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Dennis Peacock
12-04-2018, 10:02 PM
Well, I've talked to my new financial advisor. I've lost a lot of money over the past several years and I am currently advised that I'll need to bring in about another $2K per month to support my life as it stands today. I "want" to start doing some type of business in the woodworking area and my heart is wanting to get into CNC work for signs, crafts, and many other things that come across this brain of mine. I have about 6 years left before I will retire, so I have time to get setup and learn what I need to learn. My real problem is that I don't know how to get started and if you say all you need is money, I'll scream!! I know I need money, but I need to start somewhere and I sure don't know how to run a business but I do know woodworking. Woodworking and refinishing has been my passion since I was 14 years old. I've been good at it and I've taught a few others how to do woodworking basics.

I'm looking for your advise, pointers, tips, and here's how to get started kind of things.
Please? and Thank you.

Aaron Rosenthal
12-04-2018, 11:15 PM
I suggest you take a few courses at a local college or night school on business matters.
They’ll get you started on accounting, sales, writing a business plan etc.
Go see your bank. Usually they have a ton of helpful people for starting a business.
Try contacting a local chamber of commerce branch, ask around at your charitable places you donate time and and money to.
That will start you off.
Remember, as you approach retirement age, you have less energy. Take time to enroll and maintain a steady excercise program.

John Cole
12-05-2018, 2:10 AM
Looking forward to the replies, I retired two years ago,but. Need about 2K per month additional to be really comfortable.

Rich Engelhardt
12-05-2018, 6:09 AM
I sure don't know how to run a business

SCORE - Service Corps of Retired Executives - https://www.score.org/ they can help you head in the right business direction.

If you don't already have a good accountant that does your taxes, then find a good CPA to help you with the tax end. They should steer you in the right direction as far as LLC vs just sole ownership. Don't just jump right into a LLC thinking it will "protect" you. Once you form a corporation, then everything related to it becomes more expensive - insurance, taxes, tax preparation,,etc. Lll for pretty much nothing because as the sole owner/chief executive of the LLC, you are still open to the same liability as you would be as a sole proprietor in many, many, many locations.

Talk to your insurance agent about what type(s) of coverage you need and what should be covered.

If you don't already have one - get a good lawyer. One that knows business and tax laws.

Plan to spend an entire day going over the small business web site. https://www.sba.gov/

Tons of information there - tons of funding information there also. (not to cross any political boundaries - but - the present administration is very friendly to small businesses right now- so take advantage of it)(OTOH - the previous administration was very friendly towards minorities and women when it came to small businesses - I investigated forming a LLC and putting it in my wife's name as a source of funding)

Lastly - find a niche and fill it...

Good luck! I'll let others give you better advice on the actual mechanics.
Keep in mind that most business attempts fail on the bookkeeping an/or legal - - or the customer relations end, not the actual workmanship end.

Steve Rozmiarek
12-05-2018, 9:09 AM
Having been self employed nearly my entire working life, I'd suggest taking that time you have between now and business opening to plan everything. If you need to borrow capital, you'll need a banker ready business model, if you don't you'll need one for yourself. If you understand how the money should be flowing in and out of your business, you can tell when it isn't before it's an unsolvable issue.

Some expensive lessons I've learned, keep compliance costs as low as possible by minimizing the regulations you fall under. For example, some woodshops here require a full fire sprinkler system, some don't. If you need one, the costs of your product just went up by the $ it took to install, which your more clever (in my case) competitor likely doesn't have to pay. It's based on number of full time employees working in the shop, so simply structuring a business as a one man show saves $50k.

I agree with Rich about the tax and attorney pros, with a caveat. You are looking for $24,000 net, it's really easy to double that in a year to pay an attorney and CPA. I recommend having an attorney help you form the business, here it cost about $1000, which will get you a federal tax ID and state level licensing. Also you'd get an "articles of incorporation" and a "banking resolution", which you will need if you want to do any business banking, like checking accounts or loans. Beyond that, keep on the attorney's good side, and call him if you need, but try not to. I'd recommend tracking your own finances with quickbooks or similar, and monthly reporting to a CPA. He won't charge as much that way, and he can help avoid tax pitfalls as you go. Let him file the returns, that way when you do get audited, you have a pro handling it. You will be audited.

There is another way that plenty use, which a cash type business that operates on the ragged edge of the governments oversight. It's possible to do, but in my experience, it is a full time job in itself keeping the government out of my business. It's arguably easier and more profitable to give in to the system and pay the fees. You'll be shocked how many different agencies are counting on you for revenue.

Jim Becker
12-05-2018, 9:13 AM
Your first step is to sit down with a local accountant that specializes in small businesses to determine how best to setup your business to provide maximum benefit from its legal structure relative to liability and tax advantages. If you do this right, the cost for setting things up may be largely balanced by how taxes are handled, but it has to be done correctly, especially with the recent changes to tax laws. By handling things this way, you may be able to see how doing what you want to do is actually possible financially. You may want to do this sooner, rather than later, relative to setting things up, so that you can balance the costs/tax benefits against the higher taxes you pay now at full salary, too. You'll also need insurance, which is fortunately pretty reasonably priced. My business ended up being best handled as an S-Corp for tax purposes and woman owned. With no employees, I was able to opt out of PA's Worker's Compensation program as an officer. Professor Dr. SWMBO is the CEO and although it's "my business", she's been actively promoting it through the huge communities she's part of "out there".

While your time is more limited at present, having the business setup properly will allow you to start slowly, learn any new things you need to learn and work comfortably through your business and marketing plans before it becomes "essential" that the business is bringing in revenue. Certain costs go to the business, too, rather than your personal pocket. (yea, they sorta are the same at first, but not for tax purposes) The marketing is what is been the biggest challenge for me in this past year since retiring. "Finding my niche" and building things up is what I'm having to focus on every day at this point. You'll want to put an actual accounting system into place, too, even while it's "very part time". Record keeping is really, really important.

I have no doubt you'll be successful as you are an excellent craftsman and care about doing quality work. Pick your customers carefully in that respect. Do as much B2B as you can get. Consider alternative channels for things you can sell "in between" commissioned/contracted work...I'm doing that with ETSY and actually making some sales while keeping my CNC machine running daily.

