new WW business

[Wes Ramsey]

I'm starting to sell enough pieces now as a hobby ww'er that I think it is time to setup a business and see what I can do with it. I hesitate to ask for tips and advice here, but I won't object to sage advice from some old hands. What I'm looking for is a good book, blog, site, etc I can start reading to see what I can learn about ww'ing as a business. I'm a solutions architect so I'm pretty good with project planning and estimating costs, and my wife runs her own business and is great with social media marketing so I have a good resource there, but I think I'm still at the stage where I don't yet know what I don't know. Where do/did y'all look for info about how to get your business off the ground?

[Jim Becker]

There is a lengthly thread in OT that Dennis Peacock started a week or three ago that has content that will be helpful to you.

[Matt Day]

And a few hundred others over the years. I say this every time this comes up, search for old threads

[John Sincerbeaux]

What you produce and your target market will determine a lot of what you need to get started.

[Richard Coers]

Don't quit you day job until you have a minimum of 6 months of work on back order, you have 1 year of cash in the bank, and you have all the machinery you will need paid for. You won't need advice on running a woodworking business. You're either good at woodworking or you aren't. It's running any business that you need to know how to do. Marketing, calculating overhead, profit and loss, scheduling, and writing a business plan. Are you charging enough now that you could live on it and pay for shop space rental? Are you part of the underground economy? Almost anyone can survive in a garage when they don't carry insurance and don't meet local codes. But when you need a million dollars of liability insurance, can meet fire codes, and can get licensed if necessary, it gets much tougher. Many hobbyists charge like they are buying it. You have to charge to make a living. Most commercial shops have shop rates running from $65 to $150 per hour. Depends quite a bit on location and what it costs per square foot to rent shop space. Are you fast enough and good at meeting deadlines? I worked part-time in my basement for 15 years before going full time pro. It was when I was getting work from interior designer that I knew I had what it took. What I didn't plan on was how hard I would be on myself. After years and years of 80 hour weeks, I closed the doors after 8 years. (As my cousin always said about her professional woodworking husband, "He only works half days at woodworking, that's 12 hours!) I got the opportunity to go to work at Woodworker's Journal Magazine as project builder and designer. 40 hour weeks and benefits is a rare woodworking job! Good luck!

[Chris Parks]

As someone who has started a few businesses all non woodworking planning is the key. As a rule I reckon six months of research and planning is what I allow and one I see everyday is still going after 30 years.

[Dave Sabo]

Richard summed it up pretty well, but I'll add:

Running a manufacturing concern is a bit different than a service type business like you're currently in. A lot more capital is needed to get it off the ground and sustain it.

How are you with hiring and firing people ? And, dealing with them disappointing you ? You're not going to scale a manuf. biz without workers, and I can say with confidence a solo shop is going to have a hard time generating a professional type salary you're probably used to. If you're not adept with personnel, you'll have to hire someone, which means capital. And you'll still have to hire the search firm or personnel guru.

Do you have an accountant that specializes in small businesses ?

How about an attorney (or firm preferably) that is well versed in contract and labor law ?

What are you making ? (doesn't really matter) .

What makes it so special and differentiates itself from all the other buggy whips, twinkies, or computers already in the market?

I'll assume you're not starting your working career at this point so, you really need to ask yourself why you're doing this. Because you have fun making wood widgets and think: I'd like to have fun at work ; is prob. not a recipe for success. You really should approach this as a business first and foremost. Dispassionately. If you have fun , that's a bonus. But, I'm making a lot of assumptions about what your goals are based on reading between the lines.

[Perry Babineaux]

As someone who has started a few businesses all non woodworking planning is the key. As a rule I reckon six months of research and planning is what I allow and one I see everyday is still going after 30 years.

Aside from checking into old threads this is sage advice. Plan for everything, and never be afraid to deviate from the plan if it is not working.

[Chris Parks]

It is a surprising fact that men go through a period in their lives, usually from mid to late 30's where a lot think about starting a business or at least having a huge look at their working life and a lot of them want to work for themselves. Some make the change work and a lot fail, I made it work fortunately then decided a few years down the track it wasn't worth the bother and sold my first one. Years later I did it better in that I refused to employ and worked just enough to be happy with my earnings. I now have a golden rule, never employ anyone and never go into partnership with anyone.

