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hitchmss

Some free advice!

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So this isnt necessarily business/marketing, so if the moderators feel this is in the improper location please feel free to move.

I wanted to share an experience of mine from this past year, with the hopes that it will benefit any of you!

Back in May, we had a neighbors water pipe, from their adjoining condo, burst, which flooded their basement, and consequently our basement which is also my main studio where I make and bisque all of my work. At first I thought Id be down for 2 weeks while work was done to remediate water and mold damage, but I was extremely naive. Two weeks in, and Servpro had only just come in to tear out drywall and run dehumidifiers. It became apparent that my studio was going to be down for a long time, and that this would impact my full time pottery business. We had been speaking with the neighbors insurance company who was pretty helpful about dealing with our personal property and structural damages, but when I inquired about lost income for my business I immediately received resistance from him, which led me to hire legal representation.

Long story short, my attorney and I accurately calculated my losses for the time which the studio was actually going to be down (4 months) due to this incident, and had come up with a figure of $87k in lost income, and lost "production value" (pots that would have been made in that time, but sold in later years/periods). The insurance company remitted this info to their own CPA who threw back a lowball (no surprise there) of $5k which the insurance company forced us into accepting. I wont go into the drawn out details about this, but they basically told us to take their offer or lose ANY compensation for our personal/business losses.....it was our only option.

Now Im not writing this to provide advice on how to negotiate with insurance companies, hire attorneys, etc, but on how to document your studio work. For years I have had a running tally sheet of inventory made at the end of each day. Over the years of selling the same pots, I have been able to, at the end of the year, predict how many of each pot style I will need to make to meet next year's demand. So, after a day of throwing, I jot down what I made, and go on; seemed like it was enough information for me. Even though this data was enough information for my attorney, CPA, fellow potter, and myself to use numerous calculation methods to consistently come up with the same loss value, it would have been much more difficult for the insurance company to dismiss my claims had I collected daily, and more detailed logs about my use of time.

Because of this, I now keep a little spiral bound book in the studio (4" x 6" or similar) where every day, at the end of the day, I jot down what I did that day, and about how long each task took me. If I spent 2 hours on the computer, 30 mins eating lunch, 6 hours throwing sponge holders etc, I also jot down what I made that day. I dont get super detailed with my times, as I dont want to be checking the time every 30 mins, but as close as I can accurately ballpark. Lastly I still have my tally sheet on the wall, but instead of just writing down how many of what I made today, I also put the date next to the quantity of pots made. The idea behind all of this, is god forbid, this experience should ever happen again, then I will be able to go to the insurance company and say "this, THIS is what each and every day is valued to me", not just this is the number of pots I had left to make this year to meet quota/prorated out, but this is what my down time costs me. Not to say the insurance company wont try to bully me into another lowball settlement offer (they know they have the upper hand, since anyone who has dealt with an insurance company can attest to the fact that they LOVE to pay attorney's fees), but it will be another ace in my hole to substantiate my claims.

Also, this experience led me to do a couple of more things to protect myself. I of course reached out to my homeowners insurance company, who wouldnt do anything to help since the damage was caused by a neighbor (of course, why would they help their insured....), and I also reached out to my business insurance policy, but the policy did not cover loss of income claims. So, I began shopping around for insurance coverage for my business, and low and behold, State Farm, who has had our auto policy for years, did offer a business insurance policy, which WOULD have covered every penny of my loss of income, and had I lost any inventory/tools/space etc, they would have covered the retail values of those items, not just the materials or wholesale values like many insurance companies (Like ACT) do.  This is important to inquire about when shopping for insurance, especially for potters. At $.30 /pound for clay, and a buck or two for glaze for each pot, when insurance companies value losses based on materials, not retail values, I could lose a box of sponge holders (retail $1025), and the insurance company would value the loss at just materials (~$110); also inquire how they determine retail value? State farm's policy is if I have records that Ive sold an item at that price previously, then that is the value. Also, do you need to have a highly detailed inventory of your each and every item, or can you bring them of box of shards and price tags to determine the loss? Every question I asked of State Farm came back with great answers; couldnt be happier with my new policy with them. To top it off, State farms policy for all of this isnt but about 60% more than what my previous policy was. A lot of coverage for IMO not a lot more money. (Used to pay $800/yr which covered $20k of inventory/display while traveling, and liability policy; SF's policy covers tools/equip/inventory both on/off site, liability, structural, loss of income.......for about $1300/yr; full replacement limits, and liability over $2 mill)

