Going Pro? Here's something to think about???

[R Jones]

Going pro??

Geezz I have been watching various posts and threads thinking if you only knew what I now know…. and I still know very little. But for what it's worth… I have been in business now 5 years. Full time for the past 2 after losing the day job. I started like most working part time in my garage building those really nice studio pieces for friends and family. Always curious what will sell and where to sell it. As time went on I became better at pricing ( I thought ) and have become a much better craftsmen. So as a part time gig it was great right, I lose the day job and go full time. For the most part I have always had work (because I am an idiot) So what's the problem?? Well I didn't have to eat and pay the mortgage from the profits or lack there of….

In a nut shell I never run the business like a business, I still run it like a hobby. I thought I knew what my costs were, but really had no idea so last year I ended up working for about $5/hr. I was busting my butt and never seem to have any money in the bank:( Although I turned more in sales than my wife grossed at her day job… so here's a couple thoughts I wished someone would have shared with me.

if you have no plans of going full time then no need to read further.

Treat it like a business from day 1

Know your costs! That means you without a doubt need to have some idea what your overhead costs are, electricity, gas in the car, glue, sandpaper, screws, tools, internet, paper, Medical insurance, business liability……. I can't imagine even working out of your home shop you can do this for less than $15/hr. Some might say that's outrages for a home shop but on a full time basis? Now you have to pay yourself what $20-$25 ah yes but don't forget your paying taxes out of that so you really need to be maybe $30-$35??? So now you are at 45-50ish per hour? Sounds like a lot huh? Of all the threads and posts in this and most other forums very little if any talk about knowing your costs and making a profit:( I am not talking about "what to charge" which funny as it seems never digs into knowing your actual costs. Just "well materials plus how much you want to make per hour" We all talk about how to build the work, how to sell the work but...

I look around and see most want start a woodworking business and build high end custom or studio furniture, heck look around the internet everyone's doing it… Probably not so much, it would appear to me that most woodworkers on the internet also have some other form of income IE Blog or website where they sell something to aid in the couple of pieces they actually build. Don't get me wrong there are those out there doing it but they are few and far between. More than likely this won't be you. You will be like the rest of us building cabinets or widgets or whatever pays the bills and there is nothing wrong with that because I am not working for the man:) But I have sense realized that market is way small!

Don't be afraid to outsource! When you actually look at the costs, don't forget your time!!! I certainly can't build a drawer or door cheaper than I can buy one. I sometimes I can't finish my projects cheaper than I can have someone do it for me. Why because these vendors/craftsmen have found their niche and are way more efficient at it than I therefore cheaper. As time goes on I slowly see what makes the most money and I that's the direction I tend to focus my efforts.

If you can't sell yourself or your product it's going to be a long long long road letting your work sell itself. You will have to wear all the hats, accountant, marketing, delivery, admin the list goes on and it would seem that on most days the "art" of woodworking is on the bottom of the list.

This year with a new outlook my sales are on track to double. I have started paying myself, no a lot but it's something and there's finally something in the bank to let the business grow:) Take this with a grain of salt, everyone's different and so is there business but if you don't treat it like one you won't have one for long.

[Vic]

I think that's a pretty accurate assessment. If a person is to make the jump to pro, they need a business plan, which will include all of what you talked about, sales, marketing, overhead, etc. and a set of bench marks they plan to hit along the way. Goals are essential and they must be realistic. I have decided to slowly move into a business model and be up and running, making at least enough to cover my costs by retirement. No, not necessarily a positive net income, just one that covers the cost of my habit. Even then, I'll need a much more thorough plan than I currently have in place.

[Gregory Paolini]

Vic nailed it when he uttered the words "Business Plan" - We hate them, but the plans do open our eyes. And it's probobly best to revise the business plan every few months, to see that you're achieving your goals, staying on corse, or need an adjustment. The business plan is like a map on a road trip, without one you're bound to get somewhere, just who knows where that somewhere will be...

Best advice I can give anyone who is thinking of going pro is, you're not becoming a professional woodworker, you're becoming a busnessman or businesswoman who happens to do woodworking. And at the end of the day, if you don't have more black ink than red, then your woodworking has just become a very, very expensive hobby.

[bois]

An eye opening, but valid post. I'm one of those guys that still has a day job and just uses woodworking to pay for the habit. I feel fortunate that I actually did run through a business model before I considered going full time, and quickly realized the numbers just weren't going to work. Even my "best case" scenario would have come with about a 60% pay cut (after accounting for all my costs) which was my deal breaker. Given that my mortgage presumes a certain income level, this wasn't going to happen. I also found that the more my hobby became a job, the less I liked it anyway. So I decided to stick with the day job (and all its benefits) and invest as much or little in the shop as I want, taking jobs when I have bandwidth, and turning them down when I don't. This has kept woodworking enjoyable, while also profitable enough to allow me to invest more in the shop or equipment for video production, etc. I don't want to discourage anyone from going down the pro path - the next Thomas Moser could be in the forum already. It just needs to be done with eyes wide open, rather than through sawdust covered glasses.

