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Message Thread:

Business And Management

Marshall Member

Hey guys, I'm starting a woodworking business and I wanted to get some advice. I've been in woodworking for few years and I think I'm ready to manage a small business, but I would really love some tips from you.

11/20/18       #2: Business And Management ...

Shop rate should always be based off of your WHOLE over head for the year on a per hour basis plus your time and profit. A lot of people starting out say I want to make $20 an hour so $30 an hour shop rate sounds good but it doesn't work that way. Its a calculated number.

11/20/18       #3: Business And Management ...
D Brown

If you are talking full time and quitting your job : you will want to have about 6-12 months worth of living and bill and overhead costs put aside to cover your startup year. Try not to get into debt deeply or at all to start. Best regards .

11/20/18       #4: Business And Management ...
rich c.

First and foremost, you need a wife with a fantastic job with benefits. Make sure she understands you will be a drain on the finances for at least 2 years. If you've never been self employed, learn about all the taxes. Hire an accountant at the start to learn about local, state, and federal responsibilities. Talk to an insurance agent. Find out the expenses of a million dollar liability policy, and equipment coverage. Talk to a real estate agent and find out what commercial property costs will be. Then talk to local fire officials to see what requirements are for a woodworking business. Talk to a web designer, and a social media consultant. Talk to SCORE or take a business class at the local junior college to learn how to write a business plan. Now with all those numbers, you can calculate your overhead as Ryan has said. When you manage a small business are you talking employees? Triple all the things that you think can go wrong. Make sure you mention numbers of employees to all those experts I mentioned. I hope you have most of your machinery already purchased. Banks won't give you the time of day without some business track record.

11/20/18       #5: Business And Management ...
Matt Calnen

I think the first thing to ask you is what type of woodworking business are you planning on opening? Then I would ask about who you think your target customer might be? Then, what are your goals? A lot of what Rich said applies to some people, but certainly not everyone. I know Iím not normal, but I bought and fixed up used machinery for a few years before I went into business so I didnít have those upfront costs. I spent less than $3500 to open my doors and I turned a decent profit in my first month.

11/20/18       #6: Business And Management ...
Family Man

Yes, generic vague questions get generic vague answers. Running a business is about precision and being focused- even your questions.

11/21/18       #7: Business And Management ...
Marshall Member


Thanks for informing me about that, if you could teach me exactly how it's calculated I would be grateful.

D Brown

I have saving for about 7-8 months, no serious debt yet, but thank you for letting me know about it.

rich c.

Thank you very much, that was very informative !

Matt Calnen

That is great idea, I have some tools including electric ones, but I will try to gather more before I quit my job. I was thinking something like general woodworking, tables, chairs, couches, so forth. Things that everyone needs.

Family Man

I'm sorry but there is a huge difference between getting a general idea of a field and "generic vague" questions. I wanted to hear from experienced people like rich, to get advice and expand my knowledge. I know it requires precision.

11/21/18       #8: Business And Management ...

Your overhead is calculated by every dollar that the business puts out in a year other than material cost because this can vary with the amount of work you are doing. Your heat bill and insurance and all of that stay the same no matter how much work you do. Even if you have nothing to do you still have to pay your insurance and all other bills like that. Then take this number and divide by the amount of weeks you plan to work in the year. Then divide that number by 40 if you are the only employee. Even if you plan on working more than 40 hours I wouldn't add those in because you should be paid more for your overtime work. This will give you an over head per hour. Then add this amount to what you personally make per hour plus all of the other stuff you pay the government and your personal insurance (anything the business pays out on you per hour). This will give you the per hour rate that you need to charge to break even. At this point you can add in whatever profit you want or think that you can get. In our area show rates are going about $65-$85 an hour. So if you only need $50 an hour to make a profit you might be able to get a little more or you keep it at $50 and your prices will be lower than other shops and you could get more work which is good starting out.

11/21/18       #9: Business And Management ...
MarkB Member

Just my 0.02 but "tables, chairs, couches, etc." is very very far from general woodworking. Chairs alone can be some of the most complex, difficult, and costly, things to build. Look at generally available quality factory build dining chairs. They are not cheap. the 250 and under chairs you see out there will be unattainable to make profitably in a small shop.

