the thought of going pro is daunting

[pagel]

You are required to hold a business license in every state in the united states to do retail business. In fact Its at every level in some state. Some counties require a license and most cities require a license I have two one for the city and one for the state.. Your professional license theory has nothing to with being legit as a retail business owner.

Don

You misunderstood my question. A business license is not the same as a professional license. Anyone regardless of their formal qualifications can hold a business license as long as the legal requirements are met. Those legal requirements don't require formal competency in running a business to obtain the license.That's why I stated, "there are various laws that regulate business activities, but you don't need to pass an exam or be licensed per se as a business owner to participate in that activity."

In short, there's no formal licensing process, certificate, or set of qualifications that distinguishes a professional woodworker from a non-professional woodworker. A business license certainly doesn't do it (or does it?). The problem here is that unlike other professions, there is no standardized set of requirements that include or exclude anyone from calling themselves a professional woodworker. So to talk of legitimacy sort of begs the question - what counts as being professionally "legit" in the field of woodworking?

[dwacker]

I guess everyone with a tablesaw is a pro. Makes the discussion on going pro sort of moot. Bought me a 99 dollar ryobi tablesaw now im a pro. I can charge people, break laws, and don't have to care what any agency thinks about tax evasion or liability. Seems to be the standard now days.

Don

[Jfitz]

There is going pro(fessional) and there is operating a business. Different things.

A pro attempts "participates for gain or livelihood in an activity or field of endeavor" (Merriam Webster online). This is the "getting paid" part.

Obviously there are the things required to operate a business - retail licenses, local regulations, etc. Don posted a list of all the items with which he, as a business owner, must comply.

One can be a professional and not need to handle the business part, as long as they work for a business. The finish carpenter for my builder just punched the clock with no business worries. He was definitely a pro - very good. Some pros - to the OP's point - must have a license of some sort to even ply their trade.

Where does amateur transition to pro, with respect to income? I don't know. I think i should be able to do something for a friend/neighbor/etc without it being considered "stealing". Otherwise, that beer he gave me for helping him move a sofa falls into not only compensation and liability issues but also runs afoul of all local and state liquor laws. I shouldn't be able to solicit business from the general public at all though, even with the "will work for food (beer)" approach. This includes posting a business card at the local coffee shop But is there a gray area between " friends and family" and "general public"? Good question.

[CessnaPilotBarry]

I dont really care if your the Krenov of the neighborhood and sell to the whole block, if your not legit your a hobbyist.

No, you're breaking the law. There is nothing illegal about pursuing a hobby.

[Jfitz]

Guys, I'm going to open another thread on the structure/legalities of selling your work. I think it is an interesting topic worthy of its own thread (moderators - feel free to shut it down if it goes awry!).

The original poster here asked for info on setting it up. Looks like there is the work itself - how much to charge, what type of work, how to line up work, etc etc....and then there is the part of it to set up a legitimate business (fees, licenses, sales tax, regulatory compliance, etc etc etc).

[CessnaPilotBarry]

You are required to hold a business license in every state in the united states to do retail business.

We don't call it a business license, it's simply a sales tax permit.

Here, you must collect the tax, file a periodic return, and forward sales taxes to the state on retail sales. You get it with a two to four page form and a fee. It's not a business license at all, as no test, no qualifications, no educational or apprentice credentials required.

If you do work over a minimum dollar amount in residential homes, you need to pay into a contractor consumer protection guaranty fund. No such payment is required if you are making products for sale for others to install, or if you only work in commercial properties. The state assumes commercial property managers are saavy enough to protect themselves from bad contracting deals.

[dwacker]

I guess it boils down to definition and splitting hairs. Going pro IMO usually means quiting your day job and change to woodworking as a source of income, or using woodworking as a second job. If your going to change jobs and punch a clock for some other woodworking company then you have no worries, all you need to be concerned with is the sawdust. If your going to go out on your own you need to realize that you have to meet your legal and financial obligations. If you dont know your legal obligations then you need to get an education prior to stepping out on your own. If youve never run a business in its entirity then you probably need to get an education.

