Do you want to start a woodworking business from home? If YES, here is a complete guide to starting a woodworking business with little money and no experience plus a sample woodworking business plan template.
Starting a woodworking business is a great way to turn a hobby you enjoy into a money-making venture. Wood items are popular and make great decorations and gifts.
But starting a business involves more than creating wooden objects. It requires research and planning particularly in marketing and business management.
Obviously, if you enjoy woodworking, what better way to enjoy it than get paid for it at the same time, right? In addition to doing something you love, you also get to experience other people appreciating your work – which can be very rewarding.
Another benefit is that working from home in your own wood shop means that you can skip the morning commute, you don’t have to dress up to go into the office and generally you can schedule your own hours. Having greater schedule flexibility really enables entrepreneurs to enjoy other aspects of their life as well, like family activities, travel, etc.
Woodworking can be a fairly low-cost business to start, especially if you already have much of the equipment you need. You don’t have to lease a retail storefront, hire staff or invest in lots of product inventory.
You can start small and then expand as your client base grows. This can be a critical point for entrepreneurs on a limited budget.
There are also plenty of woodworking business opportunities outside of building products. You could teach the craft to others write and publish a book about woodworking or sell design plans.
Steps to Starting a Woodworking Business from Home
1. Understand the Industry
This industry manufactures wood products not produced by sawmills or by manufacturers of veneer, engineered wood, millwork and mobile homes. Therefore, industry products are miscellaneous. They include wood ladders, cabinets, kitchenware, broom handles, kiln-dried lumber, reels and toothpicks.
The Wood Product manufacturing industry has turned a corner since the collapse of the housing market, driven by improving household income and a rebound in housing starts.
However, the growing popularity of low-cost imports and competition from non-plastic substitutes will limit profit growth in the coming years. Nonetheless, expanding residential construction, falling unemployment and improving incomes will lead to strong growth for the industry.
Interesting Statistics About the Industry
The Wood Product manufacturing industry has a geographic distribution similar to other wood manufacturing industries.
The majority of industry establishments are located in the Southeast, Great Lakes, Mid-Atlantic and the West. Typically, industry manufacturers choose to locate near upstream industries such as sawmills and millwork producers.
Additionally, establishments located near major wholesale and consumer markets, as a considerable portion of industry products are eventually purchased by households. The Southeast dominates production, accounting for 24.0% of industry establishments.
Within the region, North Carolina and Georgia are the major producers, although industry establishments are distributed prominently throughout the region. Woodworkers held about 237,200 jobs in 2014. The industries that employed the most woodworkers were as follows:
- Other wood product manufacturing – 23%
- Wood kitchen cabinet and countertop manufacturing – 21%
- Household and institutional furniture manufacturing – 11%
- Sawmills and wood preservation – 10%
- Office furniture (including fixtures) manufacturing – 10%
Although many smaller shops employ a few workers, production factories can have as many as 2,000 employees. Working conditions vary with the specific job duties.
At times, workers have to handle heavy, bulky materials and may encounter noise and dust. As a result, they regularly wear hearing protection devices, safety glasses, and respirators or masks.
Woodworkers are exposed to hazards such as harmful dust, chemicals, or fumes, and must often wear a respirator or mask.
Others may be exposed to excessive noise and must wear hearing protection devices. Most injuries involve sprains, back pain, carpal tunnel syndrome, and hernia.
These injuries or illnesses come from excessive amounts of awkward bending, reaching, twisting, and overexertion or repetition. Most woodworkers work full time during regular business hours.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Those who need the woodworking services include children, adults, corporate organizations, as well as individuals.
3. Decide What Niche to Concentrate On
Woodworking is a very wide field. The products that you can choose to make are also varied and give you a lot of choice. In order to maintain better focus and to start with clarity and precision, it is better if you decide which category of products you are going to cater to.
There are 2 basic factors that you need to consider when deciding a niche for your woodworking business. You need to look at your own skill set and you need to look at the market demand and supply.