If your looking at the Pinterest world of woodworking you'd better hold onto your hat with regards to profit margins unless your working nights and weekends after your day job for the $20/hr (if you can even come close to that) rates mentioned above. Kicking off a profitable furniture making business from scratch which is what you outline is very very difficult.

I would advise you to spend several weeks/months heavily studying your market. Go out and network, make some sales calls, talk to potential customers, get direct input on ideas for products and market pricing then sit down and calculate what your actual costs will be to build these items. Very easily done long hand on paper or with a simple spread sheet. You dont need to build the actual work to figure out if you can be profitable. Setup columns for time and cost for everything from calling around to procure materials, doing drawings, meeting with and quoting customers, picking up or taking delivery of said materials, loading it into the racks, taking it out of the racks and making product, sanding, finishing, invoicing, cleaning and maintaining the shop and equipment, delivering product, on and on.

At that point you will be able to see what type of margins you can expect (they will inevitably be lower) and how much volume you will have to do to earn a living.

I agree with Rich that you will find many small shops are simply not profitable and rely heavily on a spouse with a good job and benefits (a luxury Ive never had) or a shop that was built and established largely while earning income from another job. That is to say a shop space, tools, and some bit of an established customer base and reputation.

Only you can decide what works for you but if I were in a situation as yours I would be working on the side establishing an extremely solid customer base before I ever ventured out on my own. It will mean not seeing your family, working every night and every weekend and while laying in bed at night, but you will at least have a base and you and your family will be prepared for you to go full time because you will likely still be working nights and weekends and in bed at night once full time.

Just my 0.02

11/21/18       #10: Business And Management ...
David R Sochar  Member

Be sure to watch the video attached. It is most helpful. You will need to develop a good sense of humor as part of owning your own business.

Seriously, someone has to be successful, why not you?

Best of luck.

Beginning Business

11/21/18       #11: Business And Management ...
the google

read the archives here. this subject is brought up every six months or so and addressed differently each time. i've found the archives to be a very, very good resource. i've visited this site daily for 10+ years and consult the archives for specific topics.

i would encourage you, if you haven't already ready, to work in another shop. this was less of an option when i started in 2008. you should have your pick of shops these days. you can learn a lot about how the business is run, how to manage jobs, and expand your woodworking skill set by working for someone else. the length of time is up to you, but a great reference to have. you might also find a business owner willing to help with your own shop. i have a guy i'm working with right now to do this.

i would also encourage you to look into becoming a social media star. i'm just too old to figure this out, but there appear to be some pretty well paid guys on youtube, instagram, etc. their woodworking skills are all over the place but most work from their garages so no overhead. my business needs $30k/month to cover expenses so there is a lot of pressure everyday to sell and build things. building stuff from your garage would allow you to "try out" your idea without spending $10+ in equipment and committing to a year lease on a commercial space. never mind the regulatory compliance and fees, insurance, etc.

i was in-too-deep from the beginning and was fortunate to have a wife with a good job. we're starting our 11 year, but i'm not sure i would pick this path if i had it to do all over again. the profit hasn't been there with constantly upgrading my equipment (first 5-7 years), so my cumulative earnings for 10 years are not what they would have been if i'd worked for someone else. now, i could have a business to sell (if i could paint myself out of the picture), but this is complicated and i don't think any business owner makes out in this final transaction.

good luck.

also, read paul down's book - boss life. it is a scary accurate description of a lot of shops (mine included). paul actually took a call from me years ago from a posting here on woodweb. i greatly appreciated him doing that for me and will always be a big fan of his.

11/21/18       #12: Business And Management ...

I don't know that I would get into the furniture business right now. Stuff is too cheap to buy at the big box stores. People are not willing to pay for quality anymore unless you really have the market for it and that market is hard to break into.

If I wanted to start a wood working business it would be to mass produce cabinets and outsource as much as you can. I would take out a loan and buy a 4x8 or 5x10 cnc with a tool change and an automatic Edgebander. Something like a CamMaster CNC and a Cantek Edgebander. I would outsource all drawer boxes and doors. One man can turn out a lot of work this way.

