Starting a Cabinet Shop

Good down-to-earth business advice for a well-qualified woodworker considering how to go into business for himself. June 22, 2010

I currently work for a construction company and love my job. I am planning on taking the rest of my apprenticeship with the company and then parting ways to set up a cabinet/fine furniture shop.

Unfortunately, so far this sounds like any other young woodworkers dreams are. However, unlike many I am sure I have the determination and knowledge to make this dream reality. I was just wondering if any of you had any tips or information on the legal side of owning a business? I've read endless articles on contracts, liens, advertising but I still haven't studied the accounting aspect of owning a business. How does a woodworker deal with taxes and what kind of taxes? I currently live in the province of Manitoba, Canada but I would imagine American accounting information wouldn't hurt.

Also, this may seem like a silly question, but how does one know if a specific area has a market for another cabinet builder. I've looked in the local phone book to see if there are many cabinet makers but there appears to be only a few. Any ideas how to check this out for sure?

Forum Responses
(Business and Management Forum)
From contributor S:
Well, your English is pretty good, but as you say, the tax system in Canada is, as of today, a bit different than it is here in the states. You will need to consult with a local accountant familiar with small businesses, and better yet, one that has worked specifically with a cabinet shop before. Our tax laws are different in every state, so advice from one location may not work in another.

From contributor T:
Go to service Canada or the CRA website - lots of info there. Then go to your provincial government agents office they will give you more info. The only way you will know if there is room for another woody hocking his wares is to work in that area for someone and watch and learn. You could spend tens of thousands on a market survey but I 'm pretty sure your pockets are not that deep. Now that you've worked in that area for a couple of years, spent your evenings learning sales, marketing, accounting, CAD, business management, and perfecting your skills as a woody.

From contributor P:

Talk to an accountant he will set you up probably on Quick Books. Do enough accounting to stay out of trouble with the government and to know if you are making money. In the scheme of things accounting is not very important. The marketing is where you should spend about 90% of your attention. There is a book called guerrilla marketing, read it.

In the book they state something to the effect that of the 31 aspects of marketing position in the marketplace is by far and away the most important. That is what you should spend 90% of your time searching for. When you truly find a niche the rest of the aspects tend to fall into place.

From contributor R:
Business management is way more complex than it appears to be to most new business startups or know-it-all-yet-confused-employees. Take some classes on business administration before you jump in. It's by far cheaper and quicker than the school of hard knocks and will make you more competent to quantify the risk involved.

From the original questioner:
I appreciate the feedback from everyone. I am interested in the relationship between employer and employee. It appears that many believe their workers are idiots or "know-it-all-yet-confused-employees." I resent this as I am currently part of this sect. If I was to find out that my boss thought this of me I would have some very strong words for him. I have just arrived home after working from 3pm Thursday to 7:30 Friday morning. Many know-it-all-yet-confused-employees are dedicated to their jobs and sometimes their knowledge even surpasses that of their employer. On a different note I have an arts degree that I have to finish. I require one more class to receive my minor however I may take an additional minor in business. Unfortunately, I have heard that the teacher of the afterhours business class at the local community college has had several failed businesses. I am thinking itís not the best class to take.

From contributor Z:
I would not be so quick to discount the wisdom of a business instructor who has failed in business. The Harvard Business Review had an interview with John Peterman of the J.Peterman Catalog Company. The premise of the article was the apparent contradiction between his meteoric rise to success and equally rapid descent into ashes.

According to Mr. Peterman there were three reasons for this failure:
1. He grew faster than his management systems could support.
2. He strayed from what he was good at.
3. He failed to communicate his vision in a way that was useful to others.

I would consider this to be very instructive information. Mr. Peterman would probably not have learned these things had he not failed so miserably in business.

From contributor C:
There are workers who understand their job very well. They can build all sorts of projects and they are very good. However, since they can do this, and have been for a long time, some of them think that they understand the entire business process. After all, the boss doesn't do anything but "sell stuff" and "collect the checks." So, these folks are "know-it-alls" when it comes to the technical part of the business, but are "confused' about the business side.

I do agree with contributor R. Take business courses. Many of us fail not because we are not good technicians. We can design, fabricate, and install wonderful projects. But, if we don't have the business side taken care of, we will fail. Maybe not immediately, but sooner or later, if we don't learn the business side, we will fail. Take the advice of adding business courses to your formal education. No, they will not teach you everything. Some things will need to be learned by trial and error. Everyone and every situation is different.

However, there are a lot of things in common that will be addressed in business classes. Oh, and the teacher that has had failed businesses? Is there another community college nearby? Does he teach all of the classes you might want to take? It is very astute of you to learn about your potential instructor ahead of time. That by itself indicates your ability to succeed. Now, find a way to get the knowledge you need either with him, without him, or in spite of him. He might be able to teach you what you need to know while mentioning some of the things that caused his businesses to fail. Maybe all of the failures were beyond his control. There are uncontrollable events and forces in the market place. Disaster planning can only prepare a business for so much.

One more comment about that teacher. Bad news travels faster and stays longer than good news. Maybe he had some successes that folks don't know or mention. Maybe he really is a better teacher than businessman. You could always make an appointment during his office hours and go talk to him about which courses you are considering. You may learn, firsthand, that he and his course can offer you what you need.

From contributor A:
I agree with contributor Z. As woodworkers and businessmen we typically learn more from our mistakes rather than our successful endeavors. The success is often due to luck (beneficial chaos) or non-obvious decisions. Most successful people have failed numerous times while climbing the ladder.

From contributor R:
Grow a thicker skin or you wonít survive in business; we all have bosses, ours happens to be our clients. Are you going to tell them off too if they say something you don't agree with, or simply don't understand? Diplomacy skills are your best skill set for being successful, loose the emotional depressions you hold.

As to, employer-employee relationships, the same can be said about employees believing that their bosses are idiots. Are you making him money or is he supplying you a job. Either way, the relationship has to be mutually beneficial or it is flawed. The relationship ultimately equates to consideration for consideration. Being successful in business is not about how many times you fail, or your feelings, it is about times you succeed and make a profit; whether on each sale or over the lifespan of the business. With experience you will get better at being successful. With education and experience you can shorten that time. Profit is not a curse word for a for-profit business, and many employees don't understand the difference between gross and net profit.

From contributor M:
1. Get a good book-keeper. I have a guy who is semi-retired, knowledgeable and inexpensive. Spend your time on marketing, organizing and hiring/training good employees. Figure out the basics of QuickBooks.

2. Buy good quality equipment, either used or new, but stay away from the cheap stuff. Good equipment is efficient and produces a higher quality product.

3. Hire one good employee to start; someone with a good work ethic and some brains. Contrary to what some say, there are lots of smart hard-working employees out there. If you treat them decently, they will stay with you.

4. If you need some financing, you might try the Business Development Bank of Canada. The bank has lots of money at the moment as they are still trying to "stimulate" the economy.

5. Take the time to produce a quality product and maintain good relations with clients. If you start cutting corners, you will end up in a low quality market niche with accordingly low prices.

6. Be prepared to stick with it through possibly 5 lean years as you establish a market and reputation.

From contributor R:
I really don't think you need to worry about taxes but rather set up the business so it will make enough to be able to pay them. I would suggest getting an accountant to help you with the accounting and you concentrate on the work of getting profitable contracts ant delivering them a quality product and get paid. Consider also getting into computerized CNC operated equipment should you want to grow the business and be able to compete with other young up and comers such as yourself.