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How to Start a Woodworking Business in 7 Steps

by Winnie Li Posted on February 02, 2024

Woodworking is a multibillion-dollar industry. You can take your fair share of profit from the industry by starting a woodworking business. The amount of income you earn will be largely dependent on your skill level, and how you position your business in the marketplace.

Starting a woodworking business is an avenue to working on your terms, setting your working hours, and being your boss. It also provides a pathway to making healthy connections with people within your community, and other business persons.

It's worth stating that running a woodworking business can be quite challenging. One of the major challenges lies in the vast number of tools you'll need. These could be regular tools like hammers, sanders, screw guns, and advanced tools like laser cutting machines.

a woodworker handling a laser cutting machine

In this guide, you will discover the 7 easy steps to starting and growing a woodworking business.

In This Article

  • Acquiring Woodworking Skills and Knowledge
  • Ideas for Your Woodworking Business
  • Planning Your Woodworking Business
  • Pick a Woodworking Business Name
  • Investing in the Right Tools and Equipment
  • Setting Up Your Woodworking Business
  • Marketing Your Woodworking Business
  • FAQs on Starting a Woodworking Business
  • Conclusion

Acquiring Woodworking Skills and Knowledge

Formal college education is not a prerequisite to becoming a successful woodworker. However, you need to have strong woodworking skills. Woodworking skills involve carpentry and other related skills that help you produce high-quality products people will pay for.

Here are easy ways of acquiring woodworking skills and knowledge.

  • Take courses: You should consider paid (or free) online (or offline) courses. Professional organizations like the Woodworkers Guild of America and Home Builders Institute are good places to get started.
  • Find a mentor: Woodworking is usually a hands-on adventure. Finding a mentor in the industry is a sure way to build your woodworking skills over time.
  • Practice: Working on multiple projects is the only way to develop your skills. You can head to Pinterest (or other free platforms) to check out the next project to work on.

Ideas for Your Woodworking Business

To get your woodworking business off the ground, you need to focus on the right woodworking business idea. All woodworking business ideas can be grouped into major categories like:

Cabinetry business: It involves building good storage spaces for homes.

Custom furniture business: It involves the building of sleek furniture for customers.

Carpentry business: It involves building windows, doors, and house frames according to the customer's style (or local code).

Craft business: It involves building artistic jewelry, trinkets, and other similar items with wood as the primary material.

wood crafts made with laser cutters

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A Woodworking incubator: This involves the provision of wood (and tools) for woodworkers (and other creators) who desire to start a business in the industry. If there are no woodworking incubators in your area, start one!

Your choice of a woodworking business will be largely dependent on the market demand for your products (or services) within your area.

Planning Your Woodworking Business

The first step to planning your woodworking business is to come up with a business plan. If you're unsure of how to do that, this SBA resource shows you how to write a business plan. Your business plan should give you a blueprint of how to make money with woodworking.

There are various types of business plans — the lean business plan or the traditional business plan. The lean business plan is the best fit for start-ups while the traditional business plan doubles down into the details of how the business should run. If you're using the traditional business plan, it has to include:

  • A thorough description of the woodworking business
  • A good analysis of your market
  • An outline of your market
  • Details of your product (or service) offering
  • Details on how your target market is reached
  • Information on how your product is sold
  • Financial projections about the business. These projections should be related to the operating expenses, potential income sources, and start-up costs.

Pick a Woodworking Business Name

Here are other tips you should consider when picking a woodworking business name.

Your business name should be clear: Your business name should show what you do. Names like woodworking, woodworks, or its variations show what the business does.

However, you should avoid the urge to be too specific. Becoming too specific in your naming could limit opportunities for business growth.

If you're in business to make custom furniture for your customers, inserting the word "furniture" seems quite fine. But if you're focused on making artistic wood products, you should consider inserting a word like "craft" into your business name.

Keep your business name simple: Your business name shouldn't be confusing or difficult to spell and remember. Always keep it simple and short.

Stay true and authentic: Your business name should reflect your brand values. It has to align with the culture you want to create within your company.

Register your domain: As a general rule, always opt for the .com extension when registering your business domain. Check out Instant Domain Search and GoDaddy to figure out domains that are available for use. Instant Domain Search shows you domains that are available in real-time.