So, in summation; document your studio work habits, it takes just a minute or two per day, and becomes second nature readily. Check your insurance policy coverages and limits and ask TONS of questions about the policy; how are claims handled, how are they valued, how do they investigate, how do they pay....ask the questions you think are stupid, but really may not be. Lastly, be prepared for the worst and hope for the best; the only reason I was able to keep my business alive this year was the fact that I had made almost 60% of my year's inventory prior to the flood. Granted, I lost a lot of money, and the setback has been huge and will take me years to recover, but Im still swimming! Remember, when it rains, it pours, and for those of us who make a their living selling ceramics, we cant take on too much water before we capsize; most of us aren't a major corporation with huge assets to count on when business slows down. Sadly too many of us are show to show, paycheck to paycheck, and a few hiccups can mean big consequences.

P.S.- I know right now, many of you are thinking "....why didnt you rent studio..", "...why didnt you sue the insurance co...", "...why didnt you sue your neighbors...", etc. I did look into renting studio space; local community center wanted $3k per month to rent 400 sq feet, wiring for my pug mill, and 5 bisque firings per week....too expensive. Other local rental options wont allow potters on site as we "...like to make fires...", even though they regularly cater to artists. We didnt sue the insurance co because that would have been futile, suing our neighbors wasnt an option we wanted to pursue. I wish we had a better option to deal with what happened to my wife and I, but we didnt. It was almost too much to just keep on top of the contractors, attorneys, insurance folks and still do the 15+ shows I had scheduled for the time period, all while living in a construction zone.

I appreciate your sentiments, and thank you in advance for any support you may offer, but really I bring this to light to try to help prepare yourself in the event of an emergency. This is especially true of those of us who make a living in the mud, but is still pertinent for anyone who sells their work at any volume.

Also, CERF, (if you're not familiar, Google them), was able to help me with a grant. A wonderful organization who helped offer us a line of hope in a dark time and I wish I had known about them earlier in the process.

Stay Safe, and POT ON folks!

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Good info when the sh-- hits the fan. My worry has always been fire. My shop is not connected to the home but gas kilns are always a concern . My shop is old tinder dry wood. 

I also have State Farm business insurance (the fire part for the shop is a flat 12K)

I had a loss claim once due to stolen pottery out of my truck while I was fishing back in the 90s(was tweekers)-they paid for all 10 boxes -I got about 1 box back from the cops who plea bargained his sentence down  due to another larger crime(they had his prints on my pots)

Business insurance is a must for us professionals

Thanks for sharing your story

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When I was a decorator I carried a million dollar coverage plan for working in customers homes.   I had a friend that had a photography business in her home,  her basement was flooded from a 100 year storm.   Her home insurance wouldn't cover it but her business insurance did.  I just sell some work at galleries now but if I decided to get into heavier production I would buy insurance.  I have insurance on my pottery equipment,  I need to send photo's of my latest purchases to State Farm.  Denice

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1 hour ago, Mark C. said:

Good info when the sh-- hits the fan. My worry has always been fire. My shop is not connected to the home but gas kilns are always a concern . My shop is old tinder dry wood. 

