January 31, 2023 | Last Updated on: February 6, 2023
Starting a woodworking business can be a fulfilling and profitable endeavor for those with a passion for carpentry and an entrepreneurial spirit.
Whether you’re a seasoned professional or a hobbyist looking to turn your passion into a career, loanenterprise. At the same time, it can provide an outlet for you to do what you love while at the same time making some money doing it.
However, starting a business of any kind can be a daunting task, and woodworking is no exception. From crafting a business plan to sourcing materials and finding customers, there are many steps involved in starting a woodworking business.
In this guide, we will walk you through the process of starting a woodworking business, from the initial planning stages to the day-to-day operations. Then, we’ll cover some financing options that you can consider if you need tools or a few special pieces of equipment to get started. With the right planning and execution, you can turn your woodworking skills into a successful business venture. We’ll cover the following in this piece:
Flexibility:Starting a woodworking business allows you the flexibility to work on your own schedule and take on projects that interest you. You will get to set your own hours and decide when to work. However, keep in mind that, as with any startup business, hours will likely be long, and you will have to work hard.
Creative outlet: Woodworking is a creative and artistic endeavor, and owning a woodworking business allows you to express your creativity and passion. A woodworking business is much different from many other business models since it is inherently an artisan business.
Potential for high profits: Woodworking businesses can generate high profits, especially if you specialize in high-end, custom work. However, this requires establishing the right clientele and having a true gift for what you do. There are no guarantees, and the business model is definitely more difficult to make successful than, say, a franchise restaurant.
Low startup costs: Starting a woodworking business does not require a significant initial investment. With some basic tools and equipment, you can start a business with relatively low startup costs. This makes it a very accessible small business from a cost standpoint.
Solid demand: There is solid demand for woodworking services in the economy, from furniture making to cabinetry and custom carpentry. Woodworking jobs are expected to grow by 3% annually from 2021 to 2031, a little under the 5% growth average for all jobs but still a reasonably solid growth rate.
Diversifying revenue streams: Woodworking businesses can diversify revenue streams by offering different types of services like cabinet making, furniture making, woodwork for home renovation, custom carpentry, and more. This means there are a lot of different areas woodworking businesses can specialize in and offer products for.
Ability to work from home: Woodworking businesses can often be run from a home workshop, which can save on overhead costs and provide a comfortable work environment. However, if you are working from home, marketing will definitely be more challenging, and you will likely have to rely on word of mouth and online customer acquisition more than anything else.
Personal satisfaction: Building something with your hands and seeing it used and appreciated by others can be a source of personal satisfaction and pride. Woodworking is an artisan craft that places a premium on skill and craftsmanship. As such, it can often be much more fulfilling than routine jobs.
Demand fluctuations: Demand for woodworking services may fluctuate depending on the time of year, leading to uneven income and potential financial instability. Demand for woodworking services can also fluctuate based on the overall macroeconomic conditions. If there is a recession, people will have a lot less money to spend on beautiful furniture, cabinetry, and other non-essentials. Woodworking businesses tend to offer very few “essential” items – so, like most artisans, they are more vulnerable to economic fluctuations.
Physical demands: Woodworking can be physically demanding and may require long hours of standing, bending, and using heavy equipment. It is not an easy job.
Requires a great deal of skill: The most successful woodworkers are those who are true artisans and can create beautiful pieces that clients demand. If you are truly a gifted woodworker, then you can create pieces that fetch extraordinarily high prices – driving your profit margins and the value of your time. However, this is not easy to achieve. There are a lot of woodworkers, and not everyone has the skill to be truly great.
Risk of injury: Woodworking involves the use of sharp tools and machinery, which poses a risk of injury if proper safety precautions are not taken. While nearly all jobs come with some risk of injury due to the nature of woodworking, the risks are definitely much higher.
Competition: The woodworking industry is highly competitive, and it can be difficult to establish a successful business in a crowded market. Again, this will come down to your skill and your ability to create products that are nicer and of a higher quality than the competition.
