How to Start a Laser Engraving Business

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Quick Reference

If you have an artistic eye and are looking for a unique and profitable business to start, a laser engraving business may be a great opportunity.  The costs to start one are relatively low, and your potential profit margins are high.   Laser engraving is easy to do, and you could build a great business and be your own boss.

Business Overview

A laser engraving business uses a laser engraver to mark items such as jewelry, awards, phone cases, wedding gifts, toys, book covers, and many other pieces.   It offers customers the opportunity to personalize items to their specifications.

Industry Summary

According to Markets to Markets, the laser marking industry is expected to grow 6% per year to become a $3 billion market in 2024.  Laser marking is much more accurate and precise than traditional marking methods, fueling the growth of the industry.

Related Industries

Craft business
Gift shop

Industry Trends

According to IBIS World, the industry has declined 2.4% per year for the last five years, but growth in disposable income is expected to increase demand.  Personalization is very popular, and companies utilize laser engraving to mark items with their logos.  The industry is sensitive to economic fluctuations, so demand declines during economic downturns.

Target Market

Your target market will be people who have items to personalize for themselves or as gifts, and companies who need their logos on engravable items or custom signage in wood or acrylic.  Companies or teams that need awards engraved are also a potential market.

Skills, Experience, and Education Useful in Running a Laser Engraving Business

There are several specific skills that you will need to open a laser engraving business.

  • Experience.  Experience utilizing a laser engraver would be beneficial.
  • Training. Some companies that sell laser engravers offer training which is essential if you have never used a laser engraver.
  • Software experience.  Software programs are used to create designs and marks such as Photoshop, Illustrator, CorelDRAW, etc., so some experience using various types of software is helpful.
  • Business knowledge and experience.  You will need to have some basic knowledge of marketing, finance/accounting, and human resources.
  • People skills. You’ll need to build rapport with your customers so that you retain them as customers and keep them coming back.

Costs to Start a Laser Engraving Business

Here are the typical costs you will face when you open a laser engraving business.

  • Setting up a business name and corporation costs approximately $200.
  • Business cards, brochures, postcards for marketing $200 – $300
  • Website setup $100 –$200 for a basic, do it yourself website, $1000 – $2000 for a professional site
  • Laser engraving machine $500 – $10,000 (be sure to watch out for the machine’s wattage and whether it is strong enough to etch the materials you want to work with. A 25-watt laser will work with most common materials and is good for starting out, but won’t work well with wood, rubber, etc.)
  • Computer $500 – $3000
  • Software $500
  • Liability insurance, worker’s comp, property-casualty insurance $600 – $1,000
  • Initial marketing such as Facebook ads or search engine optimization for your website, flyers, and postcards, $500 -$1000

Steps to Starting a Laser Engraving Business

Step 1: Write your Business Plan

After coming up with the idea, the next step in starting your laser engraving business should be to write a business plan.  The business plan will make you focus on some important aspects of the business, such as who your customers are, how you plan to reach them, projecting sales and expenses, your value proposition to use for marketing, and more. You’ll also need to do some research to calculate exactly what your startup expenses will be and what your ongoing expenses will be.

Not only will a bank require you to have a business plan if you need financing, but multiple studies have shown that having a good business plan increases the odds of starting a successful business. Writing the plan helps you think through all the aspects of the business and then serves as a guide as you begin.

Related:
How to write a business plan
Free sample business plans

Step 2: Name the Business

Finding the perfect laser engraving business name can be challenging. Not only does the name have to reflect what you do and be appealing to customers, but it also has to be available to use. You can check your state’s website to see if the name is available and register your name.  Your name should make you stand out, reflect your brand, and tell potential customers exactly what you do.

Related: Tips and ideas for naming an engraving business

Step 3: Form a Legal Entity

A legal entity refers to how a business is organized to operate. There are four primary business entities to choose from, which include a sole proprietorship, partnership, corporation, and Limited Liability Company (LLC).  Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

RelatedComparison of Business Entities

Step 4: Select your Location

Laser engraving businesses often operate as a home-based business, mall kiosk, or as an additional service for a gift business, trophy shop, etc.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

There are no specific licenses for a laser engraving business, however, there are common local, state, and federal business registrations a laser engraving business may need which include a sales tax permit and an Employer Identification Number.  

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a laser engraving business is another.  In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the income and expenses of the business.

Step 8: Get your Marketing Plan in Place

Common marketing techniques for a laser engraving business include social media marketing and online advertising on sites such as Amazon, eBay, and Etsy.  Developing a website can be a significant expense, but it can also give your laser engraving business greater visibility online.

You may also be able to partner with gift shops and wedding planners to get referrals.

Related: Low-cost ideas to market a new business

Step 9: Get Insurance

A laser engraving business needs several types of insurance for full coverage:

General liability insurance can help protect you from third-party claims of bodily injury and property damage.

Professional liability insurance protects you from claims of professional errors or negligence that result in a financial loss.

Worker’s compensation insurance covers expenses like medical bills and legal fees that a business might face if an employee were ever hurt while working.

Insurance policies will vary. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. When comparing the quotes, consider not only the premiums but also how the plan exclusions, coverage limitations, and deductibles compare.

Related: Common types of insurance a business may need

Step 10: Hiring Employees

You may need to hire employees to help you run your laser engraving business if you grow a large customer base.

In addition to salary costs, your budget will also need to include other employee-related expenses. Workman’s comp insurance, unemployment insurance, and paid time off are common expenses that a business will need to cover when hiring staff.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your laser engraving business is critical to the long-term success of your business.

Staying on top of taxes not only keeps the business out of trouble with the government but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up accounting for your business

How Much Can You Potentially Make Owning a Laser Engraving Business?

The price for engraving a small item is about $25.  Larger items can be much more.  If you get clients who need a large number of items engraved, such as a company that needs a large number of logo items, you can make a lot of money in a short period of time.  Profit margins are very high because once you have the laser engraver, it does not cost anything to use it.

Things to Consider Before Starting a Laser Engraving Business

Running a laser engraving business or any business will have its challenges.  You need to be prepared and make sure that you know what you’re getting into.

Marketing and acquiring customers will be your biggest challenge and an ongoing expense.  A profitable and consistent source is through larger corporate customers or gift shop partners.

You will face competition, so your marketing will need to make you stand out, and you’ll need to do top-quality work.

There is a certain amount of risk because a mistake could damage a valuable item that you are trying to mark, which is why insurance is critical.

Talk to other business owners for tips on starting a business and do your homework to determine costs.  Research other laser engraving businesses to see what they offer and what prices they charge.

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