[ChetlovesMer]

this is a great post.

I'm small time. I do maybe 3 to 4 projects a year. I pick and choose the ones I want to do, and I don't need to pay the bills from them, because I also have a "real" job.

The reason I like the set up I have is that I don't "have to" take any projects on. I really enjoy woodworking, but I don't want to get to the point where I'm the guy who "has to make the donuts".

Great post.

[R Jones]

Chet,

Ah yes I remember those days well:) You are in a great position for sure! Being able to pick and choose your projects is a great thing! Unfortunately, most days I "make the doughnuts" and the whole pro thing isn't exactly what I thought on a number of different levels but to be honest I wouldn't trade it for anything! At this point I really can't see myself working for the "man" again.

RJ

[mlehikoinen]

Some good info here. I'll be sure to make use of it. See, I'm getting laid off at the end of August after 10 yrs with big blue. Sucks, but that's life. I'm going to forge my own silver lining and be my own boss again. Wish me luck!

[ronteti]

I think everyone really wants to make thier hobby their job.

Its a lot harder then people think it is.

Knowing the actual cost is a major factor especially if you plan on making it your full time job and sole income.

Cost of materials change…rapidly and never do they go down. So you should be aware of the cost when you bid the job. Also when I bid a job the bid is only good for a month. Sometimes less depending what it is.

If the bids are open ended meaning a client will come back 2 months from te time you gave them the bid/estimate then cost have changed.

Not only cost of material, labor cost, but tooling and tooling maintenance and up grade and replacement must be considered.

Then the intangables as well.

You must take all those things into consideration as was already mentioned.

But also you should add in profit to. Other wise you are just working for wages.

You also have to have a way of screening your clients.

Otherwise you will be wasting your time on window shoppers.

You have no friends or neighbors when it comes to doing work for them.

They are the hardest to work for.

It is purely business.

Friendship should not be included.

It can be a real quagmire.

But there are people who do have sucessful hobby businesses.

[Dr Dave]

I think also when you consider the well known studio woodworkers, they do not live in malibu canyon, so even at the top of their game woodworking is a fantastic career working for ones self, but not tremendous wealth.

The big names, David Marks, Michael Fortune, Krenov and others make great stuff but also had faculty positions, TV shows and do a lot of classes both in their studios as well as travelling.

the pure high end status held by Maloof or Nakashima are very rare.

[CJC5151]

This is a great post. I was in the same boat a year ago. I jumped in with both feet and had my own eye opening experiences. About 2 mo in I was dumbfounded how i couldnt seem to make any money. I found out quickly that i had not completely thought out what I had done. I had quit my job and thought my dreams were turning into a pipe dream. I sat down with a freind who is a financial planner and realize i had to make some serious changes. The first was move shop. sure the 3000 sqft place i found was nice and reasonable for its size but it was costing me way to much money to heat and i could get away with a much smaller space. Found a unit 1900 sqft and 20 mls closer to home for half the cost well more then that cuz utilities are included. The second was to get them in and get them out. What i mean is stop turning down stuff that can be built in a day or two. Cabinets, builtins, closets,pantries, they pay the bills and have a much higher profit per hour yield. Im not saying forget about the beautiful originals you dreamed of, Im saying if you cant pay the bills and make some money, you wont have a shop very long to build those originals in. The last eye opener was all the other buisiness costs, business insurance, liability insurance, I was lucky that my wife is a nurse at a hospital and has wonderful health insurance. I cant imagine anyone starting a new business that would be the only income in there household or atleast being the income that would have to provide there own health insurance. you hit on a couple other issues i hadnt thought about. I like the idea of purchasing pre-made drawer boxes. When I started the one thing i did think about was finishing. Because my knowledge was so limited in this area. But the guy i used didnt turn out to have the knowledge i thought he did and wasnt happy with the results, so I had to learn on the fly. How did you find your finisher. Is he a painter by trade, a furniture refinisher. this was just my 2 cents, graet post

[davestanton]

I had my own cottage construction construction company for 20 years. I built maybe 2 or 3 homes per year and found the only real area I have made a profit was in my own home. I bought land, built a house and lived in it for a year or so and then sold it. I did this a few times. All the profit is personal, so no tax.....on condition that you don't claim any of the costs as a tax deduction and that it is your private dwelling.