I also have State Farm business insurance (the fire part for the shop is a flat 12K)

I had a loss claim once due to stolen pottery out of my truck while I was fishing back in the 90s(was tweekers)-they paid for all 10 boxes -I got about 1 box back from the cops who plea bargained his sentence down  due to another larger crime(they had his prints on my pots)

Business insurance is a must for us professionals

Thanks for sharing your story

When I got my new policy with SF my agent said that he wanted to get on site once the new studio was built. In regards to fire insurance he wanted to see and document the set up, layout, tools, equip, all of that. When we shopped for the policy he asked how much inventory I normally keep on hand, which is something around 6 figures of inventory. He said that in the event of a fire and total loss they would cover everything under that roof, including the inventory. Of course if we were able to determine how much inventory was actually lost, not just the blanket value, it would be better, but if I was paying for it, they'd reimburse me for it. Thats a HUGE peace of mind!

Glad the cops got the guys, and you got some of your work back. Years ago I sold a pot that as I was loading it, had a perfect thumbprint from a different color glaze on the side of it. It fired out perfectly; not sure that you could scan it and find me, but Ive wondered if some day I might be framed, nefariously, for some dastardly deed!

Without a doubt insurance is a must. I had always carried liability with the fears that someone would sue me over (insert any crazy "justifiable" claim here) issue. I also have myself setup as an LLC to mitigate losses in the event of such an issue. My policy also covered a total loss of my van/display/pots/etc while traveling to and from shows, and I had a small policy to cover lost equip/tools in the studio, but I had never thought about not being able to USE my studio. I guess it takes going through a circumstance like it, or hearing about it, to make you think "...thats a smart idea...".

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I was trying to stay focused on your entire post but couldn't get past the 87k for 4 months of lost income. Since that was your net loss claim then that means you are producing 300-400k of work a year in a basement studio. Wow, congratulations, that is definitely one of the highest numbers I have seen listed here for a solo home operation. Sorry to hear of your troubles. If I have it right you mentioned recent retirement to pot full time recently. Me I would take this opportunity to consider moving your operation into a commercial location  that might be a better fit. Obviously you can still have issues in a commercial location but 'a neighbor flooding the basement' kind of stuff is less likely. Doing 30-35k+ a month in production might also go smoother in a larger commercial building.  I hear you on the loss of materials only clauses in some of these policies. ACT and those outfits I think are mostly just low cost show insurance. I read over the exclusions when I was looking for retail insurance and they really only offer minor coverage and show liabilities. I had to get another policy even though I had almost a full year left on the ACT one. Went through a broker and I forget who we went with but had to have some riders added for full coverage including lost income.

Good luck and again sorry for your hit, hope you can recover quickly. 

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15 minutes ago, Stephen said:

I was trying to stay focused on your entire post but couldn't get past the 87k for 4 months of lost income. Since that was your net loss claim then that means you are producing 300-400k of work a year in a basement studio. Wow, congratulations, that is definitely one of the highest numbers I have seen listed here for a solo home operation. Sorry to hear of your troubles. If I have it right you mentioned recent retirement to pot full time recently. Me I would take this opportunity to consider moving your operation into a commercial location  that might be a better fit. Obviously you can still have issues in a commercial location but 'a neighbor flooding the basement' kind of stuff is less likely. Doing 30-35k+ a month in production might also go smoother in a larger commercial building.  I hear you on the loss of materials only clauses in some of these policies. ACT and those outfits I think are mostly just low cost show insurance. I read over the exclusions when I was looking for retail insurance and they really only offer minor coverage and show liabilities. I had to get another policy even though I had almost a full year left on the ACT one. Went through a broker and I forget who we went with but had to have some riders added for full coverage including lost income.

Good luck and again sorry for your hit, hope you can recover quickly. 

I wish I was producing about 300-400k of work a year, but its more like maybe half of that. If all I had to do was stay home and make pots, I could do that. A typical day in the studio making pots makes about $2k +/- of inventory on average. Im making pots maybe 3 months of the year.  I also have to spend time at my second studio an hour away from home where I glaze and fire. Makes my efficiency go way down because when Im there Im only firing, and when Im here Im only making.  Likewise I do around 22 shows a year, and keep 10 galleries happy. Usually if Im not working, Im out in the woods; gotta have a life in there too.....somewhere. When I had my full time employee, and he finally got trained well enough that I could really count on him to handle a lot of responsibility, I could have been making a LOT more pots, but just at that time he decided to go into the sheet metal duct business. Pots were too much for him. Sad as he had a lot of promise as a potter.