Limited scalability: As a small business owner, it may be difficult to scale your business beyond a certain point without significant investment in equipment and staff. Additionally, it is not always easy to find staff for a woodworking business. You will have to find individuals who possess a talent for woodworking and who will be able to support your craftsmanship.
Limited market: Woodworking businesses may be limited in the number of potential customers in their area or the type of projects they can undertake.
Complex regulations: Woodworking businesses may be subject to a variety of regulations and permits, which can be difficult to navigate and comply with.
Starting a woodworking business can be a challenging and rewarding endeavor, but it requires careful planning and execution.
By following a step-by-step guide, you can ensure that you have covered all the necessary bases and set yourself up for success. The guide provided here will take you through the process of starting a woodworking business, from the initial planning stages to the day-to-day operations.
It includes steps such as developing a business plan, securing funding, obtaining necessary licenses and permits, building a workshop, sourcing materials, developing a marketing strategy, hiring employees, and more.
Creating a detailed business strategy is the first thing you should do when beginning a woodworking company. A goal statement, a study of the market, financial predictions, and an in-depth strategy outlining how you will recruit clients and produce income should all be included in this. These can all be combined into a comprehensive business plan that will lay out the path of your business from day one so that you aren’t walking in the dark or shooting from the cuff as you start your new business.
Once you have a strong strategy in place, the next step is to choose the business entity or legal form of your business, which might be a sole proprietorship, an LLC (Limited Liability Company), a partnership, or a corporation, depending on your preferences.
You should consider to advantages and disadvantages of each business structure to determine which is the right fit for you and your business.
Register your business with the IRS and your state’s tax department and obtain an employer identification number (EIN). You should do this right when you form your business, as an EIN will frequently be required moving forward for opening bank accounts, filing official documents, and more.
In order to maintain financial privacy between your personal and business lives, your company should have its own bank accounts and business cards. This will also help protect your personal assets in case your business fails, or something goes financially awry. Keeping your personal and business finances separate is critical, and you will want to make sure your bank accounts and credit cards are set up the right way from day one.
Establish a procedure for the correct recording of financial transactions, such as invoices, costs, and tax payments. Many online software options can assist with this. However, if your business is starting small, you may not need to invest in software right away. That said, eventually, you will want to streamline as much of the tedious business operations work as possible so that you can devote more time to what actually generates revenue for you – in this case, woodworking.
You will need to go through the process of obtaining the required licenses and permissions before you can get your woodworking company up and running. This may include a new business license, a license to collect sales tax, and any other licenses that are necessary by the government in your locality. It is always important to make sure you are in compliance with local and state laws when operating your business, as the fines can be high if you are not.
Ensure the safety of your company by signing up for the appropriate insurance coverage, such as liability and workers’ compensation (worker’s comp) insurance. You may also want to look into some form of bodily injury coverage for yourself in case you injure yourself on the job.
We recommend seeking out a reputable insurance broker to help you determine exactly what insurance policies and coverage your business should have before it begins operating. That way, you can ensure there are no gaps in your coverage.
Establish your firm’s brand by naming your company, designing its logo, and developing its message. The business name and brandings will play an important role in your business. It will become a critical part of building a reputation for excellence and quality, so you want to make sure it is something that people can remember and visually identify with ease after only seeing it a few times (or even just once).
Construct a website where your work can be seen and where information about your company may be found. If you don’t have the skills to develop your own site from scratch (which is very common), you can use a website-building platform like Wix, Squarespace, or one of the many other options. You will also need to purchase a domain name according to your business name. After starting up the website, utilize social media platforms such as LinkedIn, Instagram, and Facebook or start a YouTube channel.
Your site is an opportunity for you to showcase your portfolio and what you do. People will want to see your past work and the quality you have to offer. Customer referrals and reviews can help add credibility to your site as well. And, if you expand enough, you may even be able to start selling products online in the future.
Small Business Administration (SBA) loans are a financing option available to small businesses, including woodworking businesses, that are backed by the federal government. These loans are designed to help small businesses access the capital they need to start or grow their operations.
