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Woodworking Business #2: Speculation or Contract Jobs

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Blog entry by billb posted 1402 days ago 1424 reads 2 times favorited 6 comments Add to Favorites Watch
« Part 1: Experiences in the Woodworking Business Part 2 of Woodworking Business series Part 3: Contracting For Woodworking »

Except when building things for myself or the family, I’ve never cared for building things without being certain that I would get paid for them. Whenever you build projects in hopes of finding buyers for them that is speculation. There are woodworkers who do exactly that successfully and it seems that many of those interested in starting woodworking businesses have a similar plan. As I read many blogs it has become clear that this is a common method of running woodworking businesses. I must admit that it surprised me to learn that because it’s not something I ever did. In well over twenty years of operating my own full time woodworking business I never built projects that were not under contract in advance. So, my posts will lean toward that method.

My one venture outside of contracted jobs was when I designed, built, and donated a cross to a local church. They asked if I could make smaller versions for sale in their gift shop. I gave it a try and sold quite a few of various sizes. The crosses were seen by a large wholesaler who asked me if I could make a thousand of them. I gave that a lot of thought because the idea of making a thousand of anything did not appeal to me. Nevertheless, I gave them a price and they made a counter offer that was about 25% less than my quote, which I already considered a little low. I refused and that was my last experience with speculation. I did sell a few more crosses at various gift shops but it just wasn’t very lucrative so I stayed with my contracted work.

This is not intended as a criticism of the speculation method but simply a statement that I was never adept at it so I chose a way that was comfortable for me. I believe most who are interested in making money from their woodworking skills would like to make a living doing work they love to do. So, the important thing is to choose the way that works for you.

-- Bill, Austin, Texas, http://woodworking-business.com



6 comments so far

View shipwright's profile

shipwright

4942 posts in 1434 days


#1 posted 1401 days ago

Good discussion, Bill. I built Custom boats, always on contract, when I had my shipyard. Now I’m retired and toying with the idea of selling some of my “art” projects. While I would never have built a 36’ sailboat on spec, I find that just having the idea that I could sell a piece gives me a little more incentive to go wild and be creative and do what I want to do with it. I’m immensely enjoying the freedom that that allows me and if I can’t sell any of it, at least it gave me an excuse to get outside the box.
That said I’m not trying to make a living here and if I was I wouldn’t be spending as much time (or having as much fun) building “in the hope”. The big problem I find in spec. work is evaluating your piece. I have no idea and have found very little help in that regard.
I look forward to others’ views on this interesting topic. Thanks Bill.

-- Paul M ..............If God wanted us to have fiberglass boats he would have given us fiberglass trees. http://prmdesigns.com/

View shipwright's profile

shipwright

4942 posts in 1434 days


#2 posted 1401 days ago

Good one bentlyj, my deposit was always the cost of materials. For one it was substantial, and second, if the buyer did back out you’d have lots of wood!

-- Paul M ..............If God wanted us to have fiberglass boats he would have given us fiberglass trees. http://prmdesigns.com/

View canadianchips's profile

canadianchips

1831 posts in 1633 days


#3 posted 1401 days ago

Good Point.
In my life I started business young. Rather than a Deposit, I would have the people buy the materials. I picked what I wanted to use, they paid. My thoughts were if I got stung, I would only be out the labor portion. Only happened 2 times in 20 years.(Both cases were my relatives !)
Today I build for speculation. It is something for me to do. I try to stay away from CUSTOM ORDERS,making hundreds of items all the same, that would take the fun out of doing what I am having fun doin.
I do small jobs _Once again it is something to do.
In the past 30 years working on my own I learned 1 important thing. Do what you enjoy doing, money isn’t everything !_ It is only a necessary iteml we need to survive.

-- "My mission in life - make everyone smile !"

View billb's profile

billb

112 posts in 1581 days


#4 posted 1401 days ago

I definitely believe in the deposit for every job and that is in a future post. It is critical to cover your costs and I think getting the customer to buy the materials or pay you for the cost of materials in advance are good way to handle this. I always set 50% as my deposit requirement but, as with everything else, there are many ways to accomplish the same thing which is to protect yourself from out of pocket loss.

-- Bill, Austin, Texas, http://woodworking-business.com

View Jamie Speirs's profile

Jamie Speirs

4119 posts in 1493 days


#5 posted 1401 days ago

Great subject.
I always take 25%, I think that shows good intent from the customer.
I’ve also learned the hard way not to take a cheque when the customer collects.

Jamie
BTW
I just got stung last week for 40 tables.
Not big deal, I can resell, but I had not taken a deposit as it was a regular customer.
Space is my biggest problem.
They came back and asked if they could still take five. NO was my answer

-- Who is the happiest of men? He who values the merits of others, and in their pleasure takes joy, even as though 'twere his own. --Johann Wolfgang von Goethe

View Div's profile

Div

1653 posts in 1576 days


#6 posted 1401 days ago

I do both commissioned work and speculation pieces. On commissioned work I provide a detailed quotation with specifications, drawings and :

“This quotation is subject to the following conditions: 1. Above quotation is valid for a period of 14 days. 2. All goods COD with a 50% deposit upfront. 3. Prices are quoted as per specifications. Changes in design will necessitate a new quotation. “

My client has to sign the quotation.

My spec pieces go on consignment to art galleries. Yeah, my outlay on materials and time and no guarantee of a sale. It is, however, a way to do some one-off art furniture and it satisfies my creative urges! I do manage to sell pieces this way.

PS. Jamie, I think ALL of us have a space problem! :^)

-- Div @ the bottom end of Africa. "A woodworker's sharpest tool should be his mind."

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