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Income Goals for a Furniture Maker
Question
Forum Responses
From the original questioner: Decent numbers Contributor F. Do you have a guess as to what the average overhead is? 40-60%? Do you do 200k a year? From contributor Z: Maybe you can find some kind of average income, but will that relate to what you will be doing? Are you going to be producing fine furniture of your own designs, in the hopes of finding people that want to purchase? Will you focus only on furniture, or will you be doing kitchens, built-ins, etc? If you are in it for the money, you might want to consider becoming a plumber. If you are passionate about your work, and create high quality pieces, I wouldn't worry about the average income of someone else. From contributor F: I wouldn’t want to guess an average overhead. You really need to sit down and add it all up. It’s different for everyone. Estimate your overhead like this: Rent.
These are your hard costs for your overhead and are very easy to estimate. The hard part of estimating your overhead is the soft costs, or indirect labor. You need to figure how many hours per year you can actually work, usually around 2000. Now from that you need to figure how many hours you can actually bill for. The time it takes to do your marketing, bookkeeping, accounts payable, cleaning up the trash, picking up materials, quoting, meeting with clients, etc. are all hours you need to spend that you can’t bill the customer for. These hours are overhead, or indirect labor. Rough numbers here - say you can work 2000 hours per year, and it is going to take you 500 hours per year for all that indirect labor or 25% of 2000. Now let’s assume you want to make an income of $60k per year. 25% of that $60k is $15k. You need to tack this $15k per year on to your overhead value. The first year is the hardest as you don’t have any history to estimate from. Create an overhead calculation form, and treat it as a living document as the numbers should always be reviewed and adjusted as required. A good history here will help make your overhead estimates more accurate. Now to make that $60k, you actually need to be able to bill for those other 1500 hours at $30 per hour. This means you need the sales. Now on top of this, you want the business to make a profit. I hope it’s not looking too scary yet. So you need to figure: Materials+labor+overhead+profit = selling price. This is the biggest mistake people make. They think profit is what’s left after you have bought materials. Spend some time, create a business plan, and the plan should help answer a lot of your question.
From the original questioner: I did as you suggested and it doesn't look pretty. One man shops are especially difficult. Sell, sell, sell! From contributor K: Yes it can be scary, but if you are passionate you will find a way to make it happen. You may decide to grow slowly like I have, one client at a time and income from other sources while I build my reputation and improve my skills as well. Nothing like having a customer to make sure you do your very best and your reputation is being made.
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