Do you want to start woodworking business plan?
Do you want to start a woodworking business? The business has a widespread market and inclusive demand throughout the year, as there is a substantial category of people which never compromise on spending money to adorn their property with high-quality artistic wooden pieces. So, it can the most righteous and profitable business for you, if you are a creative carving master, and have good management skills too.
Before starting a custom woodworking business, you have to make a thorough business plan covering all the details about how you will start and run your business. To guide you about the startup costs, the employees and tools you will need and the competitive aspects you have to come up with, we are providing the sample business plan of a woodwork business startup named, ‘Logan Woodcraft’.
Executive Summary
2.1 The Business
Logan Woodcraft will be a woodwork company with its outlet and workshop combined, located on the Strip in Las Vegas. Company will be owned by Christopher Logan and will be licensed from the authorized wood suppliers to buy wood and the required machinery for woodwork. Logan’s serving as an interior designer for the last 4 years, have helped him in knowing even the tiniest detail about how to get into woodworking business.
2.2 Management
Logan has prior experience of working with wood, still, he has decided to organize each and everything before starting a woodworking business. The company will buy the wood from the suppliers and will hire some carpenters and artists to work on Logan ideas and the orders of interior wooden designs desired by the people.
2.3 Customers
Majority of the people decorate their property like decks, terrace, staircases, lawns, balcony and kitchens etc. with wooden adornments. Many just buy the beautiful wooden pieces and decorations for placing inside their houses. As the Strip is the center of entertainment palaces and luxury hotels, so our customers will not only be the residents of the city but also the tourists and the managers of resorts and palaces.
2.4 Target of the Company
Our business targets are as follows:
Company Summary
3.1 Company Owner
Christopher Logan will be the owner of the company. Logan is a famous interior designer, crafting unique items of wood is Logan’s hobby, even some of his handmade wooden sculptures were kept in the International Woodworking Fair last year.
3.2 Why the Business is being started
Logan has been related with making designs, and artifacts since his childhood. He is called by various shows and programs to give interior designs ideas. By starting a woodwork business, Logan wants to use his experience, skill, and passion on a larger scale to earn profit.
3.3 How the Business will be started
Logan has done a great research on how to start a woodworking business, his first decision was to open the outlet in a strategically most visited area. To start the business, he’ll hire carpenters, artists, salespersons etc. and will buy the required inventory and tools. The startup requirements are as follows:
The detailed start-up requirements and liabilities as forecasted by experts is given below:
| Start-up Expenses | |
| Legal | $55,300 |
| Consultants | $0 |
| Insurance | $32,750 |
| Rent | $32,500 |
| Research and Development | $32,750 |
| Expensed Equipment | $32,750 |
| Signs | $1,250 |
| TOTAL START-UP EXPENSES | $187,300 |
| Start-up Assets | $0 |
| Cash Required | $332,500 |
| Start-up Inventory | $32,625 |
| Other Current Assets | $232,500 |
| Long-term Assets | $235,000 |
| TOTAL ASSETS | $121,875 |
| Total Requirements | $245,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $273,125 |
| Start-up Expenses to Fund | $11,875 |
| Start-up Assets to Fund | $15,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $23,125 |
| Non-cash Assets from Start-up | $18,750 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $18,750 |
| Cash Balance on Starting Date | $21,875 |
| TOTAL ASSETS | $0 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $0 |
| Planned Investment | $0 |
| Investor 1 | $332,500 |
| Investor 2 | $0 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $695,000 |
| Loss at Start-up (Start-up Expenses) | $313,125 |
| TOTAL CAPITAL | $251,875 |
| TOTAL CAPITAL AND LIABILITIES | $251,875 |
| Total Funding | $255,000 |
Services for customers
As the woodwork business offer a wide range of opportunities so, you must decide your services before setting up a woodworking shop and focus on just enhancing those services in the early stages.
The products and services that Logan Woodcraft will keep at the shop are:
- Beautifully carved wooden decoration pieces and sculptures
- Designated wooden chests
- Designated wooden cradles
- Wooden toys
- Wall to wall woodworking
Logan Woodcraft’s major serving will be adorning the stage and sets with beautiful woodworks in events and programs. The company will also take orders on doing interior wood designing in the residential or commercial buildings.
Marketing Analysis of Woodworking Business
The most significant part in developing a woodworking business plan is its accurate marketing analysis. Knowing the customers’ demand before you start your own woodworking business is really helpful in deciding your services and sales strategy for business.
Before writing a carpentry business plan, you must go through sample woodworking business plans available online. However, if you want to start woodworking business on a larger scale then you must seek the services of professional marketing analyst to do accurate marketing analysis for your business.
