Going Pro

G

Gerald

Active member
I have this theory that SAPFM members can be divided into three categories (actually four if you include me, but I suspect that I'm a bit of a oddity).  The main difference between the categories is determined less by skill or style but more by…tax filing status.  The first type, and I suspect the most common, is the "hobbyist."  Although the hobbyist may sell the occasional piece, it's not their primary source of income.  They have a "real" job or are retired.  The second type is the "professional"; more about them later.  The third type is the "Master.”  These are the guys that are making (what I assume is) a really good living.  They're not only making furniture but teaching others, writing books, giving lectures etc.  A short list of masters would include the Headley brothers, Adam Cherubini, Alan Breed, Phillip Lowe, Steve Latta, Jeffrey Greene etc.  Then there are also people like me.  For those of you who have read my other posts or worse yet heard my sad story in person, you know my dirty little secret.  I'm not a period furniture maker; in fact I'm not even a wood worker.  I'm what you call a dreamer.  And the real purpose of this post is to ask for help in changing my tax filling status.  The first step of course is to actually become a woodworker or a hobbyist as I said above.  There's no lack of information and advice out there on how to get started and someday I hope to actually have the money and time to make sawdust instead of excuses.  What I'm really interested in is becoming a professional.  To me, the professional is the guy who works full time in his own shop, making a modest living (about $50K or whatever the typical S-Corp claims.)  Since we're all period people here, it should go without saying that I'm not talking about owning a production shop making kitchen cabinets and built-ins.  I worked briefly in one of those shops after college and the most important thing I learned (other than the fact that nothing kills a love of woodworking like running a pneumatic random orbital sander for eight hours a day) is that there's a big difference between owning a shop and working in a shop, especially a kitchen cabinet shop with six or eight other guys.  I've read in other posts about the challenges of attracting business.  That's the one thing I'm not worried about I've worked as an advertising writer and stockbroker (try going door-to-door to introduce yourself and convince others they should trust you with their life savings) so I feel relatively confident that I can find the most cost effect ways to reach the right niche.    

The first question is how much does a one-man shop have to gross to net $50K.  The answer of course depends on…

The second question: what's the typical overhead for a one-man shop?  Obviously there are a lot of factors but I'm guessing that the average overhead is also about $50K (lease, equipment, materials, etc.)  If this is about right then the professional will need to gross at least $100K per year.  Of course no small business will be pulling in $100K its first year.  Which leads me to…

My third question: How much money and how many years will it take to become profitable?   If you can only claim a loss for three of your first five years and that loss is essentially equal to your start-up cost then is it safe to say that $300K is enough to get a business started from scratch?  Assuming most of you don't have $300K under the mattress, my forth question is...

Other than good credit and personal debt-to-equity ratio; what kind of experience or education does the average bank want to see before they'll float you that kind of money? Does it take a degree from North Bennet Street School or 10 years working in someone else's shop?  What kind of collateral do they want to see?  What are they looking for in a business plan?  If your starting with very little shop experience, but are working for yourself fulltime, about how many years without a woodworking education will it take to become skilled enough to gross the theoretical $100K / year?

Finally, I've made a lot of assumptions and generalizations here.  Am I even in the ballpark?  What am I missing?  What have I got wrong?  I suspect I'll be told that I need to become a hobbyist until I retire in 20 years and then go pro.  Unfortunately, that may end up being the most realistic option.  But if there's a way to do it in five without winning the lottery or starving my family I'd sure be interested in knowing.  If you fit the basic description of "professional" and have some advice (encouraging or discouraging) or a story to tell, please respond.
 