- Basket weaving
- Making beer and wine wooden crates
- Cabinet making
- Wooden beer mug
- Card holder
- Carpentry
- Chip carving
- Craft Supplies
- Candle Holder: Wooden caned
- Cutting Board
- Hardwood chopsticks
- IPod and Device Stand
- Jewellery Box
The Level of Competition in the Industry
Demand is closely tied to the level of home construction. The profitability of individual companies depends on efficient operations, because many products are commodities. Large companies enjoy economies of scale in purchasing. Small companies can often compete successfully by focusing on a local market.
Overall, the US industry is fragmented: the top 50 companies account for about 30% of industry revenue. However, some segments of the industry would shrink due to over attachment by newcomers.
4. Know the Major Competitors in the Industry
- ANDERSON – US
- CASCO – US
- Weyerhaeuser – US
- Sekisui House – Japan
- Stora Enso – Finland
- Svenska Cellulosa – Sweden
- West Fraser Timber Canada
Economic analysis
Consumer confidence and per capita disposable income are expected to recover in the next few years, boosting demand from households for the industry’s products. Downstream industries, such as wood product manufacturers, carpentry contractors, and residential and nonresidential construction industries, are also expected to pick up, supporting renewed revenue growth.
5. Decide Whether to Buy a Franchise or Start from Scratch
There is a lot of debate about whether it’s better to start a new woodworking business or acquire a woodworking business on the business-for-sale marketplace. Both ownership strategies have their benefits and drawbacks. For first-time business owners, it makes more sense to buy an existing woodworking business than to attempt to build one from the ground up.
Established woodworking businesses are already equipped with the resources and processes new business owners struggle to acquire. The key is to locate a business-for-sale that closely matches your ownership philosophy and professional objectives.
Franchising is not a recipe for certain success but does make everything a lot easier.Prior to starting a woodworking business, you may want to assess whether franchising might make it easy to get started.
6. Know the Possible Threats and Challenges You Will Face
The woodworking industry is exceptionally diverse, encompassing a wide range of entrepreneurs, skill sets and job sites. While some woodworkers specialize in architectural projects, the majority of woodworking entrepreneurs are hobbyists interested in translating their passion into a full-time career opportunity.
- Having the Wrong Attitude
- Having a hobby mentality
- Improving Business Skills
- Promoting business
- Understanding Your Responsibilities as a Business Owner
- Being afraid of getting expert help
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
You have two legal entities available when trying to open a woodworking business – sole proprietorship and the LLC. To understand the tax liabilities for each, it is important to understand the definition of the terms. A sole proprietor business structure is, as the name suggests, a company with a single owner.
This structure is used by three-quarters of all businesses. It keeps the owner in control of the company and has the simplest initial setup. A limited liability corporation, or LLC, is often formed for partnerships when the business has grown significantly. The advantage of an LLC is more options for growth and tax advantages.
Many people would rather create an LLC than a sole proprietorship because of liability issues, but that takes money to prepare the articles of incorporation. Payment options need to be considered, a bookkeeping system has to be in place, and this all takes additional money that takes away from the funding necessary to purchase the materials to make the products.
8. Choose a Catchy Business Name from the ideas Below
- Zen wood
- Geezer Woodworking
- Tentorium
- Artisan Woodwork
- Woodworks of Art
- Old World Woodcraft
- Retro Woodcrafters
- Fine Furniture Joinery
- Forest of Furniture
- Wooden Joinery Creations
- Edge of the Woods
- Bentley Antique
- New age capentery
- Access timbers
- Felix planks
9. Discuss With an Agent to Know the Best Insurance Policies for You
Woodworker businesses have a lot of flexibility. You might do all of your work on site at a customer’s house or place of business. You might make your creations in the comfort of your own woodworking shop.
Regardless of how you choose to do business, there are several potential pitfalls that can cost your business extensive amounts of money. Prepare for potential problems and hazards by making sure you have the right types of small business insurance coverage.