5.1 Market Trends
The business of woodworking is in great demand and keep blooming throughout the year especially in well-established areas or in most visited places. According to IBISWorld, there are more than seven thousand woodworking businesses running in the United States, generating a revenue of $8 billion annually. The business is responsible for employing about 38 thousand people and carpenters around the country. Above all, the demand of this business is rising day by day as reported by the same source, that the business is growing at an annual rate of 4.5 percent. All these statistics are a proof that you won’t be at loss provided that you plan and market your business successfully.
5.2 Marketing Segmentation
Considering the wider audience and large market demand, Logan had hired an expert marketing analyst, who has identified the following categories as his target audience.
Business Plan for Investors
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Individual Buyers: Logan Woodcraft will present beautiful pieces of architecture made of wood. The residents and visitors of our vicinity will surely like our wooden decoration pieces and small and large sculptures for keeping in their houses as well as for giving gifts. We expect that this category will also buy our wooden chests, cradles and our other elegantly carved wooden products and will avail our services of decorating their lawns, and galleries.
5.2.2 Institutions & Companies: To maintain a decent environment, educational institutes, offices, and companies prefer woodwork for interior designing. To let such people, know about our skills and ideas of decorating their offices, terraces, lawn’s boundaries, staircases, and doors etc. we’ll send them our brochures and offer them discounts to try our services.
5.2.3 Resort & Event Managers: A significant portion of our target customers will be comprised by the restaurants or bar managers who need modern and unique ideas to decorate their lodgings with wood. We’ll have discounts and special offers for them if they avail our services for adorning their interior and exterior and for making wood designated sets for major events.
5.2.4 Production Designers & Art Directors: Considering the fame Logan had gained after arranging some sets for T.V. shows broadcasting, our marketing analyst also identify the art directors as our target group. For shooting and designing the sets and props those directors will surely avail our services.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Individual Buyers | 32% | 11,433 | 13,344 | 16,553 | 18,745 | 20,545 | 13.43% |
| Institutions, Companies & Event Managers | 48% | 22,334 | 32,344 | 43,665 | 52,544 | 66,432 | 10.00% |
| Production Designers & Art Directors | 20% | 12,867 | 14,433 | 15,999 | 17,565 | 19,131 | 15.32% |
| Total | 100% | 46,634 | 60,121 | 76,217 | 88,854 | 106,108 | 9.54% |
5.3 Business Target
We aim at becoming the most renowned and the most visited woodworking shop in the whole Las Vegas. Our target is to gain popularity among our customers so that they always consult our services whenever they require woodwork for their estate or for hosting events and programs. Our financial goal is to balance the costs of our startup within the three months of our launch.
5.4 Product Pricing
Setting the prices of products and services is undoubtedly the most challenging part while starting a new business, as it is difficult in the initial stages to earn a profit while keeping low prices. You can have an idea of the wooden product prices by going through any woodworking business plan example available on the web. In this woodworking business plan sample, we are providing the pricing scheme of Logan Woodcraft.
Logan has decided to offer various discounts on his servicing to the managers and art directors so that they won’t hesitate to try our servings. The prices of wooden products are also kept slightly lower than our competitors to gain more customers, as the thing that drive the customers inside a new shop is its extraordinary appeal or low pricing.
Strategy
Note
The most important part after starting a small woodworking business is to advertise your services to let your target customers know about you. In fact, there are more chances of a startup to end as a failure if its owner failed to market his products and services. After starting a woodworking shop, you must pay attention to make an effective sales strategy to increase your sales and profit.
6.1 Competitive Analysis
Our biggest competitive advantage is the reputation of our owner, known for his unique and incomparable design ideas. Logan got familiarity in Las Vegas after the wonderful sets he made for the television shows broadcasting. Secondly, we are in a location which most people visit throughout the year. Whenever the tourists or visitors see a glimpse of the display and appeal of our entrance and products, they will surely buy at least a small wooden decoration piece or sculpture from our shop. Another competitive advantage is our beautiful entrance and doorway of our outlet. We have done appealing wooden work on our exteriors to attract the customers towards our shop.
Lastly, we have displayed some of our best items on our website so that all people can get a know-how about our distinguished work.
6.2 Sales Strategy
To advertise our services and products, we’ll post the photos of our best and unique items on our website. We’ll also advertise the interior designs we had made with wood, through social networks, posters and brochures. To encourage sales company will offer discount on all servicing during the initial stages of the launch.
