Measure What Matters
Ed Young
Fabricator’s Business Coach
www.fabricatorscoach.com
If you’ve ever felt like you’re the only one in the shop keeping track of what really matters, you’re not alone. Many shop owners struggle to delegate effectively because they aren’t confident their team knows what to prioritize. What if there were a simple metric that could align everyone in the shop and empower them to take ownership of their responsibilities – without your constant oversight?
Throughput Dollars ($T) is that metric. It measures the cash your shop generates after deducting the costs that vary directly with each additional square foot of countertop produced. It’s the clearest indicator of how much money your shop is making and, better yet, how much value your team is delivering. Let’s explore how you can use $T to build a culture of accountability, reduce micromanagement, and improve your shop’s profitability.
Why $T Matters More than Square Feet
From the start, the countertop industry has defaulted to square footage as a key metric for shop performance. But square footage doesn’t tell the full story. A 100-square-foot kitchen in quartz with eased edges, no miters, and no laminations is vastly different from a 100-square-foot exotic stone project with miters, full-height splashes, and waterfall legs. The complexity, material costs, and labor hours are completely different.
That’s where $T comes in. Throughput Dollars focuses on the dollars generated by your shop, not just the volume. It gives you a true measure of your shop’s output in financial terms. This means you’re not just looking at how much work you’ve done, but how profitable that work is. When you track $T, you’re tracking the cash flow that keeps your business healthy. After all, the goal of your business is to make money, not square feet!
Calculating $T: A Simple Breakdown
Calculating $T is straightforward: $T = Sales Price – Totally Variable Costs
Totally Variable Costs (TVC) are those costs that vary with each additional square foot of finished countertop or that are job-specific. Typical TVC examples are slab cost, sales commissions, 1099 costs, and equipment rented for a specific job (like a reach lift for upper levels of a building).
Let’s break this down with an example. Imagine you’ve sold a kitchen project for $10,000. The material costs $3,000, and the salesperson earns a $500 commission. There are no subcontractor costs for this job. Your $T is:
$10,000 - ($3,000 + $500) = $6,500
That $6,500 represents the cash generated by this job. It’s the money left over to cover operating expenses, pay your team, and generate profit. By calculating $T for every completed job, you get a clear picture of how much money your shop is actually making.
How $T Drives Ownership in the Shop
When your team understands $T, they start connecting their daily work to the shop’s success. It shifts their focus from just “getting jobs done” to “getting jobs done profitably.” Here’s how $T fosters accountability:
Shared Goals: Posting $T metrics creates a shared goal for everyone. It’s no longer just about keeping the boss happy; it’s about hitting $T targets that benefit the whole team.
Improved Problem-Solving: When team members see that $T is lower than expected, it creates opportunities for collaborative problem-solving. For example, if remakes are a frequent issue, the team can brainstorm ways to reduce errors at the templating or cutting stages.
Increased Awareness of Individual Impact: Every employee, from templaters to installers, can see how their work directly affects $T. Templaters understand the value of accurate measurements, CNC operators recognize the importance of reducing waste, and installers know that avoiding on-site issues boosts profitability. This awareness fosters pride and ownership in their roles.
Supports Transparent Comm-unication: By making $T metrics visible, everyone knows where the shop stands at any given time. This transparency reduces misunderstandings and aligns the entire team around a common goal—making every job count.
In short, $T transforms your shop culture. Instead of a top-down model where managers constantly chase after issues, your team becomes proactive participants in driving profitability.
Practical Ways to Implement $T in Your Shop
Here are some actionable steps to make $T a part of your shop’s daily routine:
1. Post $T Metrics Daily
Make $T visible to everyone in the shop. Use a whiteboard or digital dashboard to display yesterday’s $T, today’s target, and the progress toward monthly goals. This transparency keeps the whole team aligned.
2. Tie Team Bonuses to $T
Set weekly or monthly $T targets and reward the team when they’re exceeded. For example, if the shop consistently hits or surpasses $T goals, everyone shares in the success. This builds engagement and a sense of ownership.
3. Highlight High $T Jobs
Train your sales team to identify and prioritize high $T jobs during the quoting process. Show them how quoting directly impacts the shop’s $T and profitability.
4. Integrate $T into Meetings
Make $T a standing agenda item in your daily or weekly stand-up meetings. Discuss recent results, identify what went well, and brainstorm ways to improve.
Avoiding Common Pitfalls with $T Metrics
While $T is a powerful tool, there are a few potential pitfalls to avoid:
- Overemphasis on $T Alone: Don’t let $T become the only focus. Balancing $T with quality and customer satisfaction ensures long-term success.
- Lack of Understanding: Make sure your team understands what drives $T. Educate them on how remakes, material waste, and errors can drag it down.
- Hidden Metrics: Update $T metrics daily and keep them visible. Stale or hidden data undermines trust and reduces engagement.
Real-Life Examples: The Impact of $T
One shop we worked with decided to focus on $T as their primary metric. They noticed their remakes were eating into their profitability. By tracking $T and identifying root causes, they reduced remakes by 25%, which led to a 15% increase in monthly $T. They didn’t add new equipment or hire more staff — they just worked smarter.
Another shop realized that prioritizing high $T jobs could significantly boost their bottom line. By training their sales team to focus on quoting premium materials and complex designs, they increased their average $T per job by 20%. This translated into an extra $50,000 in monthly revenue.
Getting Started with $T in Your Shop
Ready to make $T a part of your shop’s culture? Here’s how to get started:
1. Calculate Your $OE (Operating Expense):
Determine your shop’s daily operating expense. This helps you understand how much $T you need to cover costs and generate profit.
2. Start Tracking $T:
Calculate $T for every completed job and total it daily.
3. Make It Visible:
Share $T metrics with your team through electronic displays or manual boards. Keep the data up-to-date and easy to understand.
4. Set Goals and Rewards:
Establish $T targets and reward the team when they’re achieved. Tie these goals to actions they can directly control, like reducing remakes and other errors.
Conclusion: Focus on What Matters Most
By measuring what matters—your $T — you can create a shop culture where accountability thrives, profitability grows, and micromanagement becomes a thing of the past. Your team will feel empowered to take ownership of their work, and you’ll gain the clarity needed to make smarter decisions.
Take the first step today: Calculate your $T and share it with your team. You’ll be amazed at how quickly they step up when they know the score. By focusing on $T, you’re not just improving your bottom line—you’re building a stronger, more efficient business that runs on teamwork and results.
If you want to discuss this article or want some coaching on how to implement $T as the key measurement at your shop, click the SCHEDULE A FREE CALL button on my website or email me. We can talk about your specific shop.
About the Author
In addition to having run a countertop fabrication shop, Ed has also helped many fab shop owners become very successful. He is a seasoned manufacturing manager and coach who has helped hundreds of companies from single person startups to large international corporations. As a former business owner, he understands the responsibility to make payroll while also satisfying customers. Ed can be reached at Ed@FabricatorsCoach.com . If you want help implementing this tool, Schedule a Call with Ed. If you enjoyed this article and want to hear more from Ed on this and other key Fab Shop topics, check out our podcasts (www.fabricatorscoach.com/podcasts) and videos (search YouTube for Fabricators Coach).