Thankfully I am in the process of building a new, all inclusive studio, where I will be every day, and will be focusing more on galleries and less on retail shows. Gotta make lots of pots to make a living selling mostly wholesale, but while my body allows me to do it I will.

Ive looked into commercially zoned operations; buying and/or building. Commercial building code is WAY expensive. Just the fire detection and suppression system alone would make out my budget. I will be writing more about my experience in building my new studio, as I think theres lots of good info that Ive learned throughout the process, applicable to small and large operations.

It is funny how much money Ive made out of my basement though. Its a small 280'ish square feet of cramped space where I make everything; around 8,000 pots a year/ 8 tons of clay. Sometimes I feel like an ant down in the "hill" just scurrying about!

Edited by hitchmss

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sam, now i understand how you can possibly think of making such a huge studio pay off.   

and i looked at the photos you posted.  i think i saw all 203 of them.  you really have the skills and ability to make it a full time occupation with a good income.  congratulations on making it all work.   wish there were comments on each photo, the kiln collapse looked awful but i see that the damage was to only a small part of your inventory.

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19 hours ago, oldlady said:

wish there were comments on each photo, the kiln collapse looked awful but i see that the damage was to only a small part of your inventory.

I will get some comments added to the photos I put up. Was just in a hurry, and I realized that I had no information about me, or photos of me/my work on here so I thought Id share.

The kiln collapse; my studio mate had always had his kiln posts in the same configuration, but I had switched them up so I could fit a big platter in on the bottom, and when he fired/loaded the next time, he didnt pay attention to where the posts on the bottom were(nt). Of course, posts over open air space is not good, and I wanted to upload those for anyone who may wonder what would happen if you did the same. His words to me "....all of a sudden, the cone packs were just GONE...!!". When I came in the next morning to unload the kiln I could see immediately what happened. Thankfully I was able to scoot the car out just enough to reach inside and fish all the pots out. All in all, the shelves and lost pots together only accounted for maybe $200 in lost work, which is nothing in comparison; those few pots held up the remainder of the stack and kept the whole pile from falling in. Very fortunate as it could have been much worse. Amazing also to see how the shelves broke; not a clean break, but almost a literal implosion from stress.

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@Stephen Not sure how it is where you live, but here there's no classifications for size restrictions on residential vs commerical. I could build a 10,000 Sq foot home if I wanted, or a 500 Sq foot commercial space. A 3400 square foot home is not a rediculoulsy large home, not so big that the permit Dept would raise their eyebrows when I pull permits. Plenty of folks build numerous thousand square foot pole barns all the time out here that are residentially permitted. As the chief inspector told me ..."what I do inisde my 4 walls is my business...". 

Edited by hitchmss

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So your permitting it like its a residential home? How does that get insured as a business?

ya know except for way out in the middle of no where it seems to comes down to if your operating a business out of the building and are there any employees/customers onsite. I don't think smallish shops (under about 1500 ft)  cause much of a reaction if there are no employees and you don't get many customers on larger properties but I think the bigger shops do and I think they are actively in most areas around here trying to make sure people don't put commercial buildings on their res zone properties. From what I hear though it is mostly construction folks who want to run crews out every morning and store large equipment at their "hobby shop" making it unsightly and generating complaints from the neighbors.

Hey if it works for your area, it works. Enjoy the new digs. Sounds like a really nice setup.

  

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@Stephen  Yes, the building is being permitted Single Family Residential.

The reason that the building/permitting office would want a commercially permitted building would be for the safety of my customers/employees etc. While a Residentially permitted home is totally safe (the building isnt going to fall down), it does not have to meet requirements like ADA Thresholds on your doors, and egress/ingress points which are sized appropriately for emergency evacuation. There is a whole slew of other criteria when it comes to differentiating between a compliant residential grade building and a commercial one; things such as proper lighting for interior/exterior, easements for public access areas (sidewalks etc), parking spaces, proper road surfaces etc. The biggest design feature, which is the one that pretty much is impossible on my budget would be the fire detection and suppression system. A smoke detector in a home is fine, but the county would look pretty poor should there be a major fire where injury was incurred, and they had not required a suppression system on a major factory floor, full of employees.

