How to Start a Woodworking Business: A Complete Guide

By Ty Criswell


How to Start a Woodworking Business

From selling on Etsy to setting up at your local farmers market, there are numerous ways to start a woodworking business.

It can be a rewarding venture for those with a passion for the craft. By turning your skills and love for woodworking into a profitable business, you can create a sustainable income while doing what you enjoy.

While some may only aim to do this as a side hustle, it is definitely possible to turn it into a full time job. It really depends on your goals and how much time you want to dedicate to the business.

Although it may be difficult to make a significant amount of money woodworking, I can attest to the fact that it is a very fulfilling endeavor.

As with any new venture, there are several critical steps to consider when starting your woodworking business, such as determining the right business structure, conducting market research, and crafting a comprehensive business plan.

To set up a successful woodworking business, you’ll need to have an efficient workspace, acquire necessary equipment and materials, and comply with relevant regulations. Creating a strong brand identity is crucial to stand out in the market and attract customers.

Pricing your products for profit will ensure that your business is financially viable in the long run. Managing employees, labor, and business finances are also integral parts of maintaining and growing your woodworking business.

Key Takeaways on How to Start a Woodworking Business

  • Woodworking is not a get rich quick type of side hustle, more of a slow burn. It takes dedication, but could become very rewarding. This is the case with most small business.
  • Starting a woodworking business requires thorough planning, market research, and a strong brand identity.
  • Setting up your workshop and deciding what tools to get is an important (and fun) aspect of the business.
  • You will need to focus on pricing products for profit and managing all of the business finances.
What is a circular saw used for?

Determining Your Woodworking Business Structure

While this won’t necessarily affect how you conduct business with customers, it helps to get everything started in the right way.

Before starting your woodworking business, it’s crucial to decide on the appropriate business structure. The structure you choose will have a significant impact on your business management and legal entity responsibilities.

This section will briefly discuss four common business structures: Sole Proprietorship, Partnership, Corporation, and Limited Liability Company (LLC). This is not tax or legal advice, for your situation it may be best to consult your accountant or an attorney.

Sole Proprietorship

A sole proprietorship is the simplest business structure, often chosen by small woodworking businesses with a single owner. In this structure, you and the business are considered the same legal entity, meaning you have complete control over business decisions.

However, you are also personally liable for any debts and legal issues the business may face. It’s important to note that the sole proprietorship structure doesn’t offer much protection for personal assets if your business encounters financial or legal troubles.


If you plan to start your woodworking business with one or more partners, a partnership structure may be suitable. This structure divides the responsibilities, profits, and losses among the partners.

The partners share business management and are personally liable for the partnership’s debts and legal issues. It’s crucial to create a written partnership agreement that outlines each person’s roles, responsibilities, and share percentages to avoid possible conflicts in the future.


A corporation is a more complex business structure that legally separates the business from its owners. This structure provides personal asset protection for the owners, known as shareholders, who are only responsible for the debts and legal issues up to their investment in the company.

Additionally, corporations allow for versatile corporate organization and business management options. However, the incorporation process tends to be more expensive and involves more paperwork and regulations.

Limited Liability Company

I myself use an LLC for my business, and for many woodworking businesses, a Limited Liability Company (LLC) may be the best option. An LLC combines features of both corporations and partnerships, providing personal asset protection while offering more flexibility in management.

In this structure, the profits and losses pass through to the owners’ personal income tax returns, avoiding double taxation. An LLC also has fewer regulations and formalities compared to a corporation, making it generally easier to set up and maintain.

In summary, each business structure presents its own advantages and drawbacks. As you plan your woodworking business, carefully consider the needs of your business and how each structure could affect your responsibilities as an owner before making your decision.

Conducting Market Research

Understanding Target Market

To successfully start a woodworking business, it’s crucial for you to conduct market research. This will help you identify your target market and understand their needs, preferences, and desires.

Start by examining your potential customers, their interests, and the type of projects they may require. This information can assist you in tailoring your offerings, so your work stands out and appeals to this specific audience.

Market Analysis

After getting to know your target audience, it’s time to conduct a thorough market analysis. This will help you understand the woodworking industry landscape and its challenges. Study industry trends, market size, and growth potential to grasp the broader context in which you’ll be operating.

You may see that “farmhouse” style furniture is no longer as popular as it used to be, or maybe the prices have dropped from what you previously recognized.