[Wes Ramsey]

Yeah, I knew this was the right place to ask ;)

My shop is pretty well equipped, but I’m investing some this year in lighting and organization. I (my father-in-law actually) have a sawmill and regular sources for wood and a place to dry it. I’ve made a few pieces of furniture - took too long but they were nice and I get better each time. I have 3 pieces on order right now and am using this as a test of my project management and estimation skills as I priced them at what I believe I need to make so I can pay myself enough. My larger passion is turning so I plan to focus there, but I can make anything between a salad bowl and a bedroom suite. My niche is making custom pieces that have a personal touch. I won’t go into a lot of detail, but I want my customers to have a deeply nostalgic connection with the pieces they order.

I’ve thought about the mid-life thing. I know it is real and I can’t dismiss it completely, but I’ve been working in this direction for several years now. I may never be financially secure again, but with my wife’s successful business I don’t have to completely or immediately replace my current income. But I will miss those corporate benefits...

I’ve never had employees, but I’m not opposed to or scared of the prospect.

Anyway, I greatly appreciate the input and will accept all I can get. Thanks guys!

[Matt Day]

I’ve made a few pieces of furniture - took too long but they were nice and I get better each time

If I were buying furniture, ready to drop a few grand on a dining room table, there’s no way I’d get it from a guy who has made “a few pieces”.

Before you even consider the basics of running a business, what’s your level of understanding the basics of woodworking? Wood movement? Joinery? Finishing? How do you design your furniture?

Also, strictly from a business standpoint, what hourly rate do you plan to charge? In my opinion, anything under $60/hr is not good business practice. Some will say that number is $100/hr. Either way, you have to value yourself.

On your next project, make an estimate of how much you would charge for the piece. Then keep an honest running total on how long the project takes. For everything: design, emails/calls to clients, material pickup, milling, joinery, sanding, finishing, delivery. Then figure out what your hourly rate is.

I don’t like being so negative but I also don’t want to encourage you to make a life changing decision that goes bad. Somebody said in one of the many of these threads that if you have to ask you’re not ready.

You’re looking for information, so here’s a site I found helpful.
http://www.solowoodworker.com

[Joe Hendershott]

If I were buying furniture, ready to drop a few grand on a dining room table, there’s no way I’d get it from a guy who has made “a few pieces”.


This might be true for many, but certainly not all customers. I've seen many, many, many manufacturers (which would include 1 man shops or large companies) That have made hundreds, or more, of something I would never consider buying at any price. Also have seen items from brand new 'shops' I would easily purchase. Quality can be seen right away. This would also depend on the intended purpose, whether it's a functional piece or merely decorative.

[Tom Bender]

An unfortunate fact about business is similar to building a house. Outsource the rough-in and spend your energy on the other 90% of the job.

[andy bessette]

...I (my father-in-law actually) have a sawmill and regular sources for wood and a place to dry it. I’ve made a few pieces of furniture - took too long but they were nice and I get better each time. I have 3 pieces on order right now and am using this as a test of my project management and estimation skills as I priced them at what I believe I need to make so I can pay myself enough. My larger passion is turning so I plan to focus there, but I can make anything between a salad bowl and a bedroom suite. My niche is making custom pieces that have a personal touch. I won’t go into a lot of detail, but I want my customers to have a deeply nostalgic connection with the pieces they order...

You definitely are not ready to quit your day job. But keep taking on paying work, in your spare time, and gain the experience you need to develop a comprehensive business plan.

[Mike Kees]

I have had my own business since 1995. My route was basically like most other successful businesses ,jump in the deep end and learn fast. Never quit learning. You have to have a foundation to work from,either business experience or woodworking expertise. Ignorance of exactly what you got yourself into only works if you are young and overcome it with hard work. Buy used tools and work hard. Always adjust,you have to be flexible and love a challenge. Good luck,Mike.

[Wes Ramsey]

If I were buying furniture, ready to drop a few grand on a dining room table, there’s no way I’d get it from a guy who has made “a few pieces”.