Robert Engel
12-05-2018, 9:30 AM
First, you need a business plan. How much will it take to get started? What is the market? Can you compete with big commercial outfits? How do you reach the market? What are you going to charge? What are the expenses for equipment, licenses, insurance, etc.

I wouldn't blame you for being a bit scared of the replies so far. You can start out very small and build from there. Depending on your area and regulations, you may be able to start out in your home shop and avoid a lot of expense.

I know of one guy who started his business (not ww'ing related) entirely with Facebook and a Webpage. This is something I think is the first order of business.

I suggest have a professional web designer do it for you and pay Google for some advertising. Build a portfolio of work and post it.

You're going to have to invest to get started you have to weight the risk/benefits of that, too.

Think about what $x/month is based on. That can drive a lot of anxiety and stress. I would see a Certified Financial Planner before you do anything. Now is the time for that. Find an independent person that is not affiliated with an investment firm.

The investment corporations are the ones who came up the idea you need $1M in savings to retire.

Jerome Stanek
12-05-2018, 9:47 AM
I see you say you would like to make signs, crafts and other things. Are there other signs shops around? Crafts are ok but sometimes they are not profitable. Around me there are so many sign shops that it would be almost impossible to break into the business I ended up using my CNC and Laser to cut for the shops that do not have that ability.

William Adams
12-05-2018, 9:51 AM
You might want to look at information which is available for hobbyist CNCs, even if you get a higher end machine --- the concepts are the same and transfer well, and for folks on a budget, the hobbyist CNC machines can work out well.

I'd like to think that everything you'd need to know is on the Shapeoko wiki, but if you have a question which isn't answered there, I'd be glad to help you research it.

One notable resource is the "Guerrilla guide to CNC machining, mold making, and resin casting" (should pop right up on a search, as should the shapeoko wiki)

ob. discl. I work for Carbide 3D which sells the Shapeoko 3 and Nomad 883 machines.

Julie Moriarty
12-05-2018, 10:38 AM
I read an article by a guy who had retired and started making cutting boards and selling them locally. It grew to the point it became a full time job. The problem came when demand exceeded his desire to make them. But he was making so much money he couldn't walk away.

Not sure if this is the kind of thing that interests you, Dennis, but making small items and see how they sell can keep the startup costs low and you can learn how to best run the business as you grow.

Tony Pisano
12-05-2018, 10:57 AM
Market Research at the top of my list, which is all part of a business plan. You need to be doing what people want to either buy, or pay to have done. And it has to be something that either no one else is doing, something that you can do better, or something that has room for more like businesses. As far as the better part, there is often a market for different qualities of the same thing.
When I was hired to write a book on building beekeeping equipment, I had to see what books were already out there, where they were being sold, who the target audience was, price point etc.
Just in the town I live in, many small businesses have come and gone, and some had obviously not done the research or had a good business plan. One reason they failed was they assumed that everyone would have the same passion for what they were offering as they did themselves.
Find a niche. Think "Frank's Cranks"
I know someone who wanted custom drawer pulls and knobs for their cabinets, then turned it into a business because they knew there was a market.
Another business that recently moved here from out west offers specialized variegated yarn. The woman could never find quite what she wanted so she started dyeing her own and found there was a big demand.

Tony Pisano
12-05-2018, 11:00 AM
The other option is lower your standard of living to mine and you can live on 2 grand a month for the most part.:)

Dennis Peacock
12-05-2018, 11:39 AM
Ok, great info from ALL of you so far. All of my equipment that I currently have is paid in full. I have an 1,800 sq ft shop. Most every tool I have is commercial quality tools. I've been collecting and upgrading tools/equipment for over 35 years. I've repaired antiques, refinished antiques, repaired and refinished chairs, upholstery work, built kitchen tables, benches, bedroom furniture, beds, chest of drawers, dressers, blanket chests, and more. I've never been an assembly line type shop. I've even built over 300 bee hive boxes for a buddy of mine getting into the bee business. I know how to do the work and I love using computers and woodworking tools. The idea of designing and CNC appeal to me and I've been thinking this over for a few years now.

Locally, there are 4 colleges (under 25 miles from me) and 2 hospitals. Not to mention businesses galore. I live in a city of about 90,000 people. Maybe I'm trying to think too much on the money making side to supplement my tiny retirement income. I'm paying off personal debt like crazy and my hope is to be totally debt free in 5-6 years, to include my house. I know a lot about stuff but I'm no real expert at any of it. Once I turn 60, I can go to college here for free, I just have to pay for books. My plan is to take some business courses to better educate me about this very topic.

Maybe I'm thinking too big...I really don't know. Sometimes I feel desperation building in my mind but I do know that I have a professional I.T. skills that I can lean on while I'm trying to get setup to make stuff in my own shop. My preference would be to work business to business but I don't know enough yet to even make that type of choice.

I've often wondered how people get started in business. I think...how did they come up with the money to even get started? Did they save it for a while or did they borrow? Did they come into an inheritance that gave them the money to start? I asked a local millionaire about how he started a business and he said....."ya gotta know somebody that has money and that trust you enough to lend you the startup money". Well, that shut my door right there.

Maybe I'm thinking about this all wrong. I truly just don't know.