6.3 Sales Forecast
Considering the market demand and the beauty of our products, our sales pattern is expected to increase with years. Our experts have forecasted the following sales on yearly basis which are summarized in the column charts.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Wall-to-wall woodworking | 1,887,030 | 2,680,320 | 2,588,240 |
| Decorations & sculptures | 802,370 | 815,430 | 823,540 |
| Wooden cradles & chests | 539,320 | 770230 | 1,002,310 |
| Wooden toys | 265,450 | 322,390 | 393,320 |
| TOTAL UNIT SALES | 3,494,170 | 4,588,370 | 4,807,410 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Wall-to-wall woodworking | $140.00 | $150.00 | $160.00 |
| Decorations & sculptures | $600.00 | $800.00 | $1,000.00 |
| Wooden cradles & chests | $700.00 | $800.00 | $900.00 |
| Wooden toys | $650.00 | $750.00 | $850.00 |
| Sales | |||
| Wall-to-wall woodworking | $2,149,800 | $2,784,000 | $3,383,200 |
| Decorations & sculptures | $120,050 | $194,500 | $268,500 |
| Wooden cradles & chests | $50,110 | $71,600 | $93,000 |
| Wooden toys | $139,350 | $194,600 | $249,850 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Wall-to-wall woodworking | $0.70 | $0.80 | $0.90 |
| Decorations & sculptures | $0.40 | $0.45 | $0.50 |
| Wooden cradles & chests | $0.30 | $0.35 | $0.40 |
| Wooden toys | $3.00 | $3.50 | $4.00 |
| Direct Cost of Sales | |||
| Wall-to-wall woodworking | $989,300 | $1,839,000 | $2,679,700 |
| Decorations & sculptures | $66,600 | $119,900 | $173,200 |
| Wooden cradles & chests | $17,900 | $35,000 | $52,100 |
| Wooden toys | $19,400 | $67,600 | $115,800 |
| Subtotal Direct Cost of Sales | $1,294,100 | $1,699,400 | $2,104,700 |
6.4 Sales Monthly
6.5 Sales Yearly
Personnel plan
Personnel plan is really the footstep for the success of a business. The success of a business varies with the dedication of its employees. If you want to know about how to start a small woodworking business and that how many persons will be required to start a woodwork business, you can take help from this sample business plan on how to start a woodworking shop written for Logan Woodcraft.
7.1 Company Staff
Logan is all-in-all in carving wooden products and making unique designs, he needs a staff for working on his ideas, so he has decided to be in the production center and not be the manager himself. He’ll hire the following persons:
- 1 General Manager to manage the operations
- 2 Accountants to maintain financial records
- 3 Artists/Designers for presenting and drawing new designs
- 8 Carpenters for woodworking
- 4 Salespersons to operate display centers
- 3 Sales and Marketing Executives responsible for delivering products to retailers and discover new ventures
- 2 Technicians for maintaining machines
- 2 Drivers for transporting wood and other material
- 1 Front Desk Officer to act as a receptionist for receiving interior design orders
- 2 General Workers for routine tasks
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Accountants | $85,000 | $95,000 | $105,000 |
| General Manager | $45,000 | $50,000 | $55,000 |
| Carpenters | $550,000 | $650,000 | $750,000 |
| Artists/ Designers | $410,000 | $440,000 | $480,000 |
| Salespersons | $152,000 | $159,000 | $166,000 |
| Sales Executives | $145,000 | $152,000 | $159,000 |
| Technicians | $50,000 | $55,000 | $60,000 |
| Drivers & Workers | $187,000 | $194,000 | $201,000 |
| Front Desk Officer | $42,000 | $45,000 | $48,000 |
| Total Salaries | $562,000 | $599,000 | $646,000 |
Financial Plan
To estimate the woodworking business profit, you have to devise a comprehensive financial plan. An effective financial plan forms the base of the success of a startup and helps in evaluating the woodworking business margin and financial turnouts. Making a financial plan helps you by guiding that how you can be able to balance the startup costs, the salaries of your employees and the costs of raw material with the profits earned. The company will be financed by Logan himself since he was unaware of the statistics and trends of formulating a financial plan, so he hired an expert financial advisor to make a detailed financial plan for his business. You can also take help from this sample business plan of Logan’s Woodcraft, as we are providing it free of cost.