- General Liability Insurance
- Business ownership policy
- commercial auto insurance
- Workers Compensation Insurance
- Property coverage
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Designing a product is hard work – the result of training, experience and the creative process. You also must be a smart businessperson exploring creative alternatives to keep your cost to market low.
After you take so much time bringing your idea to life, it is vexing beyond belief when you discover your arts/crafts design or promotional copy is stolen. In the arts and crafts world, imitation is not the most sincere form of flattery; it’s a potential drain on your gross income and your ability to support yourself.
11. Get the Necessary Professional Certification
Education is helpful, but woodworkers are trained primarily on the job, where they learn skills from experienced workers. Beginning workers are given basic tasks, such as placing a piece of wood through a machine and grabbing the finished product at the end of the process.
As they gain experience, new woodworkers perform more complex tasks with less supervision. In about 1 year, they learn basic machine operations and job tasks. Becoming a skilled woodworker often takes 3 or more years. Skilled workers can read blueprints, set up machines, and plan work sequences.
Although not required, becoming certified can demonstrate competence and professionalism. It also may help a candidate advance in the profession. The Architectural Woodwork Institute (AWI) offers a national certificate program, which adds a level of credibility to the work of woodworkers. The Woodwork Career Alliance of North America also offers five progressive credentials.
12. Get the Necessary Legal Documents You Need to Operate
If you’re in business, you need a business license. It’s not dependent on what you make or sell, or if you make a profit or not. Several licenses may be necessary, depending on where you sell and to whom. You also might need additional licenses if your craft is food-based.
Your first step is to find out if you need a business license. If you plan on operating a home-based business and live within city limits the best place to check is with your city business license office. Otherwise, check with your county business license office.
If you need to get a business license, you also need to check for zoning issues. You will not be able to get a business license if your business address is not zoned for the type of business you want to run.
Normally, the county will require you get your city license first if you need one. Bring it with you when you apply for your county business license. The good news is that most counties rubber stamp your county license application if you’ve already gone through the licensing process with your city.
13. Write a Business Plan
Most experts recommend that the business plan be put into place first, and generally that’s a great idea. However, before doing the business plan, make some of the products and see how they sell, and just how popular the product is because it may be a great fad for five minutes before the next hot product comes along, and the creator is stuck with hundreds of pieces that can’t be sold.
The products have to be easy enough to make, durable, and affordable (at least enough to cover the expenses of the materials needed). Once it’s discovered that these woodworking products are popular, and then start setting up the business plan.
You need to have a clear plan of how you want to run your woodwork business even before you get started; the plan has to contain every little detail of your business; include estimated amount you need as capital you need to start this business.
Tools you will need to perfect your trade. Where you will purchase wood in large quantity; how you intend to market your products; other aspects of woodwork you will incorporate into your business, and business goals you wish to achieve in the next 2 to 5 years.
A business plan is made to understand and anticipate what it’s going to be like to start a woodworking business. You cross many bridges before actually coming to them and that’s helpful. It’s helpful in deciding how you would like to start, what to expect, what you will be required to do and avoid expensive errors before they happen.
Most people who create a woodworking business plan claim that it helped them in getting successful. Therefore, we suggest an informal plan that you do not have to feel pressured about. Take your time. Business plans are not made in one day. Just keep adding to it at your own pace.
14. Prepare a Detailed Cost Analysis
It goes to say that when you start and run any business, there are going to be costs involved. It is true even for a home based woodworking business. Even though you will be greatly able to reduce your costs by starting from home, woodworking is usually expensive. How much money you will need to invest will depend on how you handle the business startup.
- Woodworking tools – $1,500
- Wood and other raw materials – $2,000
- Business cards – $200
- A good camera (if you have plans of selling online too) – $300
- A website – $500
- A new computer – $1000
- Miscellaneous – $1000
Total – $6, 500
Starting a woodworking business may sound small and common but just like any other business it takes commitment and fund to start and strive.