11/21/18       #13: Business And Management ...
MarkB Member

In addition to David's post this is another pertinent watch


11/25/18       #14: Business And Management ...
BrenLeaf Member

You want to read this. It offers tips on what to do to run a business from scratch. https://bit.ly/2z0OjkQ

11/25/18       #15: Business And Management ...
Family Man

You blew me off last time, but your responses to questions shows that you don't know that it requires precision. The business questions you've asked are the equivalent of not knowing how to run a screw gun. That is how elementary they are. I'm not trying to be mean. I'm trying to save you tens and probably hundreds of thousands of dollars, immense amount of heartache and possibly your marriage. Trust me, the adventure will still be there. The "freedom" (as long as that means working twice as much as you currently do) will still be there. Take the time to learn enough to even ask questions that are somewhere in the vicinity of getting you the answers you need. If you don't know how to calculate overhead in general, trust me, you don't know how to even remotely know how to run a business with precision. Respectfully-

11/26/18       #16: Business And Management ...
Marshall Member

Ryan, MarkB and the google

Thanks guys, that was very informative. I am now 100% sure I can learn a lot from you and I will certainly do so.


I will check that link, thank you very much.

Family Man

That is exactly why I am here, to learn things I do not know yet. I know that I have to study a lot regarding the field and business, but I am skilled when it comes to using tools. I'm sure you will be great mentor as well.

11/26/18       #17: Business And Management ...
Puzzleman Member

I would recommend college courses, night classes, managing a business for someone else. There is a lot of basic knowledge that be learned in these areas to help you get started. You might be able to learn from former business people who are out to help others such as SCORE. Talk with an accountant, tax person and a bookkeeper to learn how they can help you. You may great in using tools but running a business is a different set of skills.

11/27/18       #18: Business And Management ...
Marshall Member


I've been thinking about college courses and some classes, I think I'll start them soon. I will definitely need to speak with someone with experience in business and I totally agree with you, running a business needs different set of skills.

11/27/18       #19: Business And Management ...

I worked almost 20 years for others before jumping out on my own. While I appreciate and understand the desire to own your own business, I doubt you have enough background with a few years experience to make your venture successful. The skill set to making cabinets or other woodwork is just a small portion of things you need to start up. Money, proper machinery, helpers, sales contacts, vendors, insurance, taxes, and the list goes on. Think long and hard about making this leap. If you're ready - best of luck. If you're not, get ready for a very bumpy ride.

11/28/18       #20: Business And Management ...
Jim Conklin  Member

Website: http://www.jhconklin.net

Before you think about tools, shop space, skills, techniques, shop rates and all that stuff that a crafts-person loves to serve as an indicator that they are a 'real' business, work out your marketing. No joke. As a business owner, your #1 job is to provide enough sales to keep the business a business vs a part time expensive hobby. Who are you gonna sell to, what are their needs for your stuff/skills, how/where can you reach them, how are you different from the guy across town or from Wayfair, etc? IMO, this should be 75% or more of any startup focus. Idea is "find a market, reach it, everything else follows." You can see that the stuff in my first sentence just sits there if no work.

11/28/18       #21: Business And Management ...

Some really good advice. Running a business is not being a woodworker! The google hit many of the points. Before you go any further get & read Paul Downs book. I thought I was looking in a mirror when I read it.
The products you list probably are the poorest paying things you could make. You must have a considerable cash cushion before you start because there are so many things that you can't fully control that will crush your business. Going to work for the best shop in your area is a great idea. Are you a skilled PR guy? It helps! If you don't offer something people want and can't find already being done you are going to battle an up hill water fall. I've had several past employees go on their own, all failed. None of them believed me when I told them what the business part of it entailed. One told me they had figured out my overhead costs per man hour, $4! I've typically had 16-20 employees for many years. Would I do it again? NO! I'd hobby woodwork and find a job I enjoyed, that had good advancement opportunities. Read Paul Down's book!

11/29/18       #22: Business And Management ...

Larry we had about the same as you 16-20 employees at one time 2004-2007 range when things were good. 2008-2009 we dropped to about 9-10. As we got busier we tried hiring more people and good help is very hard to find. We did hire some and got up to about 12-13 in the shop but overtime we have had some leave for different reasons. We stared buying better machines and advancing with the times. We lost one guy today so I have 6 in the shop and can turn out dollar wise about what we did in the 2004-2007 range. I do not want to have that many guys again its too much to keep up with. The key is the right people that you keep and the right machines and the employees that are smart enough to run them right. You also have to pay the good ones enough that they don't leave.

11/29/18       #23: Business And Management ...

