Initial Finance Documents for TKD Woodworking

Therefore, I have done some reading on financial documentation for small businesses and side hustles, and so I have started creating those documents for TKD Woodworking. I will be using accrual based accounting (vs. simpler cash-based) to track my finances.

The three basic finance documents for a business are:

  1. Budget/Profit & Loss Statement: A document, which shows, by month, the amount of money you are bringing in and the money you are spending to create the products/services. This is what many people think of when they do a family budget.
  2. Net Worth Statement:  A listing of the assets the company possesses (real estate, machinery, raw materials, etc.), the cash and accounts receivable (what is owed the company), as well as the debt and accounts payable (bills the company owes). All of this rolls up to the overall value of the company for that “snapshot” in time. 
  3. Cash Flow Statement: With the accrual based accounting system, you often log in expenses and income after a sale. This leads to better tracking and tax accounting, but can lead to a major issue. You may be actually spending cash, but not accounting for it in the P&L statement until months later. You need a third report, cash flow statement, to track the in/out flow of cash in the business – or you may run out of cash while still appearing to be “profitable.”

Each of these reports are linked and effect each other (ex. you can spend money in the cash flow, and increase the net worth statement with inventory, but not affect the P&L statement until you sell the items). The idea behind them is to record the base/start, and track them as the year progresses – in order to look for variances and changes, which need to be addressed. Once the year is up, they are the foundational documents for figuring out taxes.

For my P&L statement/budget, I arrived at a sales plan that assumed I’d start selling halfway through the year, and sell three (3) of each item I’m building. Based on that and current spending (remember, I’m having to purchase raw materials – which impacts my cash flow – but not getting real credit for it re: taxes until I sell something) my P&L looks like this:

Area Annual
Sales Revenue $3,518.94
Cost-of-Goods Sold Expense ($1,148.71)
Gross Margin $2,370.23
Operating Expenses ($1,407.58)
Earnings before interest and Income Tax $962.66
Interest Expense $0.00
Earnings before income tax $962.66
Income Tax Expense ($362.03)
Net Income $600.63

For the Net Worth, I am in a little bit of a pickle. For most companies, the equipment and workspace would be considered part of their assets. However, I am using my shop at home (in my garage) and the machinery (table saw, band saw, etc.) that I already own. The result is that my net worth is actually rather low to start. I am adding in the initial startup case ($3,000 – cost of some checks) and the material costs for the inventory I have built so far.

Assets
2/15/2020
Cash $2,973.65
   
Accounts Receivable $0.00
Inventories $232.42
Prepaid Expenses $0.00
Subtotal of current assets $3,206.07
Property, plant and equipment $0.00
Accumulated Depreciation $0.00
Cost less accumulated depreciation $0
Total Assets $3,206.07
Liabilities and Owner’s Equity
2/15/2020
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 $0.00
Total Liabilities $0.00
Owner’s Equity – invested capital $3,232.42
Owner’s Equity – retained earnings $0.00
Total Liabilities and Owner’s Equity $3,232.42

Another interesting feature of this for the future is that if I purchase tools/machinery in the future for the company and eventually leave/sell out – I will need to separate those items from my personal equipment. More paperwork!

Finally, the cash flow. I have started tracking what I have spent so far, and my expected cash outflows going forward. I put in roughly $639.60 before I started up the company in early February (for inventory, training, some tools, etc.) – so I added that to my initial cash pile.

Cash Flow from Operating Activities Annual
Cash collections from revenue $3,639.60
Cash payments for Expenses ($696.19)
Total $2,943.41
Cash Flow from Investing Activities
Investments in new long-term operating assets $0.00
Cash Flow from Financing Activities
Increase in short-term notes payable $0.00
Increase in long-term notes payable $0.00
Issuance of additional capital stock shares $0.00
Cash distributions from profit to shareowners $0.00
Total $0.00
Net Increase of cash during year $2,943.41
Beginning Cash Balance $0.00
Ending Cash Balance $2,943.41

The last two things I did for the company’s financials is setup a separate business account at a bank (where the $3K was deposited) and to get a business credit card – where I will charge all my future business expenses. As I noted previously, you need to keep your business and personal charges separate if you want to be successful in this (and prevent the possibility of being sued and losing your personal assets).