Additionally, analyze your competition, focusing on their strengths and weaknesses, and how they are pricing their products and services. Knowing your competitors is essential for creating a strong business strategy and setting yourself apart.

While we don’t want to copy anyone, it is important to watch competitors to gauge where the market is headed.

You can take this information and put your own personal spin on your creations. Find your “niche”. For example, if restored furniture is a popular trend, you could choose to solely focus on midcentury style furniture that has been restored.

Studying Demographics

Once you gained an understanding of your target audience and industry, it’s essential to study the demographics of your community. This includes the age distribution, income levels, and occupations of people within the area you plan to operate your woodworking business.

By analyzing these demographics, you can determine if your business’s products and offerings align with the needs and preferences of the local population. This information will help you target your marketing efforts effectively and ensure you cater to the demands of your core customer base.

Crafting a Comprehensive Business Plan

Starting a woodworking business requires thorough planning, and the creation of a comprehensive business plan is crucial. As you begin this process, consider these key considerations for your woodworking business plan.

First, outline your company’s vision and mission. Clearly state what your woodworking business will offer, such as custom furniture or wooden home decorations. Don’t be afraid to make it personal, because for most of you it will be a business based around you and your abilities.

Describe how your products stand out from competitors and the potential target market for your offerings.

Next, delve into the financial aspects of your woodworking business. Calculate your startup costs, which may include purchasing tools and equipment, renting or buying workspace, and initial marketing expenses.

Establish ongoing operational costs, such as material and labor expenses. Create sales projections and a break-even analysis, which will help you determine the level of sales and revenue required to cover your costs.

In addition, assess your technical skills and any needed training or hiring. Learning woodworking techniques is essential for a successful business.

Identify areas where you need additional expertise, and consider whether you’ll require further education or assistance from other skilled professionals.

If you want to take it a step further, conduct a SWOT analysis to identify your company’s strengths and weaknesses, as well as opportunities and threats. This strategic analysis will help you understand your business’s positioning in the market and guide you in making informed decisions.

Finally, develop your sales and marketing strategy. Determine how you’ll reach your target customers through advertising, social media, and in-person networking. Outline how you plan to showcase your woodworking products and attract leads, whether through an online store, local markets, or showrooms.

By following these steps and creating a detailed woodworking business plan, you will be better prepared to launch your business successfully and make informed decisions to drive growth.

Setting Up Your Workspace

Table Glued and Clamped

When starting a woodworking business, one of the first things you need to consider is setting up a functional workspace. The space should be able to accommodate your tools and equipment while also allowing you to work comfortably and safely. There are two main options for setting up your woodworking workspace at home: a garage workshop and an at-home wood shop.

Garage Workshop

Transforming your garage into a workshop is a popular choice for many woodworkers, especially if you have a home-based business. Start by assessing the available space in your garage and consider the following:

  • Ensure you have enough room to move around and operate your tools safely.
  • Proper ventilation is crucial for a woodworking workspace. A filter can be placed overhead to help keep sawdust and fine particles out of the air. You will of course need to keep in mind safety precautions such as a dust mask, etc
  • Adequate lighting is essential for accuracy and safety. Invest in overhead lights and task lights for your work areas. You can get cheap, bright LED lights online that are easy to attach to the ceiling.
  • This can probably go without saying, but be sure to organize your tools and equipment, using cabinets, shelves, and pegboards for easy access.

At-Home Wood Shop

Creating a dedicated wood shop in your home is another option for setting up your workspace. Here are some tips to consider:

  • The same bullet points from the garage shop can be applied here. First and foremost you should consider the safety and environment when utilizing power tools.

Remember, whether you choose a garage workshop or an at-home wood shop, it’s essential to keep your workspace clean and organized. This will not only boost your productivity but also ensure a safe working environment for your woodworking business.

Acquiring Equipment and Materials

Belt Sanding of Shelf

Power Tools

In this guide I’m not going to tell you exactly which tools to buy, but I will give you some direction below.

As you begin your woodworking business, you’ll need to invest in some essential power tools. These tools not only speed up your work but also improve the quality of your projects. Some power tools to consider include:

  • Saws: A versatile collection of saws – such as a table saw, circular saw, jigsaw, and miter saw – will enable you to make precise cuts in various materials.
  • Drill: A good quality power drill and a set of drill bits will help you create holes and join pieces of wood efficiently.
  • Sanders: Orbital sanders and belt sanders are crucial for achieving smooth surfaces and removing excess material.
  • Routers: A well-equipped woodworking business needs routers to help in shaping edges, creating patterns, and cutting grooves.