Startup cost for a home based woodworking business which doesn’t include the incentive for leasing or any structural adjustment was what the above detailed cost analysis covered. With increase in size and scale comes the increase in start-up cost.
15. Raise the Needed Startup Capital
Of all the decisions start-up business owners have to make, the decision of how to finance one’s business has to be the thorniest. Do you beg, borrow or steal the money? Who can afford to finance a business these days? There’s no easy solution, especially in this economy.
But the fact is hundreds of thousands of people have started craft businesses and galleries, sometimes on the flimsiest of budgets. With care and planning, you can too.
- Personal savings
- Credit card caveats
- Investors
- Partnership
- Crowdfunding
- Family and friends
16. Choose a Suitable Location for your Business
One of the most common reasons people shy away from woodworking is that they think they need a huge garage or work space. But you can successfully set up a small hobbyist woodworking shop in any space, even in an apartment. A compact woodshop just takes a little planning and preparation.
First, as most eager but hesitant potential hobbyists realize, you have to be much more thoughtful about tool selection. A 14-inch band saw? In your dreams, in a small space, you’re going to have to rely on bench-top or handheld tools. (It is possible to forgo power tools entirely in favor of hand tools, but that’s a discussion better left for another time).
Then there are material considerations, such as how to bring full-size sheets of plywood home to cut down to size (you don’t). And safety and cleanup are two more concerns: Proper ventilation and dust collection, a cinch in a larger shop, can be quite a challenge (and a potential health hazard). Nevertheless, you can set up a great wood shop in a small space.
However, getting a good location in the woodworking business is very critical to the success of your business but this can prove quite difficult because one of the challenges of starting a business successfully is getting a good business site. But in other to get a site that can make you a formidable opponent to your competitors, you need to consider the ideas listed below;
- Demographics and Psychographics
- Good road network
- Let your location boost your brand awareness
17. Hire Employees for your Technical and Manpower Needs
Although the term “woodworker” may evoke the image of a craftsman who uses hand tools to build ornate furniture, the modern woodworking trade is highly technical and relies on advanced equipment and highly skilled operators. Workers use automated machinery, such as computerized numerical control (CNC) machines, to do much of the work with great accuracy.
Even specialized artisans generally use CNC machines and a variety of power tools in their work. Much of the work is done in a high-production assembly line facility, but there is also some work that is customized and does not lend itself to being made on an assembly line.
Woodworkers set up, operate, and tend all types of woodworking machines, such as saws, milling machines, drill presses, lathes, shapers, routers, sanders, planers, and wood-fastening machines. Operators set up the equipment, cut and shape wooden parts, and verify dimensions, using a template, caliper, and rule.
After the parts are machined, woodworkers add fasteners and adhesives and connect the parts to form an assembled unit. They also install hardware, such as pulls and drawer slides, and fit specialty products for glass, metal trims, electrical components, and stone.
Finally, workers then sand, stain, and, if necessary, coat the wood product with a sealer or topcoats, such as a lacquer or varnish. Many of these tasks are handled by different workers with specialized training.
Important Qualities
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Detail oriented
Woodworkers must pay attention to details in order to meet specifications and to keep themselves safe.
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Dexterity
Woodworkers must make precise cuts with a variety of hand tools and power tools, so they need a steady hand and good hand-eye coordination.
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Math skills
Knowledge of basic math and computer skills are important, particularly for those who work in manufacturing, in which technology continues to advance. Woodworkers need to understand basic geometry to visualize how the wood pieces will fit together to fabricate a three-dimensional object, such as a cabinet or piece of furniture.
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Mechanical skills
Modern technology systems require woodworkers to be able to use robots, computers, and other programmable devices.
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Physical stamina
The ability to endure long periods of standing and repetitious movements is crucial for woodworkers, who often stand all day performing many of the same functions.
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Physical strength
Woodworkers must be strong enough to lift bulky and heavy pieces of wood, such as plywood.
