You may have three primary areas that you do business: your workshop, where you create the furniture and the wood decorative items; your office, where you handle daily business functions, such as computer work; and you may consider a third option, selling through craft fairs and utilizing a booth. When considering a budget for these areas, you’ll find most of your furnishing and materials through office supply stores, wholesale suppliers, and craft support catalogs. Finding the best pricing is usually just a matter of being vigilant and informed, checking around for the best pricing, and not being an impulse shopper.
A lot of businesses have super-deals, buying volume at what seems like an incredibly low price. Be aware of these deals, while you might be able to get 10,000 business cards at a great price, chances are you’ll make some change to your cards long before you’ve even used a fraction of the cards. As you through out the rest you’ll have that sickening feel in your stomach of throwing away money – what started as a great bargain was in reality a waste.
Here are some items you need to include in your planning:
Capital Equipment – this equipment is a one time purchase and will depreciate over time. For instance, if you buy a Table Saw you will probably put out a lot of money initially, or perhaps finance it, but this is not a consumable item – you won’t buy another for some years to come. We’ll talk more about taxes and depreciating equipment in later chapters. For now, think about capital equipment in terms of:
Office Equipment (desks, bookshelves, chairs, cash register, credit card processing equipment)
Art Booth (the booth or canopy, tables, counters, display equipment, props, shelves, storage containers, etc.)
Office Supplies -- Once you’ve decided what equipment will be needed, you need to plan for your office supplies. Office supplies will include:
Paper, Pens, Folders
Taxes, Insurance, Specialty Services and Fees – What’s the old saying – No one can escape death or taxes? Well, it’s still true even if you are starting your own business. This is kind of an umbrella category for many different things. Let’s take a look:
Taxes – Generally, you will have to get a business license for both your state and city. You may also need to budget to pay income taxes (Federal Income tax often is required to be paid forward based on your projected sales for the future quarter.)
Insurance – You need to consider several different insurance policies. If you are operating a home business, you’ll need to make sure your home owner’s or renter’s policy will cover any damages that might occur to your business in your home. If you plan to display your furniture at a craft fair, you’ll need to consider craft festival insurance (many festival promoters will not let you display without it). This covers any potential loss or injury that would occur in your booth.
It’s often difficult to plan your business insurance needs. Contact an agent or broker who has experience with working clients with similar businesses or similar sized business. Work with other vendors or small business owners to get recommendations for agents and brokers.
If you are operating a business out of your home, you may need a different policy from your average homeowner’s insurance policy. In fact, it’s a good idea to check with an agent to see if running a business from your home would have an adverse affect on your home policy. Your basic insurance should include:
Fire insurance (extended coverage on buildings and contents);
Burglary protection (theft coverage);
Dishonesty insurance (covers thefts by employees).
Specialty Services – When you’re first starting out it may pay to get the help of some specialists. You may wish to consult with an attorney on the type of business that’s best for you (sole proprietor, limited partnership, incorporation); you may wish to work with an accountant for a year to assist you in setting up your business records; depending on your computer skills, you may wish to seek the assistance of a website developer; if you are competing in furniture shows, you may want to utilize the services of a professional photographer to develop pictures of your wood products that will emphasize some of the special parts of the furniture item.
Of course, you can manage most of these services yourself, with a little research. However, sometimes you can find providers who will help small businesses get established with affordable one-time services.
Fees – If you plan to display your work at either arts and craft festivals or craft malls, you’ll need to pay entry fees. Fees for entry into fairs and shows can vary greatly, usually driven in part by the number of attendees, and the quality of the show. It’s not uncommon for small craft fairs to be as little as $25; the fees for some of the larger festivals can be as much as several thousand, and many ask for a fee to hold your reservation, plus a percentage of sales from the fair. While you may be able to pay part of that from your sales, you’ll still need to plan for the initial entry fee.
Finally, you have to plan one more expense; this expense is the one people have the most fun planning and spending –woodworking supplies.
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