How to Start a Woodworking Business
Starting a woodworking business can be a rewarding and profitable endeavor for those with a passion for working with wood and an eye for design. More than that, it gives you the flexibility that many other traditional businesses don’t have – you are able to craft custom products and set up your own schedule.
Plus, many woodworking businesses bring in substantial income for their owners – especially if you specialize in luxurious items like custom dining room furniture, home decor, or other custom wood crafts. Maybe you’d like to go even further by teaching classes or becoming an artist-in-residence at someone else’s woodshop. No matter what path you choose, there’s great potential to make a living from woodworking while having fun designing pieces of beauty from raw materials along the way.
If you are a practical, hands-on person with relevant technical skills and a creative vein, then read on to find out what it takes to turn your hobby into a career.
A woodworking business typically involves designing and creating a wide range of products, such as furniture, cabinetry, and decorative items, using wood, veneers, or laminates. These products may be sold to individuals, businesses, or wholesale to other retailers. In addition to designing and creating the products from scratch, a woodworking business may also provide repairs, restoration, and custom work services.
According to IBISWorld, the American wood product manufacturing industry currently commands a market size of nearly $9 billion and comprises over 6,550 businesses. The industry is a heavily male-dominated one in the US; females only make up 8% of the workforce, according to Zippia. The sector continues to be impacted by an acute labor shortage as well as international and domestic supply chain issues.
Recent trends in the woodworking industry include a shift towards sustainable and eco-friendly products and a growing demand for customization and unique design. Many consumers are willing to pay a premium for products made from sustainably sourced materials built to last. Additionally, there is a growing trend towards DIY and home improvement projects, driving demand for both finished products and raw materials.
On the other hand, inflation, an increase in material costs, and changes to housing affordability may all impact this industry.
The US Bureau of Labor Statistics forecasts an industry growth of 3% to 2031, which is somewhat less than the country’s average.
The target market for a woodworking business will vary depending on the type of products or services offered. For example, a firm specializing in custom furniture may focus on high-end consumers, while a company offering cabinetry and millwork may target builders and contractors. Additionally, a woodworking business may target a client base looking for sustainable and eco-friendly products.
Your target market will largely depend on your skills and passion as well as supply and demand.
Checklist for Starting a Woodworking Business
Starting a woodworking business can be an exciting and rewarding endeavor, but it is important to make sure that you have thought through all of the necessary steps. From deciding which type of woodworking products to produce and sell, to registering the business, there is a lot for entrepreneurs in this field to consider. The following checklist will help break down the various elements of setting up your new woodwork venture.
Step 1: Write a Business Plan
A well-conceived business plan is an essential step in launching a successful woodworking business. It will help the owner to objectively assess what products to sell, what pricing strategies they should use, develop a marketing strategy, and identify potential sources of capital. A comprehensive plan allows a business owner to efficiently structure their goals by breaking them into detailed objectives, setting achievable milestones towards achieving those objectives, and providing guidance for decision-making and measuring performance.
Related: How to write a business plan
Step 2: Name the Business
Starting a woodworking business can be an exciting venture, but what do you call it?
Creative and catchy names will help new customers remember your company better, but there are a few things to keep in mind before picking one. So, when selecting a name, consider what products you plan to sell, such as terms related to the products you make.
Most importantly, you need to make sure the business name you want is available. Depending on the type of business entity, there may be restrictions in place by the state. Additionally, it’s important to be sure a trademark isn’t on the name you want to use as well.
Related: Tips on naming a business
Step 3: Form a Business Entity
A business entity (also referred to as a legal structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the 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.
When deciding on which business entity is best for a woodworking business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 4: Select Your Location
When it comes to picking a location for a woodworking business, there are some important criteria to consider.
Since many woodworking businesses are run from the owner’s property, it’s essential to research neighborhood covenants – if your desired site falls within any limits that could potentially be violated, especially if your operation will be making a lot of noise.
Another consideration is the accessibility of your shop to receive supplies. If you will need to receive product via a semi, be sure the truck can access your shop in order to minimize the difficulty of unloading supplies.