You can do it. The first thing you have to do is convince yourself you can. Don't paint houses and pretend you're a furniture maker. Make furniture, starve, pay alimony. There's not an easy answer. Unfortunately you will be running an orbital sander 8 hours a day ( or night). That's the great thing about being self employed!You only have to work half a day and you get to choose which 12 hours you work!
50K? Do the math. If you pay yourself as a part-time secretary, which you are, and have a mark up of 42% for this secretarial work and a modest 8% margin included, to pull 50K profit you need to turn over 50K X 1.42 or 71,000 a year. That's $5917 per month, for you. Now you have to convince a whole bunch of people in a whole bunch of economic strata that giving you 6 grand a month plus the cost of materials is better than buying a wad of pus made in China from Target every year or so.
I built a shop out of a forty foot deep garage next to the house I bought. I turned it into a shop for 23 thousand ( that includes a bunch of lie nielsen tools and a sawstop) My federal tax advantage from this investment amounts to about 1300 dollars deducted not from my tax liability but from my net income after the years deductions for business. WOW!
I know a guy who does nothing but make kitchen cabinets and built-ins. His average monthly turnover is 53,000. Lets deduct his pay as secretary and allow him his margin (which he really needs to reinvest) He now has 37,324.00. The industrial space he occupies is reasonable. He has 7,000 sq ft for only $4.18 per square foot per month. There goes $29,260.
Unfortunately the city came down on him for his finishing space and he had to build a HEPA exhausted paint booth within his work space. This 80,000 is ammortized over 25 yrs. There goes another $600.00. Now his out going is $29860. So his gross is $7464. Wow! That's 1735 a week! Holy schamoly!  Deduct health insurance, alimony/child support, auto. Let's go back.
53,000 X 12 = 636,000 a year. This guys gross (personal, after business deductions, is 90,000. 90K is about 14% of his gross operating budget before personal expenses. Think about this.
Can you pull $6000 a month? Easy. Can you do it without spending the majority of time wadding pus together? That depends on you and your ability to stomach pasta 4 nights a week and hot dogs the other 3. Good luck! Let me know how it goes.
 
Gerald- Fran has obviously done the math and I think he's on the money.
I, however, have become whatever it is that I am, through the "build it and they will come" theory. Granted, I started in 1976, but the trick is keep your overhead low and educate your clients. There's no way they can appreciate what work goes into a piece without you showing and telling them. The smarter they are about craft in general, the more willing they are to part with the money for a piece. We aren't competing with cheap furniture, we're competing with Porsche for their extra money. So basically you need to find people that love hand work, not those who want to show the world they've made it.-Al
 
You can do it but you will need the recipe for Wiener Water Soup along with the pasta and hot dogs. The biggest thing you can do is do not borrow money or you will be working for the bank.
Mike
 
Gerald,

I started my business in 1985 and it was PT, of course. Don't quit your day job!  In 1993 my wife and I opened our retail store.  She worked solo in the store and I worked solo in my shop.  Steady furniture orders did not come in until we opened this store.  Being in the "publics eye" and on a main street helped.  In February 2009 we closed our store.  $50K per year for rent, property taxes, utilities and business ins. was just too much to keep paying.  This did not include health ins. or our wages.

Now and for the past 10 years I have had a 15 month backlog of orders.  But it took 16 years of a retail store to get to this point and also being in business for 24 years helped.

You stated, "try going door-to-door to introduce yourself and convince others they should trust you with their life savings".
If you start a wood working business you will being the same thing.  Hanging an open sign on your shop door does not mean people will be pouring in.  Where will your shop be located?  How will customers find you?  Don't put your shop in your house especially if you are zoned residential.  The city will probably not let you.  Don't forget advertising.  Monthly ads can be $300-800 per magazine and most will not produce any orders (I speak from experience).  It probably will takes years to develop a customer base, speaking from experience.

I'm not trying to discourage you from starting a wood working business but you must be practical. Do not borrow from the bank as Mike said.  Have a least one or two years income saved to live on. We did when we started our store and we did live on it and the economy was much better then.

If you do not have a lot of period furniture building experience you will need to get this knowledge from seminars and going to schools.  How long will it take before you get steady orders?  And how old will you be then?  And unless you are the exception to the rule, don't expect to get rich from building period furniture.  You probably will make a better income from your present job.

Dennis Bork
Antiquity Period Designs, Ltd.
 
Gerald    I started my business in 1979, before that I was an operating engineer. I think Fran's numbers look about right, and Al's comment about keeping over head down and educating your clients is right on also. What I'd like to add is that a formal ed. in this field would be a great place to start.Seminars are good ,but I don't think you should base a life style on them.I'm not a full time period furniture maker,although I do build,I'm a conserator of wooden artifacts. Ya , an oddity,and 30yrs later, I'm still taking classes.Even though I've given lectures and seminars in schools,museums, and instutions across the country, I'm still convinced I don"t know it all. Technology in this field has given us the ability to reproduce or even {clone} most historic finishes.I've meet some great furniture makers that have fallen short in the finishing end.In short,what I'm trying to say is, pay your dues in the beginning so you don't spent a good portion of your life trying to catch up to where the others began. Randy
 