With the finances in order, it is time to move onto my next steps for the business. Those consist of:

  • Creating a website and building a marketing plan (March)
  • Complete building of samples to determine time/cost for each as well as potential shipping costs (April)
  • Acquire sufficient insurance to protect myself and the business (May)
  • Begin selling on Etsy, Craig’s List and Craft Shows (June)

I will let you know how I am progressing

I hope your own efforts are bearing fruit!

Mr. 39 Months

Opposition Research for TKD Woodworking

So, I’ve done some of the work, built three different items (two types of cutting boards and a photo frame). I’ve got plans for another frame (pretty cool) and some boxes. Now that I’ve built some items, I know the material costs, labor time, and my estimated overhead costs. With that, I can start determining estimated sales cost for each item in order to recoup my time/costs. Time to do some opposition research!

One of the big places to sell arts & crafts online is Etsy.com (I’m sure a lot of you are aware of it). You can purchase a wide range of items, of all shapes and sizes, crafted by people throughout the world. It’s a major “side hustle” location, and lets you create your own Etsy store, where someone can click on and see all the crafts you sell. You can check out your competition there for their prices, quality, and variety of items – and compare to what you are thinking of offering. What did I find out?

I have to improve my game a lot!

Obviously, the items I’m starting with are very easy to make and sell, so there will be a lot of people to compete with. In addition, it’s a worldwide market place, so I will be competing with labor costs that might be well under my estimates (I’m going with $20/hr. for my time). They may also have the ability to setup and make large runs, which can bring down the cost-per-piece of an item. Still, what I’m seeing is impressive:

  1. Costs are all over the board. There are items similar to mine which are selling for 50% – 200% of what I was going to ask
  2. Quality looks pretty good. I definitely can’t try to sell stuff that is not up to par
  3. There are a lot of sellers with 5-star ratings, so when I’m first starting out, I’ll be behind the curve
  4. The options some of the sellers have are tremendous. One person lets you pick the wood your cutting board will be made out of, the pattern, etc. Other ones do personal engraving. All of this for competitive costs to what I was thinking of charging.

I know I’ll need to build a bigger assortment in order to both compete and to see what sells. I’ll also need to look into making items which aren’t as generic as cutting boards.

At least I’ve got an idea of what I’m up against!

Mr. 39 Months

Determining Cost for your product in a side hustle

As an Industrial Engineer/Supply Chain professional who has run a few manufacturing operations, I thought I would go through some of the basics on how to determine the price for an item you may be manufacturing. I’ve already covered how to estimate the size of a production run on your product (EOQ), so we’ll assume you have done the math. I’ve also covered the fixed costs for an operation, which you will need in order to determine the sort of gross margin you’ll need to charge in order to meet your profitability goals.

The simple equation is basically Price = Cost of raw materials + Cost of Labor to build + Gross Margin

I’ll use a recent cutting board project I made as an example.

With that, the first thing you need to do is to determine what you want to try to price, and create a  bill-of-materials (the items which go into your product) for that item. With this you will be able to determine the cost of your raw materials. In this example, I used a simple piece of maple (a good item for a cutting board) and used a can of finish for cutting boards and bowls. I didn’t put in any additional money for sandpaper, brushes, etc.

DescriptionLWTBFCost
Maple12811$10.50
Finish    $2.00
 $      12.50

The next step is to try and determine the steps and labor necessary to build the item. When I did my EOQ analysis, it came out to be about 4 per run, so that was the plan. I determined the steps, and as I built the 4 boards, I timed how long it would take. When I totaled it, I added a 15% PF&D (Personal time, fatigue and delay) factor to the time for breaks, delays, etc. This is fairly common in the manufacturing industry. The result was:

