring material/machines/equipment over time works too. But you can lose the ability to right off depreciation of equipment because it doesn't really belong to the business until you form the business.

I guess it all depends how risk adverse you are.

Back in the late 80's I did MX photography on the side. It paid for all the darkroom equipment, film, etc. and made good $$ at the time for 2-3 years shooting on speculation. It was a fairly captive audience. It did give me a little bit of business experience and customer relations. There were people who thought they're little point and shoot camera was as good as real 35mm camera. (before the days of digital) "Oh is that speck on the track your son"... They were proud of their little pic and you weren't going to tell them differently. Anyway, there's always that element you'll have to deal with.
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Post by doughboyshredder »

I started my contracting business with 10k of credit card debt. Most everyone tells you that is the wrong thing to do, and that you need at least 30k cash to start a business. Bullshit. 6 successful years now.

100 boards a year? I don't see how that could be close to enough. You'll be lucky to net 200 bucks a board. If 20k is enough for you to roll with more power to you. I personally don't think that's worth the stress of being self employed.

I did a little research awhile ago in to what Chinese manufacturers are charging, and was shocked. 50-100 usd per board depending on options and quantity purchased.

Chinese boards sell for the same price as American made boards and net a much higher profit.
lex
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Post by lex »

Sisco factory basically buys most every factory that closes down. They have the Karhu factory, the old Zoopla factory etc, they have their own base extruder but don't know how to use it, they make their own edges but they blow donkey, they can't make a board that you can mount your bindings to since their countersinking is so bad. How does this place survive with all the equipment & shitty quality?

They own M3 & sell direct to most chain stores, not to mention a bunch of other companies. It's soley volume based. They have no heat so the girls in the office where gloves in the winter. They use to produce Arbor years & years ago actually. Till that factory burnt down. The place is dark & the coolant from the grinders flows right into the river...class act.

Eric or anybody else starting a biz in building. Few things, don't quit your day job...it takes money to get all the basic equipment, tools, molds & while your spending your not really earning. I would work out of the garage or personal shop. Paying rent is a 12 month a year gig, actually selling snowboards is a little over a 2 month time period. First year I would just focus on friends, selling boards at cost. Give yourself time to actually develop a good board, to tweak shapes, profiles, test materials. I'm suprised how many people can make a board or ski but can't actually design a board without the aid of snocad. Basically ask yourself what would you spend to have a board made by a small factory & why would you if they can't even shape a board.

I've ridden a few small factory boards...to be honest, these were typically heavy, poor finishing, didn't look that great or ride that well. So saying it's hand built might sound cool but doesn't mean the board/ski is any good. So give yourself sometime to learn the ropes, what works, what doesn't & figure out what is realistic. 100 boards, is not impossible, but it's not easy. To be fair, you might be stoked on selling 10 boards. My first board sucked, my second was too techy & I screwed it up, third something different but screwed it up, fourth was good, 5-10 I started to get my an idea on how to design a really good board, but I still had a lot of mistakes. I don't want to discourage anybody, just saying that there are other things to look at.
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EricW
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Post by EricW »

Yeah, I'm definitely keeping my day job. I think I'll be lucky to get a design that can sell by the '11 - '12 season.

I actually do my designing on DraftSight. It's a pretty good free CAD software. We'll see how my first one works out.

I got a lead on a guy that has I-beams all over the place. His company builds bridges so he's got hundreds all over the field near his office. He was saying something like $.25 a pound for used and $.10 - $.15 for scrap. Got an appointment with him at 7am tomorrow. Hoping to pick it all up for about $300.
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