Remember to take the time to research and invest in quality power tools, as these will have a direct impact on the efficiency and quality of your woodworking projects.


It is easy to get carried away, especially with accessories and supplies. Most of what you buy is going to be determined by what you are making, but there will be some essentials that most shops will need.

In addition to power tools, your woodworking business will need an ample supply of materials and supplies to complete various projects. Essential items include:

  • Wood: As the main material for your woodworking projects, you’ll need a reliable source of quality wood. Choose from hardwoods or softwoods depending on your project requirements.
  • Hardware: Stock up on various types of screws, nails, hinges, and other hardware required for assembling your projects.
  • Glue: Wood glue is vital for bonding wood pieces together. Make sure you have enough supply to keep up with your projects.
  • Sandpaper: Having various grits of sandpaper on hand will ensure your work has a professional finish.
  • Finishes: Don’t forget to stock up on stains, paints, and varnishes to finish your projects and protect them from wear and tear.

By gathering the necessary tools, equipment, and supplies, you will be well-prepared to start your woodworking business and tackle a wide range of projects with confidence and skill.

Regulatory Compliances

Starting a woodworking business requires adhering to various regulatory compliances. This section will discuss some of the essential compliances, such as obtaining permits and licenses, registering your business, and filing taxes.

Permits and Licenses

To legally operate your woodworking business, you need to obtain the necessary permits and licenses. These may include a business license, zoning permit, and safety permits, depending on your local laws and regulations. Make sure you research and comply with federal, state, and local regulations, such as those imposed by OSHA for woodworking safety and EPA for environmental regulations.

Business Registration

Registering your woodworking business is crucial for tax purposes and legal protection. You can choose from different legal structures, such as sole proprietorship, partnership, limited liability company (LLC), or corporation. Each structure has its own set of pros and cons, so research and carefully consider which structure best suits your needs and long-term goals. Additionally, if you plan to operate your business under a different name, you must register a “doing business as” (DBA) or a fictitious business name, depending on your state regulations.

Filing Taxes

Filing taxes is an essential part of running a successful woodworking business. As a business owner, you must ensure that you comply with federal, state, and local tax laws.

Since I am not an accountant, I am not going to tell you what you should do in this area. Be sure to consult with an accountant for your specific situation.

Creating a Brand Identity

Industry DIY Logo

Business Name

Selecting a unique name is an essential part of your woodworking business brand identity. By doing this, you’ll be able to effectively communicate the essence of your woodworking business and differentiate it from the competition.

Choose a name that reflects your woodworking skills, is memorable, and able to create a positive impact on potential clients. Also, make sure to check the domain name availability, as it will strongly contribute to your online presence.

Be sure to check for trademarks, social media platforms, etc. to see if your chosen name is being used already.

Business Cards

Invest in professionally designed business cards to help promote your woodworking brand and gain exposure. Your business cards should include your business name, logo, and contact information.

Include them whenever you collaborate with other businesses, participate in trade shows, or meet potential clients. They are a tangible representation of your brand, and an effective tool for building brand awareness.

I personally recommend Canva for any graphic desing purposes. For beginners and experts alike it is very easy to use and quick. Business cards can be made with many of there available templates.


Creating and executing promotions significantly contributes to your woodworking business brand’s visibility and growth. You may collaborate with other local businesses or participate in woodworking-related events to showcase your work and increase your brand exposure.

Additionally, develop a strong online presence through a professional website and active social media channels to engage with your target audience and showcase your woodworking skills.

Utilizing these branding elements can help elevate your woodworking business brand while building trust among prospective clients.

By carefully crafting and strategically implementing your brand identity, you can ensure that your woodworking business is well-positioned for long-term success.

Preparing Inventory

Before starting your woodworking business, one strategy is to prepare an inventory of wood products that you’ll be creating and selling. Having a diverse inventory with various wood items will attract a wider range of customers.

Begin by considering the type of wooden products that are in demand. Some popular options include wooden furniture, home decor, and wooden toys. As you gain experience, you can explore creating custom and unique pieces to set your business apart from competitors.