Simple Cutting Board Lot Size 4
STEP DESCRIPTION SECONDS TOTAL TMU’s
1 Get Wood Down from Storage 58.2 1,617
2 Crosscut four (4) pieces with handsaw to rough size 120.0 3,336
3 Joint edges on 4 pieces 122.0 3,392
4 Plane 4/4 wood down to 3/4″ thickness (four pieces) 911.0 25,326
5 Rip & Crosscut to final dimensions 706.0 19,627
6 Setup Router Table 825.0 22,935
7 Rout roundovers on both sides of Four (4) cutting boards 325.0 9,035
8 Setup Drill Press for hole 180.0 5,004
9 Cut hanging holes of four (4) cutting boards 184.0 5,115
10 Setup small router to roundover hanging holes (4) 241.0 6,700
11 Cut roundover on hanging holes (4) 136.0 3,781
12 Sand cutting boards to 400 grit (100/180/220/320/400) 2,169.0 60,298
14 Clean off boards with mineral spirits or denatured alchool 120.0 3,336
13 Apply 1st coat of finish to four(4) cutting boards 534.0 14,845
14 Apply 2nd coat of finish to four (4) cutting boards after 8-12 hours 534.0 14,845
15 Sand with 400 grit – four (4) cutting boards after 8-12 hours 433.8 12,060
17 Clean off boards with mineral spirits or denatured alchool 120.0 3,336
16 Apply 3rd coat of finish to four (4) cutting boards after 8-12 hours 534.0 14,845
    TMUs 229,432.8
  Standard Fatigue Allowance: 15.5%
  Seconds Per Unit: 2385.0
  Avg Units Per Hour: 1.5

A “TMU” is an engineer’s term – it is a “Time Measurement Unit” and 27.8 TMUs = 1 second. So it took me roughly 2 hours and 40 minutes total to build 4 of them, or 0.667 hours/40 minutes to build one. At $15/hour (what I’m paying myself) this works out to $10 for labor.

Finally, I looked at my gross margin, what I’m using to help pay for all the fixed expenses. I’m using a 40% margin goal, which is about middle of the road for manufacturing. This is going to be used to cover my liability insurance, website, machinery purchases, etc.

So the equation looks something like (12.50 + $10) * 140% = $31.50

Based on this analysis, I could sell this item for around $31.50. In looking at Etsy, however, I’m seeing similar product selling for $50-$60. I’ll have to research to see how much of a “cut” Etsy takes, and if shipping is part of the price.

I hope this was useful.

Mr. 39 Months.

TKD Woodworking – Legal and Insurance Issues

Some of the items involved in setting up a business involve legal issues and liability insurance. As you prepare your side hustle, you want to make sure that it doesn’t impact/endanger your personal finances and lifestyle. The worst thing that could happen would be for you to have a liability issue, and find your homeowner’s or personal insurance doesn’t cover it – or to find a state or local government suddenly “interested” in what you are doing, and potentially issuing taxes and penalties. Better to get it right “out of the gate” and account for it in your pricing.

Registering your Business

One of the first items in registering your business, if you intend to make a profit. Of course, most states (as well as the federal government) want to make sure they get their cut of your profits. Typically, you need to register your business, and there are all sorts of legal classifications:

  • Single Proprietor: Simplest one, where it is you in business. Easy to do, but not good for shielding personal assets.
  • S-Corporation: The big one, which most companies are. A lot of paperwork, but very good for handling large amounts of money and shielding people within the organization
  • LLC – Limited Liability Corporation: This is the standard one that most “side hustles” end up going with. It has the benefit of lower fees, lower paperwork requirements, and shielding personal assets from liability. This is what I’m choosing to go with.

Don’t try to get around this, and not pay! You may survive for a while, but eventually they’ll get you, and they will go back years in order to get their cut (and add penalties as well).

My state (New Jersey) has the ability to register your LLC online (most states do) and the fee is $125. It gives you the opportunity to test your name out to see if its already taken. This basically records the name of your business entity, registers it for tax and employer purposes, and allows you to do work for the state (if called upon). My plan is to register as an LLC in the next couple of weeks.

The next step is to set up a separate account at my bank for the business, once it is registered. One of the ways that a lawyer could “pierce the veil” of protection of an LLC, and sue the personal assets of the owner, is if the owner does not keep the finances separate. By opening up an account specifically for the LLC, it will also better assist me in managing the finances of it.

Finally, I need to look into liability insurance. Since I am planning to produce a product (and some products like cutting boards will involve food) there is always the potential of liability. In checking with my insurance company (also my bank, USAA) I found that my homeowner’s and Umbrella insurance policies would not cover me if I sold a product and it was defective. For that, I’ll need liability coverage for my LLC. This is another of those fixed costs I wrote about earlier.

All these details! I’m trying to write about them all in the hopes that it will assist others in their attempts to build side hustles and pursue their own FIRE journeys. Good luck!

Fixed Costs for a Side Hustle

One of the financial items that a business needs to consider is its fixed costs and variable costs.

