There are two ways of creating a woodworking business plan, formal and informal plan. Formal plans are usually created for seeking funding and sponsorship from lending institutions. Informal ones are more for you own assistance. A good business plan should be a source of inspiration and a guiding method, so that you stay on track, get where you want to go and achieve what you want to achieve.
Another very important function of any kind of a business plan, including one for a woodworking business, is to help pinpoint possible obstacles. It shows you the weak points and possible problems areas, and thus helps you take better business decisions beforehand.
When you make a woodworking business plan, list the possible factors in it. Take your time. There are many formats available online, but you can also create your own format. Some business plans are only as large as a single sheet of paper. It’s good to keep things concise, just like it’s a good practise to update the plan every year to include new ideas and progress.
Informal ways are also a great way to explain your business and its potential to friends and family when they want to get involved or invest in your growth. So lets go over the steps:
- Visualize
On a single sheet of paper, in plain language write down what you want to do. Don’t get into technical details of this point. Just write about things like what you want to do, how much money you want to make, why you are doing things and even what inspires you.
- Product
Next we came to describing the product you want to make. Write about everything connected to its manufacture. What tools are you going to need, how much time its going to take to make, how much is it going to cost to make and how much you intend to sett it for.
- Market and Research
Talk about the market potential for your woodcraft. What research have you don’t that leads you to believe that your craft has potential to sell. Talk about the selling price as well.
- Finance
Start calculating the amount of money It’s going to take to start in the business. Not just the manufacturing process but tell the time that you start sharing a profit. So typically, you are looking at enough money to support running your business for about 3-6 months. Figure out the costs of starting up and running the business for that duration. Detail the method of how you intend to come up with the money.
IMPORTANT: it is a fact that almost all businesses take time to become profitable. Till that time they used funding. If you cannot afford to spend a lot, start small. But always provide resources for the sustenance stage and don’t loose heart and hope with what otherwise can turn out to be a very successful woodworking business from home.
- Selling
This is the actual money making stage, so of course its important to have a good plan for it. How are you going to sell the woodcrafts you create? Where is your market? This part can also be included in the ‘Market and Research’ section. But it doesn’t matter where you put it, as long as you address it.
Is your customer local? Are you selling from home? Are you selling online? Are you selling to family and friends?
- Marketing
How are you getting the word out about your woodworking business? Do you already have contacts? Do you want to use local ads in newspapers, flyers, etc. Are you using online advertising?
- Product Development
There are certain steps you used to follow to ensure that your woodworking business does the best it can. Things like choosing a business name, creating business stationary, making signs and logos, creating packaging etc.
All these come under product development and are important for a professional image of the business.
Sample Business Plan For A Small Woodworking Business
Making a business plan for a small business is different to making one for a larger enterprise. Typically, one of the uses of a formal business plan is for presentation to banks, investors and other lending institutions for seed capital. But as a one person woodworking business, the business plan is more of a roadmap and guidance tool. Let’s make a simple plan for a small woodworking business below. Let’s say that the name the woodworking business is Outwood Inc and it makes outdoor furniture and structures.
Business summary.
This is the first part of a business plan but should actually be left till the last when you have everything else written down. It makes it easier to summarise everything that way.
Vision statement.
What is your Business set out to do?
Outwood Inc wants to become the leading supplier of outdoor furniture and structures in the local community as well as have a strong brand presence online.
Mission statement.
Outwood Inc will specialise in making small outdoor furniture and structures that are strong, high-quality and novel in design. The mission is to make simple and yet pretty structures that will beautify the outdoor space of a home.
Product summary.
What is this woodworking business going to manufacture? This part of the business plan is based on your research on what will be profitable items to make and sell.
Outwood Inc will make a small garden furniture like tables, stalls and chairs. It will also manufacture planters, bird houses, feeding stations, small animal and pet homes, bird houses, wind-chimes and will keep developing fresh and new project ideas for the outdoor space. The products will be simple, sturdy and attractive.
Competition.
Outwood Inc plans to handle competition by being a one shop stop for all outdoor wood crafts. As of now there is not a significant availability of outdoor furniture in the area. There is also a large scope for selling this category of products online. Even the large retail outlets focus on selling indoor furniture. Outwood Inc intends to take advantage of this untapped demand.
Marketing method.
Every small business needs to figure out how it’s going to promote itself and reach the target customers.
