WCH:

Better think about how much you want to make... People usually forget
about that -- some examples of how you might approach it.

Let's suppose you want to make $4000 a month -- Before taxes. What
should your revenue be?

Hint (Assuming $3800 a month in material and expenses you should be
billing at least $7600 at 50% profit margin..

If you want to work at 30% profit margin here's what happens...
$4000 / (1 - 0.7) = $13,333 {30% of this number is about $4000.}

So make sure your work is good enough to charge high rates and you can
use the three times table for your time... :-)

Look at this another way... If you have a profit margin of 70% The a
billing of about $6000 gives you about $4200 in income (70% of $6000).
It's easier to make money this way obviously - but the utility, quality,
and uniqueness must appeal to people with money to pay.


Assume your Costs are something like...
Some of the numbers are guess work... of course.

Biggest mistake BTW is that people assume that Marketing plans start
with Positive Revenue. Assume $0 in sales for a while and see how long
your cash horde will last.

But we will allow you one sale the first month for the exercise...

Cost of running small shop (Heat, power, water) $100
Phone bill $100 a month
Cost of tools amortized over a reasonable period $300 month (???)
Vehicle Costs $400 /Month (Or delivery and Taxi costs)
Rent? Naw -- use the garage - like me - So $0 for now.

Call it $1000 (General Expense) a month for now. We'll leave out
accountants lawyers and the other hangers on. :-)

Let's say you sell one project and the materials cost (wood, finish,
sand paper, a new gizmo only for this job) is $1000 and it takes 40
hours work over two weeks. Since you do have to wait for the paint to
dry...

Ok what profit margin do you want? I recommend the 2 times table (at the
least) to start thinking about it... That's 50% profit margin - not
counting labour. Assume that you would pay someone to do the work - and
you just sell. $20/hr. X 40 = $800. So you should charge about 2 X
$1800. Is your work worth that much? Are the customers available.

Increase or decrease numbers and profit margins as you like - but start
thinking about what you have to charge versus the value of what you
produce to earn the income that you want.

Note that in the following example your first month's income would be...

Expenses $1000 (Gen. exp) + $1000 Materials + $800 for the mythical worker.

That Leaves $3600 - $2800 = $800

Even if we forget the worker that still leaves just $1600 for that one
good sale a month? Happy with that? If not play some more and try to
find a combination of things that you can do that will meet the revenue
objectives.


wch wrote:
Hi,

I lost my job yesterday working at a company that builds furniture in north
Idaho. I'd been contemplating starting my own woodworking business for
quite some time anyway so this was kinda the final kick in the pants to get
me to do it.

I have a little experience in residential trimwork and quite a bit of
experience in furniture, jewelry boxes, and general woodworking. So I'm
wondering if any of you good people have similar experiences, what works for
you, what resources are out there, etc. I found some useful information
doing a Google but thought I'd check here too.

I've looked on ebay to see what kind of furniture is selling and I don't see
making it building doll furniture and selling it for $3. Many years ago I
tried the craft show route without much success but that might be something
to try again. I have a friend who does greeting cards at craft shows and he
said I could give him items to sell on consignment.

I know there are risks here financially but I'm in a position that it's
something I have to do. I have enough tools and equipment to get me started
and a garage for a workshop so I have the basics.

Anyway, any ideas / input is welcome.

Thanks

Will



--
Will
Occasional Techno-geek