Variable Costs are those items, which can “vary” up or down, based on the volume of sales that you have. These might include:

  • Labor (to make the stuff)
  • Shipping (to ship the stuff)
  • Materials (what the stuff is made out of)

 Fixed costs are those expenses you have which do not vary based on the volume of sales that you have. Examples of that might be:

  • Real Estate costs (lease of building, taxes, etc.)
  • Utilities (electric, gas, data lines, etc.)
  • Equipment (production machinery, computers & IT equipment, etc.)
  • Insurance costs (liability, insurance of machinery, etc.)
  • Management (i.e. you will have one manager, whether or not you employ 1 or 10 people to satisfy the sales)
  • Marketing & Sales (while there is some link, you often have to pay for these whether you make sales or not, and might include website & hosting costs)

Starting a side hustle with something I enjoy and have equipment for (woodworking) has enabled me to not have to consider (for the short term) the fixed costs for equipment (I’ll use the tools I already have), real estate (I’ll just use the shop in my garage), management (it’s just me) and most utilities (just part of our normal expenses).

However, there are some fixed expenses that I will need to get a handle on and understand as I start making the case for this side hustle.

  1. Legal Costs: My thought is to incorporate as an LLC, and this will cost some funds – both upfront and ongoing.
  2. Liability Insurance: If I’m making a physical product that can be used (and potentially miss-used) I need to have liability insurance in order to protect my personal assets
  3. Marketing: Here I am looking at two costs. One is the setup and hosting of a website that can have items purchased off it, and the other is the cost of craft fairs and farmer’s markets, where I will sell my wares. Researching these both.
  4. Equipment: While I am using my existing equipment, it will wear out and will need to be replaced. I may also buy additional equipment to improve my processes, so that will need to be included.

The fixed costs are covered by a percentage of the revenue you gain from your sale, often covered by the “gross margin” of a business. You need to generate enough sales to satisfy the cost of your materials and meet your fixed expenses as well. That is why the gross margin is so important in business, as it is this “excess” revenue which helps cover your fixed costs, and helps to fund future growth (like when you take on more real estate or equipment costs as your company grows).

For example, let us say that TKD Woodworking has the following fixed expenses:

  • Real Estate: $0
  • Utilities: $0
  • Equipment: $0
  • Management: $0
  • Insurance: $450 for liability insurance
  • Marketing: Twelve (12) craft fairs @$30 each = $360
  • Web-hosting for website: $190

Total Fixed expenses: $1,000/year (I know, I am keeping it simple)

Suppose I am selling cutting boards and picture frames, and each has a variable cost (labor, materials, etc.) of $40. I add a 25% gross margin to this, or $10, and sell them for $50 each.

In order to break even as a business (i.e. no profit, no extra funds for business expansion or new tools, etc.) I would need to sell 100 cutting boards/picture frames: 100 * $10 gross margin on each = $1,000, which is what I need to meet my fixed costs.

Thus, you can see, for a small business, you need to try to achieve your highest gross margin, and at the same time, watch your fixed costs like a hawk! If it is just you in the hustle, you can only do so much (your variable labor costs) so in order to generate profits, you need to keep the fixed costs down.

I am continuing to explore mine, and I will share them with you in the months ahead.

Mr. 39 Months.

How much do I make on an item to sell? Economic Order Quantity

As one is looking at a Side-hustle and trying to start out, once you do some of the preliminary work (determining what to build, material schedule, etc.) one of the first questions that hits you is one than manufacturing companies deal with every day. How much of this item do I produce? What is the most efficient amount to make, in my current conditions.

In manufacturing, this is known as EOQ, the “Economic Order Quantity.” The idea behind it is that you can calculate, based on sales & the cost of carrying inventory, what is the optimum number of pieces you should make of an item at any given time.