Step 5: Apply for Business Licenses and Permits
Setting up a successful woodworking business requires more than just an affinity for carving and crafting – it also requires you to register for the right business licenses and permits.
There aren’t typically many legal requirements for a woodworking business, however each state regulates businesses differently. Some common requirements include a business license, sales tax permit, and an Employer Identification Number (EIN).
Related: Common business licenses, permits, and registrations by state
Step 6: Find Financing
You may already have all of the tools you need to get started, but in some cases making an investment in commercial equipment to handle the volume of production is necessary.
Banks are typically going to want the borrower to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
Starting a new woodworking business is a great way to make money by crafting custom items for friends and customers alike. To get going successfully, you will need to develop a marketing strategy that will get your name out in the community and ignite interest in your products. A combination of traditional methods such as flyers, setting up a table at Farmer’s Markets and flea markets, grassroots promotions, and word of mouth, as well as online advertising can help you reach potential customers all over the world.
Through properly packaging content with social media outreach and email newsletters, you can create an engaged network that will become loyal customers of your woodworking business. The most important factor when it comes to marketing is consistency: commit to taking action every day, no matter how small each task may be, so your efforts can truly add up and drive success.
Related: Low-cost ideas to market a new business
Every business is going to need a logo. Make a professional logo in no time with the free logo makers from BrandCrowd and Canva.
Step 9: Get Business Insurance
Owning a woodworking business requires a lot of knowledge and investment, but securing the right insurance is just as important for success. Many businesses require general liability insurance to cover potential property damage or injuries during operations, and woodworking businesses should also consider product liability policies to protect against issues during manufacturing or delivery. Additionally, if you plan to have employees, workers’ compensation insurance is a requirement and covers employees should they get injured on the job.
If you are producing or storing products at your personal residence, it’s important to review your current insurance as damages from business activities are not commonly insured.
This material is property of StartingYourBusiness.com
Common Questions When Starting A Woodworking Business
How much does it cost to start a woodworking business?
Your start-up costs will depend significantly on the size and scope of your business. In addition, the products or services offered will determine the type of machinery and tools you need and the size of your workshop.
The equipment needed ranges and can be as simple as basic woodworking equipment such as hammers, drills, clamps, chisels, etc. all the way to large saw machines, lathes, planers, and other industrial woodworking equipment. Since there are so many options, expect to spend anywhere between $500 and $100,000, depending on the focus of your business,
Other expenses will include leasing or purchasing a facility, obtaining necessary licenses and permits, and insurance coverage. In addition, ensure you set a budget aside for marketing and advertising to build brand awareness and attract customers.
How profitable is a woodworking business?
It is difficult to pinpoint the income potential for a woodworking business as it will vary greatly depending on factors such as the type of products or services offered, the size of the company, and the target market.
According to the Bureau of Labor Statistics, the median annual wage for woodworkers was $36,710 in 2021. However, the income potential can be much higher for those who can establish a successful business and build a reputation for high-quality products and excellent customer service.
Are there grants to start a woodworking business?
It’s extremely rare to find a grant to start a woodworking business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What skills are needed to run a woodworking business?
Technical Skills. Running a successful woodworking business requires a combination of technical woodworking skills and creativity. Technical skills include knowledge of woodworking tools, materials, and carpentry techniques. In addition, the ability to use computer-controlled machinery has become increasingly essential. Proficiency in these skills “typically requires more than a year of on-the-job training” (US BLS Handbook).
Creativity is also needed to design and create unique products that will appeal to the target market. This is your chance to develop your style and brand.
US Woodworking Network
US Woodturner Association
Business Management Skills.
A good understanding of good business practices and acumen is needed to manage the financial and administrative aspects of the business, such as budgeting, marketing, and sales. You will need to negotiate contracts with your suppliers and determine the correct price points for your products or services. Staying up to date with industry trends, connecting with your local industry network, and marketing your services will all be essential to run your business successfully.
Starting your own woodworking business can be an excellent opportunity to do something you are passionate about and become your own boss. However, the set-up costs can be high, and you will likely need to consider financing options. Therefore, we highly recommend you develop a detailed marketing analysis, business case, and budget to successfully and sustainably establish your company.