The Service Delivery Process of the Business
In the united states, most trees destined to be cut into lumber are grown in managed forests either owned by the wood company or leased from the government. After the trees have reached an appropriate size, they are cut down and transported to a wood mill where they are cut into various sizes of lumber.
Here is a typical sequence of operations for processing trees into wood;
- Felling
- Debarking and bucking
- Head rig sawing large logs
- Bandsawing small logs
- Resawing
- Drying or seasoning
- Planning
- Grade stamping and banding
18. Write a Marketing Plan Packed With ideas & Strategies
Production usually isn’t a problem for most new woodworking entrepreneurs. You already know how to make finely crafted pieces of furniture and other wood products. Instead, the problem is convincing consumers to buy your products for a fair price – and that’s where marketing comes into the picture.
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Embrace Technology
Woodworkers are more comfortable in the shop than they are behind a computer. Yet profitable woodworking entrepreneurs understand the importance of the Internet and value it like any other tool in their tool chest. A business website, social media marketing, e-newsletters and other strategies can have a big payoff for new woodworking operations.
2. Portfolios
In the woodworking industry, marketing activities are image-driven. No matter how well you explain your work to prospective customers, nothing can replace images of completed projects. From day one, begin creating a business portfolio that can be reproduced in print form and on your company website.
3. Craft Fairs
For many woodworkers, craft fairs are the primary outlets for their products. Research craft fair opportunities in your territory, carefully weighing estimated traffic against booth rental costs. To squeeze even more ROI out of your appearances, create a mechanism to capture customers contact information (including email addresses) so they can be added to your newsletter distribution list.
19. Work Out a Reasonable Pricing for your Services & Products
Finding the right price requires five separate calculations to determine costs for materials, labor, overhead, profit and selling expenses. You can calculate these by hand, or use your computer and a spreadsheet. For instance, let’s price the round-top table featured in the October 2005 Woodworker’s Journal.
For starters, it took two and one-half hours to make. The materials consist of the actual parts used to make the product: the cost of the wood, plus any mechanical parts, such as hinges, mechanisms, etc. The table has 12 board feet of oak, at $3.25 a board foot, so the material comes in at about $39.00.
Labor is calculated by the hour. Suppose you want to make $75,000 a year. If you take four weeks’ vacation a year and work 40 hours a week, then you will work 1,920 hours a year. Divide 75,000 by 1,920, and you get $39.00 an hour. The table took 2.5 hours to make, so multiply $39.00 by 2.5. The labor cost for the table is $97.50. Add this to the materials cost for a total of $136.50.
Overhead consists of the rental and utilities of your shop, tools, glue, nails, sandpaper and finishing materials. An industry average is 15 percent. Multiply your total (of materials and labor) by 15 percent. For the table, multiply $136.50 by 0.15. Add this amount, $20.50, to $136.50. The total cost (materials, labor, and overhead) for the table is now $157.00.
Profit is the amount added to cover business expansion. Add 10 percent of $157.00 ($15.70, but round up to $16.00), and you have a price for the table of $173.00. This is the value of the finished table sitting on your workbench (the “workbench price”).
If someone comes to your shop and picks up the table, you could charge them $173.00, because you haven’t incurred any selling costs. At your workbench price, all of your shop costs are covered. However, if they bought the same table in a store, it would cost them $400.00 because of selling expenses.
Selling expenses consist of two calculations. The first, the cost to put the table in a store, amounts to 15 percent of the workbench price. This could be used to pay a sales rep, have a booth in a trade show or to advertise the table in a magazine or newspaper. Add 15 percent of $173.00 ($26.00) to $173.00, and you get the wholesale price of the table: $199.00.
A store or gallery will mark up your wholesale price to cover their expenses. This is called the retail markup, usually 100 percent. To calculate the (suggested) retail price for the table, simply double your wholesale cost, $199.00, and you have a final price for the table, displayed in a store or gallery, of $398.00.
