Starting any business is enticing and very promising. Like any other type of investment, woodworking is a rewarding enterprise. However, this is not an easy venture, you make a little mistake, and the entire capital you invest is off the ground. But, then you are not alone in this; that is why this article is for you to discover how to start a business venture of this kind and become a successive entrepreneur.
Notably, wood for a long time is an infamous material for making a range of functional and attractive products at the same time. Besides, many people seek out and pay attractive payments for products from the woods.
Woodworking enterprise specializes in making wood products like furniture, carvings among others. It requires extensive research and proper planning, especially in management and marketing strategies.
The wood product manufacturing business, according to IBISWorld, is a $6 billion industry that is still growing. Remember, approximately 30% of this industry’s market is run by top firms, leaving space for emerging wood workshops to flourish.
Essentially, if you have settled on a woodworking idea and you are more than ready to roll your sleeves. Note that there is more to starting this investment than just registering the business with the state agencies.
How to start a woodworking business
Below is a comprehensive guide that will enlighten you on creating this investment and become a successive entrepreneur:
1. Understand and know the industry
The woodworking industry manufactures wood items from sawmills engineered wood, millwork, or veneer manufacturing and involves producing miscellaneous products. The products include cabinets, kitchenware, wood ladders, kiln-dried lumber, broom handles, and toothpicks, just to mention a few.
Reportedly, the wood-product industry has recently been on the low due to the fall of the housing market. This is as a result of rebound and upgrading household income and housing starts.
Nonetheless, the growth of completion and popularity of non-plastic alternatives will deter profit growth. However, enlarging residential construction and increasing revenues will enhance the development of this industry.
Significant statistics on the industry
The geographic distribution of the wood product manufacturing sector is comparable to that of other wood manufacturing industries. With 24.0 % of industry establishments, the Southeast leads production. Notably, in In2014, there were around 237,200 woodworkers employed. As a result, they are exposed to risks such as toxic dust, chemicals, and gases.
2. Conduct feasibility studies and Market Research
According to demographic studies, those in need of woodworking services include adults, children, cooperate organizations, and other individuals.
3. Settle on a rewarding niche
Since woodworking is a vast field. You will require to select products to concentrate on because the products vary are they give different returns depending on the type. Therefore, to remain focused and start with precision and clarity, you have to decide on the category of products to deal with.
There are two fundamental aspects to consider when determining a suitable niche for your business: marked demand and personal skills. Among the categories you can opt for:
- Cabinet making
- wooden beer mug
- jewelry box
- Basket weaving
- Making wine and beer wooden crates
- IPOD and Device stand
The level of competition in the woodworking business.
The profitability of any business entity is dependent on structured, efficient operations. Besides, large companies take pride in economies of scale. However, small and start-up companies can also compete successfully by focusing on the local US markets.
The entire USA industry is fragmented, with top companies accounting for approximately 30% of woodwork industry revenue. But some sectors of this industry would contract due to overcrowding by newcomers.
Besides, it’s essential to know who your competitors are to make you formidable for them not to outshine you. Examples of popular woodworking companies like CASCO, ANDERSON, and Weyerhaeuser are doing well in the industry.
In the coming years, consumer confidence and disposable income per capita are projected to improve, boosting demand for the industry’s commodities among households.
In addition, downstream sectors such as wood product producers, carpentry contractors, and residential and non-residential buildings are also predicted to improve, resulting in increased income.
4. Choose between buying a franchise and starting a business from the ground up.
Most entrepreneurs are usually confused about the better ownership strategy between starting a woodworking investment and acquiring the business already established. Arguably, both approaches have their pros and cons. for first-timers, it’s sensible to develop an existing woodworking enterprise than attempting to build on it from scratch.
The reason being established woodworking investments are already having enough resources, something that new entrepreneurs strain to acquire.
Of importance is to search for a business on sale that matches your professional objectives and ownership philosophy. Even so, franchising does not mean you will have all the successes, only which makes everything easier for you.
Thus, before taking the first step of starting a woodworking investment, you may need to assess if franchising will ease the process of starting up.
5. Understand the Threats and Challenges You Might Face
You will agree with me that the woodworking industry is diverse. It comprises job sites, skill sets, and an extensive range of entrepreneurs. Importantly, the majority of woodworking businesses are doing it as a hobby while some specialize in architectural works. Those doing it as a hobby are interested in transforming their passion and ambitions into lifetime career opportunities.
Below are challenges and possible threats you may encounter;
- Having the wrong attitude
- How to improve your business skills
- How to promote your business
- Having a hobby mentality
- Being afraid of hiring an expert help
- Understanding your role and responsibility as an entrepreneur
6. Select the Most Appropriate Legal Entity (C Corp, LLC, S Corp)
When establishing a woodworking enterprise, you can register your company as either LLC or sole proprietorship. The two legal entities are allowed in the US. It is critical to comprehend the meaning of the terms to comprehend the tax responsibilities for each. As the name implies, a sole proprietorship is a business with only one owner.
