How To Start A Woodworking Business [Ultimate Guide]

Wood products have always been among the most popular, from furniture to jewelry boxes. That is why so many hobbyists intend on starting a woodworking business.

You can do something you love while making money, killing two birds with one stone.

However, what you don’t know is that there is a huge difference between woodworking as a hobby and woodworking as a business.

In this article, we bring forward this concise and thorough guide to help you start your own woodworking business

Let’s dive into it!

Why Start A Woodworking Business?

Love For Woodworking

There are actually a multitude of reasons for starting a woodworking business. But, the first and foremost one should always be your love for this craft.

After all, it’s no longer a boring and repetitive job when you are genuinely into what you do. We believe that only by doing something you love can you achieve the highest possible efficiency.

Freedom

A successful woodworking business also provides you with an unbelievable level of freedom.

There will no longer be a nightmare of congested and hectic commutes each morning going to the office. You don’t even need to dress yourself up every single day.

You can start working at any time you like with your own woodworking business at your workshop or home.

No matter how small your own woodworking business is, you are still a business owner, so you can work according to your own rule.

As such, there is nothing stopping you from writing your schedule to fit with other important parts of your life.

You can now move plans around easily, making it possible not to miss out on important moments with your family or friends. This kind of leniency simply doesn’t exist if you are working the regular 9 to 5 job.

Affordable Nature

Another huge advantage is the fact that woodworking is not an expensive niche to start a business with.

This case is especially true if you have already been into woodworking for some time, as you will own most of the necessary tools.

You can reuse some of your hobbyist tools while starting out.

Of course, you will still need to pay on some odds and ends, such as website or business card designing. Nonetheless, they are all small changes compared to other types of business.

Ease Of Operation

The last reason lies with the vast nature of woodworking as a category. This field is simply so versatile, with so many sub-categories that it will take you no time to pick a suitable service.

If you know what you are doing, the level of competition can be very low. As a result, your own woodworking business can quickly start earning.

How To Start A Woodworking Business (Steps by Steps)

Here are the steps you will need to follow in order to have a successful woodworking business.

• Planning the business
• Ensuring the proper space
• Preparing the tools
• Deciding on a delivery service
• Tax Registration
• Bank Account Opening
• Business Accounting
• Getting documents
• Marketing and deciding on influence sphere
• Always Keep Learning

Step 1: Planning The Business

These days, no entrepreneur can succeed if they don’t have a clear and concise plan behind their business.

That is why you must first plan out by asking yourself some questions regarding the estimated overall cost, target markets, charging process, etc.

How Much Can Opening A Woodworking Business Cost Me?

As you can easily guess, opening a business always carries a significant cost, no matter which field it is. However, woodworking as a business is especially manageable in the overall cost department.

The final number may be over or under it, but we believe around $7000 should be the amount you would need to spend.

If you are smart with your money, there is a significantly lower risk in operating a woodworking business.

Of this number, the most significant proportion is $2,000, which will be spent on materials (mainly wood.) Then, you need to spend at least $2000 on tools and another $800 on a computer.

All businesses must have an online presence these days, so $1000 for a camera and website is a must.

Finally, you should put out $200 to make some high-quality business cards and store the last $1000 to serve as an operating budget.

As most aspiring woodworking business owners are hobbyists themselves, they tend to already have their own working space. That is why we will not include the shop leasing fee.

What Are A Woodworking Business’ Ongoing Expenses?

For the most part, your woodworking business’ ongoing expenses should only consist of overhead and material costs.

You can cover the material costs with the finished product’s sale. As for overhead, it usually covers utilities, rent, or small expenses such as sandpaper, nails, finishing materials, etc.

A rule of thumb is to assign 15% of your labor and material value to this number.

What Is My Target Market?

The ideal target market for woodworking businesses should be people who have discretionary income and love wood products.

In other words, they must have a high chance to be interested in your products and can afford them.

Older generations are a good target market for a small woodworking business.

You can also take your skill level into consideration. If your skill level is high, you should try approaching the true collectors and wood experts.

This target market is way harder to crack, but once they decide to buy something, any price is possible.

On the other hand, focusing on casual customers is also praiseworthy. Casual customers don’t spend that much, but they are much more likely to open their wallets.

As long as they feel that your product fits their needs, they will buy it.

How Does My Woodworking Business Make Money?

The main way to make money as a woodworking business is, of course, to produce and sell wood products. For example, you can make some furniture such as dressers, cabinets, tables or chairs.

Here is a more in-depth video explaining how to make money with a woodworking business.

