A carpentry career has a high potential to generate profit. However, this potential can quickly become a significant setback when you start a carpentry business without extensive planning and execution of those plans.
While the hard skill of being a great carpenter is essential, understanding how to run the business and developing soft skills are just as important.
This article will share a detailed guide on starting a carpentry business with excellent chances of success.
The Carpentry Business: How Profitable Is It?
Whatever your assumptions about this field may be, carpentry is a lucrative profession.
According to US News Money, the average annual salary of experienced carpenters in the US as of 2020 was $54,200.Â
Statics by Salary.com in June 2022 state the average salary of skilled carpenters to be $59,866.Â
The lower limit of this average is $44,069, while the upper limit is $78,048. Entry-level carpentry jobs, however, have a much lower average salary of about $32,000.
Even better is the profitability of establishing your own carpentry business.
The woodworking industry is worth over $200 billion, with the carpentry business making up about $40 billion of that total amount.
As a specialized carpenter, you stand to earn up to $100,000 yearly running your own carpentry business.
You can even increase the amount of profit you make by making intelligent business decisions as you run your business.
Of course, starting your own business will require an investment on your end.
The amount of your investment could start small and will scale up as the business grows. Start with an estimate – usually $10,000 or higher – and be sure to consider equipment, staff salary, and operational costs.
How to Start a Carpentry Business
If you are interested in starting your own carpentry business, then you are in the right place. Starting a carpentry business requires being well experienced in carpentry.
However, while that is a solid foundation, getting acquainted with how to run a business to create, maintain and scale yours successfully is essential.
Below are the steps you must undergo to start a successful carpentry business.
Become a Licensed Carpenter
While this is not a step that directly affects the creation of your carpentry business, it is necessary if you plan on scaling your business.
Getting licensed as a carpenter offers many benefits which you may not have or find difficult to access otherwise. These benefits include
- Legal freedom to advertise your business
- Ability to bid on more prominent and more profitable projects
- Hire contractors and laborers
- Gain respect in your community
- Flexibility in scheduling your time
If you’re looking to become a licensed carpenter, here are the basics that you should have covered already:
- Invest in formal education: This could be a vocational school or community college with a curriculum. Formal education typically takes two years of classroom and practical learning experience. Formal education is not a requirement for getting licensed in most states. However, doing so aids the future of your business as clients tend to favor contractors with formal education.
- Build work experience: Most states require carpenters looking to get licensed to have at least four years of experience before they can apply for licensing. After formal education, you can go ahead and gain employment for a few years until you can apply for licensing.
Those without formal education can decide to join an apprenticeship program to gain experience. These programs are especially great if you want to develop into a niche and enjoy receiving one-on-one instruction. An apprenticeship usually takes about three years before one can receive their journeyman certification. After your apprenticeship, you might need to work for at least a year before you can apply for licensing.
- Take the Licensing Examination: Now, you have probably met all the requirements and can go ahead to sit for the licensing examination. Find your state’s exam procedures, apply, and take the exam.
After taking and passing the exam, you can then go ahead to submit your licensing application.
Create/Conceptualize a Business Plan
No business makes it far without proper planning, as you will miss many crucial details that can make or mar the business. If you have carefully considered carpentry and think it is a good fit for you, you must first start by conceptualizing your idea into a plan.
A business plan is effective in helping you gain insight into your idea and goals for achieving the idea and helps you successfully track them. It is inescapable if you want to secure funding from investors. To get started:
- Ask the right questions:
- What is your target demographic?
- How much are you willing to invest initially?
- What sources of financing can you use to start up the business?
- What are the specific features of your service?
- How does the competition compare to yours?
- Carry out competitor research
- Choose a smart business name
- Decide on the business type
- Figure out the detailed pricing
Your business plan should cover the following:
Executive Summary
The executive summary outlines the business’s goals and highlights their relevance while providing a brief overview of other sections in the plan.
This summary is the first thing an investor reads before looking through the rest of the business plan, so it should be concise and able to hook the reader.
Research Findings
Creating a new business requires extensive market research. You should research the industry, competition, and target audience.
The findings from your research should then be broken into industry, target audience, and competitive analysis and added to your business plan.
The industry analysis contains details of the market size, trends, and gaps you can fill, while the competitor analysis outlines the strengths and weaknesses of your competition.
Finally, knowing your target audience helps determine their pain points and how you can provide solutions.
Marketing Plan
A business can only remain one if there are customers. Your business plan, therefore, needs details on how you plan on marketing and gaining customers, as no investor will want to invest in a business with low chances of success.
The marketing plan defines the strategy you want to use and the channels you will use to get customers.
Management Structure
Who are the members of your management team, and what are their roles?
The business plan should contain a management structure with the above information, the professional background of each team member, and the organizational hierarchy.
Operation
The operations plan details all you will need for day-to-day work; pieces of equipment, office location, and anything else required to streamline work. It should also detail the workflow from start to finish.
Business Model/Financial Plan
The business model captures how you plan to create value, i.e., profit with the business. This model includes the startup cost and how you plan on getting the finances for those.
Many people tend to underestimate their initial expenses and, in so doing, overestimate their projected profit. Determining how much it will take to start your business is essential.
When calculating your startup costs, remember that you will spend money on:
- Research
- License and permit fees
- Office space,
- Tools and equipment
- Technology: websites, apps, and others
- Transportation,
- Insurance
- Cost of labor (if you will be hiring)
Seek Expert Advice
There are lots of business and legal terms and contingencies with which you might not be familiar.
This makes it necessary to seek the opinion of lawyers and business consultants who are experts in their field to help you understand certain formalities.