Evidently, three-quarters of all companies use this structure. It offers the most effortless initial setup and retains the owner in control of the firm. When a partnership has considerably developed, an LLC is usually better than a sole proprietorship.
Still, many people choose to form an LLC because of liability concerns rather than a sole proprietorship, but the articles of incorporation are costly to complete. So, again, exploring Payment alternatives and using an accounting system requires funds. Instead, you can utilize the said funds to acquire raw materials.
7. Draft a Business Plan
For you to be a successful entrepreneur, a business plan is essential. It assists you in identifying the specifics of the investment and unearth the unknowns. Advisably, prior to drafting a business plan, you may make a few products just to use them to find out how they sell.
Also, you will have a chance to see how popular these products are. The products should be easy to manufacture, durable and affordable.
Equally important, the plan must capture even the fine details of the business. For instance, you will have to estimate the capital you need for the company. Also, highlight the raw materials you need and where you can source them at a relatively low price.
Aside, the tools and equipment that are necessary should be in your plan. Therefore, engaging in a business with an elaborate business plan is linked to many woodworking businesses.
As you think of a business plan, below are a few points to consider:
- the cost involved
- who is your target market
- how to charge your customers
- what will be the name of your business
Here is a detailed guide on how to go about it.
How much does it cost to start a woodworking enterprise?
The cost of putting up a woodworking business is not inexpensive and expensive at the same time, but it’s manageable. According to online sources, it’s estimated to cost you about $6500. Here is the breakdown;
- wood & other materials -$2000
- woodworking tools -$1500
- computer– $1000
- miscellaneous expenses -$1000
- camera & website – $ 800
- business cards -$200
The above estimation does not include other costs incurred on lease charges for storefront or shop. Notably, most entrepreneurs in this industry are enjoying their hobby and thus own working space. This can evade lease charges by selling their products online and at festivals.
Even so, woodworking entrepreneurs who own tools can lower their production costs by using the equipment and tools they have. Alternatively, one can source money from friends and family to acquire the necessary tools.
How much does it cost to run a woodworking business on a regular basis?
The main regular expense as you run this business is costs of materials and high up. The cost of materials should be compensated by the sales made. Cost overheads are the expenses on utility bills, rent miscellaneous purchases. Usually, to determine the cost of expense take 15% of labor and materials used.
Who is your target market?
An ideal customer for you as a woodworker is an individual who appreciates products made from wood and is financially capable. This person is interested in your products and can afford to buy. So any marketing strategies you apply should target this specific target market.
How much to charge a client for a Product
Each product has a price tag depending on its materials and labor until it’s a finished product. When settling on the price of the product, you as an entrepreneur should put into consideration the following; material costs, hourly wage x Hours of work plus selling expenses will be equal to the price.
8. Employ personnel to meet your technical and Human Resource Needs
Saws, milling machines, drill presses, lathes, shapers, routers, sanders, planers, and wood-fastening machines are just a few of the woodworking machinery that woodworkers set up, run, and maintain.
To make a finished product, woodworkers apply screws and glue and join the pieces. Therefore, many of these works you will have to divide among multiple individuals who have received specialized necessary training and skills.
9. Select an appropriate location for your business
Even a small flat can accommodate a modest woodworking shop. In this industry, finding a decent site is crucial to your business’s success. That way, finding a proper place accessible to your clients you are ready to pay for is the most effective approach to obtaining rewarding sales.
For instance, there are notable cities with a good market for wood products are Biltmore, Boston, new haven Seattle San Diego, Indianapolis, Minneapolis, among many others. So, with this knowledge, you can choose to set up your workshop in one of these cities.
Equally, in order to be unbeatable by your competitors as you settle for a location, consider the following;
- psychological and demographical viability
- excellent road network
- let the location of your business enhance your brand awareness
10. Consult an agent to understand the best Insurance Cover for your woodworking business
Businesses that employ woodworkers are pretty adaptable. However, Make sure you have the appropriate insurance covers for small businesses. You may complete all of your work on-site at a customer’s home or workplace. Nevertheless, there are a number of possible impediments that might cost your business a lot of money. Some of these insurance covers include:
- Business Ownership Policy
- Workers Compensation Insurance
- Property Coverage
- General Liability Insurance
- Commercial Auto Insurance
- Other important things to consider
Make sure your business is registered and get a license from state authorities. Also, ensure that you apply modern marketing methods such as affiliate marketing strategy to create awareness of your products.
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Suppose you have a woodworking business ideal; go for it. It is a profitable enterprise if you apply the necessary tops we have shared. Additionally, information is power, do thorough research to equip you fully with the essential knowledge concerning the trending business information on this industry. On top of that, if you have capital challenges, it’s good to source funding from sponsors who are ready to invest with you on an equity and profit sharing basis.
Bijay is an entrepreneur and start-up founder having more than 14 years of IT industry experience. He is the co-founder of TSInfo Technologies, a SharePoint development company.
A dedicated professional and very passionate about public speaking and also wrote thousands of technical blogs in various technologies. He also wrote a lots of blogs on entrepreneurship, investment, startup, business, manage money tips, etc.