Business Plans

Ed;
I would contact your local SCORE chapter. This is a almost free program for people wanting to either start a business or learn how to make there business better. I know that they have a free tutorial on writing a business plan. If you can’t find one there let me know and I have a two friends in my Rotary club that are instructor’s for SCORE.
Thank You
Dennis Mitchell
“DeputyDawg”

-- DeputyDawg

Dennis,
I spoke with the local SBA office, and they have a number of different business plan models to use. But none of them reaally apply to custom Cabinets and Furniture. There models would be say for Kitchen Cabinets.The question of who are your competition in your area. Answer, Home Depot, Lowes etc…..... I am not looking at going after that market. I have no way that I would even try to compete in that arena. I am more interested in High Built ins, Closet systems, Furniture, not the type of client who shops at Ikea for their dining room set. Theres nothing wrong with those kind of people. They are looking for a totally different product than I care to build. There is no way of competing with the mass made crap that is sold in retail stores as furniture. If you talk to them about woodworking they closest model they have is a lumber yard? This is why I was wondering how others have faced this problem. And be able to come up with some sort of a accurate business plan.

-- Taigert - Milan, IN

Hi Ed;

For me a business plan has always been a problem. I am trained to estimate costs based on drawings and specifications.

These are facts and figures that with some time spent will yield real numbers.

A business plan is a series of guess, based solely on more guesses. When writing one I can’t help but feel I’m making things up.

As an example, with my ezee-feed business, potential investors want to know what results can be expected, prior to disclosing how much money they will be investing, and over how long of a period.

I too just don’t get this part of it.

Lee

-- by Lee A. Jesberger http://www.prowoodworkingtips.com http://www.ezee-feed.com

When I was working wood for a living it was pretty hand-to-mouth.

Keep your costs as low as possible. Don’t overinvest in expensive
new machinery. You can depreciate new machine purchases but
it’s a mistake to think that gives you a license to spend $50k
on sliders and edge-banders if you don’t have the work.

The marketing is the toughest part of the business. You’ll have to
really work hard to get the right kind of word-of-mouth.

Specialize. Learn to do what you do Fast. Go for high-profit jobs.

If you need assistance with marketing… well, I now consult in that
area. I found it was too much for me, as a one-man show, to
do the business and do the production and get ahead. I got
tired of the backbreaking long hours. If you are going to hire
2 guys to do the work expect to be spending all your time managing
the business, designing, coordinating, and selling the jobs.

Ed,

When I first went into business I sat down and tried to write a business plan. There were no model plans out there for a business that made high end 18th Century reproductions. Everything is custom. I spent hours in the library researching related businesses, charting sales trends and lots of other nonesense trying to figure out how to accurately predict the path my business should take. Like Lee, I found that business plans are a series of guesses based on other guesses and a few hopes and dreams. You can find numbers to support nearly anything you want. The reality is, you need to have a backlog of work and the desire and ability to do it to the highest level you can. By the sounds of it, you are looking to gear yourself in that direction. If you don’t already have a handful of clients, it could be a long hard road. High end clients are tough to get. If they weren’t, everyone would do this. The best advise I can give is, don’t waste too many hours writing a plan. Work to the best of your ability…always. Be uncompromising in the quality of the things you make. High end clients often (not always) have at least some understanding of “quality”. Give the customer 100% and your business will grow. Nothing is better for a business than a recommendation. It’s worth hundreds of ads. Good luck. Keep us posted on the progress.

-- Chuck Bender, period furniture maker, http://www.acanthus.com

I’ve started to write a business plan based on SBA models, and models I found on Dan Miller’s website. And then it dawned on me: other than the excellent advice that Chuck and Loren have already given, the next most important thing to me was to cashflow EVERYTHING so there would be no debt. Without the need to go to a bunch of banks to get big loans to buy tools with, it seems to me that I really don’t need a very elaborate business plan. So far, mine looks something like this (and I’m just starting on this journey, too):
1. Guerilla marketing—not advertising, but branding and marketing myself. Total investment: $200 for a logo design, $50 for a box of business cards, $5/month for website hosting. Lots of sweat equity. (I’m still working to perfect my elevator phrase.) Best advertising so far seems to be glossy varnish.
2. Financing—if I can’t pay cash for it, I can’t afford it. If I can’t get 50% down on a commissioned piece in order to lay in supplies, I probably can’t afford to work for this client.
3. That’s all I can think of right now. I’m guessing that most real businessmen would laugh at me and predict an early demise, and they may be right, but so far I have as much work as I can handle.

-- There's no tool like an old tool...

Just my thoughts… Are not business plans primarily used to get investor (banks, individuals) dollars? I like Texasgaloot’s theory. If I can not pay cash for tools and essentials, either find another way or don’t do it at all. A one man business is tough enough. I owned a computer consultancy for a number of years in the late 80’s and early 90’s and it was BRUTAL. So much business that I had to bring in help, which ended up being the downfall of the business because you can NOT be in two (or three, or four) places at one time.

Making the decision to incur NO outside debt will lead you to be more creative, i.e. you won’t have every newfangled gadget, and re-think many processes, often to your benefit. The downside to this is, without the tools to do the job as quickly as possible, you may find that you should not do the job at all.

Hutch

-- Hutch - North Dallas, Tx - Safety First

Yes a business plan can be used to seek fiunding for start money but it can also be used in order to help you to grow the business and track where you want the business to be and where you want to be. I have been working with the local SBA to seek their advise. I have reviewed their models and none of the models they have relate directly to us. They are either for a retail or a manufacturing business. Not for a solo woodworker, he stated that what I am looking at doing would almost be concidered an Artist, or Studio Artist. I find it hard to see myself described an Artist??
From talking to SBA I have found out that their are some grants that I may qualify for, but in order to apply you have to have a business plan. You must identify your target market, your competition, and financial projections at given dates. If I can get free money for start up, why not grab it?