Before you even consider the basics of running a business, what’s your level of understanding the basics of woodworking? Wood movement? Joinery? Finishing? How do you design your furniture?

Also, strictly from a business standpoint, what hourly rate do you plan to charge? In my opinion, anything under $60/hr is not good business practice. Some will say that number is $100/hr. Either way, you have to value yourself.

On your next project, make an estimate of how much you would charge for the piece. Then keep an honest running total on how long the project takes. For everything: design, emails/calls to clients, material pickup, milling, joinery, sanding, finishing, delivery. Then figure out what your hourly rate is.

I don’t like being so negative but I also don’t want to encourage you to make a life changing decision that goes bad. Somebody said in one of the many of these threads that if you have to ask you’re not ready.

You’re looking for information, so here’s a site I found helpful.
http://www.solowoodworker.com

That site is exactly what I was looking for. Thanks! He gives some good advice on pricing, among other things. Since I will mostly be using wood I source and mill I think the right path would be to work out a formula to determine the cost of the wood from tree to final S4S. That will simplify my project estimates.

To be fair, I don't know that I would even consider building a table for a few k $$, at least not yet, and I wouldn't expect anyone to ask me to. I know my tools, I know the properties of my local woods and how they work/move/look/finish and I know more about joinery than I've had the pleasure to use so far (I read and study technique, design, function and use case a lot). I'm experienced with several types of finishes and have an understanding of how to pick the right one. For my designs I currently draw a non-scale draft on graph paper, then draw a final, to-scale version on graph paper with views of each 'module' and exploded diagrams of joints. From that I make my materials and cut list. I've been playing with Sketchup for a couple years and will probably start using it more, or I may hunt up a better CAD program as it is kinda hard to use.

For now, as a hobbyest, my rate is $20/hr. I fudge on that when the learning curve makes the cost unreasonable, knowing the $$/hr will go up quickly with experience. For now my profits are all reinvested in my shop. For turnings that don't turn out as expected I finish them anyway and sell at a discount or let my boys see what they can do with it.

And really - I didn't come here expecting encouragement. Y'all have experience to burn and I'd be a fool not to consider your advice. I know what I know - what I don't, well, that's where y'all are helping, and I appreciate anything you're willing to share.

Also, this is just me trying to build a business doing what I enjoy doing. I'm not stepping off the cliff until I know I can support my family without hurting more than I'm helping.

[Jessica de Boer]

Be ready to fight tooth and nail in the beginning to bring in work. It will take several years to build a customer base and reputation for yourself, not to mention a relationship with suppliers. You also need to prepare for the fact you won't be making any profit the first few years because you need to invest it back into the company. If you want to play with the big kids you'll have to invest in machines to drive down the cost of manufacturing (table saw, band saw, jointer, belt sander, shaper, thicknesser and of course professional quality electric hand tools). Settle for a reasonable salary. And you need to fully realise it's not a hobby any more so fully hand made objects will mostly be a thing of the past. There are machines that do it faster, more accurate and repeatable.

[Richard Coers]

$20/hr? At that rate you must be making $10/hr considering overhead. Have you hired a plumber lately? All his overhead fits in a truck and they charge about 4 times that in my area. That's what I meant when I said hobbyists charge for their work like they are buying it. Try charging $80/yr for a while and see how much work you have showing up. Of course you will have a lot of work when you work for minimum wage. Don't fool yourself with the idea that your speed will greatly increase and you will make a living wage. Custom woodworking is very difficult. You have to invent jigs and fixtures for so many jobs, and you need to make the same amount of money when doing that work as well. Often he first approach to building may not even work out, so be prepared for lots of lost time. Lost time also includes the phone calls, lost estimating time when you don't win the contract, and all the talking with a customer that prevents any machines from running at all. Also woodturning is even harder to make a living with. Even turners with work in museum collections have to criss cross the country doing demos and marketing their signature line of tools to make a living. No one really needs a $500 vase sitting on a self. The only turning work I have done well with is cremation urns (human and pet) and heritage turning. People that have an emotional connection with a tree that has to be removed. In most cases, multiple pieces are ordered at one time so other family members get a remembrance too.

