The cost of manual labor and our first day at market!

I’ve been remiss in updating, but I have an excuse!  (Yes, I’m like that kid that forgot my homework but have a great reason for it…)  I cut my middle right finger and both thumbs on the finger tips, and thus was unable to type effectively.  It still hurts a bit now (anyone feel sorry for me yet?  No..?  Moving on then…) but I’m able to at least just wince when I type instead of not being able to touch anything at all now.  How did this happen?

We had decided early on that we should spend a bit more money to make our oven exterior a bit more rustic.  So instead of just plain stucco, we picked up some veneer stones to add to the face to add to our “homemade” feel.  Over Memorial Day, I spent 8.5 hours putting on an external finishing stucco layer, along with trying to attach veneer stones to the face of the oven.  Notice I said “trying”.  The finishing stucco layer was easy enough, but the stones, oh the stones… I’d attach one, hold it in place for 3 minutes (really just sit there and hold it for 3 minutes!), and then tentatively let go to see if it would stay or fall.  70% of the time, it would fall.  So I resorted to using my bare hands to help push finishing stucco into the cracks behind each veneer while I was holding it so that there would be more surface area that would stick to each back.  Using my bare hands to push stucco clay across dried stucco and into veneer stones basically is what tore up my fingers…

Let me tell you, I definitely had moment I was about to just give up on completely on the veneer stones… particularly when I had 80% of the stones done, was installing a piece near the top of the oven, only to watch it fall off, hitting the stone below it, and watching a domino effect of knocking out another 6 pieces below it.  (4+ hrs of work wasted).  I was literally ready to tear all the stones off and call it a day.  But I took a deep breath, turned the music on louder, and eventually we ended up with this:

 

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After showing my wounds to EyeDoc that night, I recounted all the injuries I had sustained (minor carbon monoxide poisoning, various cuts/scratches, knicked my leg with a hand axe, getting fiberglass insulation all over my arms, etc.) we talked about whether it was worth it or not… At the time our team kicked off this project, we decided to build the oven ourselves and pick up the trailer so that we could save around $6000.  Was all the man and woman hours (EyeDoc really spent a lot of time helping and staying up to help build this, even on her birthday!) worth it?

My answer given our current situation is always going to be a resounding “yes”.  Let’s take a look at the situation:  We’re a new business with the idea that our partners wanted to invest minimally ($1000 each) to reduce our cost of entry and risk.  We raised good money through Kickstarter, but really just enough to pay for the trailer, fees for licenses, market applications, some ingredients, equipment, building materials, etc.  (our personal investment went into the oven).  We’re doing this as a side job for now just to get our feet wet in the market.  What would $6000 mean?  Some numbers to toy with:

Assuming we make a $5 profit per pizza we sell, that’s 1200 pies we would have to make/sell to cover the cost.

Assuming a day job makes $4000 a month after taxes/savings, that’s 1.5 months of work AND not saving it in order to pony up the cost of hiring out.  Let’s say we had each partner pay equally to cover it and we all made the same amount?  That’s still a minimum of two weeks of post tax pay AND saving it (meaning you can’t pay for anything with it, going out to eat, paying for bills, etc.)

Simply put, we were not in a position to just casually “drop” $6000.  And personally, I think this is part of the reason why a lot of new business don’t make it past the first two years.  Small business owners with the mindset that you should just “hire out” all the things you don’t want to do would have easily said “yes” to spending the $6000 in our situation.  But then you’d be $6000 in the hole, with 1200 pizza to sell to cover that cost of equipment!  That’s a lot of pizzas…and that’s not assuming any other overhead costs…

People have taken the message of Tim Ferriss (notorious author who’s claim to fame is how to create a 4 hr work week by hiring out other folks to do the work for you) and skewed it to convince themselves that you should hire out all the time.  That, and potentially the new generation of workers that just want things handed to them on a silver platter.  Don’t get me wrong, Tim has some great ideas and concepts, but it only makes sense to hire out if you can use that time to generate more success/wealth/progress in your business.  If you’re not able to actually use the time you have to generate more income in some aspect, then it’s really just wasting your money to outsource.  A brief and likely unfair model of Tim’s main premise is that you use cheaper labor to manage your work to generate income that is greater than what you’re paying your labor.  (He uses personal assistant to help advertise his products, grunt work essentially).  And from there, the idea is that you use your revenue to hire more workers to do more advertising, which generates more revenue, etc.

Tim’s book is inspirational, but in many ways, his greatest success is the release of his concept: Four hours of work a week.  Who wouldn’t want to buy into that dream?  That’s like saying you can be fit and in model shape while eating whatever you want, as long as you  just be eat this one pill a day.  We all know (at least I hope so) that being healthy and in shape requires working out hard, eating right, and making good decisions… there is no magic pill.  (Though GNC and other pill pushers have a billion dollar some market that is still successfully fooling many people otherwise).  Similarly, financial success has no magic pill that everyone has access to… (we’re going to leave the arguments of getting some fluke financial windfall off the table). It’s not simply four hours a week of work to make a business succeed.  It’s take focus, hard work, determination, perseverance, vision, etc.  all those crazy buzz words that really do mean something.  But it’s funny, people are always looking for the easy route: taking a pill, or hiring someone out to just do the work.