Just looking to see how others have answered these questions.

In a past life as a Sheet Metal worker I had my own shop. Besides doing sheet metal, I also sold, installed and service heating and a/c. In that market it was easy to answer all the questions I am now trying to find answers to.
As has been mentioned growth can kill a business, when it was only my and two guys it was easy to control quality and make sure the customer was happy. When I had 25 guys in the field it became a nightmare. I will never put myself in that position again, no matter what. You can only be in one place at a time. When I had 25 guys the money was great but the frustration was enough to cancel out the money. Money does not provide the relaxation some think it does. I was so stretched out it was ruining my life and the life of everyone in my family. I was never home, I din’t take any time for me or my family, I couldn’t go out of town for even a weekend. My wife and son would fly home to family for holidays. It just really sucked, it taught me a lot of lessons. I ended up keeping my family, some how, but it was close.
Time to get back to work!

-- Taigert - Milan, IN

I’m in line with Tex. In fact his so called business plan looks and sounds like my (non existing) plan. If I have to borrow money for it, I don’t need it. 50% down on orders, usually covers all my cost to get the piece built and to the customer. The balance pays for my investments. I put nearly everything back into the business. One of my goals is to not have any outstanding debt, that way if I want to close the doors, I do it, and I don’t owe anything to anybody.

-- Tim-- http://www.tmuli.com

But a grant does not have to be repaid. I agree about staying debt free and the part about deposits. But there is no sense in telling the SBA that I don’t want there free money for not wanting to write a business plan.

-- Taigert - Milan, IN

Hi Ed,

Sounds like you are about to launch your woodworking into a business. Quite a step.

Best wishes and much success.

Dale

I’m heading that way, slowly but surely. Ive been looking aound trying to find where to set up shop. I’m taking my time, my target date is about this time next year when I’m finished school.

-- Taigert - Milan, IN

Hello Ed, I’m getting into the discussion a little late, but so far you have gotten some good advice. During my years in the banking biz, I have seen many business plans. The type of business plan that you need somewhat depends on what your trying to get accomplished. If you are seeking money for start up and taking it to a bank, the primary considerations are going to be what you have and are willing to put up to secure the loan and more importantly your credit history. Even if you are seeking an SBA guarantee, you will still be dealing with a lender. The SBA rarely makes loans direct and then only for a narrow category. If you are going to seek grant money, the granting entity will most likely have a form (either paper or electronic) that you will need to complete. They will tell you what pertinent info they want from you.
In either case, you will need to demonstrate that you have the expertise, or access to it, that will help you locate and avoid the inevitable land mines that are just a step away and will, if not avoided, take you and your business out. They will need to be able to understand and believe your numbers. Make you projections based on real facts, not dreams. Banks, despite their advertising, have an aversion to dreamers. Banks will want some assurance that you will be able to repay the loan even if the woodworking business doesn’t work out.
For starters, use the internet and look at various sites that have examples of business plans. DON’T BUY AN OUTLINE FROM ANY OF THEM. You know your business and you know what you want to do. If you don’t feel comfortable writing the info out, call the local college and get some upper division kid in the business school and give him/her some real time experience in helping you write it down. Believe me, the banks and the grantors aren’t looking for Hemingway, they are looking for the next Bill Gates.
I would encourage you to seek out the experience that you can find from the folks on this site and others and talk to local businessmen/wormen who have done what you’re trying to do. If they don’t discourage you completely, you may have the stuff needed to make it.

I’m working on getting a business plan together for a Gov’t(Cdn) subsidy I’ve been able to get.
Anyone know where I can get info on current furniture market trends? Not too much info from Googlizing so far.
Thanks in advance.

-- http://www.brianpenning.com/

So I realize that this post will largely restate the obvious but it helped me clarify my thoughts about what kind of work I wanted to do. I thought about what would make people want handmade furniture when they can go to Ikea and furnish half there home for the price of one custom piece. I came up with 5 central types of value that fine furniture has:

1) Durability- obviously solid wood dovetailed together will last ten times as long as particle board screwed together so in essence the value is several times that a cheap piece of furniture.

2) Aesthetic Value- in the time that a person owns a piece they will have a far more personal relationship to it and consider it more attractive than mass produced furniture.

3) Investment Value- this is a tricky subject but in general an mass produced piece will only go down in value, but a handmade piece will be easier to resell at a reasonable price. In addition many customers will have a subtle fantasy that you may be famous one day and there piece will be worth a lot. (that is why to should advertise the fact that you sign your pieces)

4) Display Value- It is no secret that people like to show off to their friends. Having fine furniture is one way that people can do this. Furniture can suggest that a certain person is sophisticated, or has a taste for authenticity, and lets not forget that it also displays wealth. This is why I think it is so important to sell a story or shpeal with every piece so the customer can fantasize about passing the story on to a friend.

5) Charity Value- People who but fine furniture are generally affluent so they have a lot of choices about where to spend their money. In an age where most products to be bought conceal the disappointing reality that a face-less corporation stands behind their production, the small furniture shop seems refreshing. the point is you need to sell the fact that buying your furniture keeps a dying craft alive, and that you are a starving artist doing what you do out of passion for it. People love to think of themselves as patrons of the arts.

-- Adam, http://adamweisfurniture.com