Expert: Jamie Yocono - 1/29/2006

Question
hi Jamie
  so far i have been making small things like shelves, coffee tables, and jewelry boxes. i like small items since my shop is small. so far this is a hobby and i do it to gain knowledge and experience. can this be enough to go out on my own or should i just do it for the extra cash?

Answer
Hi Patrick,

Grab a cup of coffee, this turned into a long answer!

Your question is a pretty broad one. It sounds like you have some skills, and are working to develop more. I wonder what you're doing with those finished items that you make- do you give them away or sell them? If people pay for them, that's a good indicator that there might be a market for them.

Next- I was thinking about what you said you build- shelves, coffee tables, and jewelry boxes, and while those sound small, they're really not. Each one is fairly involved, and if you cost out the materials, you'll probably discover you have a fairly large investment in each piece. You need to learn how to make these items efficiently, and then learn how to sell them. It's not easy.

I think the biggest thing for me was acquiring the proper tools to allow you to work efficiently. In the beginning of my woodworking career, if I needed to crosscut a wide board (say...a large table top), it might take me an hour with a router and a straightedge. Later, when I bought a huge radial arm saw, I could accomplish that same cut in about 10 seconds.

So.... good tools = time savings = more profit. It's fairly simple. What's your tool situation?

Next, I would limit yourself to what you know best. If it's building small items, then become an expert in that, and only that. Don't try to spread yourself too thin by making a kitchen cabinet one month, and then desk the next, and then building a deck the next month. Find your niche, and stick with it. You'll acquire the specific tools for that niche, and you won't need to buy every tool out there.

Refine your methods of building so that you can make large batches of your items- like a dozen at a time. Or- even if you don't make a dozen at a time, at least cut the materials and get everything ready to assemble. The only way to make money at woodworking is to become super efficient. You want to reduce your labor- because- as they say, time is money.

Next- consider outsourcing. There are some things that I simply cannot do in my shop and make money at it.....like cutting dovetailed drawers. Yes, I have a dovetailer, but it's complicated and a pain in the neck to set up. So if I have a client who insists on dovetailed drawers, I buy those from a drawer manufacturer. I can buy them cheaper than I can build them.  If there is some component that takes you a long time to make- like coffee table legs, consider buying them already made. It's probably cheaper to buy them than to make them.

You also need to keep excellent records. I keep a file on ever piece I've ever made. It doesn't have to be fancy, just information about each piece, like a material list with prices, and a small sketch.  I have a time sheet for every piece, so if I want to see how long a 6 drawer dresser took me to build, it's easy to find out. If I lost money on the job, because it took me longer than I anticipated, I make a note of it. The next time I price a dresser for a client, I won't make the same mistake.

After a while, you should be able to look at a job and know how long it will take you to complete it. Yes, you will make some mistakes, and yes, it will take some thinking about the job. You need to know your capabilities, and obviously, if something looks complicated (and you've never attempted it before) you need to add some extra hours onto your price to cover for your time.

That brings up another thing: I've learned to not get in over my head. People have brought me ideas that they want me to build, but if the work involves something that I cannot do expediently, I have learned to turn those jobs down. For example, if someone wants me to build something that involves carving or veneer, I am not equipped to do those tasks in my shop, so I turn the job down.  Unless I am going to make a buttload of money for the job, I simply cannot make any profit in a job that I have to buy extra tools for, or learn a new technique.  I stay with the stuff I know.

Another thing...over the years, this has been a pricing formula that has worked for me. If I am trying to figure out how much to charge for a piece of my furniture, I first price out all the materials that I will use. I mean, everything....from the lumber to the plywoods, the hardware, the screws, the glues, the sandpaper and the finishes. Don't forget a thing.  That doesn't mean I know exactly what each screw costs, but I will simply include a supplies charge that might include normal shop supplies like screws, sandpaper, and glue.

OK, once I have a total cost of materials, I use a multiplier of 5 or 6, depending on if it's a piece that requires a lot of work, or a little. What does that mean? If a piece has a lot of detail work, like drawers or hanging doors, it's harder to build than say, a table with no drawers. So you have to examine the piece and decide if it's a complicated piece or a relatively simple one to build.

For example-say you have a client that wants you to build a coffee table. After figuring all the parts, you come up with a $100 price for materials. Building a table isn't' that complicated, so it's priced using the lower multiplier.  So a piece with $100 in materials (multiplied by 5) would cost $500 for my client. But a Jewelry box, with little dividers and maybe small trays, would be more complex to build. So if the materials for the jewelry box are $50, it might have to sell for $300 (x6 multiplier) because it's more labor intensive.

Now, I am in Las Vegas, so my overhead might be higher than yours. But you should be able to look at your past jobs and figure out what your multiplier is for your company. Since you're not renting shop space, you don't need to include an overhead charge for that. But you need to figure out what your overhead is, in terms of your electric bill going up, as well as other utilities.

You'll need an accountant to help you sort out all your money and pay your taxes. There are a lot of tax write-offs in starting a new business, and you can even declare a loss for the first few years, until you get on your feet. It shouldn't take too long to figure out if you're making money or losing it. And that's the bottom line.

So- the quick run down.... buy the right tools, become an expert in whatever area you choose, know your limitations, keep good records, and hopefully, make money. Oh yeah....and have fun.

OK, I hope this helps. It's a complicated subject, but certainly one that you need to think about. My best advice- after all this- is stay small, do it as a hobby until your business becomes so popular that your woodshop is bursting at the seams. THEN... consider doing it full time.

Jamie Yocono
Wood It Is! Custom Cabinetry
Las Vegas, NV
www.wooditis.com