- Word By Mouth. We have a network of friends and their friends who are interested in buying from us. This will provide the initial momentum to the business. Promoting the business word by mouth and reference is going to be a large part of the marketing strategy.
- Advertise through local newspapers, place flyers in key locations.
- Take part in local fairs and markets to spread brand awareness.
- Open an e-commerce store and blog .
- Leverage online mediums of promotion like Facebook and Instagram. Run targeted online ad campaigns.
- Use all affordable local mediums like a local newspaper, local radio station, local television and magazines.
Point of sale.
How are you planning to sell your wood crafts.
Outwood Inc will concentrate on being the ‘go to’ local shop for outdoor small furniture. Towards this end the sales will be made through the following places:
- From the home-based store.
- Through the online e-commerce store. Only small wood crafts will be made available for nationwide shipping.
- Through Tie-up with local craft stores.
- Through regular participation in local and prestigious out of town trade shows and craft fairs.
Marketing and promotion strategy
Since Outwood Inc is a small home-based business to begin with, the promotion strategy will be commensurate with the size of the enterprise.
- Word of mouth will be the primary and the mainstay form of promotion. Referrals will be encouraged and rewarded.
- A cosy, friendly and welcoming outdoor or indoor space will be set up at home to retail the wood crafts. The feel of the place will be less like a shop and more like a home.
- The next promotional step will be sharing pictures and information on social media and encouraging acquaintances to share as well.
- Promotional campaigns will be run on Facebook and Instagram to reach more people.
- Participation in craft shows will increase sale and brand awareness and also provide networking opportunities.
- Local craft stores as well as related businesses to be approached for promoting, referring and selling to their own customer base.
- Ads in the local newspaper on Sundays to generate more interest and awareness.
- A strong brand image will be created that communicates quality and exclusivity.
- Theme based wood crafts will be made according to local customs, for special occasions and popular festivals to increase popularity, sales and brand image.
- Focus will be upto 5 profitable niches of wood crafts and to establish oneself as an expert in the field.
Possible hurdles.
- Making, selling, shipping and maintaining an online store is a lot of work. The business will need help from other people. Since there is a limited budget for this small business, people at home need to pitch in.
- Competition from other local woodworkers can easily surface. The branding needs to be strong and unique. The quality and workmanship needs to be exemplary. The designs need to stay fresh and current.
- Limited capacity for production. An increase in orders will require purchase of advanced power tools as well as hiring external workforce or outsourcing the work to other local workers.
- Limitation of work space at home. More investment needed if business needs to expand in terms of physical spce.
Advantages.
- Start small, no external funding needed. No business debt. Scale up with time.
- No special competition at present.
- A lot of possibilities for creating a strong brand image and establishing the business as an expert in the field.
- Market research shows that this is a strong and popular niche.
Business and local processes check list.
- Business Registration.
- Required permits and licences to operate.
- Corporate/business bank account with credit card payment facility.
- Obtain taxpayers ID.
- Business insurance.
- Setting up a workshop.
- Generate start-up capital.
- Applying for a loan from bank, friends or family.
- Draft contract documents and other legal documents.
- Company logo and business name.
- Create a website/e-commerce store.
- Purchase tools, computers, office equipment.
- Run awareness and campaigns online and locally.
- Health safety and fire safety compliance.
- Compile product list.
- Contact other vendors and craft stores.
Expansion strategy.
The business will start small, retailing from home, online e-commerce store, craft stores and trade fairs. The employees will consist of family members helping with the business. Expansion will happen in the following order.
- Purchase of advanced tools and machinery to increase production and scope.
- Higher help to take care of online order processing, packaging and shipping.
- Emphasis on increasing revenue through online sales.
- Hire additional help to perform the following functions:
– Take a product photographs.
– Post products on e-commerce site and other third-party platforms.
– Write product descriptions and blog articles.
– Post updates on Facebook and Instagram.
– Manage an email list and send periodic newsletter.
– Process online orders, pack and ship.
– Offer customer service for online sales including handling returns, exchanges and refunds. - Expansion of workshop when needed.
- Outsource to other local wood workers to increase production.
Startup expenditure and costs
- Total cost of registering the woodworking business in United States – $200.
- Legal expense fee for obtaining licences and permits and accounting software – $500.
- Cost for conducting market research and hiring business consultant – $1000.