[Jim Becker]

I agree with Richard. You'll need to bump your shop rate up to at least $45 to $80, depending on complexity of task/pain-in-the-backside factor. I use the lower number for "odd job" type things, delivery/sourcing time, etc, and a much higher number for "craftsmanship time". Heck, my CNC machine makes at least $100 an hour and doesn't take lunch, vacations or get sick time. (I hope LOL) And seriously, Richard also makes a good point relative to labor time that's just not chargeable...and there is a lot of that, especially when one is trying to establish a business, for marketing, accounting, prototyping as well as overhead for insurance (which you must have), accounting services, utilities (even if you are using your home's utilities), etc.

[Darcy Warner]

Except that time should be billable. It's part of your overhead. You are darn right I am making money sourcing material, parts, etc. Someone has to pay for it, and it's not me.

[Jim Becker]

Darcy, you are correct, but the "overhead" time that actually cannot be directly attributable to a specific client/job can only be "billed" by having its cost be absorbed by your rate for the jobs. That's part of what I and I think Richard reference and why we've suggested that the billable rate needs to be a lot higher so that "actual" hourly rate after everything is considered isn't a pittance.

[Darcy Warner]

Don't forget marking materials or supplies up either.

[Martin Wasner]

It's 8:11pm. I punched in a little after six this morning.

I do this a lot.

Keep working for someone else. It's way easier. You will sleep better, worry less, and live way longer.

[Patrick Walsh]

$75 hr shop rate in my area.

[Darcy Warner]

It's 8:11pm. I punched in a little after six this morning.

I do this a lot.

Keep working for someone else. It's way easier. You will sleep better, worry less, and live way longer.

Yeah, but oh that's all I got. Lol.

[Martin Wasner]

Yeah, but oh that's all I got. Lol.

You and I are stupid and unemployable. Change my mind. Haha

[Chris Parks]

Except that time should be billable. It's part of your overhead. You are darn right I am making money sourcing material, parts, etc. Someone has to pay for it, and it's not me.

That is a good point, my lawyer charges me every time he makes a photocopy or talks on the phone etc so I started to do exactly that noting down the time I was on the phone or doing anything that related to the job but not on the tools. It is all part of completing the job and someone has to pay. Another thing that costs money and often does not get fully charged for is the miscellaneous stuff like screws, small parts of all descriptions, if you don't want to count it at least make a standing charge for that stuff. I bet a lot of guys don't charge for glue but it costs money as do dominos, dowells etc.

[Wes Ramsey]

Lotta wisdom and food for thought here. I guess my first step is to set some goals with go/no-go criteria and a floating timeline. Then I can go at it as hard and serious as I want. Probably won’t be a year from now. Maybe 2 or 10. And I know I will have to weigh how much I and my family are willing to sacrifice. I guess worst case is I end up keeping a great job that lets me do this for fun until I retire. When I put it that way it isn’t such a bad prospect. Maybe I just need to take a sabbatical and get it out of my system. Let’s call that plan B :)

[Dave Sabo]

$20 / hour :eek:

With Amazon rank and file making $15/hr and that being the defacto minimum wage anyway, I cannot see how you’re going to be anything more than a hobby by charging $20.

You mentioned liking Corp. benefits. If you don’t account for benifits in your pricing and business plan - you’re a hobbyist. If your spouse doesn’t have them, it’s going to be really tough unless you both generate a huge amount of cash flow to not really worry about it. Except then, you’re accountant is failing you by not structuring your business to benefit you by paying yourself with pretax dollars.

And at 20/hr - I really don’t see you covering basic overhead , let alone benefits.

[Wes Ramsey]

$20 / hour :eek:

With Amazon rank and file making $15/hr and that being the defacto minimum wage anyway, I cannot see how you’re going to be anything more than a hobby by charging $20.

You mentioned liking Corp. benefits. If you don’t account for benifits in your pricing and business plan - you’re a hobbyist. If your spouse doesn’t have them, it’s going to be really tough unless you both generate a huge amount of cash flow to not really worry about it. Except then, you’re accountant is failing you by not structuring your business to benefit you by paying yourself with pretax dollars.