Ohhhh boy......here we go! I really don't want to be discouraging but I need to be straight with you. I've been in "one of those moods" for a few weeks now wondering why the hell I ever wanted anything to do with woodworking and trying to figure out just what else I can do for a living! Back in 2000 I took over a furniture mfg. biz I had worked for on and off for the previous decade. My dream, quite literally since sixth grade. Imagine a shop similar in size and capabilities to the shop at Thaddeus Stevens and I had this when I was in my late twenties. Not exactly a hobbyist shop! Things looked great, I hired a full time guy, got a few more machines, I was just about ready to hire another guy, can't remember how many weeks were over 70 hours and plenty of 2 and a half hour delivery drives on 2 hours of sleep.... by 2003 the phone stopped ringing, by 2005... chapter13. All because of imports! Don't let anyone tell you otherwise, one of the main reasons our economy is in the shape it is is the greed that created things like the WTO. The "Global Economy" WILL be the end of all manufacturing of this type here before long if nothing is done to help the little guys have some chance. What do I have to show for my time and effort??? A warehouse full of tools and machinery that I'm not allowed to use which costs me 2 weeks bring home pay every month! To get the labor and industry permits to set my shop up again the state wants me to put in a man door(the sliding door won't cut it in an emergency), my own handicap bathroom(the drain is on the other side of the building so I'll need a grinder pump), the heating system up to modern specs, fire extinguishers every 75 feet(really....in a woodshop....who would have thought???) but what really got me was everything has to be signed, stamped architects plans down to where each machine is going to sit on the floor to show "means of egress" and engineered ductwork for the dust collection to each! One more thing, even if I do all this the building I'm in is up for sale! If you judge success by your finances as most people seem to do this is the last thing you want to get into for a living! I'm far from perfect or knowing it all and don't claim to be the worlds best businessman but if I couldn't make it the way I was set-up is there really any point to trying anymore???
 
Mark- Just having been a one man shop most of  my life (my son is working with me now), I can't imagine having to manage an operation like yours, and I think you're right in saying thst the world economy and trade is doing in operations like yours.
I think that the fear of always having to compete with another business has driven me, over the years, to always strive to do things that others either can't or won't do. My first pro turning job, for instance, was 375 spindles that no one else wanted to do. I used to make windsor chairs, but evrybody started doin it, so I stopped and referred windsor inquiries to someone else. My theory was to say "yes" to any job that interested me and then figure out how to do it.
I guess what I'm getting at is that we can't compete with cheap furniture from somewhere else, so we need to make things that can't be done well anywhere else. Most importantly, you need customers that wouldn't have that cheap stuff in their house anyway. So the market niche for people like me is a very thin one and not that deep either, which means that to be a period furniture maker and be even moderately successful you need to be a people person and have a very personal one on one relationship with customers. There's no guaranteed course that will work, it's kind of a crooked path.
Price isn't the main factor. People are buying you and your philosophy and your knowledge. And this, of course, is what makes it so hard to make  living doing just furniture: it takes a long time to develop these relationships and to accumulate the knowledge that you need.
I've always assumed with some jealousy, that the people who make the money are the ones who crank out kitchens, but I decide long ago that that wasn't my idea of woodworking.
Sorry for the long rant, but I really sympathize with those like you who tried to do everything right and now can't compete.-Al
 
I agree with Al.  I have always given the customer a top quality product.  It does not have to be high end or high style just quality.  Anyone can make cheap furniture to compete with China and the other overseas countries.  My customers keep coming back because they want not only quality but a one-of-a-kind piece of furniture.  They range from the very rich to a school teacher (who ordered a secretary).  If they can not afford it at first, they save their money and come back.
Like Al said, it is a very small niche but that is all I need to keep me busy.

(In the patternmaking shop where I served my apprenticeship, the owner made a crank case for on of the big auto companies.  All other shops said that the pattern could not be made.  He said we can do it, and he did.  That's my moto-I will take the job and then figure out how to make it.)

Dennis Bork
Antiquity Period Designs, Ltd.
 