If you are more confident in your skills, you can try to challenge yourself with smaller items.

Things like manual coffee grinders, cutting boards, jewelry boxes, etc., are much harder to make than they look. This case is even more precise if you want to etch some patterns onto them.

Once you have familiarized yourself with making them, however, you will find that they are the fastest to make. Their prices are also respectable, so your savings will grow quickly.

Step 2: Ensuring The Right Space

As we have mentioned, an aspiring woodworking business owner tends to be a hobbyist too, so they already have some sort of working space.

But not all spaces can qualify as suitable for a business, especially if you are serious about it.

You will, after all, need to store quite a lot of machines, tools, and lumbers, so the space must firstly be huge. Woodworking is also a precise and demanding job, so good ventilation and lighting are must-haves.

Only storing the materials will take out a big chunk of your space.
We didn’t mention the fact that you must separate some space out to store your completed projects.

The commissioned products are easy to deal with, but the non-commissioned ones may take a while to sell.

As a result, your workspace will be further reduced, limiting your woodworking capability even more.

There will surely be a point where you have no other choice but to halt all production until you can sell some pieces.

Step 3: Preparing The Tools

You may utilize some of your hobbyist tools when you start with the business. Nonetheless, you will quickly realize that they all have lots of limitations, preventing your own woodworking business from reaching its full potential.

That is why you should never start with a full hobbyist set of woodworking tools. Our recommendation is to get some pro-grade pieces of machinery and keep only the best-performing of your old gears.

For example, there is no way that your woodworking business can function properly if you don’t have sanding tools, table saw, various of saws, routers, planers, or even joiners, etc…. Other must-haves for this line of work are lacquers and paints.

Once you have decided on the type of equipment you need to renew, remember to never cheap out. There is simply no chance for cheap woodworking tools to be worth it. The speed at which they wear out or break down is too fast.

As long as your woodworking business can last for a relatively long time, you will save quite a reasonable amount of money. Despite the fixing fees being small, they add up quite quickly over time.

Step 4: Deciding On A Delivery Service

Many people overlook this step, but we believe that it will be pivotal to the success of your woodworking business.

The right packaging solution, a decent courier, and easy-to-manage delivery choices mean a world of difference.

Just completing the assignment perfectly is not enough, you must deliver it to the customer.

If you don’t have these, you will be looking at a ballooning delivery budget in no time. Sometimes, the shipping cost alone can eat away all of the profit you made from the product.

If your choice is limited, we recommend focusing purely on local advertising in the first few months.

After you have succeeded and expanded your successful woodworking business a little bit, you can then pick a more expensive but reliable delivery service.

Believe us; this investment will prove to be worthwhile very quickly.

Step 5: Tax Registration

There are various federal and state taxes that you must register for before you can open your woodworking business. However, before you can register any tax, you need to first possess an EIN (Employer Identification Number).

The quickest way is to access the IRS site and fill the form there. Then, you simply follow the guide and pick the options applicable to your business.

We all know how scary the IRS is, so please make sure that you don’t make any mistake in this step. If you are not confident, you can use the consultation service of a lawyer.

Step 6: Bank Account Opening

Never use your personal account for anything related to your business. Doing so may cause harm to your personal asset protection.

After all, once your personal assets and business assets are mixed, they are seen as the same.

In other words, once the business gets sued, your personal assets are at risk, too. You will also have a much easier time filing taxes and accounting.

Once you have opened a business bank account, remember to also open a net-30 account. This credit agreement lets you receive inventory despite being short on cash. Of course, you will need to pay it back in 30 days.

Step 7: Business Accounting

You are, at the end of the day, a woodworking hobbyist, so there is a high chance that you have no training in business accounting.

An untrained person doing accounting is a huge recipe for disaster. That is why you need to get a professional business accountant.

If you cannot afford a specialized accountant, you can try to outsource the work to an accountant firm.

Remember that doing so will cost a lot in the long run, so we still recommend getting an accountant as soon as possible.

They will help your business account details and accurate as well as easier when you do annual tax filing.

Step 8: Getting Required Documents

A hobbyist does not have much pressure regarding this department. A business owner is a whole different story, as not having the necessary documents can lead to some very hefty fines. That’s not all since the risk of being shut down is also high.

Local And State Business Licenses

The very first thing to check is the business license. Most new woodworking businesses tend to operate at the business owner’s home, within the limits of the city.

We suggest checking with the business license office of your city.

If your city doesn’t have one, you may need to travel a little bit to check with the county’s business license office.

