TKD Woodworking – Year 2 Financials

Well, I can say 2021 was a much better year for my “side hustle” of woodworking than 2020. My primary mode of sales has been the local Farmer’s Markets/Craft Shows – and there weren’t many of those in 2020. I did take the opportunity to pay to upgrade my website and enhance it for internet sales – though I haven’t had much luck selling anything on the internet. In a lot of cases, I’m competing with products from overseas, where they use lower quality woods and cheaper labor – so I can’t compete on their prices. At least that is the story I am telling myself.

So what do my financial  reports look like?

Income Statement:

AreaAnnual
Sales Revenue$1,364.98
Cost-of-Goods Sold Expense($531.55)
Gross Margin$833.42
Operating Expenses($4,372.62)
Earnings before interest and Income Tax($3,539.20)
Interest Expense$0.00
Earnings before income tax($3,539.20)
Income Tax Expense$0.00
Net Income($3,539.20)
  • Cost of goods sold is coming in around 38.9%, which is a little higher than I expected. It may be that I was purchasing more materials that what I needed, and I certainly have some inventory remaining
  • Operating expenses (insurance, business fees, etc.) were high, but $2,400 of this was for work on the website, which was a one-time thing (hopefully). This number should drop significantly in 2022.
  • Still, coming in at a loss of $3.5K for 2021. I lost $2.5K in 2020, so I’m $6K in the hole for the side hustle so far

Balance Sheet:

Assets 
12/31/2021
Cash$2,434.07
Accounts Receivable$0.00
Inventories$679.24
Prepaid Expenses$0.00
Subtotal of current assets$3,113.31
Property, plants and equipment$0.00
Accumulated Depreciation$0.00
Cost less accumulated depreciation$0
Total Assets$3,113.31
Liabilities and Owner’s Equity 
12/31/2021
Advanced payments from Customers$0.00
Accounts Payable$0.00
Accrued Expenses Payable$0.00
Short-term notes payable$0.00
Subtotal of current liabilities$0.00
Long-term notes payable$1.00
Total Liabilities$1.00
Owner’s Equity – invested capital$3,113.31
Owner’s Equity – retained earnings$0.00
Total Liabilities and Owner’s Equity$3,113.31
  • So I’ve got about $2.5K in cash, and $680 in inventory (the inventory is listed as the cost of materials only, not its sale price).
  • When you look at what I put in vs. the current balance sheet, I’d say I’ve lost about $3K for the project in the first two years.

Cash Flow:

The cash flow report (the last of the big 3) showed that I had to inject $500 on four (4) occasions throughout 2021 to make sure my cash was sufficient in the account. If I had not been getting the website done (-$2,400) I probably would have been fine.

Lessons Learned:

  1. Need to go into the business well capitalized. Even for this small business, I’ve got $6K+ in, and I came with my own tools and shop.
  2. Continue to look for ways to save money. I’ve got a friend who I borrow the pop up and tables for the Farmer’s Markets/Craft Shows. Cost = $0 vs. $200+ to purchase them
  3. A good website will still drive traffic & interest, even if it doesn’t generate internet sales. I believe this was money well spent
  4. Identify the “price point” for your market/show. Depending on the clientele, people will be spending within a certain price range. If the price point is $50, you aren’t going to sell a lot of $300+ items.
  5. Commission work can be very lucrative, provided you price it correctly. For your existing work, you’ve identified the time it takes to make it, and put your labor into the price. For “one offs” commission work, you need to do a good job of estimating time in order to make the work pay for itself.
  6. As the year goes on, do an analysis of what items are getting people’s attention, and what sells. Those are the items you need to emphasize, while the lower ranking items can be “pushed back.”
  7. Signage is important at craft shows. People walk by very quickly, so your signage needs to show what you do, and what are the advantages of your product vs. others.

Overall, I’ve enjoyed myself, and gained some useful experience in running my own company.

Hopefully your “side hustles” have done well!

Read more

Mr. 39 Months

Gone to Market!

        

The Craft Show/Farmer’s Market season is closing down, and this weekend was the last time I’d get to “sell my wares” at the local farmer’s market. So TKD woodworking went to the local Burlington County farmer’s market to set up shop.

I always enjoy these, not only to sell, but to talk to other vendors and the people who stop by. I get a lot of questions and opinions/thoughts on the craft, and its always a joy just to engage in conversation with folks. Its been somewhat profitable at the shows, and I’ve gotten some commissions off of it which have helped expand the business. So win/win for everyone.

