A reality check for most makers

les i do not have an mba, i do not currently require one for my career path and have never stated or implied i have one.

what if i said my name was woodworkghost? or woodworkghost2?

would that change anything?

i am a sceptic.

here is my manifesto

i am not selling anything here.

i will spend less than i make

i think knives are a high-risk investment despite what others may say. they are very cool things though. i like them and prefer them over factory knives, even Chris Reeve ones.

index funds will outperform managed funds in the long term.

i am a sucky stock picker

i will avoid risky tax reduction strategies, no matter who recommends them

i prefer data over platitudes
 
Hi Baindaidman,

So as I predicted (I seem to be able to do that with some accuracy)

You will not tell us your name.

You will not tell us what your professions is.

So you do not have an MBA (I already knew that)

You don't run your own business (or have anything to do with its marketing or business plan). (Again I already knew that).

You are the perfect example of why I say "everyone's opinion is welcome. However you have to check the source of the information."

Your Manifesto: LOL

How can it possibly be that you are a sucky stock picker?

After all Im sure those companies are utilizing the CV correctly in their statistical analysis. Given your love for data and statistics you should be right up there with Warren Buffett. :D As you have found out, merely understanding the "Book Definition or Book Solution" does not translate into success in the real world.

Statistics are merely a snap shot of what happened in the past and the chances (within given parameters) of what will happen in the future. As well Im sure you know can manipulate the results by asking questions a particular way. Consequently statistical analysis can be skewed to produce the results you are looking for.


Les Robertson
Custom Knife Entrepreneur
www.robertsoncustomcutlery.com
 
peterinct said:
That IS funny Les. :D Thanks for the chuckle.

I don't care to debate qualifications with you regarding the business or investment characteristics of collecting knives, but I do think there is one negative aspect that wasn't mentioned. That would be liquidity.

Peter
Click to expand...

There are definitely more liquid investments out there, but perhaps none more enjoyable. ;)
A mentor of mind used to say "buy right = 1/2 sold".
I have found that to be true with custom knives.
 
Hi Peter,

I agree with you 100% about other investments having better liquidity. Any investment strategist will advise you to diversify your investments. Many investors do have works of art in their portfolios.

Now to bring it back on point (to appease the great and powerful Gill!)

Makers who utilize a business strategy that incorporates "customer" wants and offers value pricing. Will go a long way to possibly creating a great knife as well as a knife with investment potential.

Investment Custom Knives can in many case not be an oxymoron.

Les Robertson
Custom Knife Entrepreneur
www.robertsoncustomcutlery.com
 
i've been reading this thread and it seems that something simple has been made to sound complicated and somewhat mysterious. i have had my own small business for over 20 years and have been quite successful without an MBA or a college background in business. i happen to be a distributor of commercial steel doors, frames, and hardware. the "secret" of my success? product knowledge, competitive prices, (not always the lowest) and an understanding of what my customers want. delivering the merchandise on time, returning calls, not make promises i can't keep, and paying my suppliers on time seems to do the trick. i would imagine the custom knife business is similar whether you are a purveyor or a maker. quality always sells. it doesn't matter whether it's a product or a service. and they go together. as far as custom knives being an investment, i'm sure people have made lots of money re-selling knives, however, i'm more inclined to approach collecting knives like this. i read some advice to a newcomer on another forum that went like this. "buy what you like, you won't lose too much money." that made sense to me.
 
Hi Martin,

Collecting custom knives is as easy as you wrote: Buy what you like...however the you won't lose too much money.

First, define "too much money."

An acceptable percentage of loss to you may not be acceptable to the next buyer.

75% of custom knives are like brand new cars...soon as they leave the showroom (or table at a show) they start losing money.

The main reason for this is because makers build their knives to be sold in the "primary" market.

Collectors sell their knives in the "after" market.

The difference between these two can be night and day.

The primary market is where the collector gets the "rush" of the purchase, the interaction with the maker and the pats on the back from their fellow collectors.

In the after market is where they go to "school". It is the after market where you find out what a knife is "really" worth. A definition of what something is worth...is what some one will pay for it.

So while the "buy what you like" advice will be great in the short term, it may turn out to be a very "expensive" lesson in the long term...I know it was for me.

In your business you are selling commercially produced items. This business plan for this will differ greatly from one that focuses on selling "custom" made items. Hell, the on time delivering merchandise on time aspect (if you were working with custom knife makers) by itself would probably put you out of business.

I can see where a business owner such as yourself would "assume" that the business aspect of the purveyor and maker would be similar....you couldn't be more wrong. Primarily because the vast majority of makers are part-time and as such don't feel the need for incorporating "business" concepts into their knife making.

Those makers who are full time, do incorporate business concepts and then couple that with what most business owners do. They bust their ass 6-7 days a week 8-12 hours a day, to make a go of it.

As you have pointed out an MBA or even a BA or BS is not necessary to be a successful businessman or woman. A commonality that makers and purveyors share is working in a "niche market". Each have advantages and disadvantages over the other.

My 24 years in custom knives is much more valuable than a College degree or even two of them. That being said, the concepts I learned in Graduate school helped me "Focus" the utilization of my capitial and more importantly time.

In my book and at seminars I conduct for makers I always tell them "Buy what you like"....but.....

