making money from woodworking

Your business plan based on your woodworking talent may rely primarily on your skills and passion, but you will require more than just a good personality and work ethic.   There’s no point ignoring the fact that you’ll be competing against a very competitive market from day one, and there’s no telling how difficult it will be to make a good living from your craft.

I was recently shocked to learn how many woodworking businesses have failed in the last 2-3 years, and it really emphasises how important it is for new Woodworking Businesses to understand how competitive your area of specialisation is and how difficult it could potentially be over the first 6 to 12 months.

Lower profit margins, primarily as a result of falling prices, are one of the most pressing issues confronting all woodworking businesses today. Many manufacturers have entered the woodworking industry and are going hard at it, flooding the market and causing the average price of wood products to fall significantly and reducing the profitability of woodworking in general. On top of that, there is a global lumber shortage, which is causing a significant increase in the cost of raw materials.

However, the home-based woodworker has a lot of freedom; you can make whatever you want. You don’t have to limit yourself to only making a few specific products; the home woodworker simply needs to conduct research and identify the least commonly available types of products that appear to be very worthwhile making.

To avoid overextending yourself, limit your production to only a few products in which you have complete confidence, manufacture them with high quality, and then market them effectively or hire someone to do so.

I’d also suggest researching the eight wastes of lean manufacturing; you’d be surprised how applicable they can be to a home-based business.   When you first begin, you must have a well-thought-out plan or strategy in place. For a variety of reasons, having a clear and distinct plan is critical to your future success if you want to start a woodworking business. Set clear and precise strategies for producing high-quality items with the least amount of waste.

These strategies could include measuring properly every time and twice before cutting, cutting carefully and without errors, maintaining all tools and equipment to high standards, always checking for square, using the right tool for the right job in the right way, and finally, proper storage and handling of base materials and finished products.

A marketing strategy can and will assist you in making the most of any opportunities that present themselves, as well as identifying any unusual or difficult-to-foresee factors that may impede or set you back.

Get all of your licences in order before you begin, and check with your local council and possibly your state government to see if you can run a woodworking business from your home at your specific address. There may be provisions for you to do so if you meet certain criteria, and I imagine noise pollution would be a big issue here, so expect to spend some money on sound proofing of your home workshop before you get the big green tick from the Authorities.

You have no idea whether you’ll succeed or fail, so minimise the harm any threats you can think of could possibly do, how would they affect your success, family finances, and happiness? Get all of your planning done now, before you get too busy.

After a while, you’ll have enough on your plate with the usual running costs, so having a few dollars set aside for a rainy day could come in handy. In your spare time, do everything you can to build up what could be your sales network; you need a large enough audience to support your business today and, ideally, where you want to be in a year. You’ll feel a lot more confident knowing that the people there are interested in what you’ll be producing.

Take out adequate insurance, and if you’re going to have customers come into your home woodshop, you’ll need to be protected against them slipping and injuring themselves (public liability). If you’re going to have some people working for you (workers compensation), you should also think about ‘bad times’ insurance (income protection). All of these insurances are in addition to the comprehensive insurance you will need to put in place to cover the replacement costs of everything (fire, theft, flood, tornado, cyclone, and so on). Make sure it covers all possibilities that could take everything away from you in an instant.

Get a good certified accountant; he/she should be able to help you with the hundreds of reasons why; this is one of the top three things to do in my opinion.   Once you’ve been at it for a few months and have established a consistent routine, try to calculate how long it will take you to break even in terms of your start-up costs plus any other unforeseen overhead costs you’ve incurred thus far. This will provide you with a benchmark against which to measure your progress, and as you may have heard, what gets measured gets managed.