To manage your inventory effectively, follow these guidelines:

  1. Quality Control: Ensure that all of your wood products are of the highest quality. This will help you build a reputation as a reliable and professional woodworking business. Regularly inspect your products for any defects or issues, and address them promptly.
  2. Organize Your Storage Space: Keep your inventory well-organized and easy to access. Make use of shelves, racks, and storage boxes to maintain a neat and clean workspace. This will help streamline your production process and save time when fulfilling customer orders.
  3. Tracking Inventory Levels: Keep track of your inventory levels to ensure you always have the right amount of stock available. Set up a system to monitor your inventory levels, either using spreadsheets or inventory management software.
  4. Replenishing Stock: Regularly assess your inventory and replenish your stock as needed. Keep an eye on market trends and popular items to ensure that your inventory remains relevant and up-to-date. For more complex pieces, plan ahead as they might take longer to create and restock.

Following these steps will help make your woodworking business successful and sustainable. Maintaining a well-stocked and organized inventory will not only make your day-to-day operations run smoother but also enhance your customers’ overall experience.

Pricing and Profit

When starting your woodworking business, an essential aspect to consider is pricing your products and services for a profitable outcome. To determine your pricing strategy, you’ll need to account for various factors, including the cost of materials, labor, overhead expenses, and your desired profit margin.

Firstly, calculate the cost of materials for each product. This includes the cost of wood, hardware, glue, and any other supplies needed. Add a buffer for potential waste or mistakes to maintain your profit margin.

Next, determine the labor cost. Decide on a reasonable hourly rate for your woodworking skills, and estimate the amount of time needed to complete each project. Multiply the hourly rate by the hours required to derive the labor cost.

Don’t forget to account for overhead expenses, such as rent, utilities, insurance, and marketing. Allocate these costs to each product or service based on the percentage they contribute to your total sales.

Finally, establish your desired profit margin. Typically, between 15% and 40%, depending on your target market and willingness to invest in high-quality materials and equipment. Apply this percentage to the total cost of materials, labor, and overhead to determine the final selling price for your woodworking products.

To ensure a profitable woodworking business, keep track of your expenses, adjust your pricing strategy as needed, and focus on increasing efficiency and reducing waste. By combining a solid pricing strategy with high-quality craftsmanship, you can set your business up for success.

Employees and Labor

Hiring Employees

When starting a woodworking business, it’s essential to consider the staff you’ll need.

For most of you reading this, you will generally just want to start by yourself. You may even want to stay at that level (that’s what I have done).

But depending on the growth and demand of your business, you might require skilled woodworkers, a sales team, and administrative support. To attract talented candidates, offer competitive salaries and benefits, as well as opportunities for career growth and skill development. You can advertise job openings on industry-specific websites, job boards, or partner with woodworking schools and associations to find potential employees.

Labor Considerations

For those who do hire help, this section is focused on employee aspects of the business.

Managing labor costs is critical for the success of your woodworking business. To ensure you’re accurately compensating your employees and managing your budget, consider the following:

  • Hourly rate vs. salary: Determine if it’s more appropriate to pay your employees an hourly wage or a fixed salary. Hourly rates can be helpful for those working on specific projects, while salaried employees may be more suitable for ongoing tasks.
  • Overtime: Be aware of overtime regulations and compensate employees accordingly. Not managing overtime properly can lead to increased labor costs and potential legal issues.
  • Efficiency: Ensure your team uses their time as efficiently as possible to minimize wasted labor hours. Proper planning, communication, and task management can streamline operations and reduce labor costs.
  • Training and development: Invest in your employees by providing regular training and skill development opportunities. This can help improve productivity, reduce turnover, and drive business growth.

By carefully considering your hiring needs and managing labor costs, you can build a strong team that contributes to the success of your woodworking business. Remember the importance of investing in your employees by offering fair compensation, benefits, and training opportunities, as it will ultimately reflect on the overall performance of your business.

Marketing Your Business

Marketing Plan

A strong marketing plan is critical for your woodworking business’s success. Start by identifying your target audience, and then outline your business goals. From there, determine the marketing channels you’ll use to reach your audience. Your plan should also include budgeting, scheduling, and performance measurement options to help you stay on track and adjust your strategies as needed.