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 11.00% | 12.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 26.42% | 27.76% | 28.12% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| Monthly Units Break-even | 5530 |
| Monthly Revenue Break-even | $159,740 |
| Assumptions: | |
| Average Per-Unit Revenue | $260.87 |
| Average Per-Unit Variable Cost | $0.89 |
| Estimated Monthly Fixed Cost | $196,410 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $309,069 | $385,934 | $462,799 |
| Direct Cost of Sales | $15,100 | $19,153 | $23,206 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $15,100 | $19,153 | $23,206 |
| Gross Margin | $293,969 | $366,781 | $439,593 |
| Gross Margin % | 94.98% | 94.72% | 94.46% |
| Expenses | |||
| Payroll | $138,036 | $162,898 | $187,760 |
| Sales and Marketing and Other Expenses | $1,850 | $2,000 | $2,150 |
| Depreciation | $2,070 | $2,070 | $2,070 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4,000 | $4,250 | $4,500 |
| Insurance | $1,800 | $1,800 | $1,800 |
| Rent | $6,500 | $7,000 | $7,500 |
| Payroll Taxes | $34,510 | $40,726 | $46,942 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $188,766 | $220,744 | $252,722 |
| Profit Before Interest and Taxes | $105,205 | $146,040 | $186,875 |
| EBITDA | $107,275 | $148,110 | $188,945 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $26,838 | $37,315 | $47,792 |
| Net Profit | $78,367 | $108,725 | $139,083 |
| Net Profit/Sales | 30.00% | 39.32% | 48.64% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40,124 | $45,046 | $50,068 |
| Cash from Receivables | $7,023 | $8,610 | $9,297 |
| SUBTOTAL CASH FROM OPERATIONS | $47,143 | $53,651 | $59,359 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $47,143 | $53,651 | $55,359 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $21,647 | $24,204 | $26,951 |
| Bill Payments | $13,539 | $15,385 | $170,631 |
| SUBTOTAL SPENT ON OPERATIONS | $35,296 | $39,549 | $43,582 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $35,296 | $35,489 | $43,882 |
| Net Cash Flow | $11,551 | $13,167 | $15,683 |
| Cash Balance | $21,823 | $22,381 | $28,239 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $184,666 | $218,525 | $252,384 |
| Accounts Receivable | $12,613 | $14,493 | $16,373 |
| Inventory | $2,980 | $3,450 | $3,920 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $201,259 | $237,468 | $273,677 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $12,420 | $14,490 | $16,560 |
| TOTAL LONG-TERM ASSETS | $980 | $610 | $240 |
| TOTAL ASSETS | $198,839 | $232,978 | $267,117 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9,482 | $10,792 | $12,102 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9,482 | $10,792 | $12,102 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9,482 | $10,792 | $12,102 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | $48,651 | $72,636 | $96,621 |
| Earnings | $100,709 | $119,555 | $138,401 |
| TOTAL CAPITAL | $189,360 | $222,190 | $255,020 |
| TOTAL LIABILITIES AND CAPITAL | $198,839 | $232,978 | $267,117 |
| Net Worth | $182,060 | $226,240 | $270,420 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 4.35% | 30.82% | 63.29% | 4.00% |
| Percent of Total Assets | 4.35% | 4.71% | 5.80% | 9.80% |
| Accounts Receivable | 5.61% | 4.71% | 3.81% | 9.70% |
| Inventory | 1.85% | 1.82% | 1.79% | 9.80% |
| Other Current Assets | 1.75% | 2.02% | 2.29% | 27.40% |
| Total Current Assets | 138.53% | 150.99% | 163.45% | 54.60% |
| Long-term Assets | -9.47% | -21.01% | -32.55% | 58.40% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.68% | 3.04% | 2.76% | 27.30% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.80% |
| Total Liabilities | 4.68% | 3.04% | 2.76% | 54.10% |
| NET WORTH | 99.32% | 101.04% | 102.76% | 44.90% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.18% | 93.85% | 93.52% | 0.00% |
| Selling, General & Administrative Expenses | 74.29% | 71.83% | 69.37% | 65.20% |
| Advertising Expenses | 2.06% | 1.11% | 0.28% | 1.40% |
| Profit Before Interest and Taxes | 26.47% | 29.30% | 32.13% | 2.86% |
| Main Ratios | ||||
| Current | 25.86 | 29.39 | 32.92 | 1.63 |
| Quick | 25.4 | 28.88 | 32.36 | 0.84 |
| Total Debt to Total Assets | 2.68% | 1.04% | 0.76% | 67.10% |
| Pre-tax Return on Net Worth | 66.83% | 71.26% | 75.69% | 4.40% |
| Pre-tax Return on Assets | 64.88% | 69.75% | 74.62% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 19.20% | 21.16% | 23.12% | N.A. |
| Return on Equity | 47.79% | 50.53% | 53.27% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.56 | 4.56 | 4.56 | N.A. |
| Collection Days | 92 | 99 | 106 | N.A. |
| Inventory Turnover | 19.7 | 22.55 | 25.4 | N.A. |
| Accounts Payable Turnover | 14.17 | 14.67 | 15.17 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 1.84 | 1.55 | 1.26 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.02 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $120,943 | $140,664 | $160,385 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.45 | 0.48 | 0.51 | N.A. |
| Current Debt/Total Assets | 4% | 3% | 2% | N.A. |
| Acid Test | 23.66 | 27.01 | 30.36 | N.A. |
| Sales/Net Worth | 1.68 | 1.29 | 0.9 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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