Perry Hilbert Jr
12-05-2018, 12:15 PM
Drawing up a business plan is great for some businesses. I know a few who fell into opportunity and grabbed on with both hands and some became wealthy. One guy had a 5th grade education. Went to a small livestock sale and purchased some calves cheap to raise up for meat for his family. He was told that one of the calves was worth about 5 x what he paid for it at another large livestock sale 100 miles further west. So he checked the livestock market and found it was true. He drove that calf the hundred miles and got a check 3 days later for 6x what he paid for the calf. So he went to small livestock sales buying holstein heiffer calves and every tues drove them to the large livestock sale where he sold them for a lot more. He did that for 25 more years. suddenly going from a part time janitor in a school to making six figures a year. That's when he needed an accountant to show him how to set up and keep his books. A lady I know buys things at yard sales and flea markets and sells them on line. She knows what she can sell and for how much and sticks to that she is not getting rich, but she is paying her bills. Another guy I know made a business out of buying work shop machines, stripping them for parts and selling the parts on line. He makes more than he did when working before he retired. The classic example is the guy who charges chicken farmers to clean the manure out of the big commercial chicken houses and then charges other farmers to spread the fertilizer on their fields. It is certainly possible to make a hobby into a paying business. It is difficult to do it on the scale you say you need. Too many guys have the same idea. especially it seems for wood turners. I know one that does it successfully as a business, and he is a speed demon at what he does. He needs to turn out volume to offer items at a price people will pay. I have seen turners set up to sell bowls for $100 that were worse than average. It has to be special, very special to sell for that kind of money.

Jim Becker
12-05-2018, 12:30 PM
Dennis, I don't think you are thinking too big at all! Relative to financing the business, while having cash is a nice thing, if you do your homework, have a business plan and set things up optimally with your accountant, you really can use "other folks' money" for any additional capital equipment you want balanced by tax advantages. IE, you're paying tax now, so if you can shift that same money toward the business to cover some or all of your startup cost, you can do things without having a huge pile of money. That's one of the reasons that working with a qualified and competent small business accountant is so essential. I'm not in any way suggesting that anyone go deep into debt to start a business! But there is "good debt" and "bad debt". Making the first one work for you is all I'm saying is a potential way to get this thing done and again, if you time things while you have your current higher income, your end-state out of pocket could be reduced substantially. It's a numbers game that really needs good advising on the accounting/tax side.

Stephen Tashiro
12-05-2018, 12:30 PM
that I'll need to bring in about another $2K per month to support my life as it stands today..

The simplest and perhaps inevitable solution is not to have the same "lifestyle" as you have today.

Wade Lippman
12-05-2018, 12:46 PM
I am sure you have considered working as a woodworker...

Julie Moriarty
12-05-2018, 2:34 PM
I've often wondered how people get started in business.
Everyone I know who started a business that became successful started small.

I know a couple of people who dove in feet first, bought everything they needed, leased space and then found they couldn't generate the income they needed to keep the business going and had to close it.

Those who started small and let the sales determine growth all did very nicely and didn't have a lot of stress. Opening your doors with everything in place and offering to do any kind of woodworking won't mean much of you don't have a customer base to support it.

Develop the customer base and let that take you where you want to go, one customer at a time.

Just my two cents...

John Goodin
12-05-2018, 10:34 PM
What Tony said. No matter how great your passion if there is not a market for your product or service things will be tough. The broader the appeal the better. Sure you can create a market where one does not exist but that is better left to the Steve Jobs types telling the world they want an iPhone. Also look to your friends and contacts. Does anyone have a network you can tap?
I was a stay at home dad and wanted to work part time. My background is teaching history, hobby woodworking and remodeling. My first thought was home energy audits. They are required in the city of Austin for older homes during a real estate sale. That however, would limit my work to just certain homes in Austin. Home inspections, however, are in greater demand since most people want one when purchasing a house and not limited to a one city. I had two friends who were realtors and they provided lots of advice. They also were the basis for a network for referrals. Things were slow at first year but I work enough to allow me to keep the work-life balance in check. If there is anything I can do to help let me know.

Edwin Santos
12-05-2018, 11:58 PM
Setting money out of the equation for a moment, are you at a stage where you want to simplify or complicate or your life?
Starting any business is not the way to simplify it.
Would working 20-30 hours/week at a Rockler store, Woodcraft or some other place that could use your woodworking knowledge be a good strategy? Maybe it would accomplish what you need with none of the risks and brain damage that goes with starting a business.

Jim Becker
12-06-2018, 8:54 AM
Edwin, the problem with retail is that it tends to be minimum wage and horrible hours...it's certainly fine to make some "mad money", but it's not going to supply the $2K a month that Dennis wants to achieve even working full time, 40 hours a week...which is also not usually achievable because the majority of retail jobs are part time so they don't have to pay benefits. Leveraging his woodworking passion and excellent shop really can provide the additional income he wants/needs and with a few good relationships for B2B, it's even realistic part-time.

Robert Engel
12-06-2018, 9:39 AM
This is a topic of interest for me and its been good to read the posts.

I started my business (not ww'ing related) with $200 in the bank and missed getting my name in the yellow pages by 1 week.

Almost 30 years later, no I'm not a millioinaire, but I make a comfortable living, don't a dime to anybody. But hear me - I do not recommend this!! I can remember days waiting for the phone to ring and going out and chopping a tree down with an axe just to keep from going crazy.

So it can be done, but that said, most businesses require capital. Every business is different. Some have to be capitalized a lot more than others. this includes start up costs (supplies, advertising, remodelling a space, etc), but to pay people for 3-6 months. That comes in the from lots of sources: investors, personal savings, or a loan.

This wouldn't really be applicable in your case, the business is not that big, but you will definitely have start up expenses with a legit business model. As mentioned this includes incorporation fees, local and state licenses, liability insurance, workman's comp (will you be installing signs on people's property?), and getting a website and Facebook page up and running (which I consider an absolute must in this day and age). Before you do anything you need to check with your county and see if there are any issues running a business out of your location (anonymously, of course).

Web page design is something that may not be as cheap as you think. I can be a DIY if you're capable. Post a portfolio of work. I know I've mentioned this in a previous post, but it bears repeating.

Sounds like you have a good plan in mind. Having no personal debt is a huge thing going into retirement. Downsizing is also something to think about, too. Everyone's situation is different. Several years ago I got rid of my bass boat, a stock trailer, and a utility vehicle. We also liquidated our goat farm and milking equipment. This was partially due to elder care obligation, but truth is we were both getting a little creaky from all the physical labor.

I've got similar ideas when and if I retire so I've had my mind on these same things right along. The biggest hurdle for me is how to get jobs as in the city near me there are numerous big commercial cabinet shops that will be hard to compete with.

Something else to consider is go to work part time at a sign shop.

