How to Start a Woodworking Business

How to Start a Woodworking Business

Making the transition from hobbyist to entrepreneur can be a scary step. Woodworkers, especially, might feel stumped on how they can use their passion and skills to start a business.

You already have the woodworking skills. All you need is a little help in monetizing your craft. In this guide, we’ll explain the steps you need to know to turn your woodworking passion into profit. 

Starting a Woodworking Business in 6 Steps

Are you ready to learn how to start a woodworking business? Let’s begin.

Step 1: Write Your Business Plan

Even if you’re starting small with a woodworking business of just yourself, a business plan is critical to your success. It will be your map when transforming your profitable idea into a real, income-producing business.

If you’ve never written a business plan, be sure to check out our guide on how to write a business plan. Here’s a preview of some key areas you’ll want to address.

Choose Your Niche

Wood is a medium that can be shaped to suit different needs and trends. You can use wood to build the framework of a home. You can also use it on a smaller scale and shape it into fashion accessories. Since there are so many different ways to use wood, you’ll want to choose a niche, such as:

  • Home decor
  • Jewelry
  • Office supplies
  • Tables and desks
  • Men’s accessories
  • And more

You may fear that choosing a niche limits your potential customers. By targeting a specific market, you risk losing sales gained from consumers outside that market.

However, that isn’t always the case. Choosing a niche, especially in the woodworking industry, helps you stand out among your competition. 

Compare a general jewelry store with an online boutique that sells Parisian-inspired wooden bracelets. The latter offers a unique selling point. And this allows that business to build a specific audience and charge premium rates.

Create a Business Budget

Before you get your business up and running, you’ll need to estimate your startup costs and recurring expenses. Creating a business budget helps you understand your overhead costs and how much money you need to make a profit. For a woodworking business, here are some upfront and recurring expenses you’ll want to factor.

  • Lumber
  • Claw hammer
  • Tape measure
  • Utility knife
  • Sawhorse
  • Storage system
  • Vacuum
  • Moisture meter
  • Chisel
  • Level
  • Caliper
  • Screwdriver
  • Nail set
  • Block plane
  • Clamps
  • Hand saw
  • Workbench
  • Circular saw 
  • Power drill
  • Sabre saw
  • Sander machine
  • Shipping materials (bubble wrap, packaging)
  • Shipping insurance
  • Website hosting

How Much Does It Cost to Start a Woodworking Business?

Many woodworking business owners start as hobbyists. If you’re following the same path, you’ll likely have many of these tools in your kit. But if you’re just starting, you should estimate for your total startup costs to add up to $5,000.

Fortunately, recurring expenses tend to be nominal. If you’re starting a woodworking business from home, you can save money on rent and utilities. 

But you will need to budget for supplies, like lumber, nails, and paint. If you work with wholesale retailers, you can rack up further savings. It may be worth calling local companies to compare quotes before choosing a supplier.

Separate Your Business and Personal Expenses

You’ve heard it before: When going into business, it’s best to keep the professional and personal separate. That includes your finances. 

A smart business owner should separate their business and personal assets. This separation is critical when calculating your tax write-offs during tax filing season. Also, drawing a line between your business and personal assets upholds your personal liability protection. Should you ever get stuck in a financial or legal dispute, the opposing party can only sue the company—you, the individual, are protected.

To help you separate your assets, we recommend opening a business bank account. A dedicated account ensures that your business assets pour into a separate pot. Also, opening a business credit card makes it easy to reference your business expenditures.

Step 2: Register Your Business

After you’ve written your business plan, it’s time to sort out the paperwork in making your business official.

Choose a Business Name

Millions of businesses have formed alongside the growth of the internet and digital marketing. It’s easy for your name to get lost in the crowd. That’s why a unique business name is essential for selling your brand. When you’re satisfied with your business name, don’t forget to confirm it’s availability. Do this by conducting a quick search with your state’s secretary of state’s office and the U.S. Patent and Trademark Office

Your domain name is also useful in building your online presence. Before you commit to a business name, be sure to check if the domain is available by using websites like or While you’re at it, also check if handles on your preferred social media channels are available.

Choose a Legal Structure

After your business name, you’ll need to choose your business entity, or legal structure. Your legal structure will determine how you file your taxes and which liability protections you’ll have. There are many to choose from but for small woodworking businesses, here are the two most common entities:

Sole Proprietorship: This legal structure is the simplest to set up (you don’t need to register it with your state) and is usually favored by one-person businesses, like freelancers. However, you do not gain any personal liability protections under this business entity. If you ever stumble into a legal or financial dispute, you have total liability exposure. Also, sole proprietors file their business taxes on their personal returns.

Limited Liability Company (LLC): An LLC is an attractive business entity for any product-based business. Unlike a sole proprietorship, you gain some personal liability protection. Also, when filing your taxes, you can be taxed as a corporation or pass-through entity. Don’t think, though, that you’re unable to form an LLC as a single person. You can still form an LLC as an individual or with multiple partners.

Register for Employer Identification Number

When your business grows to receive more orders than you can handle, you may want to hire employees. Your employees may help you fulfill orders or you may want to outsource other business operations, like sales and marketing.