Word-of-Mouth Marketing

One of the most effective ways to market your woodworking business is through word-of-mouth marketing. Encourage satisfied customers to spread the word about your quality work and excellent customer service. You might also consider establishing a referral program, offering incentives for loyal customers who bring new business your way. Showcasing your work at local fairs and exhibitions can also help build your reputation and generate interest.

Online Marketing

In today’s digital world, having a strong online presence is crucial for any woodworking business. Start by creating a professional website that showcases your services, portfolio, and provides a way for potential clients to contact you. Update your website with engaging and informative blog posts to establish your expertise and build trust among potential customers.

Set up accounts on various social media platforms and use them to share content showcasing your woodworking projects, your creative process, and client testimonials. Engaging with your audience and joining woodworking-related communities can further expand your online reach. Finally, consider using digital ads and email newsletters to promote your woodworking services, special offers, or new projects.

Managing Business Finances

Opening a Business Bank Account

Opening a business bank account is a crucial step for your woodworking business. This account will help you separate personal finances from your business finances, making it easier to manage and track your business income and expenses.

When choosing a bank for your woodworking business, consider the available services, fees, and convenience. Look for a bank that offers low or no fees, online banking, and efficient customer service. Opening a business bank account early on will help you establish a strong financial foundation for your woodworking business.

Keeping Track of Finances

Proper business accounting and bookkeeping are essential for managing the financial health of your woodworking business. Effective tracking of your finances allows you to monitor expenses, revenue, and profits, and can help you identify areas for improvement or growth.

Here are some tips for keeping track of your woodworking business finances:

  • Use bookkeeping software: Investing in reliable bookkeeping software can significantly improve the accuracy and efficiency of your financial record-keeping. Choose software that is user-friendly, flexible, and tailored for small businesses.
  • Set a budget: Develop a realistic budget for your woodworking business, including estimates for both income and expenses. Regularly review your budget and make adjustments as needed to ensure your business remains financially viable.
  • Stay organized: Keep all business-related financial documents, such as invoices, receipts, and bank statements, organized and accessible. Maintaining an organized system will save you time and reduce the chances of errors in your financial records.
  • Monitor cash flow: Regularly review your cash flow to ensure you have enough funds to cover expenses, like materials, equipment, and salaries, as well as any potential bank loan repayments. A positive cash flow enables your woodworking business to grow and invest in new opportunities.

By following these steps and maintaining regular control of your business finances, you’ll ensure the long-term success of your woodworking business.

Frequently Asked Questions

What tools are essential for beginning a woodworking business?

For starting a woodworking business, you’ll need some essential tools like a table saw, miter saw, jigsaw, planer, sander, and a set of hand tools like chisels, hammers, and screwdrivers. Additionally, investing in quality clamps, a router, and a workbench will make your work more efficient and accurate.

How much does it typically cost to establish a woodworking business?

The cost to establish a woodworking business varies greatly depending on the scale of your operations. You may start with a small-scale workshop at home, which could cost around $2,000 to $5,000 for initial equipment and tools. For a larger-scale, standalone workshop, expect the costs to be significantly higher, with estimates ranging up to $50,000 or more, covering workspace rental, equipment, materials, and marketing expenses.

Which woodworking projects generate the most profit?

Profitable woodworking projects typically include custom furniture, cabinetry, and home decor items. Additionally, crafting smaller, niche items such as wooden toys, cutting boards, and special occasion gifts can yield higher profit margins, as they require less material and are often valued for their uniqueness.

Personalized items will generally be in demand, especially on platforms like Etsy.

Can a woodworking business be profitable in 2023 and beyond?

Yes, a woodworking business can be profitable in 2023. With the increasing demand for unique, customized, and quality wood products, there is an opportunity for skilled woodworkers to create a successful business.

To maximize profits, focus on niche markets, develop a strong online presence, and continuously improve your skills and efficiency in production.

What are some creative names for a woodworking business?

When choosing a name for your woodworking business, consider names that evoke craftsmanship, tradition, and quality. Some creative ideas include: WoodSavvy Creations, Artisan Woodworks, Forestcrafted Design, TimberTales Workshop, and WoodWhisperer Studio.

Do I need a special license to operate a woodworking business?

Licensing requirements vary by location, so it’s essential to research your local government regulations to ensure compliance. In many cases, you’ll need a general business license, and in some states, you may need specialized woodworking or contractor licenses. Also, consider liability insurance, as woodworking can pose potential risks to both you and your customers.