Yes, there may come a time when you can coast on 4 hours a week of work and have great financial success, but no one gets there without building the empire first… and once you’ve built it, do you really want to coast?  Coasting just means your competitors will outpace you…

Could I have hired someone locally at a more reasonable price to do some of the oven build work?  Possibly… but I’ve also been a firm believer that to fully understand a business, you need to understand all aspects of it from the ground up. Hiring someone to do the work would have just excluded me from the knowledge process and I would be no better.  I’m also a firm believer in continuous learning to be a better person… by being a jack of all trades, you aren’t necessarily a master of none.  You just have more skills to pull from than the person next to you.

Bottom line:  Don’t overestimate how much your time is worth.  $6000 is a lot of money that would have taken us a long time to recover from.  Would I do it again in the future if we were to order another oven?  Well, if we had $6000 available and steady income that could cover that cost, probably not…  I’d probably hire someone or just pay the $6000 flat out to have the finished product delivered.  But given we’re at the start of our business, it only made sense to take on the project ourselves, save a boatload of money ($5000+ after building equipment costs), and learn what it really takes to build the oven.

Finally, as an update, we had our first day of our market yesterday!

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It was a great day, the bad weather held off until we got home, we made 49 doughs and sold out (lost six due to quality assurance e.g. too much burn, dough broke into oven due to thinness, etc.) so with 43 pi’s sold, we made a small profit!  A couple lessons we learned by the end of the day:

1. We need a queuing system to track order at the market.  People often come by, order up a pi, and then go shop around at the market.  It’s very easy to forget who you owe a pizza to if you don’t have it tracked somehow and have two in the oven and two more on deck being made already, while three more orders were placed.

2.  Make excess dough.  The reason why I said it was a small profit was because overhead really brought down a lot of our net revenue (costs of renting a truck, costs of ingredients, etc.) Dough was our limiting factor for our first market, (and tomato sauce it seems) as people continued to come by to order more pizza, and we had plenty of extra ingredients (which we cannot re-serve), so really it would have been pure profit.  And dough is one of our cheaper ingredients, so we could have easily made another ten-twenty doughs and really turned a healthier profit.

3.  Expect that things won’t go smoothly, and learn to roll with it.  Much like your wedding day, not everything will go as planned.  Gambit was stopped by the police due to inactive brake lights on the trailer.  Our commissary forgot we were going to pick up the dough and ingredients at 6:00 AM, and didn’t get our calls until 7:30 AM.  We forgot our dough scraper to pull the dough out of dough boxes, and had to resort to using a pizza cutter and my hands to gently pull out the dough… not everything will be perfect, especially with so many working pieces…but it’s important to take a deep breath, level head, and roll with it.

4.  Talk it up with customers.  Even with a five minute time period from ordering to a finished pizza, not all customers wanted to go into the market to shop.  Many just wanted their pizza!  It’s a great time to talk about what kind of pizzas they like, whether they live in the area, how often they come to market, etc.  Get to know them, because these are the folks that will help spread the word, and come back for more!  We used this time to introduce the specialty voting system to them, have them sign up for a potential free pizza, and let them know they could follow our schedule and special on the all important Facebook.

5.  You can’t please everyone all the time, so stabilize your customer base.  We had plenty of customers who loved our pi’s, and a few that had some suggestions after eating them in terms of how to improve.  Some of the best advice I received before starting into this business was that it’s more important to get a consistent product than continually changing the product based on advice of customers.  Yes, it’s important to take feedback and tweak, but if you’re constantly tweaking your recipe/process/etc., then your repeat customers will basically be trying a new product every time.  McDonald’s, while terrible, succeeds in part due to consistency of product.  You walk into a McDonald’s and expect a very similar menu, similar quality, similar taste each time you go.  Your business product needs to be the same.  You can’t continually tweak all the time or else you’ll never stabilize your customer base.  It’s important to take feedback on how to improve, but it’s also important to know that you can’t please every customer all the time.  Want to improve and truly get feedback?  Due a larger scale study of your customer base to really understand 100+ opinions on the product… don’t take one-two comments and change it up.

All in all, it was a great first day with lots of lessons, a small profit, and plenty of great family/friends/kickstarter backers who came out to support us!  We even had repeat customers on our first day, which was extremely gratifying to see as it just signaled that we’re making some good pies and our price point was right.  (Someone came back after a few hours to order another pizza because their daughters liked it so much!)

And after a nice long nap in the afternoon, I got up to get in a workout, eat some arrachera, and catch up on some DVR’ed TV while I took notes on improvement for next week.  Here’s a shot of me at the end of our clean up, while our team ate the “mistakes” that didn’t make it past quality assurance…

 

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One day down, twenty-one more days to go.  Can’t wait to get to my next market!

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