There is also the zoning issue. If your address isn’t in the correct zone for your type of business, the chance of obtaining the business license is close to nil.

For more help, check with a local association listed in the US Small Business Associations directory of local business resources.

Certification

This document is not a requirement, but it can boost the value of your service by quite a bit.

At the end of the day, there is nothing better at demonstrating professionalism and competence than a widely recognized certification.

Some tools also require you to have special permits to use. One of the best certifications that you can obtain is the National Certificate Program that the Architectural Woodwork Institute (AWI) gives out.

This certificate will add to your brand name a significant amount of credibility.

If you are confident in your capability, you can challenge the five progressive credentials from the Woodwork Career Alliance of North America.

Insurance

There is just no denying that woodworking tends to carry a number of potential hazards and risks. That is why it is vital to ensure that you possess all the correct small business insurance coverage if you want to operate legally.

Some prime examples are the business ownership policy, property coverage, commercial auto insurance, and general liability insurance.

If you plan on expanding your woodworking business, workers’ compensation insurance is also a must.

Always keep in mind that business insurance is there to protect the company’s wellbeing in the finance department.

Step 9: Marketing Strategy And Deciding On The Sphere Of Influence

A crucial part of any business is the marketing strategy. There will be no sales if nobody knows about your woodworking business’ existence, even if it is high-quality and intricate.

To combat this issue, you need to let people know about you, starting with a nice brand name.

Defining A Brand

A good brand makes your company stand out and improves the perception of the public regarding the business.

If your woodworking business name can roll off the tongue nicely, you already carry quite a huge advantage compared to your competitors.

Another way to define your brand is to design a unique logo. It doesn’t need to be too intricate or complicated, but it must show the characteristics of your woodworking business.

Our suggestion is to find a reliable designer to make one according to your description.

Online Marketing Strategy

Back in the day, marketing was one of the biggest costs you had to face while starting a business. Now with the appearance of the Internet, things have changed greatly.

This video discusses how to make use of social media for a successful woodworking business.

Some classified websites such as Craiglist have free space that local businesses can post their advertisements on. Kitschy websites like Handmade at Amazon or Etsy require next to nothing to list handmade products.

There are also social media platforms, which are completely free. For instance, Facebook only calls for a personal account to create a business page. With this page, you can spend a small amount on advertising your content.

This is quite a good way to get other people interested in the products, especially for woodworking businesses. They tend to have beautiful appearances, leaving a good impression.

Business Website Creation

You may not have an official business social profile, but you must have a business website. It doesn’t matter which size your woodworking business is or what industry it is in. All legitimate businesses possess websites.

If you want to use social media accounts to replace a website, we strongly advise against doing so. LinkedIn or Facebook can only act as reinforcement for your website, not its replacement.

You may fear this step, as most of us simply do not have any experience in the website-building field. This concern was once reasonable, but there have been so many significant advancements in web tech since 2015.

These days, you don’t even need to know how to code to make a legitimately beautiful website. All you need to do is drag and drop and ensure that the website looks attractive.

Step 10: Always Keep Learning

No matter the niche, the world of business is one of constant evolution, as what works today may not work tomorrow. So you must keep on educating yourself with new knowledge constantly.

For example, you should be aware of new marketing techniques, new woodworking tricks, new equipment, and most importantly are new trends. We believe that this step is also a form of scaling, so we sometimes call it skill scaling.

Once you can keep the momentum going, you will always be on top of the game. This will create a positive circulation, improving your business even more.

Other Things To Consider When Starting A Woodworking Business

Noise Levels

It is an undeniable fact that woodworking will create quite a lot of strange and uncomfortable noises. You may not feel it, but it’s no different from torture to someone not familiar with this profession.

This case is especially true if you employ the help of power tools regularly, which is a must for all woodworking businesses.

The easiest way to combat this issue is to soundproof your working space. However, this method requires that the space is not that large; otherwise, it will cost you an arm and a leg.

Another way is to move your workspace to somewhere far away from people. There, you can work to your heart’s content without having to worry about causing noise pollution for people.

That is why we mentioned that you wouldn’t get the business license if your address is not in the proper zone.

Suppliers

Suppliers can quite literally make or break your woodworking business, so you need to perform extensive networking as well as experimenting. Never promptly decide on a single supplier; give everyone a chance.

You can use their materials on smaller and less expensive projects to test the water. After ensuring that the supply chain is dependable and the quality is stable, then you stick with that supplier.

As for the others, you also need to keep their contact information, in the case of your supplier running into some unexpected trouble. It doesn’t cost you anything to store some spare options.