For a woodworking business, an SBA loan can be used to purchase equipment and machinery, cover the costs of renting or buying a workshop, and cover other startup expenses. The SBA offers several different loan programs, including the popular SBA 7(a) loan, which can provide up to $5 million in funding.
One of the main benefits of SBA loans for woodworking businesses is that they offer market-leading interest rates and reasonable terms. This can make it easier for small businesses to access the capital they need at a more affordable cost.
Additionally, the SBA’s backing of these loans can make it easier for small businesses to get approved, even if they have a limited credit history or other challenges that might make it difficult to secure a traditional loan.
However, it’s important to keep in mind that SBA loans have a lengthy application process, and there are some restrictions on eligibility that can come into play depending on what sort of business the borrower is attempting to utilize the loan for.
Term loans are a type of business loan that provides a business with a lump sum of cash that must be repaid over a set period of time. This can be a useful option for a woodworking business as it can provide the necessary capital to purchase equipment, rent or buy a workshop, and cover other startup expenses.
Term loans can be obtained from traditional banks or alternative lenders. Traditional banks often have stricter qualifications and a longer application process, but they tend to offer the lowest interest rates.
Alternative lenders (like Biz2Credit!), on the other hand, may have more relaxed qualifications, but they often have higher interest rates and may require collateral. However, they can also get you funding in as little as 24 hours and have very fast application processes, making them ideal for many borrowers.
For a woodworking business structure, a term loan can be a good option if you have a clear plan on how you will use the funds and a solid financial plan to repay the loan. It also can be useful for those who want to have a large sum of money upfront to make a big purchase or investment in their business.
As with any type of loan, it is important to carefully consider the terms of the loan, such as the interest rate, repayment period, and fees, before signing on the dotted line.
A line of credit is a type of financing option that allows a business to borrow money up to an agreed-upon limit as needed and pay interest only on the borrowed amount. This can be a useful option for a woodworking business as it provides a source of funding that can be used for unexpected expenses such as the cost of materials or when cash flow is tight.
For example, if a woodworking business has a line of credit set up, it can borrow money to purchase additional raw materials when they experience a surge in demand for its products without having to wait for a loan to be approved.
Additionally, they can use the line of credit to bridge the gap between paying suppliers and receiving payments from customers.
A line of credit is typically offered by banks and other financial institutions, and the interest rate is often variable, meaning it can change over time. As a result, a line of credit may not be the best option for long-term financing. But it can be a great tool for short-term financing needs.
Equipment financing is a loan option that is used to purchase business-related equipment, such as woodworking tools and machinery. It can be a valuable option for woodworking businesses as it allows them to acquire the necessary equipment without having to pay for it upfront.
Equipment financing is a great option for many business owners because the equipment you purchase with the loan serves as the loan’s collateral. This reduces the risks for the lender since if you default, they will have a way to recover some of their money. As such, equipment loans often offer lower interest rates and have less stringent qualifications that borrowers have to meet.
It’s possible that taking a concept for a company and making it a reality could leave you feeling overwhelmed. However, woodworkers may take some practical actions to set themselves up for success.
The service and goods that craftsmen provide serve as the cornerstone of their own businesses. The more experience you have, the more prepared you will be to produce a quality job and confidently engage customers.
Experience may be gained by artisans in a variety of ways: you can make projects for yourself, look for a mentor in their field, or work in a shop that specializes in woodworking. Whatever option you decide in, it is important that you have at least a decent amount of woodworking experience before starting up your own shop. High-quality woodworking is not something you can just learn overnight. You will need to come into the business with a portfolio of past projects to show customers that you have the know-how to actually produce what they need.
As noted, the first thing that potential new customers will want to see is proof that the proprietors of the firm produce quality work. When you have just begun your career and don’t yet have anything to offer customers, this might be a challenging situation. That is why it is important to at least have some past woodworking experience before starting your business.