I hope everyone enjoyed my work, and I hope everyone reading has a happy and joyous holiday season!

Mr. 39 Months

Back to the shop!

       

Well the injury is somewhat healed and I can take the big bandage off.  Still don’t have much feeling in the top third of that finger, but the doctor believes its going to heal close to 100%, so I’ll take that!

Now its time to start working on the next project, which involves laminating a variety of woods (Padauk, Walnut, Ash, Maple and Purple Heart) for the next project. I’ve got to rip it into strips and glue it up in order to make panels for the next item.

Very repetitive work, but its great to be back in the shop!

Read more

Mr. 39 Months

Let’s be Careful Out there….

I’ve spoken before about my “side hustle” of TKD woodworking in the past (look through link on the right). I really love woodworking, and its given me an outlet where I can fund my interest, improve my skills, and practice the administrative tasks of running a company (financial documents, website, etc.)

One of the issues with any sort of hand labor (carpentry, automotive, etc.) is there is a danger from the tools you use. You need to always be on guard, especially with powered equipment (like Table saws, miter saws, etc.). Whenever I’m working with powered equipment, I make sure the guards are on, and I use a healthy respect for these tools. It is one of the reasons I got a Sawstop table saw – it has a braking system in it that cuts out the saw if it detects it is cutting flesh. I can honestly say that I have not had a power-tool injury in the 30+ years I have been doing this work.

Unfortunately, I now can’t say the same about hand tools. Yes, those tools that are powered by Human muscle. Its very embarrassing.

I have a few old-time wooden hand planes that I don’t use very frequently. I’ve got them stored above a cabinet, since I only pull them out once every 2 years or so. Well, I was pulling something out of the cabinet, and one of the hand planes fell. For wooden hand planes, the blade is held in with a wooden wedge, and in this case, the wedge came loose, and the blade fell down. Did I step back and away? Of course not, I reflectively tried to catch the plane & blade, and the result was a somewhat severe cut to my ring finger on my left hand. Ouch!

Visit to minute clinic and then hand doctor yielded a bandaged hand, and then an operation to reattach one of the nerves in the hand. Luckily there was no damage to the ligaments, so I still have full range of motion. But for the next 2 weeks, I’ve got no shop time – have to keep in clean.

Lesson’s learned – never store sharp tools above where they could fall. This has been fixed in my shop now. As my wife says, it could have been worse.

Read more

Mr. 39 Months

TKD Woodworking gets its first Commission!

I wrote earlier about going to my first farmer’s market a couple of weeks ago. While I didn’t sell a lot, I learned a lot and got some ideas on what sells and what might not, and how to better market my material. I also had a great time talking to the other merchants, getting some insights, and discussing their crafts and food.

One of the merchants there sold wreaths, make up of greenery, ribbons and other materials. In talking with her, she expressed an interest in whether I do work commissioned by people. When I said that I did, she told me that she needed to get a small storage rack to store her ribbons in her craft room. Her current method doesn’t work well – its very disorganized.

After discussion of what she wanted, I drew up a mockup of it. She looked at it and approved (with a few changes). From there, I was able to finalize the design, determine the materials, and estimate the amount of labor it would take to build (I was helped in this by all the time studies that I had previously done). For this first one, I didn’t add any overhead – just my hourly rate + materials. I thought it was good to start it this way for my first one.

So this weekend, my intention is to build this and apply finish, and really try to complete it. That way, I can deliver it before my next time at the farmer’s market. If all goes well, I’ll see her there, and she can sing my praises to the other vendors and customers.

Wish me luck!

Read more

Mr. 39 Months

TKD Woodworking makes its first sale!

I’ve written several articles on starting up a side hustle with my woodworking (see in  “Categories” on the right). The primary reason was to start doing finance books similar to those for running a small business, with cash flow, balance sheets, etc. I’ve enjoyed the work, and its opened my eyes a great deal to the benefits and issues of running my own business.

Well, part of any business is sales, and I had the opportunity to work at a local Farmer’s Market and sell my wares last weekend. I wasn’t scheduled to do this till July 31st, but they had an opening and were looking for someone to fill it. So I did.

Depending on your outlook, it was either a very poor or a very good day. Poor in that I only sold one item (a Japanese style picture frame for $76). Good in that I was able to run through my setup, process a sale with a credit card, and learn some marketing lessons to prepare me for the two weeks I am scheduled to attend (July 31 and late September). My wife and some friends dropped by to also observe and provide some of their own thoughts on how to improve.

