A woodworking business plan sets out what you'll build and who buys it, what each piece costs with your hours in it, the shop and the tools, and the first year month by month. Woodworking's arithmetic is unforgiving: lumber is only about a quarter to a third of a piece's cost, the hours are most of it, and a price that looks generous at a craft fair can leave almost nothing once the hours are paid. The plan's job is to find prices that pay the hours, and a mix of quick pieces made in runs with a few commissions on top. In the example below, a woodworker in Tupelo sells cutting boards, serving boards and commissioned side tables, makes a profit from month 5, and ends the year about $7,300 ahead on $64,700 of sales, after paying $20 an hour for every hour in the shop; at prices $10 to $100 lower, the same year loses money. Below is a description example, each part of the plan, the projection, the startup budget, and a free template.
The short version
- Describe the business in a paragraph: what you build, where you sell, the shop, the goals.
- Cost each piece with lumber bought, not just what ends up in it, plus supplies and your hours.
- Make boards in runs of ten; one-offs cost far more in hours.
- Price so every piece pays your hourly rate and leaves something for the shop.
- Take commissions with a deposit that covers the lumber.
- The table saw, planer, jointer and dust collection are the startup; buy used where you can.
- TaroStack keeps lumber by the board foot and every design costed. More below.
Part 1: the business description
Natchez Trace Woodworks, a made-up woodworking shop in Tupelo, Mississippi, I use in these examples, writes:
Natchez Trace Woodworks makes edge-grain and end-grain cutting boards and walnut serving boards in small runs, sold at craft fairs, online and through two gift shops, and builds side tables and other furniture to commission. In our first year we plan to take two commissions a month.
Part 2: what a piece costs
| Per unit | Edge-grain board | End-grain board | Walnut serving board | Side table, commissioned |
|---|---|---|---|---|
| Lumber bought | 3 bd ft maple, $21.00 | 5.1 bd ft, $51.00 | 1.4 bd ft walnut, $14.00 | 12 bd ft white oak, $108.00 |
| Glue, finish, sandpaper, hardware | $3.50 | $6.00 | $3.00 | $25.00 |
| Your hours, at $20 an hour | 1.5 hours, $30.00 | 4 hours, $80.00 | 1 hour, $20.00 | 16 hours, $320.00 |
| Selling and card fees | $5.70 | $14.40 | $4.50 | $22.50 |
| Variable cost | $60.20 | $151.40 | $41.50 | $475.50 |
Lumber is bought rough and milled flat and square, and the offcuts go in the scrap bin, so a board takes more lumber than it holds; the table shows what's bought. The edge-grain board's 1.5 hours are its share of a run of ten: milling, gluing up, planing, sanding, finishing and oiling ten at once. How to put your own time into a price is in how to price handmade items.
Part 3: customers and prices
| Product | Price | Variable cost | Contribution | Margin | A month at full speed |
|---|---|---|---|---|---|
| Edge-grain cutting board, maple | $95.00 | $60.20 | $34.80 | 36.6% | 40 |
| End-grain cutting board | $240.00 | $151.40 | $88.60 | 36.9% | 8 |
| Walnut serving board | $75.00 | $41.50 | $33.50 | 44.7% | 30 |
| Commissioned side table | $750.00 | $475.50 | $274.50 | 36.6% | 2 |
At $85 for the edge-grain board, $210 for end grain, $65 for the serving board and $650 for the table, the first year comes out $104 in the red, though every hour is paid. The prices above, 12% to 15% higher, turn it into $7,260 ahead, which is what the shop's rent, blades and fair fees need. A gift shop that resells boards needs its own margin; how to price for that is in how to price handmade items for wholesale.
Part 4: the first year, month by month
Fixed costs are $1,475 a month: shop rent ($800), power and dust collection ($120), blades, bits and sharpening ($100), insurance ($80), market and fair fees ($200), the vehicle ($100), the website and online shop ($40), and software and card fees ($35). Sales start at 15% of full speed and reach it by month 11:
| Month | Edge-grain boards | End-grain boards | Serving boards | Side tables | Sales | Profit | Cash, year to date |
|---|---|---|---|---|---|---|---|
| 1 | 6 | 1 | 5 | 0 | $1,185 | −$1,010 | −$1,010 |
| 2 | 8 | 2 | 6 | 0 | $1,690 | −$818 | −$1,828 |
| 3 | 10 | 2 | 8 | 1 | $2,780 | −$407 | −$2,236 |
| 4 | 12 | 2 | 9 | 1 | $3,045 | −$304 | −$2,540 |
| 5 | 16 | 3 | 12 | 1 | $3,890 | $24 | −$2,516 |
| 6 | 20 | 4 | 15 | 1 | $4,735 | $352 | −$2,164 |
| 7 | 24 | 5 | 18 | 1 | $5,580 | $681 | −$1,483 |
| 8 | 28 | 6 | 21 | 1 | $6,425 | $1,009 | −$474 |
| 9 | 32 | 6 | 24 | 2 | $7,780 | $1,523 | $1,049 |
| 10 | 36 | 7 | 27 | 2 | $8,625 | $1,852 | $2,901 |
| 11 | 40 | 8 | 30 | 2 | $9,470 | $2,180 | $5,081 |
| 12 | 40 | 8 | 30 | 2 | $9,470 | $2,180 | $7,260 |
The year's sales are $64,675 and the profit $7,260, on top of $20 an hour for every hour in the shop. At full speed that's about 150 hours a month of building, so a second pair of hands or a busy season of evenings. Commissions are lumpy; the plan takes one or two a month and asks for a deposit that covers the lumber before it's bought. How cost-plus pricing works for a one-off piece is in cost plus pricing example.
Part 5: the startup budget
| Item | Example |
|---|---|
| Table saw | $3,000 |
| Planer | $1,500 |
| Jointer | $1,200 |
| Drum sander | $1,800 |
| Router and bits | $600 |
| Clamps | $800 |
| Dust collection | $1,200 |
| Lumber, first order | $1,500 |
| Glue and finishing supplies | $300 |
| Market display | $500 |
| Website and photos | $500 |
| Working cash | $3,000 |
| Total to start | $15,900 |
Get the template
Download the woodworking business plan workbook. Four sheets: your pieces with price, variable cost and monthly volume at full speed; the year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. Try the prices a few dollars up and down and watch the year's profit. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
Maple, walnut, cherry and white oak bought rough by the board foot, a rack of offcuts, ten designs in runs, two gift shops, fairs every few weeks, and commissions with deposits. A sheet can't say how much walnut is left, what the last run of boards really cost, or which designs earn their hours.
How TaroStack does it
TaroStack keeps lumber by the board foot and every design costed.
Lumber and supplies in stock. Each species and thickness is an item, counted on a phone and kept at what you paid, and units convert: lumber bought by the board foot, used by the board foot or the piece. Glue, finish and hardware are items too.
Designs as recipes. Each design is a recipe of its lumber, with scrap allowed for, and its supplies, so recording a run of ten takes them off stock at what you paid and gives the cost of each board. Commissions and gift shop orders are sales orders that show whether the lumber is on the rack while you're still typing.
And what each design earns. A price-creep report per supplier shows whose lumber prices are rising, and margins are reported by product and by customer.
| The job | Notebook | In TaroStack |
|---|---|---|
| How much walnut is on the rack? | Measure and guess | Stock by item, in board feet |
| What the last run of boards cost | A guess | Each run, at what it used |
| Whose lumber prices are rising? | Noticed on the invoice | Price creep by supplier |
| Which designs earn their hours? | A feeling | Margins by product |
Recipes, batches, sales orders and margins by product and customer are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.