Robert Engel
12-06-2018, 9:42 AM
The simplest and perhaps inevitable solution is not to have the same "lifestyle" as you have today.

I totally agree with this!!!

Being willing to downsize and live a little closer to the vest take a lot of pressure off!!

Netting $2K/mo might mean getting $3-4K of business/mo depending on your overhead.

Jerome Stanek
12-06-2018, 10:53 AM
I do cutting for signs shops and that kind of ties me down I can't just take off on a vacation as I never know when I will be needed to do a job.

Bill Berklich
12-06-2018, 11:17 AM
I suggest you take a few courses at a local college or night school on business matters.
They’ll get you started on accounting, sales, writing a business plan etc.
Go see your bank. Usually they have a ton of helpful people for starting a business.
Try contacting a local chamber of commerce branch, ask around at your charitable places you donate time and and money to.
That will start you off.
Remember, as you approach retirement age, you have less energy. Take time to enroll and maintain a steady excercise program.
+1 on all. Especially the exercise program. 6yrs makes a big difference. Lifting and tote’n sheet goods and materials as well as finished product can be a pain so consider material handling.

Steve Tracey
12-06-2018, 7:09 PM
I retired 8 yrs. ago, more or less. It didn't take. I still get calls from my old clients to do the thing I did, but I do not take those jobs. I do craft work. Mainly for Christmas. We have here, a large Arts & Crafts show in November. I make a take apart puzzle chair that sells for about $50. 3 out of 4 are pure profit. If you go into a woodworking type business, Make few different things, too many reduce the profits. The advice given about a good CPA, or tax attorney is a really go place to start. Good Luck.

Edwin Santos
12-06-2018, 7:28 PM
Edwin, the problem with retail is that it tends to be minimum wage and horrible hours...it's certainly fine to make some "mad money", but it's not going to supply the $2K a month that Dennis wants to achieve even working full time, 40 hours a week...which is also not usually achievable because the majority of retail jobs are part time so they don't have to pay benefits. Leveraging his woodworking passion and excellent shop really can provide the additional income he wants/needs and with a few good relationships for B2B, it's even realistic part-time.

Hello Jim,
No doubt, retail is no great shakes. My only concern was his mention that he has lost quite a bit of money in the last few years. At the retirement stage of life, it's important to think about how sensible it might be to take financial risks. You're right, in retail you would not make much but you wouldn't get hurt financially either.
They say statistically the vast majority of businesses fail, I think 8 out of 10. If he goes forward he might beat these odds, but I think a good financial advisor would caution against risking more money than he can afford to lose at this stage in the game.
It's different if you're young enough to have a long time horizon to make up losses, but as we get older, financial risk becomes more dangerous. Sorry if I'm being a bit of a downer here.

Arguing in the alternative for a moment though - you mention he has an excellent shop, so if it were possible to put a toe in the water and take on a few jobs without much in the way of capital investment because he has all the equipment he needs, it may be a different story where the risks would be more modest. Maybe this is where you were coming from with your comment.
Edwin

Jim Becker
12-06-2018, 7:41 PM
Edwin, Dennis already does some work for others and has an 1800 sq ft, well equipped shop with generally higher end gear as he noted earlier in the thread. Technically, he doesn't "need" to add anything to it to go into a formal business, but I believe there's a desire to bring CNC into the picture because it opens up some opportunities that he can't pursue without it. That's part of why he's trying to get a handle on all the angles. I just went through the same thing in the last year, so I truly can relate!

Marvin Hasenak
12-06-2018, 8:18 PM
I will save you some money, skip the CPA, find a local Enrolled Agent, they are licensed to practice before the IRS, and are as up to date on tax law as the CPAs and more than most tax attorneys.

Being self employed requires salesmanship, you are selling your product and yourself to prospective customers. Start finding people that will want your products or services, get contacts and start burning some midnight oil getting your name out there as a part time business. It will give you a chance to see if your business ideas are a go or no go in your area.

I know this is not your goal, but a thought I will throw out there. Offer a handyman service, a little of this and little of that and lot of headaches, Lot of people do not have the skills or time to do minor repairs, or minor remodels. Even painting and yard work is hired out. I had one client that made all of his Christmas money simply hanging Christmas lights for a few dozen people, today he has a few hundred homes and businesses that he hangs lights on. I know, not what you were planning, but options are better than nothing happening.

Perry Hilbert Jr
12-07-2018, 7:45 AM
ditto on the enrolled agent. As a partially retired attorney, I constantly wonder why every one assumes that running off to incorporate is the first thing on their minds. That involves a horrendous amount of extra paperwork and if you are the sole employee, does not save you anything. You are still liable for any negligence and product liability. Sometimes accountants advise incorporating just so they have an ongoing income handling the paperwork. Often people are better off just buying business insurance and an umbella policy to cover them. Having other employees, particularly somebody behind the wheel, is a different matter entirely. I was self employed my last 20 years. When I hired an employee, the paperwork and required insurance etc, nearly tripled the wage paid. It simply was not worth it. It was cheaper to hire contract help part time. Yes salesmanship is a help, but in some businesses, unnecessary. I still turn business away every week. I simply have enough business that I can choose to be choosey about what I handle. I have never advertised. I don't care what people think about me. Folks still call. If you don't have a ready market for the product and you need to go looking for customers, may be you need a different product.

I turn wood as a hobby. I donate most of what I make to charity. Since the charity sale, I have received three phone calls looking to order things I made. One of the offers is quite tempting. A company wants 12 of the $40 items. I can make them in about two hours if I don't fool around.

Jim Becker
12-07-2018, 9:23 AM
Perry, I have to somewhat disagree with you. Business organization is very critical relative to tax advantages and it absolutely can help shield personal assets from business liability if done...correctly. The recent tax laws have really hurt "sole proprietorship" when it comes to taxes. All many of us are saying is to get qualified advise from a small business professional up-front to insure that there is clear understanding of what each organizational scenario brings to the table for both taxation and for liability mitigation.

I will agree with you that some accountants will push for more complex arrangement than may be necessary, but that's a risk with any professional resource. They are in business, too. The same thing happens in your own profession as well as many others. Nature of the beast...and "buyer beware"...