What I am saying is, if you can use your skills in a way that allows you to maximise your net personal result, you will be ahead of the pack in leaps and bounds.

I have recently closed the company due to overheads becoming ludicrously expensive and now operate as a "sole trader". That is another thing for people to consider, what type of entity you want to be and which is best for your situation.

I wish anyone who steps out on their own the best of luck, but the thing is, luck really isn't what you need, the advice given in this thread is!

[dwacker]

The first rule of starting a business or going out on your own is "Pay yourself first". This means at day one you should be making a wage comparable to your skill level. No this doesnt mean pay yourself $100 and hour but it also doesnt mean pay yourself below minimum wage. Punch the clock and make sure you get paid every week without fail. If you find yourself not getting full pay along with all your associated taxes then its time to go get a job.

Don

[davestanton]

The first rule of starting a business or going out on your own is "Pay yourself first". This means at day one you should be making a wage comparable to your skill level. No this doesnt mean pay yourself $100 and hour but it also doesnt mean pay yourself below minimum wage. Punch the clock and make sure you get paid every week without fail. If you find yourself not getting full pay along with all your associated taxes then its time to go get a job.

Don

Interesting idea. This would mean for most people that they would need a loan to establish the business and also to draw a wage from that loan. Not my own business model because I loathe paying interest to fat bankers.

I can see the need to borrow to purchase equipment and cover rent, but I always take a deposit from the client prior to starting the job for them. This covers materials and my wage. If the job takes a while, I also take progress payments. At the completion of each job, I check my hours to see that I am happy with wage, associated overheads and a profit. If it is good I continue on my way, or if it is not good, I reassess my margin and/or my ability to predict how long the job will take.

I strongly agree with your statement about clocking in if this is going to be your only income.

[dwacker]

Interesting idea. This would mean for most people that they would need a loan to establish the business and also to draw a wage from that loan. Not my own business model because I loathe paying interest to fat bankers.

I can see the need to borrow to purchase equipment and cover rent, but I always take a deposit from the client prior to starting the job for them. This covers materials and my wage. If the job takes a while, I also take progress payments. At the completion of each job, I check my hours to see that I am happy with wage, associated overheads and a profit. If it is good I continue on my way, or if it is not good, I reassess my margin and/or my ability to predict how long the job will take.

I strongly agree with your statement about clocking in if this is going to be your only income.

If your using borrowed money to cover payroll then you were not ready to start. Running full time on a shoe string is the worst thing you could do to a new business. Most banks wont loan money unless you have some put away. Getting deposits is a fact of life its to cover your butt only and should never be used to finance the job. Its not your money until the job is shipped or final.

Don

[jimmykx250]

I agree you HAVE to know what your fixed costs are salary,ins,sanpaper,glue etc,etc first and this should be incorperated into your hourly labor rate. Variable stuff like wood pricing deliveries,install are a per job basis. The one thing I have noticed is ALOT of the these woodworkers suppliment their income by doing classes for anything from sharpening to hand cut dovetails- granted you need students to make that work but I have noticed alot of guys do it. I would love to do it- just think it would take a while to get a client list and even then would it match my current salary? Tough leap for sure!!!

More power to those that have the determination to make it work.

[duckkisser]

honestly i dont want busness where i build cabinets and what not for a living i want to have my own school where i can teach crafts like glass blowing, metal working, wood working, ect....seem like there are not enough schools dedicated to the teaching aspect of woodworking. oh there are a few shop that do lessons and weekend training but im talking about a 6 month to year of training that would go towards a vocation. dont know how likely that is but that is my dream.

[jimmykx250]

honestly i dont want busness where i build cabinets and what not for a living i want to have my own school where i can teach crafts like glass blowing, metal working, wood working, ect....seem like there are not enough schools dedicated to the teaching aspect of woodworking. oh there are a few shop that do lessons and weekend training but im talking about a 6 month to year of training that would go towards a vocation. dont know how likely that is but that is my dream.

I think there is a need for what you would like to do- I think you would have alot of interested people.

[duckkisser]

first step is to have a wood shop and the tools.

[jHop]

I think there is a need for what you would like to do- I think you would have alot of interested people.

Definitely a lot of people are interested. however, we do not live in a society that the bill collectors will pause in collecting their money for six months while you go learn enough to pay them off.

Back in the day, baseball teams only paid a small wage, and most players had to get a different job during the off season to pay the bills. I doubt very much that Babe Ruth flipped burgers while wearing pinstripes, but sometimes we all have to do whatever it takes to fuel the belly while we keep the fire in the soul.