Don

[dwacker]

We don't call it a business license, it's simply a sales tax permit.

Here, you must collect the tax, file a periodic return, and forward sales taxes to the state on retail sales. You get it with a two to four page form and a fee. It's not a business license at all, as no test, no qualifications, no educational or apprentice credentials required.

If you do work over a minimum dollar amount in residential homes, you need to pay into a contractor consumer protection guaranty fund. No such payment is required if you are making products for sale for others to install, or if you only work in commercial properties. The state assumes commercial property managers are saavy enough to protect themselves from bad contracting deals.

Here you get a master business license. This license just makes you a number. The number is used set up your L&I, bank accounts, credit card services and anything else that requires you to have a license. We also have what is called a resale permit. This makes it possible for business to buy goods sales tax free for either resale or use in an end product. You have to have a tax reputation to get a resale permit, meaning you have to have a track record of collecting and paying your taxes. Otherwise you pay tax at the counter and then deduct it from the amount owed at time of filing your return. If you dont have a permit you wont get wholesale pricing thus destroying your bottom line. This is just the state and only applies to sole proprietors, once you incorporate the game changes just as it does in every state.

Don

[CessnaPilotBarry]

I haven't seen this mentioned yet...

SCORE, The Service Corps of Retired Executives, can be a solid resource for start ups.

One thing a lot of new pros are not good at is sales and marketing, and developing a brand. The folks above can help develop a soild plan.

This is why solid businesses have little to fear from under the table cheats and Harry Homeowner. Significant time needs to be invested on the question of WHY would people buy MY product or service." What do you offer that the others don't?

- A unique product or artistic creation?

- Rock solid dependable delivery dates? (important to contractors or designers

- Materials or techniques not used in competing products (green ingredients, reclaimed material, locally sourced materials, no machinery...)

- A good story behind the business (special history, employs homeless or special needs...)

- Immediate, or near immediate, availability

- Spotless or minimally invasive site work

Competing on price alone is rarely a good idea.

It's up to you to educate your customer as to why they benefit if they buy from you. If you're really good at this, they call you "Apple". This can require significant self-awareness and self-examination, and can be an uncomfortable process. This is where an objective third party can be helpful. People pay plenty for cool, unique, dependable, personal products, products that they feel are vaulable to them.

Case in point: I have a relative who learned carpentry in trade high school inthe early 90's. He started a one-man show installing replacement doors and windows. Last year, in a recession (builder's depression!), he installed over 15,000 windows! He and his wife have a live-in nanny. His angles?

1.) One day installs, regardless of job size. On large older homes, his jobsites look like a sneak attack!

2.) SPOTLESS cleanups. Every nail, caulk gun tip, broken pencil, ciggy butt, etc... is removed. They vacuum around every window and door they did. The take the trash with them, back to the shop. If it would help, he'd probably mow the lawn at the the end of the day.

3.) His windows are locally made, by an old, established manufacturer with a solid warranty. Snap-in replacement panes and hardware are available on a one day notice. The supplier also does a bang up job of ensuring materials are there exactly when promised, not early, never late.

4.) Every job takes place on-time, and is underpromised and overdelivered.

5.) The person who makes the trip out to do exact measurements is also trained to spot additional needs that can be suggested to the customer. "Since we'll be here, we can also do...", and include specific ways the additional service will be of benefit to the customer.

6.) Owner visits and inspects every job. During the visit, he takes the time to walk around with the primary customer and point out some of the steps his company takes that subbed-out chain installs do not. He addresses every concern of the customer.

His prices are significantly higher than big box "installation services", and he has barely advertised for several years, it's all word of mouth.

The business was grown on a plan, with help from local business consultants, including SCORE. Some of the earliest employees hired were trustworthy, commissioned sales people.