What Are Some Necessary Skills and Experiences Help You Create A Successful Woodworking Business?

The most obvious one is undoubtedly the wood-carving skill. Otherwise, how else can you make the products?

After it is the woodworking machinery skills, as there are quite a lot of machines involved in woodworking.

It’s also a plus if you have experience with being a leader and good communicator. This leadership skill may not be necessary for the early days.

However, the moment you expand the business with more employees, you will immediately see its use.

If you plan to advance into the manufacturing woodworking industry, we recommend brushing up on your computer skills. You will need to work on software all the time in this industry.

What Are The First Tools You Have to Invest for Your Wood Shop?

Everything in woodworking starts with material cutting. No matter how interesting and beautiful a piece is, it was once just a rough piece of wood.

You need to use suitable saws to rip and crosscut it, shaping it into the image that you have in mind. That is why we recommend investing in saws first.

To be more specific, you need a high-quality table saw, even if your shop is small. A table saw can do both the works of circular saws and miter saws.

Next is an orbital sander, which most new woodworking business owners tend to overlook. In fact, sanding is one of the most vital processes that you must complete for an acceptable product.

Don’t use your old sanding tool, as there is a high risk of it breaking due to too much work.

Finally, you need a new and high-quality jointer. It is especially critical for traditional projects, as they require dimensional lumber.

If you are a hobbyist, you can make do with utilizing a planer as a replacement.

Also, you can invest add some other tools like the router, chisels, and bandsaw. The important it depends on each require your job.

How Much Money Should You Charge For Customers?

The amount that you should charge your customer depends on your skill level and the materials you use.

Other things to take into consideration include the overhead costs like transportation costs, shop rentals, and the pricing of your competitors.

If you are just starting out, our tip is to list the material cost according to the retail rate. Yes, doing so will bring in less profit margin, but you can always get wholesale or bulk discounts. In exchange, you get a better reputation and more customer loyalty.

The last thing I want you to take into consideration is the cost of labor, as we can’t work for free, right?

The FDMC’s Pricing Survey, woodworking’s most illustrious publication, did a Pricing Survey and found that the average woodworking shop hourly rate averages between $35 and $85.

As you are just starting out, you should charge a little less. We believe $30 is quite ok.

Let’s take a small example, say you are contracted to build a corner shelf. The estimated wood cost is $65, the cost of the finish is somewhere around $25. That’s the material cost.

Next, you will need to figure out how much you should spend on the shelf. The main processes are shelf cutting, edge profiling, base building, finishing, and assembling.

Let’s say each process takes exactly 1 hour to do, so you need to spend 5 hours in total, making the labor cost $150.

That’s not the end, though, as you still need to do the final step of comparing this amount with what your competitors charge.

Then, you can decide on whether or not you should cut the final amount down. If there are too many competitors, $200 is a good price point, otherwise, you can charge the full $240.

Some Tips To Prosper your woodworking business

Size Scaling And Employee Hiring

Ensuring a doable scaling plan while creating a new business is more crucial than you think.

If you already have this plan in mind, the moment your woodworking business picks up some popularity, you can immediately start the plan.

In the business world, time is money, and time is power, so streamlining everything at the right time is vital. Of course, the moment you start scaling, you will have to face a huge problem, manpower.

When your woodworking business was still small, you alone could take care of everything, but it’s just not possible to do so forever. That is why you need to have access to a dependable employee pool.

To do so, we suggest building your own woodworking network by being as involved in your local woodworking community as possible.

Attend start-up meetings and events of this type regularly, exchange contact information. Once you see the need, simply reach out to those people.

Setting Up A Separate Business Phone

A common mistake that a new woodworking business owner can make is to use their personal contact information as the business’. That is not a good decision in the long run.

First of all, you will not be able to separate your personal life from your own business life. You may not think of this issue as anything severe, but it will surely eat away your love for the profession.

Moreover, setting up its own phone line makes the woodworking business much more automated. Clients also have a much easier time contacting you.

Competitor Researching

You can only win if you know your enemy well enough. This statement is true not only on the battlefield but also on the market. You must figure out what your competitors are offering so that you can think of something better.

You don’t even need to dig too deep, just perform market research by going around checking out the competitors’ stores, and research from the internet.

While this doesn’t seem like much, it lets you grasp the situation better, knowing which product is selling and which isn’t.

Decide What Niche To Focus On First

At first, you should be limited in manpower, as the business is still small. Woodworking is a supper wide field that a lot of different category products.

You should refrain from being too ambitious in this timeframe, as going in too hard is only detrimental. Instead, choose a niche that you are most confident in and start building your reputation.

