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How To Start A Woodworking Business

How To Start A Woodworking Business

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How To Start A Woodworking Business

How To Start A Woodworking Business

Do you have a passion for working with wood? Are you dreaming of turning that passion into a profitable business? If so, you are in luck. Starting a woodworking business can be a rewarding and profitable venture if done correctly.

However, to succeed in this industry, you need more than just a passion for working with wood and an eye for design. This guide will take you through the process of starting your own woodworking business, providing an overview of the industry, steps to get started, and answers to common questions.

Business Description

A woodworking business turns raw wood into valuable products. This transformation can range from 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 woodworking classes. 

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. 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.

Industry Summary

The woodworking field spans from extensive manufacturing operations to smaller, specialized workshops. This industry experiences growth due to consumers valuing distinctive, handmade wooden items along with a rising enthusiasm for do-it-yourself home projects. Below is a brief overview of the industry:

  • According to IBISWorld, the wood product manufacturing industry in the United States had a market size of $7.2 billion in 2022, with an annual growth of .6% over the last five years.1
  • The U.S. woodworking industry has experienced steady growth over the last few years and is projected to continue expanding.
  • Major factors contributing to this growth include a thriving housing market, rising disposable incomes, and shifting consumer preferences towards eco-friendly materials like wood.
  • With more people investing in home upgrades and seeking quality, handmade wood pieces, small woodworking shops have major growth potential in the coming years.

Steps To Start A Woodworking Business

As a woodworker, you’re probably equipped with the essential skills to thrive. Add some business knowledge to this mix, and by following the steps outlined below, you’ll be on track to establishing your own successful woodworking business.

Step 1: Write a Business Plan

Kicking off a woodworking business is an exciting step, but before you dust off your tools and get to work, you should first write a business plan. While it isn’t a required step (unless you are asking a bank for a loan), here’s why it matters:

At its core, a business plan helps you set clear goals. It’s the best way to translate your love for woodworking, maybe it’s furniture design, cabinetry, or creative wood crafts, into a practical business approach.

Next, while you may love your woodwork, are there people who want to buy it? Understanding customer needs goes a long way in the success of any business, and market research helps you know who to cater to and what they are looking for. Including this in your business plan gets you focused on meeting these needs.

There are many more reasons, but the last one I’ll cover is that starting a business comes with costs. Creating financial predictions as part of your business plan gives you an estimate of the amount you’ll need to kick off your custom woodworking business and whether you have access to those funds.

Related: How to write a business plan

Step 2: Source Funding (if needed)

Funding is a pillar of starting any business, and woodworking is no different. It’s common for a new woodworking business to start very small with the owner’s existing equipment and savings; however, if this isn’t enough, other funding sources can bridge the gap.

Bank loans are a common source of startup funding, but lenders typically require that you invest at least 15% of your personal funds towards the total cost of the project. You must also have good credit scores and sufficient collateral to secure the loan. If additional security is needed to back the loan, a Small Business Administration (SBA) loan guarantee can provide collateral.

Home equity loans are another source worth considering if you have equity in your home. They can provide capital for those initial investments at rates that are normally lower than a traditional business loan.

Credit cards can be used to finance startup expenses. Some offer introductory periods with 0% interest, though it’s important to have a plan to pay these back before the intro period ends.

Friends and family can be another source of funding. It’s important to put agreements in writing to avoid misunderstandings and protect relationships.

Microloans are an underutilized funding source that comes from local economic development organizations when traditional sources aren’t available.

Related: Finding the money to start a business

Step 3: Register the Business

Whether you’re hoping to sell online or open a brick-and-mortar store, the first step in starting a business is to make it legal. This means registering your business, obtaining the necessary licenses, and ensuring compliance with local zoning regulations.

Choose a business structure: First, you need to decide on the structure of your business. There are four main types:

  • Sole proprietorship: This structure is the simplest and least expensive to establish. As a sole proprietor, you have complete control over your business. However, it also means you’re personally liable for any debts or obligations.
  • General partnership: This is an option if you’re starting the business with one or more partners. Each partner shares in the profits, losses, and liability of the business.
  • Corporation: A corporation is a separate legal entity owned by shareholders. This provides owners with protection against personal liability, but it involves more administrative requirements to follow.
  • Limited Liability Company (LLC): Combines liability protection with simpler taxation and management than a corporation

Related: Comparison of business structures

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!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Depending on your location, there will likely be a variety of general business registrations needed before opening. These could include a business license, seller’s permit, and Employer Identification Number (EIN).

Related: State guides for general business licensing

Zoning regulations: Due to the noise generated by a woodshop, understand local zoning regulations for running your workshop, especially if it’s in a residential area or if you’re considering opening a retail space.