Dennis Peacock
12-07-2018, 11:20 AM
All very good info here and Thank You!!
I've done a good bit of woodworking here where I live and the strange thing is that people want stuff for WalMart prices and I simply cannot do that! Custom turned pens, customer said "I'll pay you $5 for that pen and no more". I said....I can't sell you the pen for $5 as I have more than that in the supplies for that pen. Lost sale. Custom turned bowls....People simply won't pay more than about $35 for a bowl. Custom designed furniture...people simply don't want to pay the money for well designed and made furniture but they'll go to the local BB stores and pay for the particleboard junk for a few hundred dollars and then complain about how crappy it is and how it fell apart on them in the first 6 months they had the piece.
I made an L-shaped computer desk for a guy at work. He complained about spending $600 for a desk from the local office supply store and how it fell apart on him in less than a year. I told him that I could build him a custom desk like he wants for $600. 8 Years later, he still has the desk.

I've gone over how much money I've made doing ww'ing around here and over the past 19 years, I've not made enough to cover 2 months of what I'm looking for per month after retirement. It's frustrating trying to talk to people about starting and running a small business. I live outside city limits, out in the country. Asking around and trying to talk to people about this topic seems like I'm asking them for all their personal financials! There's a lot of businesses around here that I do not trust. Their reputation follows them closely. So I'm asking online to try and get better advice, learn more, and research a bit more while I'm trying to find reputable resources to talk to about my ideas and thinking. The quest continues. :)

Stephen Tashiro
12-07-2018, 12:11 PM
I live outside city limits, out in the country.

These days, it would be rare to find a business in the country that could survive without selling its products online. Do you have a plan to manage the aspects of online sales? - or open a shop in metropolis?

Jim Becker
12-07-2018, 1:14 PM
Dennis, much of what you just wrote in post #32 is why I (and others like Keith) have suggested that B2B is really where you want to play. Direct to consumer is tough because of the reasons you mentioned around expectations vs cost. I will not say that businesses don't have sensitivity to cost...they do. But they have stronger sensitivities to quality and many also appreciate what it actually takes to make things. So subcontract work is going to be a stronger play, IMHO. I focus a bunch of my "marketing time" on that at this point. The things I make for direct to consumer are more about either keeping my machine(s) and myself working in between doing more profitable work for other businesses and makers.

Wade Lippman
12-07-2018, 1:16 PM
I've done a good bit of woodworking here where I live and the strange thing is that people want stuff for WalMart prices and I simply cannot do that!

I tried doing woodworking commercially and quit for exactly that reason. I found I was working for $5/hour. I suppose once you develop a reputation you can charge what its worth, but until then...
Other thing that annoyed me was that people couldn't even see the difference between what I made and junk.

Dennis Peacock
12-07-2018, 2:37 PM
Other thing that annoyed me was that people couldn't even see the difference between what I made and junk.

Oh I know that feeling all too well..!!!!! :mad:

Jim Becker
12-07-2018, 5:03 PM
Other thing that annoyed me was that people couldn't even see the difference between what I made and junk.
This is the primary challenge with direct-to-consumer for woodworkers, especially these days. A long time ago, folks appreciated workmanship and what goes into making things. Now...not so much because too many of the current consumers have never made anything themselves. They have no clue. And further to your statement, they don't get it even when you explain it! Now combine that with the dreck that so many folks are selling for next to nothing, it makes for a difficult business opportunity...

Terry Wawro
12-10-2018, 8:58 AM
If all you need is 2K a month ($500 a week) I would rethink starting a business. A business consumes time and money, even when you're not making any profit. If it was me, I would get a part-time job, maybe at Home Depot or Ace Hardware and then also have a handyman business on the side. A friend of mine left a great sales job over a decade ago when the owner retired and left the business to his sons. He couldn't work with new bosses so he quit. As a favor to a friend, he worked part time at an Ace Hardware during the Christmas season. Customers keep asking him for referrals for local handymen. Everyone they could find was booked out a month or more in advance. We are not talking major home renovations here, just simple things like leaking toilets, bad light switches, fixing lamps and installing mailboxes. Since they couldn't find a guy, he was nice and would stop by their house after work and take of these simple jobs. Word spread around and within two to three months he had a busy part-time handyman business on the side. It now pays much more than the hardware job but he still works at the store because that's were he gets the leads. The owner knows and it's fine with him.

Larry Frank
12-10-2018, 9:18 AM
Being a handyman sounds good but I would think that you need to form a business with proper license and liability insurance.

Terry Wawro
12-10-2018, 10:33 AM
Yes, I would. Start as a sole proprietor and get liability insurance for sure. The insurance wouldn't cost that much.

Keith Outten
12-11-2018, 12:42 AM
I prefer large commercial projects. Every General Contractor I have ever worked for understands that I operate a business and that means I have business expenses over and above labor costs. Things like phone bills, rent, electric bills, vehicle costs, insurance, etc. I pay taxes to the state, the federal government and then there are annual property taxes on my machines and tools. I also have to include profit and overhead in every job because its part of being in business, they are not an option.

Dealing with the public is tough when the majority only consider my labor costs, they think in dollars per hour even though on their day job they want medical insurance, retirement and all of the other perks on top of the costs incurred to support them within their company. My investment in tools and machinery has to be recovered as does training time, design services, materials...you get the picture. Most companies charge at least three times your hourly rate to their customers for your time. This can vary considerably depending on the number of employees involved.

Even though I can bang out a house sign for someone in a short period of time I Never offer to work for any individual, it costs me more to just discuss their needs than they are willing to pay for a completed job.