- Cost of insurance policy – $500.
- Purchase of new woodworking tools – $2000.
- Cost of setting up a workshop – $2500.
- Other costs – $500.
- Running cost for three months including salaries – $3000 (without employees).
- Cost of raw material – $1000.
- Cost of store equipment like fans, cash register – $1000.
- Cost of installing CCTV is – $1000.
- The cost of setting up retail space at home – $1000.
- Cost of launching a website – $500.
These are the basic cost of starting a small woodworking business. You may be able to add or remove some of these items from your list.
Pricing strategy.
We realise that pricing is a crucial factor directly connected to the success of the business. The customer should feel that they are getting their money’s worth and the craftsman should be paid well for his work.
The primary strategy of Outwood will be to create high-priced and high quality wood crafts. There is no point trying to sell low-end and cheaper products because any mass manufacturers can step in and offer the same product at cheaper cost, putting Outwood Inc out of business.
Since this is a small family owned business we will leverage exclusivity and make less number of items. Both quality and design will justify the higher price. Branding will play a very large role in determining the high selling price. The business will target untapped niches and aim to earn more by selling less.
Sales forecast
The sales forecast for the first year is $50,000, $75,000 for the second year and $100.000 by the 3rd year.
This forecast is made after an analysis of production capacity and growth that can be achieved during the first three years. Since the start-up is a small scale business it will be possible to sustain a fairly rapid growth during the initial years. The forecast also considers the consumer demand as shown by the market research.
Strong branding and effective promotions will be required to achieve the above sales forecast for the woodworking business.
Target market
It is one of the most powerful selling strategies to know what your target market is. A target market is defined as consisting of a certain customer profile that is most likely to buy your product.
For example, is your customer predominantly male, female or both, what is the average age group, income bracket where do they live, What activities do they like to do in leisure time, what is the location, marital and family status and even things like the assets they own, the cars they drive and where and what are they like to eat. The more you know about your perfect customer better.
Things like where they go to have fun and what cars they drive might seem irreverent to selling wood crafts but they’re not. The idea is to know who they are and where to find them.
Once you know who you are looking for and where to find them then you can pinpoint your campaigns directly at them and get very lucrative results.
Online ad networks today allow you to target people with your advertisements based on several things like their age, gender, location and interests. This helps you reach the kind of people that are most likely Buy from you. As far as off-line ads and promotions go, you can place your advertisements in exact places or mediums where they are most likely to find the perfect target customer.
One of the factors that showed up in the market research for a pudding is that it has a white age group as a target audience. They are also the people who like outdoors, take pride in their homes and love nature. The profile suggests that women are more into Zia stick about buying from this business.
Market trends
Outwood Inc targets homeowners with its products. So the housing market, prosperity of house owners and the increase in the value of property are all important factors that affect the success of outdoor wood crafts. Since the real estate economy is improving, with pride of ownership getting a much needed boost, the market looks favourable for growth. The feel good factor of homeowners is closely related to sales for Outwood Inc.
Opportunities
The size of the creative industry in the US has been estimated at a staggering $44 billion in 2016, with woodworking topping the charts as one of the leading craft forms. The study was released by the newly rechristened Association for creative industries, earlier known as craft and hobby Association. The industry has shown growth from $3.1 billion in 2011. The growth trend is strong and set for a steady increase.
The opportunities are strong for the online market and e-commerce sales are becoming increasingly popular. The growth trend is very prevalent in the art and craft industry with platforms like Etsy showing a healthy growth rate even through the economic crisis.
Opportunities for Outwood Inc exist in the local market because of the absence of a strong woodworking brand that caters to outdoor wood projects. This is a good Time to establish oneself as an expert in the field.
Most local woodworkers are not investing an effort in creating a strong brand image. This is a good opportunity to become well known and send a strong message to the consumers through effective marketing and branding.
In Conclusion
A business plan is made to understand and anticipate what it’s going to be like to start a woodworking business. You cross many bridges before actually coming to them and that’s helpful. It’s helpful in deciding how you would like to start, what to expect, what you will be required to do and avoid expensive errors before they happen.
Most people who create a woodworking business plan claim that it helped them in getting successful. Therefore, we suggest an informal plan that you do not have to feel pressured about. Take your time. Business plans are not made in one day. Just keep adding to it at your own pace.