Before you can do any of this, though, you must register online with the IRS for an employer identification number (EIN). Please note that this number will also be used for tax filing. 

Step 3: Research Sales Venues and Online Marketplaces

Determining where you’ll sell your wooden wares is another important piece of the starting a business puzzle. As a woodworker, you’ll likely choose between online and in-person platforms. 

Online Marketplaces

There are so many online marketplaces to build your online business—Amazon, eBay, Shopify, Etsy, and more.

But for handmade niche items, Etsy reigns supreme. Your wood-based products will feel at home on Etsy and your target market will likely be shopping on this platform. If you do a quick search for “wooden accessories,” for example, and you will find other businesses selling wooden cell phone cases, jewelry, home decor, and more. Be sure to read our guide on how to open an Etsy shop.

But Etsy isn’t the only marketplace where your target market is gathering. Many small business owners also find success on eBay or Amazon.

Regardless of which marketplace you choose, it’s crucial that you brush up on your search engine optimization (SEO) skills. Improving your SEO increases your listing’s visibility—you’re aiming for the first page on whichever marketplace you sell on.

Since woodworking is your unique selling point, you’ll want to factor that into your product title and descriptions. For example, instead of “brown bookshelf,” you’ll want to use “natural wood bookshelf.” This specificity will help your listing jump higher on search results when shoppers search for wooden bookshelves.

Local Craft Markets

Local craft fairs and markets are a great way to sell your products and engage directly with your customers. It can also be instrumental in building a strong brand presence within your local community. 

Think about local hole-in-the-wall restaurants. People love supporting their local businesses. If you strengthen your brand recognition within your community, you can cultivate loyal customers and repeat business. These are the people who continue to buy from your booth at craft fairs.

Step 4: Obtain Business Permits, Licenses, and Insurance

You’re probably eager to return to your workshop but there is still paperwork to complete to make sure your woodworking business is operating legally.

Secure Business Permits and Licenses

Depending on the nature of your business, you may need to secure certain business permits and licenses. Some states may require you to obtain a business license and carpentry license. A seller’s permit may also be required in certain states. 

To ensure that you’re complying with your requirements, be sure to check with your state and federal agencies.

Buy Shipping Insurance

If you’re selling your products online, shipping insurance may be worth considering. While smaller accessories, like necklaces and bracelets, may arrive without hiccups, larger items like bookshelves can often arrive damaged.

If you’re selling on a platform like eBay or Amazon, you will likely need to issue a full refund if an order arrives damaged. Shipping insurance lets business owners recuperate some of the expenses lost from packages that are lost, stolen, or damaged in transit.

If you have employees, you’ll also need to obtain specific forms of insurance, such as workers compensation and disability. Especially as a business where accidents are likely, you should also consider general liability insurance to start.

Step 5: Secure Startup Funding

Every business takes money to get off the ground. Depending on how much initial capital you need, you may decide to self-finance your business or seek outside capital.

Self-Finance Your Business

Woodworking businesses often begin as a side hobby. Your woodworking toolkit naturally grows over time, reducing the remaining costs when you finally register your business. For this reason, self-financing is a viable option for many woodworking business owners.

Also called bootstrapping, those who self-finance enjoy certain benefits. The best part is that you enjoy full ownership of your business and don’t need to worry about repaying a loan plus interest rates. This financing method, however, should only be considered if you have financial discipline. Remember: You are risking your personal cash reserves.

Apply for a Business Loan

Depending on your needs and goals, your woodworking business may necessitate a business loan. If you’ve been working out of a spare room or a garage, for example, you may want to build dedicated infrastructure for your business. 

Due to the noise of some woodworking machinery, renting an office space may not be possible. That’s why many woodworkers build a workshop in their backyards. If you have space, this may be a business goal for you. Also, if you plan to expand or upgrade your current tools, some equipment, like your circular saw and workbench, can get costly.

As far as startup funding goes, it can be challenging to get approved as a new business. Fortunately, there are alternative financing options you can consider. 

Step 6: Leverage Social Media

Social media marketing is great for showcasing your best work. You’ll want to choose social media platforms that emphasize your visuals. Instagram and Pinterest are great choices for this—and they tend to be a favorite platform for creative artisans and craftspeople to advertise their work.

But you don’t want just to sell, sell, sell. Sales are only one part of your marketing strategy. Another key factor is to connect with your audience.

Combining social media and content marketing is about showcasing your expertise but also building rapport with your customers. Closing the sale is easier when your customers trust you.

Final Thoughts

If you’ve been wondering how to turn your woodworking skills into a profitable business, we hope this guide answered your questions. If you follow the above steps, you will learn how to monetize your craft and transform it into a full-time income.

But remember: Passion is only one key to building a business that you love. You’ll need to improve your business skills as you improve your craft. Woodworking is already a unique selling point and there are tons of opportunities to make a profit. As you refine your product and brush up on your marketing skills, you’re well on your way to building the business—and lifestyle—that you’ve always envisioned.

Dan Marticio

Dan Marticio is a small business owner and contributing writer at JustBusiness, specializing in business finance and entrepreneurship. He’s written on a broad range of topics from stocks and net worth to productivity hacks. He helps SMBs scale and profit through compelling content.

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