Investing in the Right Tools and Equipment

Investing in the right tools and equipment helps you have a quick start in your woodworking business. The right tools and equipment help boost the accuracy and speed at which you complete your projects. It also helps you in saving money and time.

The tools and equipment you'll be using will be dependent on the kind of furniture you'll be producing. However, you can get started by opting for a basic toolkit that includes panel sticks, threaded screws, hand drills, routers, tape measures, sanders, and saws.

To take your craftsmanship to the next level, embracing advanced tools such as laser cutting machines is essential.

Gone are the days when woodworkers struggled with maintaining a high level of precision and accuracy during their woodwork. 

Laser cutting machines stand out for their versatility, capable of working on a myriad of materials including wood, plastics, leather, metals, and textiles.

These machines not only excel in precision but also in speed and efficiency. All you need to do is feed the machine with a design file, then the machine will follow it to turn your ideas into reality.        

One of the pivotal features of modern laser cutters is their emphasis on user safety, making them an ideal choice for woodworkers prioritizing a safe working environment. The xTool S1, for instance, is tailored to meet the needs of both novice and experienced woodworkers.

xtool s1 laser cutter

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It is adept at handling diverse shapes and materials, whether you're working with curved or flat objects. The machine's powerful engraving and cutting capabilities make it a versatile addition to your toolkit, suitable for a wide range of projects.

Furthermore, you need to invest in protective wear like gloves, eyewear, and other safety clothing. All these will help ascertain your safety as you begin creating woodwork for your customers.

Setting Up Your Woodworking Business

As a woodworker, you need to roll up your sleeves and sort out the legalities of your business. It's hard work — but that's what is required to get the business running.

Having legal structures around your business protects the business in the long run. Since you'll be creating woodwork for your customer’s home, having some legal walls will come in handy at some point. Furthermore, legal structures help you to effectively manage employee-employer relationships.

To get started, you need to develop a legal structure and obtain the necessary business licenses, permits, insurance, and tax forms.

Developing a Legal Structure

To develop the best legal structure for your business, you need to seek the services of an attorney, accountant, tax specialist, or other government officials. Alternatively, you could choose to develop your legal structure yourself — but that doesn't guarantee the best results.

Common legal entities for your business are partnerships, sole proprietorships, corporations, and LLCs.

Sole proprietorship: A sole proprietor is entitled to all the business profit, and also shoulders all potential loss, debt, and risk. It's advised not to go the sole proprietorship route when starting a woodworking business.

Since the business and personal finances are tied together in a sole proprietorship, someone getting hurt could affect the trajectory of the business. One accident or loss could be the end of the business. Opting for a sole proprietorship is not the way to go.

Partnership: A business partnership is typically owned by multiple people. Just like the sole proprietorship, partners in the partnership are liable to any legal action against the business.

Limited liability company: A Limited Liability Corporation (LLC) is a business with legal structures that protect the business owner from personal loss. That is, the owner(s) private properties will not be affected if anything happens to the business.

Limited liability businesses can be either multi- or single-owner LLCs. It's the best fit for people looking to start a woodworking business. Starting a woodworking business as an LLC protects the business owner(s) from potential business risks like workplace injuries, property damage, or product liability.

If an LLC is owned by multiple people, then an operating agreement has to be in place.

Corporation: Having a corporation protects the business owner from limited personal liability, and also offers some additional advantages like tax benefits. Corporations usually pay corporate tax and income tax (double taxation), and there are more operational guidelines for businesses that use this model of operation.

Obtain Tax Forms, Permits, Business Licenses, and Insurance:

Always keep an eye out for the tax forms, business licenses, or permits needed to legally operate a woodworking business in your area. 

If you're looking for direction on how to apply for your permit or business license, check out this SBA tool.

Here are the requirements for operating a woodworking business:

Sales Tax Permit: If you're looking to start a woodworking business in the United States, you should pay attention to the sales tax — a good number of states have it. Some states only tax the material costs. Other states, however, tax revenue from labor and wood products.

Before launching your business, look up the sales tax in your state. This way, you will eliminate the error that comes with paying too much or too little of this tax.