If you create a spreadsheet with your computer, you can calculate the price of many products quickly. You will only have to enter the number of hours to make a product, the salary you want to make in a year, and the cost of materials. The spreadsheet will calculate the workbench price, wholesale price and retail price instantly. Once you know the right price for your work, stick with it. Don’t settle for less.
20. Develop Iron-clad Competitive Strategies to Help You Win
By now, you’re probably tired of hearing how important a good business plan is to your woodworking business startup. Although it might seem like an unnecessary formality, your woodworking company’s business plan is a document that will shape your goals and strategies on a go-forward basis.
Here’s something else you should know: Business plans help prevent key startup mistakes. Lacking a solid business plan, many startups find themselves rudderless and incapable of executing consistent decision making processes, while committed business planners rely on their plans to guide all of their decision making and short-term planning efforts.
- Evaluate your competitors
- Turning Competitors into Collaborators
- Social Media Monitoring
- Advertise More Effectively
- Understand marketing ethics
21. Brainstorm Possible Ways to Retain Clients & Customers
A large pool of repeat customers is a scenario every business should be working towards. A customer with a good story to tell or an awesome product to show will surely come back with a dozen ore people who could be family or friends. Ways to increase customer retention and make your brand super lucrative may include;
- First class buying experience
- Stay in contact
- Don’t ignore dissatisfied customers
- Show you care
- Educate customers
- Up sell and cross-sell
- Know your customers
- Implement loyalty programs
- Try display advertising retargeting your customers
- Work together
22. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Having a well-known woodworking business brand is what all woodworking entrepreneurs is praying to build but it isn’t something you can fetch from the rivers, but by your hard works and creativity. Spread the word about what you’re making and the business issues you’re facing.
Offer interesting angles or hooks, and you can find your way into blogs, onto the TV news and radio talk shows, and into newspapers and magazines.
- Be active in Pinterest, Facebook and all other social media
- Don’t hesitate to discuss your business problems and how you’re solving them.
- Share your social media stories
- Create Google Alerts for the types of crafts or artwork you’re selling such as woodworking, knitting, stained glass, etc.
- Submit press releases and photos to the New Products sections of magazines.
- Scour the National Public Radio website for programs that might want you as a guest
- Offer to write a guest blog post for bloggers whose audiences are part of your target market.
23. Create a Suppliers/Distribution Network
There are plenty of woodworking products that are very popular with many people across the country, such as:
- Wooden toys – especially those magnificent wooden rocking horses
- Armoires
- Picture and mirror frames
- TV stands
- Book cases
- Night stands
- Plant stands
- Rocking chairs
- Bird houses
- Fences
The list just goes on and on, and when the quality is exceptional, these pieces eventually command better prices. One of the best ways to having the products in high demand is to create a specific “character” or look to the product – something that makes it a unique and beautiful keepsake. Having that unique look separates the product from the thousands that are manufactured, and are much cheaper products that won’t stand the test of time.
Once enough products are made (and sold) to create a following, the next step is to start producing enough of the pieces to be sold at arts and crafts fairs, flea markets, and other area gatherings where people are looking for that great piece for their home or gift for someone (and with the holidays coming up, it’s the perfect time).
Start a website. Even if the creator of these beautiful wood pieces is not a network guru, there are a number of websites that have wizards which easily walk the novice through creating a website that easy to navigate and shows off the products. Make sure to have great digital pictures to put on the website.
24. Tips for Running a Woodworking Business Successfully
It takes a lot of thought to put a home woodworking business together and ensure that there are enough pieces made to sell, how to market it, where to sell it, and how much of the product that needs to be maintained in the inventory for seasonal purchasing.
It takes a lot of planning to discover zoning laws, tax laws, and ensuring everything is handled legally for the business. This sounds like a lot of headaches, but once these steps are done, and the creator can get down to the business of designing and building the products, the headaches cease and the joy of building the woodworking pieces brings to mind the reason to start the home-based woodworking business in the first place.