So, yes, in a way the fact that I dont have regular patrons on site, and I dont have regular employees is why the Chief Inspector basically gave me the go ahead to do what I want. Now, that said, if all of a sudden I have 30 cars in/out every day, business operations out in the yard, and am not the "small operation" like I described to him, then he may inquire further with me. I was also told by a local engineer that even if that does become the case, the county has no legal right to come onto my property to investigate by building and its code compliance to a commercial vs residential build quality. So, unless I invite them in to come snoop around, in theory (unless something major occurs, like a fire/injury/etc) they cant prove that what im doing INSIDE my 4 walls is not residential style activity/hobbies.

Thankfully, this property also has the benefit of having no zoning; so I could build a landfill, strip mall, airport, or a home and it would all be permissible within the uses of the property, however the structures must meet county code for the buildings use.

If I were in a residentially zoned area, there are limitations as to what a "home occupation" can/cant do; things such as signage (must be below a certain size), no regular traffic, no retail sales, no audible noises from property boundaries, no unsightly/non residential equipment etc. Some residentially zoned communities have way more stringent restrictions, but for this generally rural county, its fairly lax. Similarly, I did ask permit central should someone ever complain about my activities (was looking at a different property which was zoned residential) what would happen; they told me that they've only ever had to take legal action against one property owner as he, like you said, had a landscaping business, and what started out as one skid steer and some trucks, turned into mulch machines, materials storage, heavy equipment out the wazoo, lots of noise, lots of dust.......

In regards to sizes of buildings, again, the county doesnt care how big anything is on your property unless it breaks the zoning regulations of your property; i.e. a residentially zoned property, in this county, cant have a structure, or combination of structures, which exceeds more than 40% of the total square footage of the lot. i.e. if you have a 100 acre farm, you cant have more than 40 acres of buildings. Maybe all the guys I know have abnormally big shops/barns/farms, but a 50x100x16' barn is not atypical. and the reason makes sense too. When you're building pole barns, the cost is not a linear growth with the square footage; in theory you can build 1000 sq ft for $60k, or 3000 ft for $100k. So it makes sense, to just build lots of space, because heck, you know you're gonna fill it up, and its relatively cheap. Now for someone to have "the whole thing" just for his "x" shop is a little less typical, but IMO by no means unheard of.

In regards to insurance, my provider state farm, will provide full coverage on my building, its contents, and my income, even though the building is not a commercial one. Its the same as it is now for me; I have a business in my home, but have business coverage which covers my business in my home. If I burn down the home with my business equip, my business policy covers all the damages, if the house burns down because of a faulty furnace, then our homeowners would cover the house, but not my business, where then my business coverage would pick up my business losses. 

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21 minutes ago, Callie Beller Diesel said:

Just out of interest, are there no zoning laws in place? Are you building in a mixed use area?

 

This township has no zoning restrictions, so yes, I can do whatever I want on the property; raise chickens, or have a strip club.

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That sounds like a colourful neighbourhood!

Permitting laws can vary so widely from location to location, as long as you've done your due diligence and your insurance company and the municipality are fine with whatever you're doing, then I hope you post pics of this project as it unfolds.

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have built is several places, the zoning is different but all of them allow "artists" to work at home with almost no restrictions.  in rural areas you can even sell your "produce" in a roadside stand on your property.

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The sticking point usually becomes: if the studio is attached or dettached to the primary living space. If attached: fire stops become the big issue. They also hammer on electrical: if your new space exceeds the capacity of the current service. The County I live in about middle of the road on code enforcement. One County north there is no inspections except private sanitary. One County south they pick you apart on everything. 