With their help, you will be able to make better business decisions like:
- Choosing the business structure that best suits your idea.
- Understanding how loans, investments, and business insurance work and applying for each accordingly.
- Identifying the licenses and permits you’ll need (these vary depending on your location) and finding out how to get them.
- Ensuring your business meets every legal criterion.
Set up Your Carpentry Business
While drawing up your idea, you have come up with your business name and better defined your business.
If you have not, now is the time to decide on your niche, pricing, and office location. If you don’t plan on using your house, find a place with easy accessibility, good ventilation and lighting, and a flexible lease.
Register Your Business
Now you are ready to register your business and make it official. There are four different business structures, so you need to decide which to register your business as.
- Sole Proprietorship: This is the choice for you if you are looking to open a small-scale business by yourself. Using this structure means your business income taxes will be paid on your personal tax returns as all the income from the company goes to you.
- Partnership: This structure is similar to a sole proprietorship except that there is more than one business owner involved. Each owner pays business income tax on their personal tax returns.
- Corporation: Here, the business is legally different from the owners; hence, the business pays taxes and debts. Owners are paid through shareholder dividends in this business structure.
- Limited Liability Company: Possesses characteristics of the other structures. Owners are also not liable for taxes here though the structure is more straightforward than that of corporations.
Set up an in-house team (albeit small)
Your in-house team may start with just you and one or two others. Make sure everyone is on the same page, and that your goals are aligned.
Consider outsourcing services
No matter how skilled you are, you probably can’t do it all. Outsourcing can help you to save money and time in the long run. You may decide to outsource staging, specialized work outside of your comfort zone, or business tasks.
Set up your website (alongside the logo, business card, etc.)
There are many great website builders available to small business owners these days. Do some research and start simple. This is another project you may consider for outsourcing, especially if you would like a unique logo created for your business!
Acquire your equipment and tools
Take inventory of what you’ve got and determine what’s still needed.
Hire competent carpenters and woodworkers
Post job descriptions and begin to hire people to fill the needed positions. In the beginning, hiring a carpenter could cost between $15 to $30 per hour, depending on their experience level.
Get Your Business Insured
Tools and equipment are your most essential business assets and must be protected. It is also wise to get insured in case you damage someone else’s property or ever have to compensate workers. Below are some insurance types to consider for your business.
- Business property
- Commercial automobile
- Worker’s compensation
- Professional liability
- General liability
- Business owner’s policy.
The Business Owner’s Policy comes highly recommended as it covers the other insurance types making it the safest insurance plan to purchase.
Register for Taxes
To completely open your business, you must be assigned an Employer Identification Number, EIN, with which you will register for taxes.
However, you do not need to file for an EIN if you registered your business as a sole proprietorship. Instead, your Social Security Number serves as your EIN.
You can file for your EIN from the IRS website and your taxes from there.
Open a Bank Account
Income from the business will need a place to be housed, hence, a bank account is necessary. Even if you are running a sole proprietorship, having a separate account for business funds is best.
This makes accounting easy and helps you file taxes. You might want to peruse your options before choosing a bank to open an account with, as individual banks offer unique features in their business accounts.
Brand/Publicize Your Business
Your branding determines how the public perceives your business; therefore, it should be well thought out.
There should be consistency across the designs and tone of your platforms, business cards, and anything else to be viewed by your potential customers.
Your logo should communicate the brand’s uniqueness and voice.
Branding and publicizing your business often go hand in hand. For example, by building a social media presence, you are putting it out for people to see and becoming more recognizable.
Other ways you can publicize your business are:
- Participating in local business fairs and exhibitions. This method effectively helps new businesses promote their services to people who are interested in such services.
- Come to an agreement with colleges, construction companies, and vocational training centers near you, so they help promote your business.
- List your business online. Several platforms like Google My Business, Yelp, and LinkedIn provide such services. Listing your business helps people find you when they search for similar services online.
- Run sponsored ads and distribute promotional materials like business cards, brochures, and leaflets.
Frequently Asked Questions about Starting a Carpentry Business
There are many unanswered questions about opening a carpentry business on the internet, with some more commonly asked than others.
Here are some frequently asked questions we encounter whose answers you might find helpful.
How Can I Get a Carpenter License Online?
As different states have their own requirements for licensing, you might want to start by first checking for the requirements within your state. Here is a list of states in the United States and links to where you can find more details about their licensing. For states that do not require licensing, you need to find out any details on local requirements before continuing to the next step.
Is a One-man Carpentry Business Feasible?
A one-man carpentry business is possible but might not be very feasible. While it has its pros, it also comes with several cons. The freedom of being solely responsible for decision-making can quickly turn into constraints and make it hard to scale your business or offset problems that may arise.
Where Can I Learn Carpentry?
You can learn carpentry in community colleges or through an apprenticeship program. Many contractors like Construction Fanatics offer hands-on training for any area of carpentry you want to specialize in.
What Are Some Carpentry Business Ideas?
The trend of using timber to create and embellish structures is unlikely to stop in the coming years, and you can let yourself get creative with what you do. Popular carpentry business ideas are fencing and decking, trim carpentry, and custom cabinetry.
Final Thoughts
With proper business management and carpentry skills, your carpentry business stands a high chance of succeeding in the industry. As you start your business, you’d do well to invest time and effort into getting the right knowledge and determining the best way to make your business positively stand out in the big world of carpentry. Test your ideas, and don’t be afraid to start your business after you have done all the required groundwork.To ensure you don’t miss out on more helpful articles about the construction world from a trusted source, sign up for the Construction Fanatics newsletter.