Gerald
          My advise to you would be start out slow with a small shop and keep it simple. Make sure you have an understanding wife that works and has good health benefits for you also. Understand that you are not ever going to get rich, you will work 60-80 hours a week, give uncle SAM most of your money and then die from some air borne particle. Life is good.
          You can do it if you are willing to sacrifice and understand that you are no better than your competition or he would not be your competition.
Make sure you have some good finishing skills, and it helps to have experience in antique restoration and you might have to do work on a lot of things you might not want to just to pay the bills.
          I started out in a 16 by 20 shop behind my house doing restoration and repair. After 5 years added on to the shop (30 by 40) and had one employee. Another 5 or so years added on a storage building 20 by 26 to store furniture in waiting and a few more employees. A few years later more storage (40 by 26) and more on the shop (30 by 80) and another employee. I found myself not able to do much more than pickup and deliver furniture and pay bills. Everytime I opened my checkbook I could hear a giant sucking sound and finally about 5 years ago I had an employee that made more money working for me than I made. You get the picture yet?
          I now work by myself and run the business, it does not run me. I think it takes a special person to run a  business with employees and I don't think the custom furniture market lends itself well to that type business unless you have cheap, cheap labor.
          Don't give up on your dream, just make sure it is a dream and not a not a nightmare.               
                                                                        Michael Armand 
          I
 
Not to discredit or make others seem any less talented but I would go one step further to add one more category above Master and call it Period furniture diety / celebrity and put Al Breed in that category.  He is to period furniture what Michael Jackson was to pop music.  Prior to him starting his school many years ago I had asked him for some information on federal chairs I was building .  He offered that I could come to his shop, look at some examples and talk to him about it.  He could not be a more altruistic person.  Having the opportunity to see some of his incredible work was amazing.  His talent is equal to or exceeds that of the greatest master in our countrys past IMO.  Al was so generous in offering plans and information and he had never met me before.  Im sure he is the same way with his customers and this goes a long way in business.    Not that any of this matters to this thread but I just wanted to share my experience.  If I was a customer who had the money to afford the best he is the type of person I would want to go to.

I have this theory that SAPFM members can be divided into three categories (actually four if you include me, but I suspect that I'm a bit of a oddity).  The main difference between the categories is determined less by skill or style but more by…tax filing status.  The first type, and I suspect the most common, is the "hobbyist."  Although the hobbyist may sell the occasional piece, it's not their primary source of income.  They have a "real" job or are retired.  The second type is the "professional"; more about them later.  The third type is the "Master.”  These are the guys that are making (what I assume is) a really good living.  They're not only making furniture but teaching others, writing books, giving lectures etc.  A short list of masters would include the Headley brothers, Adam Cherubini, Alan Breed, Phillip Lowe, Steve Latta, Jeffrey Greene etc.
 
Scott,

Not to take anything away from Mr. Breed but your coments are a bit much.  Seriously?  Michael Jackson... now thats funny....
 
Hey Craig, I guess I was trying to be a little funny with that comment but hey everyone else in this great country of ours seems to have their idols or icons why can't I have mine?  To say the least it was a real "THRILLER" for me to get to meet such a talented furniture maker and not something I have ever forgot.
Scott
 
I was looking around online and found this website a little while ago. http://www.thomastonfurnituredesigns.com

Pay close attention to the price of the dining chairs. Some of their other stuff is a little more realistic price-wise but still.....This should drive the point of my previous post home more than a thousand words ever could have! How can anyone possibly make a comfortable living here building chairs this detailed for ten times the price? I know we would all like to but how could we?

Then look at their Resolute desk.............

Ohhh... one more thing, thank you Al for your understanding. It means more than you know.
 
This is a good internet site that clearly states they have "manufacturing facilities all around Asia." I don't know if this is any different from any other US manufacturer/importer. Imported Asian furniture is cheap, but I think it is possible, at least in normal times, to make (and sell) hand-crafted furniture that sells for 2x or 3x these prices or more. We hope "normal times" will return soon, but until then it can't be fun making furniture in today's market.

Preston
 
Well, it only took a year and a half but I finally got my answer.
Watch the two short movies
"So you want to be a cabinetmaker" www.xtranormal.com/watch/7575301/

and

"I would like to hire a custome cabinet maker" http://www.xtranormal.com/watch/7582361/i-would-like-to-hire-a-custom-cabinet-maker

Nothing a like a dose of reality to kill a perfectly good dream.
 
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