Tom

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Where I live there are plenty of restrictions for home businesses, including no signs, no customers coming and going, no penetrations through the building (venting), and the business space can't be more than 25% of the level that it's on. If I want to build a pottery shed in the back yard as a hobby, it's allowed. As a business, nope.

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@oldlady @neilestrick @glazenerd

Yes, each township, county, etc will have their own unique regulations for what is and isnt allowed in a certain zoned area. A lot of the restrictions youve mentioned are ones that are present in other townships in this same county. Thankfully for me with this specific township, there basically arent any rules. The inspection of the building is a different case; we will have to meet all current county and state code requirements, which thankfully arent anything we werent planning on doing anyways. Inspections for concrete, structural framing, electrical, plumbing, septic, and gas. Of course each area of inspection will have numerous sub categories to them, but nothing out of this world. Having spoken with the permit office, they have a very clear line of what is and isnt allowed, and have been very helpful and willing to make sure I get this project done correctly. Much better than some offices Ive dealt with which basically left it up to you to figure it out.

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good.    you are right about enforcement.  it depends on the individual in charge.  

you would not believe the lack of understanding at my wv house.   codes were only adopted a few years before i bought in 2002.   the septic tank is under the dirt floor in my last garage which is sort of attached to the house.  just framing down to the ground, no insulation attic open, back wall is on top of concrete blocks, one row high.  really pretty brickwork on the door side, though.

the kilns are in that "room".   got to find a way to hold the big kiln up in the air so i can slip a solid foundation underneath it to keep it from sinking into the dirt floor.  where is the jolly green giant when you need him?

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3 minutes ago, oldlady said:

got to find a way to hold the big kiln up in the air so i can slip a solid foundation underneath it to keep it from sinking into the dirt floor

Just had to do that myself!  My kiln comes apart in 3 pieces though, made it a little easier to cart around

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10 hours ago, oldlady said:

 got to find a way to hold the big kiln up in the air so i can slip a solid foundation underneath it to keep it from sinking into the dirt floor

Depending on how big your kilns are it could be a really simple solution. Ive got a friend with a skid steer with forks on it. He'll be coming over to pick up my kiln and load it onto a truck when I need to move it; it of course will have plywood panels cut for the sides, and braced, with the arch form in it too. Of course, if you cant fit a piece of machinery in your space....A 4x4 or 6x6 frame could be constructed, and winches could lift the kiln; would allow you to slip some concrete pavers underneath the kiln.

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My business is located in a rural area with only 2 pr 3 building codes in place.   You can't run raw sewage on the ground.   Land sites with no existing septic tank have to be at least 2 acres.  They have tried to put some building code restrictions in place but failed.

Locating AWAY from city building codes is a MUST, if you can do it.   Sounds like you've found a good location.   I'll try to find my expansion post.   I have a free standing retail location.     I think you could make this work.  The fire marshal always gave us a really hard time in places like Birmingham, AL, Memphis TN, etc.   I can't imagine getting my current  situation up to code.   Very smart in looking at this BEFORE you purchase.

Your work is fabulous and production way more than what I need for profitability.     You could make it in free standing I believe.     Biggest mistake I made was not putting everything together.  I'm currently looking at a small expansion, which will join my studio (an old house) with my show rooms.    I have my own "village" here.    Some businesses in near by towns resent my lack of restrictions.

 

 

Edited by DirtRoads

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liam and sam, both great suggestions.  my garage has a dirt floor with plywood sheets that were laid on top after the kiln was  installed  in the back corner near the electric supply.  the man across the street has a machine but i cannot see a way to get it over the concrete top of the septic tank someone installed just inside the big door.  he might figure it out by the time i get back in april.  i really do not want to break the connection from the house to the septic tank.  (wonder why?  don't ask.)

liam, look at L& L kilns and notice that though in sections, the control panel must be removed to get the sections apart.   i am thinking about some kind of lever and fulcrum to get one leg off the ground at a time so someone very tiny can crawl around on the floor and insert wide patio blocks under each one.  no volunteers have applied for that job.

Edited by oldlady
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