Good post Martin,

Les Robertson
Custom Knife Entrepreneur
www.robertsoncustomcutlery.com
 
martinr said:
i've been reading this thread and it seems that something simple has been made to sound complicated and somewhat mysterious. i have had my own small business for over 20 years and have been quite successful without an MBA or a college background in business. i happen to be a distributor of commercial steel doors, frames, and hardware. the "secret" of my success? product knowledge, competitive prices, (not always the lowest) and an understanding of what my customers want. delivering the merchandise on time, returning calls, not make promises i can't keep, and paying my suppliers on time seems to do the trick. i would imagine the custom knife business is similar whether you are a purveyor or a maker. quality always sells. it doesn't matter whether it's a product or a service. and they go together. as far as custom knives being an investment, i'm sure people have made lots of money re-selling knives, however, i'm more inclined to approach collecting knives like this. i read some advice to a newcomer on another forum that went like this. "buy what you like, you won't lose too much money." that made sense to me.
Click to expand...

An ambiguous statement actually.
As it ALL depends on what you LIKE. You could lose a little or a lot or even make a bit.
 
Kevin Jones said:
An ambiguous statement actually.
As it ALL depends on what you LIKE. You could lose a little or a lot or even make a bit.
Click to expand...

I think it could be put this way: do your homework, refine your taste and you won't risk losing much by buying what you like :)
I didn't pull the trigger on some knives I like a lot, because they won't sell good in the secondary market and the difference is more than I can afford if I must sell. Would buy them in a heartbeat if I didn't have to worry about money. I'm quite sure this happens to other knifenuts. ;)
 
flava said:
I think it could be put this way: do your homework, refine your taste and you won't risk losing much by buying what you like :)
I didn't pull the trigger on some knives I like a lot, because they won't sell good in the secondary market and the difference is more than I can afford if I must sell. Would buy them in a heartbeat if I didn't have to worry about money. I'm quite sure this happens to other knifenuts. ;)
Click to expand...

We are on the same page.
 
you guys are right. i don't mean just buy anything that strikes your fancy regardless of price, i mean be smart about it like you said. and les, too much money is very subjective. too much for one person might be nothing to someone else. but a person shouldn't overpay even if he can afford it, in my opinion, unless it's your only chance to get a one in a million knife. then you can do whatever you want with your money, even if your wife might want to kill you, but that's another story. i think that most people who buy and sell knives are kind of leasing them or at least renting them so they can play with them for awhile. if they're not keepers you can sell them. what's an acceptable loss? 25% maybe less. it really depends. demand makes all the difference. which brings up another point. makers lead times. les, i do sell custom doors and the lead time is about 4-6 weeks. it's tempting to tell customers that you can get it sooner but the reality is you can't and lying is a good way to piss people off and lose customers. you probably have to deal with similar situations. what i can't figure out is why the lead times are so long. why don't the makers just raise their prices? here is a little story. i emailed db fraley to buy a knife. he replied sure but it wont be until 2014! so i told him thanks but i didn't want to think about it for 6 years. he said he understood. i asked him about the price ($500) and he said it would be about the same. anyway i told him i would love to be booked with work for the next six years and thanked him. what i don't understand is why he and other makes don't raise their prices? if derek fraley charged $2000 per knife people would still stand in line to buy one, but the line wouldn't be six years long. how does he know he will still want to make the same knife in six years and how do i know if i will want what he has or who knows? maybe he should get an MBA. just kidding. also, what about randall knives. they aren't custom so why not add more workers and get the knives out sooner. what's funny about this is we all think we know how to do it better.
 
joshsmith said:
*snipped
what if a new collector shows up and offers his opinion and then he's told he shouldn't have an opinion because he's never gutted an elk out. He might just leave thinking he's not appreciated.
Click to expand...

I have read this entire thread with great interest. I did finally realize why my teeth are all broken, you USE a knife to gut an elk!!!!

carry on my brother collectors, I am off to the dentist.:D
 
flava said:
I think it could be put this way: do your homework, refine your taste and you won't risk losing much by buying what you like :)
I didn't pull the trigger on some knives I like a lot, because they won't sell good in the secondary market and the difference is more than I can afford if I must sell. Would buy them in a heartbeat if I didn't have to worry about money. I'm quite sure this happens to other knifenuts. ;)
Click to expand...

This subject interest me, so I'm going to start another thread later, since Peter has appropriately given a warning for straying from subject of this thread.
 
Hi Martin,

The main reason that lead times are so long is that 90% of the makers out there are part time.

I suspect the people you get your custom doors from are a full time business with paid employees.

My father-in-law has owned his custom cabinet business for 50 years. Like you his work is excellent, in demand and he does not skimp on materials and he does not make promises he can't keep. I suspect that since he has been in business for 50 years he has been doing something right.

You mentioned DB Fraley. He builds an excellent knife, the problem is he only builds about 20 a year. On top of that his knives command a premium in the after market. Consequently, with just 120 orders he is booked for 6 years.

The 6 year time frame is really an illusion. As people will have any number of life changing events which will lead to a cancellation.

However, if you want one of his knives your choices are to wait 6 years or buy one in the after market and pay a premium.

I agree with you that each person determines what is an acceptable loss. The saying goes "you pay to go to school." Which is what you are doing every time you take a loss when you sell a knife.

Hi Flava,

I agree with your statement as well. However, your statement reflects that you are not new to collecting. Consequently, you have learned that doing your "homework" has paid dividends. So while you understand the "buy what you like" mentality. Having done your homework you realize that may not always be the best strategy.

Your statement goes to the heart of the "reality check for makers". Performance of their knives in the after market does carry weight with some collectors.

Hi Nick,

Of course everyone thinks they can do it better...isn't that part of the reason you make knives?

That is the reason there is enough money to pay the "Light Bill" in Las Vegas...everyone has a "system". LOL

Les Robertson
Custom Knife Entrepreneur
www.robertsoncustomcutlery.com
 
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