Step 4: Set up a Workspace

When picking a location for a woodworking business, there are some important criteria to consider. Since many woodworking businesses start off being 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 large deliveries, such as lumber or heavy equipment, are expected, you need a space where a semi-truck can easily access your shop. Consider the turning radius needed for larger vehicles and the ease of unloading supplies near your workspace.

Also, don’t overlook the need for ventilation due to sawdust and fumes from finishes or adhesives to maintain a safe working environment.

Step 5: Determine Sales Channels

If you’re starting a woodworking business and have honed your craft to perfection, you may wonder where to go from here. That brings us to the next step: getting your products into the hands of paying customers. Without proper sales channels in place, even the highest quality products may not get noticed by customers. When it comes to woodworking, there are several sales channels you can explore:

  • Your own website: Having a dedicated e-commerce website for your business gives you complete control over your brand, customer experience, and profits. While it’s easier than ever to set up a website, getting people to check out the website isn’t.
  • Craft fairs and local markets: These venues offer a fantastic opportunity to showcase your work, interact with potential customers, and build your brand. Plus, there’s something incredibly satisfying about seeing people’s reactions when they see your creations firsthand.
  • Wholesale to galleries and boutiques: Approaching local indie galleries, gift shops, and boutiques to carry your goods on consignment is another avenue to explore. Wholesaling reduces the effort spent directly selling but comes with pricing discounts expected by retailers. Yet, this channel provides more localized physical exposure to patrons.
  • Retail stores: Partnering with local furniture stores or home decor outlets can be an excellent way to reach a wider audience. However, this route requires careful negotiation and understanding of wholesale pricing.
  • Online marketplaces: Websites like Etsy, eBay, and Amazon Handmade cater to artisans and crafters. They can provide a substantial customer base and simplify the selling process.
  • Social media: Platforms like Instagram, Pinterest, and Facebook can be effective for showcasing your products and connecting with customers. You can also use these platforms to share behind-the-scenes content, which can help build a relationship with your audience.

Step 6: Prepare to Launch!

As you move forward with starting a woodworking business, there are a few more steps to consider. While we’ve covered the central aspects, other tasks might be necessary based on your individual needs. Some of these could include:

Business insurance: Common types of insurance for a woodworking business include general liability insurance, which covers accidents and injuries on your property, and product liability insurance if your products cause harm. Most homeowners insurance won’t cover a claim resulting from a business-related event.

Setting up bookkeeping: This includes tracking daily transactions, preparing for taxes, and creating financial statements. Options range from hiring a bookkeeper to using accounting software tailored for small businesses.

Opening a business bank account: A separate bank account for your business simplifies accounting processes and helps in tracking business expenses and income.

Hiring help: Depending on the volume of your shop, you may need to hire help, whether for woodworking, sales, or administrative tasks. Consider the type of help you need and the implications of hiring employees, including payroll and responsibilities as an employer.

Accepting credit cards: Offering multiple payment options, including credit cards, can make it easier for customers to purchase your products.

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 estimated total cost to start a woodworking business ranges from $4,000 to $30,000 or more. The expenses involved include:

Equipment: One of the main costs involves the purchase of tools and equipment. This can range from $3,000 – $20,000. This figure includes standard tools like saws, plane, chisels, together with specialized woodworking tools. You might also want to factor in the costs of safety gear like gloves, masks, and protective eyewear.

Business registration: The costs for business registration vary by state, but you’ll often pay in the range of $50 – $500 to file your business paperwork.

Location: If you’re not operating from your home, you’ll need to account for deposits or purchase of a commercial space.

Business insurance: While pricing varies, you could typically expect to pay at least $500 for general liability insurance.

Marketing: Marketing is necessary to attract customers and could range from creating a basic website to placing ads in local media. Initial marketing expenses can range around $200 – $1,000. 

How profitable is a woodworking business?

The profitability of a woodworking business can vary greatly depending on a variety of factors. To estimate potential profitability, let’s consider a small woodworking business that sells custom-made products.

Revenues: Assume the business sells 50 items per month at an average price of $200, which would result in monthly revenue of $10,000.

Expenses: Expenses for a woodworking business can include the cost of materials, rent for the workspace, utilities, and labor. If we assume that material costs are 30% of the selling price, the monthly cost of materials would be $3,000. Adding in business overhead such as marketing, insurance, and general supplies at $1,000 per month, expenses would be $4,000.

Profit: Subtracting the total expenses from the total revenue gives us a monthly profit of $6,000 ($10,000 – $4,000).

It’s important to note that these are rough estimates and actual profits can vary based 

Sources

  1. IBISWorld ↩︎

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

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How To Start A Woodworking Business

How To Start A Woodworking Business

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