Steve Rozmiarek
12-13-2018, 9:09 AM
If all you need is 2K a month ($500 a week) I would rethink starting a business. A business consumes time and money, even when you're not making any profit. If it was me, I would get a part-time job, maybe at Home Depot or Ace Hardware and then also have a handyman business on the side. A friend of mine left a great sales job over a decade ago when the owner retired and left the business to his sons. He couldn't work with new bosses so he quit. As a favor to a friend, he worked part time at an Ace Hardware during the Christmas season. Customers keep asking him for referrals for local handymen. Everyone they could find was booked out a month or more in advance. We are not talking major home renovations here, just simple things like leaking toilets, bad light switches, fixing lamps and installing mailboxes. Since they couldn't find a guy, he was nice and would stop by their house after work and take of these simple jobs. Word spread around and within two to three months he had a busy part-time handyman business on the side. It now pays much more than the hardware job but he still works at the store because that's were he gets the leads. The owner knows and it's fine with him.

Terry, this path is a good option. I've used this myself. I had always thought I'd like to get into cabinet and furniture making full time so I kept an active side business with it and construction for 20 years. When I had to switch careers several years back, it was the opportunity to go full time. Several things became obvious right away though. First, it's impossible to profitably compete with junk products which is compounded by people having no idea what is junk. Second, you will starve if people don't know you are in business. I started with grand ideas of being in my shop from 8-5 each day, and getting paid for what I enjoyed. What actually happened though, is the handyman jobs rapidly started coming in, and I spent less and less time in the shop. The jobs grew and so did the crews, overhead, costs, income and everything else. I've pretty much settled down to building new houses, large remodels and kitchen/bathroom remodels. I enjoy the kitchen/bathroom remodels the most, and a career could easily be made on those alone. At this point, I still have a shop, but I am seriously considering closing it and exclusively working out of the jobsite trailers to get rid of the overhead.

Point is, you can take the idea as far as you want.

Curt Harms
12-14-2018, 8:04 AM
Being a handyman sounds good but I would think that you need to form a business with proper license and liability insurance.

Also check into local/state licensing requirements if any. PA fairly recently started requiring licenses for contractors. I'm not sure if a handyman would be considered a contractor but that's something to look into.

emili ladjet
12-14-2018, 4:46 PM
Retirement can be the start of a whole new career, but it doesn't have to be the same old work.

Tony Pisano
12-18-2018, 11:32 AM
My son and I did handyman work for a number of years. We specifically told people, we are not contractors. If someone asked for a particular job that required a contractor, we told them just that. You need to get a permit and a licensed contractor. The one thing we found was, at a $25 per man hr rate, there was a lot of work out there doing the small stuff that contractors wouldn't bother with. And by doing good work at a fair price, there was no need to advertise. I've since sold my old truck and moved on to other things, but I still get asked if I'm doing small jobs and occasionly pick and choose a few.

Derek Meyer
12-18-2018, 5:43 PM
Dennis, you mentioned in one of your posts that you work in IT. If you have IT skills then you'd probably be better off doing side work in IT for people and businesses to generate that $2000/month. I also work in IT and I make extra money on the side doing work for a select group of people without even looking for work. You could probably work 10 hours a week or less and generate that amount.

Mike Circo
12-20-2018, 10:31 AM
Dennis, you mentioned in one of your posts that you work in IT. If you have IT skills then you'd probably be better off doing side work in IT for people and businesses to generate that $2000/month. I also work in IT and I make extra money on the side doing work for a select group of people without even looking for work. You could probably work 10 hours a week or less and generate that amount.

Good for you Derek. I've worked in IT for 40+ years, from the mainframe/punch card days. I'm retiring in February 2019. I'll likely take some part time job to pass the time and generate some Mad-Money.
However I can guarantee you it will NOT be in the IT area. I am burned out on that profession. At this point in my life and with the technology the way it is, I'd rather be a greeter at Walmart than go back to IT.
*** Rant Mode Off ***

Jim Becker
12-20-2018, 12:45 PM
I've also had a few inquiries about doing some consulting work with my former employer and business partners and while I agreed to it because $125 and hour speaks loudly, I'm pretty unexcited about the actual work and put some hard conditions into things, like no travel, review/advise only...no massive writing, etc. My shop is more "refreshing" after so many years in the 50-60 hour a week rat-race.

John Sincerbeaux
12-21-2018, 4:40 PM
To me, some of the advice here seems a little over the top for someone who just wants to make a couple grand a month in WW? Why do you need an attorney if you want to make wooden signs or whatever niche product? I have been selling my work in galleries for 15 years and have never needed an attorney. Regardless of what you do for a living, EVERYONE should hire a CPA for their taxes unless you don’t mind leaving money on the table. My CPA includes my small WW business P/l into my regular tax filings.
Go to your county courthouse and file a DBA. Take the remaining years you’re working your “real job” and refine your WW product and start your small WW business. Hopefully you’ll be all set to suppliment your retirement with your WW passion.

Merry Christmas

John Sincerbeaux
12-21-2018, 4:46 PM
If all you need is 2K a month ($500 a week) I would rethink starting a business. A business consumes time and money, even when you're not making any profit. If it was me, I would get a part-time job, maybe at Home Depot or Ace Hardware and then also have a handyman business on the side. A friend of mine left a great sales job over a decade ago when the owner retired and left the business to his sons. He couldn't work with new bosses so he quit. As a favor to a friend, he worked part time at an Ace Hardware during the Christmas season. Customers keep asking him for referrals for local handymen. Everyone they could find was booked out a month or more in advance. We are not talking major home renovations here, just simple things like leaking toilets, bad light switches, fixing lamps and installing mailboxes. Since they couldn't find a guy, he was nice and would stop by their house after work and take of these simple jobs. Word spread around and within two to three months he had a busy part-time handyman business on the side. It now pays much more than the hardware job but he still works at the store because that's were he gets the leads. The owner knows and it's fine with him.

Best advice here.
Probably the most important thing is letting someone else pay for your health insurance.

Tim Bueler
12-22-2018, 10:18 AM
Maybe it's been brought up already, I didn't read this whole thread. A $2k/mo job won't necessarily generate $2k/mo. You may have a month where you make $6k and then 2 or 3 months of nothing. Be flexible.

I started 3 successful businesses without all the gobbledy gook previously mentioned. Nor did I have any $ for the first one (built out of pocket as I progressed). Part of it was I was too young and stupid to know better. Part of it was both my parents were entrepreneurs and that type of thing was normal for me. I wouldn't recommend that approach for the uninitiated.

