Getting Started in Woodworking Business

[wch]

Hi,

I lost my job yesterday working at a company that builds furniture in north Idaho. I'd been contemplating starting my own woodworking business for quite some time anyway so this was kinda the final kick in the pants to get me to do it.

I have a little experience in residential trimwork and quite a bit of experience in furniture, jewelry boxes, and general woodworking. So I'm wondering if any of you good people have similar experiences, what works for you, what resources are out there, etc. I found some useful information doing a Google but thought I'd check here too.

I've looked on ebay to see what kind of furniture is selling and I don't see making it building doll furniture and selling it for $3. Many years ago I tried the craft show route without much success but that might be something to try again. I have a friend who does greeting cards at craft shows and he said I could give him items to sell on consignment.

I know there are risks here financially but I'm in a position that it's something I have to do. I have enough tools and equipment to get me started and a garage for a workshop so I have the basics.

Anyway, any ideas / input is welcome.

Thanks

Will

[dzine]

You have to putup a website and produce pieces which are original so no one can compare with cheap imports. A simple site and no woody backgrounds, such an old look, white space is good. Hardly bother with fairs now and i get paid up front.

[mjwallace]

Will:

First off, sorry to hear about losing your job - not a lot of fun.

Secondly, as to your ideas - I would do some soul searching and also some research. The soul searching is that you will have to figure out how much money you want to make out of woodworking. Then throw in, cost for supplies, tools, tool maintenace, cost of marketing (going to fairs, etc.) A lot of questions to ask yourself - what happens when you get sick for a week or two? What happens, God forbide, you have an accident and are out for several weeks? What about vacation time with your family - when will you want to do that? Also be aware that your local municipality might have some "restrictions" as to the types of home businesses can be operated out of your home. If you're running your table saw, joiner, planer a lot, will neighbors complain? Then there are the insurance questions - will your homeowner's cover you in case of an accident or disaster - fire comes to mind, if you're making a commercial product in your home?

Then the research questions might be - what will sell, at what price, who will want to buy your item, where do they shop for similar things, and who might be a competitor? (not always that obvious).

I have a friend who left a very good high-tech job do take up painting. She already had the talent and was just doing something she found enjoyable. People noticed and offered her good money for the work and a new career was born. She did all of the "high end" art/wine festivals in our area - in all of the "upper neighborhoods". She then found out that she could then just work with interior designers and also started to notice people wanted to collect her work. So she changed her marketing and continues this day in being a success. Took a lot of work - no family to support - and just understanding her art was her meal ticket - not her soul.

I'd would hook up with the local Chamber of Commerce and see if they have classes on starting a small business or marketing. Also see if there is a woodworker's guild or club nearby. They can be a valuable resource.

I'm looking into doing something similar for myself and these are things I am doing/thinking about. Right now my shop is NOT ready for any work, but I'm making it a priority.

Good luck and keep us abreast of your success!

MJ Wallace

[Will]

WCH:

Better think about how much you want to make... People usually forget about that -- some examples of how you might approach it.

Let's suppose you want to make $4000 a month -- Before taxes. What should your revenue be?

Hint (Assuming $3800 a month in material and expenses you should be billing at least $7600 at 50% profit margin..

If you want to work at 30% profit margin here's what happens... $4000 / (1 - 0.7) = $13,333 {30% of this number is about $4000.}

So make sure your work is good enough to charge high rates and you can use the three times table for your time... :-)

Look at this another way... If you have a profit margin of 70% The a billing of about $6000 gives you about $4200 in income (70% of $6000). It's easier to make money this way obviously - but the utility, quality, and uniqueness must appeal to people with money to pay.

Assume your Costs are something like... Some of the numbers are guess work... of course.

Biggest mistake BTW is that people assume that Marketing plans start with Positive Revenue. Assume $0 in sales for a while and see how long your cash horde will last.

But we will allow you one sale the first month for the exercise...

Cost of running small shop (Heat, power, water) $100 Phone bill $100 a month Cost of tools amortized over a reasonable period $300 month (???) Vehicle Costs $400 /Month (Or delivery and Taxi costs) Rent? Naw -- use the garage - like me - So $0 for now.

Call it $1000 (General Expense) a month for now. We'll leave out accountants lawyers and the other hangers on. :-)

Let's say you sell one project and the materials cost (wood, finish, sand paper, a new gizmo only for this job) is $1000 and it takes 40 hours work over two weeks. Since you do have to wait for the paint to dry...