Some of the points that were talked about were:

  1. For the tea boxes, open one up and put in costume jewelry, to show alternate uses
  2. More informative signage, including items like:
    1. Veteran owned & operated
    2. Handmade/Handcrafted
    3. Premium Hardwood (Oak, etc.)
    4. Made Locally
  3. Add verticality to displays
  4. Signage on bookshelves, noting that it is easily disassembled
  5. Vinyl banner
  6. Cutting board holder to store more, and note “end grain construction, hardwood durability but easier on knives
  7. Other items that are lower costs ($20 and $30 items)
  8. Business card holders

My thoughts are this is that it was an excellent “dry run” and I’m looking forward to the end of July for phase II.

Read more

Mr. 39 Months

Closing in on Project Completion

Completed cleaning up the Tenons and test fitting them into the shelves. I have to make each one separate, as the mortises and tenons need to match and there are always minor variations. So I use chisels and a rasp to cleanup and fit each tenon for its individual mortise slot. It needs to go in easily, but still lock tight once the pegs have been hammered home.

This is shows how the #74 goes together. The top will have a slant which will better display your books, while the bottom shelf holds books upright. The handles on top means the shelf can be picked up and shifted around, as needed.

I still need to cut the mortise holes for the pegs, make & test fit the pegs, and then sand/finish the shelf. Still, I like how its coming out.

Read more

Kevin

Do I double-down on TKD Woodworking?

I’m sure you all are aware that 2020 wasn’t that good of a year to start a new business.  Even a side-hustle has challenges, and TKD Woodworking is no exception.

I showed a lot of the steps that I went through in developing the company in my link to the right. It’s a fairly large set of postings on decisions on what to make, how much, and what to spend money on. I put a lot of thought into it, and work on the initial product line for selling.

Needless to say, the availability of craft shows and farmers markets in my local area were very small in 2020. I detailed how we did financially, and it was somewhat disappointing.

I’ve reached an interesting point in the business for year 2. I’ve put in roughly $4,100, and had $2400 in expenses for 2020, leaving me with roughly $1,700 remaining. In order to move forward in 2021, I still will have probably $1,000 in fixed expenses (insurance, webhosting, registration, etc.).

In addition, I’m interested in upgrading my website to make it more professional and be more receptive to e-Commerce. My webhosting company, BlueHost, is offering me a package deal of roughly $2,500 to upgrade my website (5 pages, up to 10 product pages, e-Commerce, Blog, etc.) and to do work on Social Media (Facebook, Twitter, etc.) to help publicize it.

I’m tempted to do this, as I think the website would look a lot better (I don’t like how it looks right now) and the potential for additional sales is tempting. Does anyone else have experience with folks helping to build their website?

Lots of fun, running a business.

Read more

Mr. 39 Months

Measure Twice, Cut Once

In woodworking, there is an often used phrase “Measure Twice, Cut Once.” The concept is that when you do your first measurement, you should check it a second time a little later, just to make sure you didn’t make a mistake, before you cut something. When you cut a piece of wood (or metal, cloth, etc.) you pretty much are committed at that point to wherever you have measured to – and the world is full of people who measured an inch (or centimeter) too short. The result – something gets tossed out because it isn’t useful.

I was reminded of this recently while doing some woodworking in the shop. I was building a couple of doors for the kitchen island I was making. The doors used a framing joinery style called “mortise and tenon” which is very old (1,000s of years) in which you create a tenon (sort of a wooden tab) which gets inserted into a mortise (a hole you’ve carved into the wood). It results in a square frame, sort of like a picture frame. You can then insert a flat panel into the middle, which “floats” between the four pieces. This is key, because wood has a tendency to contract and expand as it releases/takes in water throughout the year. If the center panel can’t move, things have a tendency to crack.

Well, in rushing things I took the measurement for the panel and cut them while I had some glue drying on something else. Guess what? The panels are too short, on both ends. Exactly one inch too short!

I had to go purchase new wood to go into these, and the other ones will go into my wood pile, where I hope to find  a new use for them.

For many of us in the days of Tesla and GameStop, there is the urge to shoot first, then aim. While this can pay off occasionally, I would still urge others to “measure twice, cut once” and double check your assumptions and decisions a second time before acting on them. A lot of trouble in this world can be bypassed if we just take a second look at things.

I hope everyone is healthy and happy!

Read more

Mr. 39 Months