Over time, you will want to keep expanding your portfolio (this is why an online site can be a great way to showcase your talents). And, if you are looking for ways to build your portfolio even when your orders are low or want to get customers interested in a new product that you are offerings, you can start by making gifts for their loved ones and acquaintances. That way, you have a sample product to showcase to customers.
Keep in mind that it is important to document the final stage of each woodworking project – that way, you can actually build a robust and expansive product portfolio. The objective is to show customers your unique style while also establishing the legitimacy of their woodworking company.
In order to finish projects, you will likely require access to a big, well-lit, and consistently dry environment. The garage or a tiny shed in the backyard is where many individuals get their start in the working world.
If you are going to use power tools, you will require a safe connection to the electrical supply as well as protective equipment such as gloves and eye protection. A circular saw, clamps, chisels, planes, files, drills, hammers, and mallets are essential woodworking equipment.
Other essential tools include files and drills. It is essential to do research in order to determine which materials are required to finish certain tasks. Additionally, artisans should be trained in the safe practices of maintaining and repairing all of their tools.
Try to establish a workshop where you know you will be able to operate without issue for many years. The last thing you want to be doing is constantly changing spaces.
Now is also a good time to decide whether you plan to operate your woodworking business out of your house or in a storefront. Sometimes, operating out of your house is a good interim step before leasing a workspace since it will allow you to figure out whether or not there is actual demand for your services before laying out a lot of money.
When all of the essential equipment has been acquired, business owners are in a position to launch a marketing campaign to attract new customers. You have to launch a website as a first point of contact for clients, and they should also create accounts on other social media platforms such as Instagram and Facebook.
You need to determine whom your ideal customers are before deciding which platform to employ since different types of individuals gravitate toward different platforms. Older individuals tend to rely on different social media and information channels than younger individuals.
It is not necessary for you to devise intricate marketing strategies in order to be successful. Being constant and continuously improving via experience is the single most crucial thing.
For instance, you could begin publishing on a certain day of the week since they’ve found that this generates more interaction than any other day.
When a firm has strong marketing, it is easier for customers to become aware of it, and it also makes it simpler for customers to collaborate with woodworkers.
Managing a company requires staying on top of a significant amount of paperwork. You have to maintain a record of each and every sale they make, in addition to the sum of money they first invested in their business.
You will be able to estimate how much time it will take until their efforts start to provide financial rewards. When company owners have access to accurate records, they are better positioned to make lucrative investments.
Connecting with other highly competent craftspeople is one of the most rewarding aspects of being involved in a trade. These individuals help and encourage one another, and by working together, they are able to accomplish much more than they could on their own.
Spending time with other proprietors of businesses provides opportunities to exchange customer referrals and acquire new knowledge.
Woodworkers need to approach these connections in the same manner as they would an important friendship. Instead of considering what they can obtain from other craftspeople, they should be doing all in their power to invest in the success of other artisans.
You should cultivate trust over time, never exploit these connections, and always compensate people for any job they perform or any equipment they use.
For example, developing good relationships with general contractors and construction companies can help get your products placed in remodels and new houses since they will know to direct their own customers to you for the finishing touches.
From the moment you launch your company, woodworkers begin to establish a name for themselves in the industry. You should begin with the same high standards for their work and strong ethical values that they want to maintain throughout their careers.
Pleasing one’s customers by delivering what was promised is the primary focus of every successful entrepreneur in the world.
It’s not easy to start your own business, but if you have a passion and are ready to dedicate the time, starting a woodworking business could be a great option for you. Of course, there are a lot of prerequisites, such as being a skillful woodworker in advance, that you will need to clear. But if you think you have what it takes, starting your own business can be incredibly rewarding in a variety of ways. Just remember to do your research and plan adequately. With the right plan in place, you could be on the path to success in no time at all.
At Biz2Credit, we are a leading supporter of small businesses and their communities across the nation. We pride ourselves on our dedication and commitment to helping out small businesses in any way possible. As part of this, we maintain our Biz2Credit Blog with all the latest news, information, and trends impacting small businesses. So, please continue to check back here each day for all the latest articles and posts.
March 20, 2023