Ok what profit margin do you want? I recommend the 2 times table (at the least) to start thinking about it... That's 50% profit margin - not counting labour. Assume that you would pay someone to do the work - and you just sell. $20/hr. X 40 = $800. So you should charge about 2 X $1800. Is your work worth that much? Are the customers available.

Increase or decrease numbers and profit margins as you like - but start thinking about what you have to charge versus the value of what you produce to earn the income that you want.

Note that in the following example your first month's income would be...

Expenses $1000 (Gen. exp) + $1000 Materials + $800 for the mythical worker.

That Leaves $3600 - $2800 = $800

Even if we forget the worker that still leaves just $1600 for that one good sale a month? Happy with that? If not play some more and try to find a combination of things that you can do that will meet the revenue objectives.

wch wrote:

[J T]

Wed, Feb 9, 2005, 9:50am (EST-3) [e-mail] (wch) says: I don't see making it building doll furniture and selling it for $3.

Hey, if you can make it fast enough and it will sell... Make 10 pieces an hour, that's $30 an hour. Not a fortune, but nothing to be sneezed at either. Look at it as cash coming in, which at this point is your first concern. It would be a start.

You're gonna get all sors of advice about % markup, what to charge, and all that. Priority one for me, would be make enough per month to pay all your bills, keep you fed, and pay for materials. Way I figure, starting out, anything over that would be gravy. I really woudn't give a rats ass about what i "want to make", untill I was in a positon it could actually happen. You've got to figure out what you can make that will actually sell, and go from there. What will sell one place, may not sell 20 miles down the road, it's not a science.

JOAT Intellectual brilliance is no guarantee against being dead wrong.

- David Fasold

[Edwin Pawlowski]

You have the basics, do you have the skills? By that, I mean not just the ability to make a nice piece of customer furniture, but be able to make it fast enough to make a living at it.

The Smith family wants a coffee table. They have a design in mind and want to get a price. They get a price of $900 from the guy across town. They visit your shop and you tell them $1000 and they like you and are very interested. They seem to like you more than the guy across town and are willing to pay the extra $100. People looking for quality, don't quibble over that much money so you get the job.

The guy across town has made many similar items and he buys $300 in wood and material and finished the job in 15 hours and makes a living. You do the same quality of work but it takes you 60 hours to complete. Your competitor buys his wife a nice Valentines gift after the payment, you buy a can of beans just to survive.

[Duane Bozarth]

...

Yeah, there was an article in FWW a while back about a fella' making nothing but bookmarks by all hand work and doing pretty well at it. Of course, he's making thousands/month, month. Most of his output was going to Lands End, I believe it was...

[Rich Coers]

For your best research, visit with interior decorators. I had a custom woodworking business for 8 years. All my best work always came from interior decorators. They can presell your skills and abilities to the customer before you show up for the first visit. They will want a referral fee, bit it sure was worth it. A custom woodworker has to sell himself before he sells his work. You have to convince the customer that you are up to the task, and then they must trust you to give you a downpayment to start the work. Nothing like word of mouth to sell your work as well. I don't know how many times the little touches helped sell the next job. When I installed anything, the vacuum cleaner was the last tool to be used.

My last suggestions, have a wife with insurance and a steady job. You'll need it. Also have a good credit card, you'll need that for groceries while you wait for the big payoff check at the end of the job.

[Art Ransom]

Woodworking business are a dime a dozen. Plenty of crap and a little fine quality. Quality means high markup. You need a niche where hopefully there is no competition. I have found that niche in the Dallas area in doing custom and architectural turning. I am the only one in the Dallas area that wants SMALL JOBS ONLY! 99% of my work in commercial and all is COD and 25% up front if materials exceed $300. You need to plan on at least 3 years to get business established and developed the skills necessary. I thought I was a good turner when I started but learned a lot fast once I went commercial. If you are willing to commit 3 years as a part time let me know and we can talk and I will give you more details.

[JGS]

[JGS]

[B a r r y]

Is this the same Smith family that flew to the Bahamas in the movie "Big Trouble"?

Barry

[mac davis]

Will... not wanting to rain on your parade, but I think this is important..

Do you have business skills? Can you do books, balance budgets & checkbooks, do promotional work, deal with clients, (ie People Person) and survive on a commission only income?

Self employed folks wear many hats.. and like me, not all of us wear each well..

*g*

IMHO, sales and promotion are 70% of the business, no matter what you make... your product is YOU... Why should someone spend 3 or 4 times as much for a piece of furniture from you as they do at a big discount store? Because you've convinced them that you're a good value..