My advise is my opinion and could be (and probably will be ;)) argued against by others here.
Find a good accounted who understands, at least, small business. Even better if they have a working knowledge of what you want to do. Not all do. Perhaps find some sort of local mentorship program where you can get advice from a successful business person, in person, in real time. It doesn't have to be in your chosen avocation, but it'd help if that person has/had a similar business type, i.e., business to business, service industry, manufacturing, etc. Why? Someone in manufacturing may not understand the needs of the direct to consumer marketer, etc. A huge part of why my businesses were successful is I had a great accountant and absolutely fabulous mentors. Another part of my success was I kept strict control on finances. I can only recall twice when I got a loan for something business related. In both cases those loans were paid off in short order and far less than the loan term (NO early payment penalties!). Paying someone else interest $ was $ out of my pocket.

Finally, I had the fortune to marry a good woman. She has been fully supportive of my entrepreneurship (though sometimes it did take some convincing) and has physically participated in all but the first. I could have done it all without her but I doubt it would have been as successful and it certainly wouldn't have been as much fun.

Good luck!

Van Huskey
12-22-2018, 10:53 AM
Well, I've talked to my new financial advisor. I've lost a lot of money over the past several years


Not to reiterate what is probably painfully obvious to you at this point but the NEW FA is probably going to be a big help. If you lost much in terms of percentage any year since 2008 (except maybe 2015 and of course the last 3 months) your old FA did a fairly poor job, especially so close to retirement, or they had sticky fingers.

One thing to look into is how machine acquisitions prior to operating as an actual business may hurt you in terms of taxes.

Jim Becker
12-22-2018, 4:05 PM
One thing to look into is how machine acquisitions prior to operating as an actual business may hurt you in terms of taxes.
Yup...which is why some of us have suggested that the ground work for setting up the business take place now prior to retirement so that any capital purchases get tax advantaged while he still has his higher pre-retirement income and tax liability.

Terry Lewis
12-28-2018, 8:03 AM
Dennis, I don't think you are thinking too big at all! Relative to financing the business, while having cash is a nice thing, if you do your homework (http://yourhomeworkhelp.org/), have a business plan and set things up optimally with your accountant, you really can use "other folks' money" for any additional capital equipment you want balanced by tax advantages. IE, you're paying tax now, so if you can shift that same money toward the business to cover some or all of your startup cost, you can do things without having a huge pile of money. That's one of the reasons that working with a qualified and competent small business accountant is so essential. I'm not in any way suggesting that anyone go deep into debt to start a business! But there is "good debt" and "bad debt". Making the first one work for you is all I'm saying is a potential way to get this thing done and again, if you time things while you have your current higher income, your end-state out of pocket could be reduced substantially. It's a numbers game that really needs good advising on the accounting/tax side.

Hello Jim,

I retired 3 years ago and can't just sit and wait till the time comes to say goodbye to everything and everyone I love. I think I did work hard as a teacher, as I taught Liberal Arts and Sciences at TAMUCC and later worked at Utah Shakespeare Festival. But I've been always interested in woodworking though. My late wife didn't take it seriously, of course, but I've been always planning to start a small business.
What is the best and easy way to create a good business plan and calculate all the possible pitfalls?

Thank you,
Terry

Jim Becker
12-28-2018, 10:12 AM
Terry, there are a lot of resources available to help with a business plan...I know I was able to download a very extensive document from my bank. (TD Bank) But before diving into a formal business plan if you want to create one...the back of a napkin is sufficient. Initially, faddle around with things like:



What do I want to accomplish...a certain amount of income, satisfaction of creating things with the income being a nice thing, but not required, etc.?
What do I need to learn (in the short term) to allow me to move forward with what I want to accomplish?
What changes do I need to make to my workshop and tool setup to allow me to safely and efficiently do the kind of work I want to do and if I need to make changes, do I have some funding available to do that?
How formal do I really want to make the business including provisions for protecting myself, my assets, my family and my taxation?
Do I have at least some funds available to establish my business in the appropriate, legal way?


Once you set the "ground rules", I really, really do recommend having a conversation with an accountant who specializes in small businesses. The goal of that conversation should be to convey your general ideas so that they can recommend the best way to legally establish your business. There are multiple choices for that and no one way is best for everyone. Each has its own cost structure to establish, too, but you CAN do a lot of the paperwork yourself to keep that cost down. 'Just be sure to have guidance with that because errors can be costly. (I chose to have my accountant do most of this, but in retrospect, I should have done a little more of it myself)

A formal business plan gets into more detail for sure. If you're going to "make stuff" to sell direct to consumers or on commission, there needs to be an appropriate plan for marketing it. If you're going to do subcontract work (B2B), that also has a marketing need. Know up front that these things have cost involved and that's beyond just your time to regularly promote your business. It's easy to get caught up in the "making" and then suddenly find no orders waiting because you didn't ask for them. ;) For most businesses, there also needs to be a "separation of church and state" when it comes to money and financial records. IE...you need an accounting system and you need to use it religiously. If you are "old school" you absolutely can do it manually if you know how, but that's a royal pain compared to using current technology. That is, of course, balanced by cost. Some accounting systems are "free to use", but have fees for certain things beyond basic record keeping and limited adoption by actual accountants who assist small businesses. Others like the QuickBooks I use, have a monthly cost, but a broad community of accountants to work with...and you really do need to have an accountant, even if it's just for quarterly reviews and taxes. Speaking of taxes, if you establish a business, there will be a regular cadence of tax filing even if you have no employees. The specifics are tied to the kind of business organization you choose, but they are state specific. I have no employees and as an officer of the corporation have an exemption from WC. But I still have to file the quarterly reports despite them being covered with just zeros. So part of the business plan is the cadence of any legal reporting. Know it up front and have it in your plan.