Aside from your talent, you should also take into consideration your available resources and the demand of this niche.

After all, if you don’t have the resources, you can’t make anything, and if there is no demand, your products don’t make money.

For instance, if you are confident in your bookcase-making skills, then it’s better to follow that niche than something like coffee tables, even if there is a higher demand for coffee tables.

Finding the balance between the people’s demands and your own talent is the secret behind success in this industry.

Protect Your Intellectual Property by Copyrights, Trademarks, and Patents

These days, it helps a lot to understand copyright law, especially for artistic niches such as woodworking.

Even though your craft is creative and technically under the protection of copyright law the moment it is created, you still need to perform a copyright registration.

Believe us, doing so is only beneficial for you, as it allows the capability of suing for things like attorney fees, statutory damages, and attorney fees.

All woodworking products fall under the visual art category, so the application process is simpler. You don’t need anything more than your contact information, your work’s name, its creation date, and the date you first publish it.

Raise Needed To Startup Capital For Development

The development of a business requires big money, so they can throw a wrench into your business’ money flow. That is why you need to use other sources of money for this process.

The most obvious source is, of course, your own savings. Doing so ensures that you still have complete control over your business.

Nonetheless, the amount of money may be limited, unless you are inherently rich. Or you can borrow from your family or friends.

Other than your savings, you can launch a crowdfunding campaign. Doing so lets you connect with people who share the same idea and gauge the interest in your products at the same time.

The third method is the most traditional way that most businesses rely on, taking a loan. The regulations and processes can be quite a pain to go through, but you can quickly and reliably get the capital needed. You do need to pay them back, so it carries some risks.

Frequently Asked Questions

Is It More Profitable To Run My Woodworking Business From Home?

There certainly are some advantages to running your woodworking business from home. Firstly, you get lots of tax exemptions like deducted costs for equipment and workspace.

The process of getting the licenses and permits is also much more straightforward for home businesses.

Do I Need Specific Skill Sets To Start A Woodworking Business?

A woodworker needs to cut a lot, and each cut must be as precise as possible. As such, having good hand-eye coordination is a must for any aspiring woodworking business owner, especially in the early days.

You will also need some aptitude for computers and math, as the newer technologies depend on them. In the same vein, you should have some machinery skills to calibrate and adjust the machines.

Where Can I Sell My Woodworking Projects?

Aside from selling your products at your own shop, the rise of the Internet has also provided many places for you to list them.

For instance, you can sell online with either Etsy or Amazon, both of which don’t require too much of a fee.

What Are The Best Wood Products To Start With?

When you are starting out, you should not immediately challenge harder projects. Instead, focus on making wooden toys, as they can quickly cause a good impression and they last for quite a long time.

After you have acquired enough experience, challenge wooden utensils, as they don’t take up too much storage capacity. Once you have a separate storage area, start making big projects like wooden furniture.

What Woodworking Tools Should I Buy New?

It goes without saying that you must be limited with a budget in the first step of your journey. For this reason, it’s better to only buy some new ones and utilize the tools from your hobbyist days.

That is not the case for the table saw. We strongly recommend that you invest in it right away. It will be the most versatile tool in your possession for a long time.

As long as you have the correct jigs, you can change its working pattern easily, too.

Does My Woodworking Business Need A Jointer?

Some people have the idea that they need to get all the recommended tools to start a proper woodworking business. That is as wrong as it can get.

For example, a jointer, while absolutely necessary once you have expanded the business, is perfectly replaceable when you are small. In fact, you can turn your table saw into a jointer simply by adding in a shop-made fence.

How Do I Earn Customers’ Loyalty?

The easiest way to earn the loyalty of your customers is to set yourself apart from all the other stores. For instance, you can offer products of higher quality at a reasonable price level.

Another good method to retain your customers is to educate them on how you made the product. Once they know how much work you pour into each piece, they will keep on coming back.

Final Thought

After reading through our guide on how to start a woodworking business, are you convinced to kick your company?

We believe that it can help you and a lot of people from wasting time, effort, or even money. Businesses can be fun, but it is business. You will have a lot of challenges in the process to start.

More, you need to have a clear plan and keep the loss at a minimum. If you follow this guide, the risk is reduced, and you have less of a chance to screw things up.

All in all, we have explained why it is necessary to start a woodworking business, the steps to do so, things to consider, and some tips. We also put in FAQs to help clear things up even more.

We hope you will create a successful woodworking business by yourself. Don’t be afraid of anything and try to do your best!