Unemployment Insurance: Unemployment insurance is designed to protect employees in cases of layoffs. No one wishes bankruptcy on your new business, but you need to prepare for the worst situations — and unemployment insurance helps you do that!

To get more information about unemployment, visit the U.S. Chamber of Commerce. The website gives you information about the agencies across the states, and how cases of unemployment are handled by these agencies.

Liability Insurance/Business Insurance: Business insurance protects your woodworking business from accidents. The major types of business insurance include business general liability insurance, professional liability insurance and cybersecurity insurance.

To get more information about the necessary insurance packages needed for the smooth operation of your woodworking business, reach out to your local insurance agent.

Set Up Your Workspace

Another factor that comes into play when setting up a woodworking business is the business location. Should you opt for a home-based workshop or a commercial space?

The low overhead cost and convenience are some of the pros that make a home-based workshop worth considering. On the flip side, you will have to deal with space limitations and customers who may view it as a less professional business environment.

Commercial space comes with more space and also makes you come across as a credible and more established woodworker. However, the high overhead cost, building rules, and lease agreements are some of its drawbacks.

Marketing Your Woodworking Business

Without the right marketing strategy, it becomes difficult to showcase your woodworking business to the right people.

There are multiple ways of marketing your woodworking business. You could start by using online platforms to sell your products. Online platforms like Etsy are easy to join, and the platforms draw massive organic traffic.

Alternatively, you could try promoting your woodworking on social media platforms. Social media platforms like Instagram and Facebook are great for growing a massive following and having a loyal community of customers. 

To get the most out of these platforms, you should be publishing great content that educates your audience about your product offering. If you're promoting your business on Instagram, then you need to invest in professional images. Furthermore, your images should be accompanied by a thorough product description.

Trade (or craft) shows are excellent places to market your products. A partnership with retailers (or local home builders) shouldn't be left out when marketing your woodwork.

craft show booth full with laser-made wood products

Craft show booth displaying laser-made wood products

wood crafts made with laser cutters

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Finally, you could launch a YouTube channel where you educate your audience on the benefits of using your woodwork. If you're up for it, you can try launching a referral program where you reward people who successfully refer your woodwork to others.

FAQs on Starting a Woodworking Business

Is Woodworking a Profitable Business?

Reports from the Bureau of Labor Statistics show that the median salary of a woodworker is about $36,710 per year. However, the earnings of individual woodworkers vary from one woodworker to the next — and it's dependent on the skills of the craftsman and other factors that influence the prices of woodwork in the market.

What Do I Need to Start a Woodworking Business?

First, you need to have the skillset. After that, you will have to:

  • Create a business plan
  • Setup the right legal structures around your business
  • Setup a workshop
  • Market your woodwork.

What Woodworking Project Is Most Profitable?

There's no way to pinpoint the exact woodworking project that's most profitable. The profitability of a woodworking project is dependent on factors like project duration time, artistic skill, and material cost. The market demand and the price point also play a role in determining the profitability of a woodworking project.

Therefore, the profitability of a project varies from one project to the next — and it's dependent on the unique market circumstances of the woodworker.

What Is the Most Popular Machine in a Woodworking Shop?

Figuring out the most popular machine in a woodworking shop is somewhat challenging. However, the two common machines you'll find in any woodworking shop are the tablesaw and the bandsaw.

How Much Money Do I Need to Start a Woodworking Business?

There's no fixed rule here. If you have the necessary types of machinery and tools, all you'll be focused on is renting a good working space. However, if you don't have the necessary tools, you will have to come up with a list and make the purchases! Ultimately, you can start with as little as a thousand dollars, or above twenty thousand dollars.

Conclusion

There you have it — seven easy steps to starting a successful woodworking business. The journey will most likely be filled with scraped knuckles and sawdust, but each chisel stroke and hammer swing bring you closer to your dream business. Embrace the process, and enjoy the thrill that comes with seeing your woodwork business idea come alive.

Deep passion and patience are what will take you to the finish line. But you should endeavor to build a vibrant community along the way. Share your knowledge with your local woodwork community, and reach out for support when necessary.

Now you know how to start a woodworking business, what popular woodworking machine(s) do you have in place for your business?

For more questions. Please join our Facebook group to get inspired!

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