The business plan needs to include milestones so you can establish your business and financial goals, track them and then make adjustments as necessary. This really should be done formally for anything beyond a "hobby with a few shekels of benefit" type activity. The goals need to be realistic but provide incentive to meet them. My business took nearly six months to get "dollar one" of paid work in the door...there was a learning process involved with the CNC and marketing takes time. I actually did hit the date I thought it would be. My next goal was enough cash flow to pay for the monthly costs for insurance, accounting, tooling, etc. I've been successful at that to-date, but I did have to make some adjustments from strictly commission and subcontract work to using down-time to produce small things to sell as finished goods. (I'm using ETSY for that now) Most of that utilizes scrap material to keep cost down so that the prices on things are not out of line. That piece is paying for itself, keeps me busy in the shop regardless, keeps me learning new things and takes material that isn't good for larger projects and turns it into things that have financial value. That was a change to my original business plan based on reality and wanting to meet the milestones I had set. I'm currently working out my next milestones, but they include adding a local retail business to sell certain equestrian related products I produce for more exposure and seeking out more subcontract work for general cash flow.

Another part of the business plan, IMHO, revolves around suppliers. Even the smallest of hobby businesses can benefit from optimizing who they buy from to help with material and tooling costs as well as making things like physically getting the materials to the shop easier. I buy my sheet goods from a real sheet goods supplier rather than grabbing my trailer and seeking out stuff from retail sources. I get better pricing for better (north American produced) material and they deliver to my shop's door. Get setup with a number of suppliers so you have choices when availability is important. Most are comfortable with small businesses that are low volume, too...it's not uncommon.

When you are thinking about what you want to do, don't panic if you don't have "everything" you need to produce what you intend to make. By example, I sometimes make table surfaces that can benefit from a wide belt sander. I do not own one, do not intend to buy one and don't actually have the space for one even if I wanted one. But I know a local concern that does have one and I can "buy time" on the machine for my occasional needs. I'm about to do that soon with a project I'm currently working on. On the other hand, there may be something you want to do that is "key" to your intended business and that might mean making an investment. That was the case with me (and potentially with the OP, Dennis) in that I wanted to add CNC capability as part of setting up the business. It's actually what drove me to set things up formally in the way that I did, both for capability and for tax purposes. This is where you really need to work with your accountant to decide what's the best way to do things, whether you choose to invest personal funds as ownership investment or if you choose to finance an acquisition. Taxes do matter and if things are done carefully, adding something like the CNC I did, can effectively shift money from taxes to equipment.

A business plan isn't all that different than the planing you did for your role as a teacher over the years... What needs to be accomplished in general? What is needed to do that from a resources standpoint? What are the measurable goals and milestones? What do I need to invest in myself to make it happen? Etc.

Edwin Santos
12-28-2018, 12:23 PM
A business plan isn't all that different than the planing you did for your role as a teacher over the years...


Hello Jim,

I retired 3 years ago and can't just sit and wait till the time comes to say goodbye to everything and everyone I love. I think I did work hard as a teacher, as I taught Liberal Arts and Sciences at TAMUCC and later worked at Utah Shakespeare Festival. But I've been always interested in woodworking though. My late wife didn't take it seriously, of course, but I've been always planning to start a small business.
What is the best and easy way to create a good business plan and calculate all the possible pitfalls?

Thank you,
Terry

Terry,
The subject you have asked about is extensive enough that it warrants reading a few books. There are many out there that cover the subject in much greater detail than you can get in a woodworking discussion forum post. Jim has given you plenty of excellent pointers. However, I would respectfully disagree with his opinion that a business plan is not a lot different than your planning as a teacher, and by extension, I do not think you should expect any similarity whatsoever in the two endeavors because there is almost none.

This is not to talk you out of it. I just think its important for anyone considering a proper business to have their eyes open to the demands, and the risks.

Two very important words that had no existence in your old career are "cost accounting". For example, even for a one man retiree business, I would say it is necessary to track your time by the hour (you can use a logbook or a time keeping app) and impute a cost even if you don't pay it out. After all, you wouldn't work at that crummy part time job for free, so why would you assume your time is free in your own business, that is if it really is a business. I think might be surprised how low this "wage" may end up to be if the business is to break even (or the inverse would be how much money your business is losing at the wage you imputed).
Anyone who assumes they enjoy woodworking and their shop is at their home, thus their time is free and has no cost is operating as a hobby or at least a quasi-hobby, not a business.

One other point, I took a B2B woodworking job this year. It was great until it came time to be paid. I took a deposit to cover the materials plus a little, but the balance was to be paid net 30. Turns out my B2B customer encountered some installation problem with his end user that escalated into a dispute, and I became an accidental passenger on the ship because when he was not paid, I was not paid. In the end I did get paid but it took six months, lots of follow up calls, lots of listening to his sob stories about what a victim he was, etc. So build an allowance for bad debt or at least a cash flow forecast that assumes something other than prompt, automatic payments. What's the expression, hope for the best, plan for the worst?

Again, not to throw cold water on this idea, because if it works out for you it could be great. Just trying to help you eliminate the surprises. Best,
Edwin

Rich Engelhardt
12-29-2018, 2:09 PM
What is the best and easy way to create a good business plan and calculate all the possible pitfalls?I'm going to repeat the advice I gave earlier in this thread.

https://www.sba.gov/ - is a treasure trove of useful information on how to plan, how to get started and how to fund a small business.

https://www.score.org/ - the Service Corps of Retired Executives is a true national treasure. The volunteers are from all different businesses and from all different levels. They are retired executives that offer everything from being a personal mentor, to online training courses - - - all free of charge.

Brian Tymchak
12-29-2018, 10:46 PM
I realize I'm late to the party on this thread, but I have a thought that I didn't see in any of the other posts. Apologize in advance if someone did and I missed it.

With a well-equipped shop, is there a possibility of leveraging that asset and offering shop time annd instruction to other users? I've read in the past few years of this type of service being available. Here is a local (to me) business like that: http://www.buildmoreworkshop.com/

Jim Becker
12-30-2018, 9:22 AM
Brian, possible for sure, but a major liability challenge...likely well above a normal business liability situation.

John Goodin
12-30-2018, 9:48 PM
If you know any realtors or a way to meet them, they are a great source for handyman type jobs. People always need things fixed before listing a house and the repairs after a home inspection. One realtor can generate more work than a gaggle of individual homeowners.