And at 20/hr - I really don’t see you covering basic overhead , let alone benefits.

Agreed. 100%. But that’s where I’m starting while it is a hobby. And yeah, those benefits. The Corp says I earn close to 3x what they pay me. Only way I see to compete with that is to keep that job and play with wood for fun. I gotta figure out what we collectively are willing to give up and weigh the balance. Plenty of time to figure that out tho.

[Tom M King]

Add me to the list that says don't even waste time thinking about it for 20 bucks an hour.

[John Gornall]

Young fellow asked me for advice as he wasnt making money. I told him to double his rates. He said he'd lose half his customers. I told him to do the math. Half the work at twice the rate is the same income. He still hesitated. But in desparation he doubled his rates. That worked. 6 months later he doubled them again. The following year he doubled them again. Hes making money now. And he learned that those bottom end customers use up a lot of time for little money

[Jared Sankovich]

Agreed. 100%. But that’s where I’m starting while it is a hobby. And yeah, those benefits. The Corp says I earn close to 3x what they pay me. Only way I see to compete with that is to keep that job and play with wood for fun. I gotta figure out what we collectively are willing to give up and weigh the balance. Plenty of time to figure that out tho.

3x seems high, that's typically the billed / wrap rate on a contract vs base salary. 20 to 40% over base would be a typical benefits package (health care, vacation, 401k/ match, stock options..)

Mechanics charge $150-200/hr here.. 20 is far under minimum wage.

[Zachary Hoyt]

In my opinion one factor to consider is what kind of lifestyle you want to live and how much money you need to make to get that. Plumbers for instance can charge a lot because a lot of people need their services and there's not another choice, but woodworking is usually making things that are more discretionary for the buyer so your clients have more time to shop around. If you can work fast and still do a good job that will help a lot. Someone told me once that whatever you sell or do you're really in the customer service business, and that seems true to me.

For IRS purposes you become self-employed when you make more than about $400 a year on your own, last I knew, and you have to pay self-employment tax which is about 15% in addition to income tax. I have been growing into a business in my spare time for a number of years, my 'day job' provides me with room and board and some use of a car, and I do other work to provide my other needs. I work 2-4 hours per evening at my business and sometimes weekends, but it's what I like to do. I hope to be able to grow it to the point where I can support myself completely with it, and I am saving most of my income now so that I will be able to buy or build a house and a workshop in the future. I am in a niche market and can work from a smaller shop and with a lot less material volume to be stored and worked on than most woodworkers, so that makes it easier for me. I also am able to mail almost everything I make, which opens up a lot of opportunities. I routinely ship banjos all over the country and occasionally overseas. It's harder to do that with furniture, but I suppose that also would reduce your competition.
Zach

[andy bessette]

...those bottom end customers use up a lot of time for little money

A very successful friend told me the following story.
Whenever someone would bring a job to him that he could readily see was going to be a problem and/or would not make him money, he would refer it to his competitor down the street. His competitor, in appreciation for these referrals, would send work his way whenever he got too busy (often with losing jobs). Win-win for my friend.

[Chris Parks]

The single biggest hurdle any business faces is bad planning because not planning properly finds the business unable to finance operating costs until cash flow becomes adequate but what happens next is worse. As the business grows the inadequate financing ensures that the business cannot finance expansion so it gets stuck at a miserable level that it needs to break out of to ensure a healthier cash flow to lift it out of the problems poor financing had left it. Also when a business gets into problems such as this it is rarely that the person who planned it all has the understanding and the ability to see the wood for the trees and it generally needs someone to come in from outside and sort it out and 99% of business owners hate doing that as it is seen as a failure on their part.

I had a fellow business owner walk into my office one day and as part of the conversation we began to discuss how things were going. It turned out that she had never made a "profit" since the business had started and was steadily getting further into debt every day the doors were opened so I advised her to go and put up a sign saying business closed which she did and later admitted it was the only option and she needed a push from someone to get her to do it. She had opened the business with some vague idea of it working and never really knowing whether it would or not.