Think of what really makes people mad about other businesses. For example, waiting for the cable guy... Then, look at your expected competition in the market you want to go into, and don't do any of the annoying things your competitors do.

[rmac]

under promised and overdelivered

A key to success in almost anything.

-- Russ

[thewoodwhisperer]

I'm noticing a trend here folks. Far too often, a Going Pro thread morphs into a thread about taxes, business licences, and who is truly a "pro". I really don't think that's what the original poster had in mind when he asked his question. This dead horse was beaten....thoroughly...in other posts. Please keep it on topic.

[williaty]

I made the transition from amateur to pro during 2011, though not on woodworking. Here's what I've learned in the last year:

Expect to lose money like you never imagined possible. There's things you take for granted now that you'll suddenly realize cost money when you start running a business. For me, the biggest wakeup call was the astonishing amount of money I spend on nitrile gloves and paper towels. Trash disposal has also been silly expensive. Who knew trash bags cost so much! Inevitably, there will be something like this that you leave out of your projections and you'll find you have to raise prices to cover it once you get going.

Expect to spend a frankly awe-inspiring amount of time doing things that you didn't think were your job. I figured, hey, I'm already doing this, I'll just jump in and make it a business. To my shock and awe, I spend about 4x as long doing "business BS" as I do actually doing my "job". I now understand why my competitors charge $100/hr of billable. It's so once you divide what you make by the total hours you were doing something for the business you're still making minimum wage. $50/hr sounded like crazy insane money when I set my shop rate. In reality, on the average "4 hour" job, I was actually making about $8/hr because that 4 hours of work was surrounded by another 20 hours of behind-the-scenes business stuff. By the time you do the research for the project, find the materials, make a quote, talk to the customer about it, get the money, take it to the bank, get the parts/supplies/materials, make the thing, deliver the thing, take the final payment back to the bank, and do the books... well, it adds up.

Expect to get yelled at. No matter what, you WILL eventually face an angry customer. Sometimes it'll be your fault, sometimes it'll be their fault, sometimes reality just won't work the way they think it will. If what you did conforms to the standards you have set for yourself, stay calm, inform them that you can make some recommendations as to which shops they might prefer to frequent, and then forget about it when they leave. Conversely, if you actually did screw up, admit it, fix it, and apologize and you'll usually cement the customer. People get such poor customer service from major corporations these days that if you admit something is your fault and just fix it, it surprises them right out of being mad and often earns their loyalty.

Expect to go nuts worrying about lulls in business. In fact, unless you position your product as Christmas gifts, you should expect to make nothing from Thanksgiving to tax return season. That's just a horrible, horrible time for retail (which is what you'll be, realistically). Christmas spending takes over at Thanksgiving, so nothing else gets done. Then everyone is dead broke from Christmas in January and February. You'll start seeing business again once people start getting income tax back. Even through the "busy season", you'll have times when you're so busy you can't find your butt with both hands and make $5,000 in a week followed by 3 weeks with no business at all. It'll take a good long time to build up a large enough client base that you have somewhat steady/stable demand.

Finally, do it without debt. I pay for everything with cash (though sometimes that cash is a debit card). The reason for this is that, if things go pear shaped, I don't owe anyone anything and can fold the business without wrecking my financial future. I honestly think things are still too unsettled to gamble on taking out a loan or using a credit card to buy supplies before you have them paid for.

[dvoigt]

Hey thanks for getting the post back on track! You bring up alot of good points that have been in my head. I'm with you on the no debt idea, I don't want my dream to become a nightmare because I have to worry about making the monthly payments!

[williaty]

Hey thanks for getting the post back on track! You bring up alot of good points that have been in my head. I'm with you on the no debt idea, I don't want my dream to become a nightmare because I have to worry about making the monthly payments!

I think the single best thing I did was to choose to work out of my house even with the HUGE limitations that imposes, just so that I didn't have to rent a space. It's the only reason I made it through the first year. Thankfully, my zoning was good for doing that. You'll need to check yours.