Ryan, The kind of work we are doing now has also changed. A lot less store fixture work. More moldings and component work for other shops & for our suppliers. We have been running a lot of box cabinets for people that resell them. Very similar to kitchen cabinets. Dirt simple to make when you are set up for them. All Euro box, doweled. One supplier drops of a couple of units of melamine & rolls of .018 banding, we cut it into 12 & 24" rips 3 sheets at a time on the panel saw, band them and they pick them up. I suspect they are selling them to small cabinet shops. Really crappy melamine! No wonder a lot of small shops don't like melamine board.

12/2/18       #24: Business And Management ...

I have no idea of your situation, age, experience, tools you have ect. since you didn't mention it, but If I were doing it and asking the type of questions you are I think I would be fairly young with little experience and not a lot of money. If that is the case I would hang on to your job for just a few more years and pay cash for all of your tools working evenings and weekends along the way. While you're building clientele, you'll also be understanding the amount of work and time it takes to do this. You will more than likely eventually grow to hate going to your shop every evening and weekend after you come home from your real job. Sometimes, this feeling is no different than what many full timers feel that once upon a time loved to 'woodwork'. When you turn it into a business, forget about enjoying it anymore as it becomes a must do everyday. The last thing I would do is to jump into this cold turkey with no product, clientele, bank roll and less tooling than I need to complete a job and compete in quality with the next guy. Yes, this all sounds negative but it is reality.
Try selling a couple of items online on Etsy before you quit your full time job and see how things turn out.
Just speaking from experience and reading posts on this site over the years....I think a large majority of us would love to have woodworking back just as a hobby and leave the worry of employees and the day today grind to someone else.

12/3/18       #25: Business And Management ...
Marshall Member

I think you all have fair points... It would be really stupid to quit my job and start a business without enough experience and enough tools. More I can learn from you more thankful I will be guys, you are giving me amazing lessons that can't be learned from just books.

12/3/18       #26: Business And Management ...
Pat Gilbert

Somebody posted a while back about Sam Maloof and the repetition of his work.

He stated para phrasing: that after you have done the same chair so many times it becomes a job and you just have to get it done.

That said I have been doing this for about 40 years or so, I still enjoy it

12/4/18       #27: Business And Management ...
Marshall Member

Pat Gilbert

That is amazing. I wish I had your experience...

12/16/18       #28: Business And Management ...
Good Stuff Member

Website: http://www.goodstuffenterprises.com

I'm reading a lot of the responses on here and listening to how cynical we all have become... and then I realized that I was at the same crossroads many years ago. If I had waited for the perfect moment to start my business, I never would have begun. To this day, I am not sure I would pass all the tests you guys would give me.

I say follow your dreams! Be smart and work hard - manage your finances - and always do what you say you will. The last one may be the most important to your customers, and therefore to the future of your business.

Good Luck!

12/29/18       #29: Business And Management ...
Steve  Member

Website: http://www.commercialforestproducts.com/the-ghost-...

When I started out on my own in 2009, the economy was really poor. A lot of people said it was dicey timing but starting from scratch was a huge advantage. I looked around and saw where a lot of mistakes were being made - competitors with too much overhead, bloated payrolls, out of control receivables, entrenched in declining segments. Starting from scratch means you don't have to deal with those issues.

If you're on the ground and see a 747 25,000 feet overhead, it may be headed to Turks & Caicos or it may be out of fuel and headed down. It's hard to tell without watching for a while.

Look at the companies in your area that are doing what you want to do and see which ones are growing, hiring, etc. Figure out what they're doing. If there are none, you might be headed down the wrong road.

12/29/18       #30: Business And Management ...
Steve  Member

Website: http://www.commercialforestproducts.com/the-ghost-...

When I started out on my own in 2009, the economy was really poor. A lot of people said it was dicey timing but starting from scratch was a huge advantage. I looked around and saw where a lot of mistakes were being made - competitors with too much overhead, bloated payrolls, out of control receivables, entrenched in declining segments. Starting from scratch means you don't have to deal with those issues.

If you're on the ground and see a 747 25,000 feet overhead, it may be headed to Turks & Caicos or it may be out of fuel and headed down. It's hard to tell without watching for a while.

Look at the companies in your area that are doing what you want to do and see which ones are growing, hiring, etc. Figure out what they're doing. If there are none, you might be headed down the wrong road.

Good luck!


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