Bottom line, before I fall off my soap box, is that the business end is very important... and it's not fun to be busy all year and find out that instead of making a profit, you were losing money on each project.. YMMV

mac

Please remove splinters before emailing

[wch]

Mac,

Thanks for the input. Yes I've thought about those things. Without marketing, a business is nothing. As far as the business end of it, I have a couple things working for me. One, I have 14 years computer experience and knowledge of a lot of programs to assist in bookkeeping, etc. Two, I have a great wife that's very discliplined with money (she's German by the way) and is beside me on this. We both know that it will be tough for awhile but we're willing to endure.

Thanks again,

Will

important..

[wch]

MJ,

Thanks for all the info... a lot to review there. Great idea on the chamber of commerce thing, I'll check that out right away.

Will

[wch]

Thanks for the reply... I am not at a point where I really care about what I

*want* to make... it's what I need to make to make a living. Sure, I have my preferences like jewelry boxes but without a market, they're just knick-knacks on my shelf. I'm not looking to get rich (yet) just pay the bills, feed the kids, etc.

Thanks again,

Will

[wch]

Good advice on the interior decorator thing, considering that custom furniture is one of my possible avenues. On the last part, I have a wife who just quit her job to be a stay at home mom. So we have our challenges ahead of us.

thanks,

Will

[Ron Truitt]

If you have cabinet and trim experience you might consider mixing construction trim work with your furniture business. Of course it would depend on the construction activity in your area of the country.

I am always amazed at how much kitchen cabinets go for and so I usually wind up making my own.

RonT

[wch]

Actually here in North Idaho, construction is exploding. A friend of mine had a house built and moved into it 5 months ago. A couple weeks ago he lost his job so last Friday, he put the house on the market. Monday, he got full offer... at a frickin $40,000 profit!!! If I'm doing the math right, that's $8grand a month just since he moved into it. There's an 8 month waiting list to build a house in most of the new developments here. I've thought about doing trim and will probably go that way... just gotta get my tax refund so I can get a compressor, nail gun, etc. to do it with.

[makesawdust]

Sorry to hear that you lost your job. When one door closes anothe

often opens.

I too am in Idaho, but in the Boise area where the new home market i also skyrocketing. Have you given any thought of producing semi-custo architectural work for builders? Specifically, I'm thinking along th lines of mantles, square fluted columns and custom entryways. Repea customers are great; if you are selling to builders, and you are abl to establish a sufficient customer base, then you will actually hav time to produce product, and won't have to be totally consumed with th sales end.

At least in my part of Idaho, some builders will have their finis carpenter build mantles, while others use a sub-contractor. For th house we are building right now, it would have cost $350 if ou builder's sub supplied our mantle. I saw several that he built an they left a lot to be desired. I built a great paint-grade mantle fo about $60 in materials/supplies and 6 hours labor. If one was buildin a number of mantles, you could probably cut this time by a third b standardizing custruction of certain pieces, building multiple piece at once, and making jigs for other parts (like square fluted column and radiused pieces).

Builders are going to be paying someone for mantles and interior colum

- if you can provide a high quality product at a decent rate, this coul be a market niche for you. It sounds like you are already tooled up fo these type of projects.

I haven't built mantles for builders, but I have built a number o mantles and interior columns on the side for private homeowners. A least with paint-grade, I always made good money. I tended to sta away from real wood/veneer because of the extra time and material cost

- the market I was hitting was on the cheap side, and I let myself ge burned on an oak mantle once (let's just say I would have made more per hour flipping burgers at McDonalds). And with paint grade, som spackle and a coat of primer will hide a host of sins and produce great looking product.

Marketing shouldn't be too difficult either - you'd probably need t make up some samples and have decent photos of them taken, then star knocking on doors. If you could get hooked up with a builder wh produces a hundred homes or more a year, then pick up some smalle clients, you could be setting in a good position. From the descriptio of your area, I'm going to assume that you are in the Coeur d'Alene are

- if this is the case, you're in a great market for growth.

Anyway, I just ran some really basic numbers in Excel looking a mantles. For the knitpickers, this brief estimated doesn't includ expenses like power, heat, water, gas, insurance, marketing, phone yada yada yada:

Units Sold Monthly, 15 Hours Per Unit, 6 Unit Sales Price, $300 Unit Material/Supply Cost, $75 Hourly Labor Rate, $30

Cost Per Unit, $255 (includes labor/materials) Profit Per Unit, $45

Monthly Wages, $2700 Monthly Profit, $675

Monthly Pre-Tax Gross Earnings, $3375 Annual Pre-Tax Gross Earnings, $40500

Good luck and keep us posted on how things progress for you,

Scot

-- makesawdust