The assumptions on which EQO is based are:

  1. Demand is relatively constant and is known
  2. The item is produced or purchased in lots or batches, not continuously
  3. Order preparation costs and inventory carrying costs are constant and known
  4. Replacement occurs all at once

You can already see the problems with this once you are starting out. While you can assume #2 and #4, you have only a vague idea on #1. For #3, you can use your bill-of-materials to determine preparation costs, but how do you calculate inventory “carrying costs” or how much it costs to store the unsold merchandise? Most folks start out with a small number, and see what sells (and how much) and what doesn’t. From there, they build more and just sort of “wing it”

For basic manufacturing, the equation is actually somewhat simple (there are other derivatives, but this is the basic calculation). The idea is that the EOQ occurs at a point where the cost of ordering equals the cost of carrying the inventory. After many years of trial and error, the equation typically used in this situation is:

EOQ = Square root of (2 * Annual Sales * Cost-per-order)/(inventory carrying cost % * Cost-per-unit)

Annual Sales: Total number of pieces you expect to sell in a year

Cost-per-order: Cost for paperwork, scheduling, etc. For major companies, this could be 1 hour of clerical time, or $30 with cost/benefits. For a small craftsperson, this could be 15 minutes to assemble the required design documents and materials, or $5.   

Inventory carrying costs: Expressed as a percentage of the sales cost of your product inventory. Larger inventories mean you have to have more space, thus more cost here. Smaller inventories mean you may not have an item to sell.

Cost-per-unit: The cost for the materials & labor to make the item

So let’s take one of my items, a simple Face grain cutting board.

  • Let’s say I believe I will sell twelve (12) of these a year
  • I’m going to assume that it will take roughly 20 minutes to get the materials, get the documentation and prepare to work. At $15/hr (what I’m assuming for my labor) that comes to $5 for ordering costs
  • When I did my bill-of-materials and process, I came up with a total project cost (materials & labor) of $15.81
  • Let’s assume my inventory carrying costs are 20% to keep that inventory stored (space, heat, electrical, etc.)

So the calculation is square root of (2*12*$5)/(20%*$15.81) = square root (120/3.16) = 6.16

Round that to 6 pieces.

So based on those assumptions, when I make that particular item, I should make 6 of them. This means I’ll be making 6 months work of product each time I fire up the tablesaw for that item.

If my sales plan is that I’ll only sell six (6) a year, that ends up being the square root of (60/3.16) = 4.35 or 4 of them.

Hopefully this is useful for some folks.

Another step in research for TKD woodworking – shipping costs?

I’ve gone through and determined most of the bills of material for the items I hope to sell. This will establish my base costs to produce (labor, materials, gross margin). One of the other costs, though, is shipping – getting the items to the customer.

For that, I’ve got a variety of ways I could ship product (Parcel with UPS or Fed-Ex, the US Post office, etc.). One of the interesting design features that most folks don’t pay attention to is how manufacturers size items and build packaging so that the items can be shipped as efficiently as possible, with the lowest cost. In my primary job, its fascinating to see companies change the thickness of their cardboard by hundredths of an inch, just to shave off a little cost and weight, or design something so that it is 23-3/16” long in the package (because if its 23-1/4” long, UPS will charge them more).

Most of my items are going to be fairly small, but still, it doesn’t hurt to determine potential costs and benefits of sizing something correctly.

I went to the US post office and checked the costs of their flat rate postage boxes. These you can pick up at the post office, and they will charge you for the box and shipping once you ship something out – just one flat rate. The costs and dimensions of the items are:

No Type Size Cost Length Width Height
1 US Postal Flat Rate Small $7.90 8  5/8 5  3/8 1  5/8
2 US Postal Flat Rate Medium $14.35 11      8  1/2 5  1/2
3 US Postal Flat Rate Medium – flat $14.35 13  5/8 11  7/8 3  3/8
4 US Postal Flat Rate Large $19.95 12      12      5  1/2
5 US Postal Flat Rate Large – flat $19.95 23 11/16 11  3/4 3     

As you can see, the difference in a ¼” can raise your costs significantly. I’ll need to check the rates of other providers to see if I need to adjust my designs. Right now, only one of my items can fit in the small. I need to see what I can do to keep my other designs in the “medium” area.

Just part of the analysis one needs to do when planning to produce items and sell online (or via catalogs or direct mail).

Mr. 39 Months

Bill of Materials

In a previous company, I was a manager of the packaging and manufacturing department for a small auto parts manufacturing/warehouse operation. A key part of that was managing the work flow through 20 different machines, with all their requisite parts, labor and quality standards. Managing all of that can be very complicated, and while software can assist with the scheduling, you still have to have the human interface to plan, shift work, and understand what the software is telling you to do (and make changes when necessary). I actually went back to school to get training in this with APICS (the American Production and Inventory Control Society).

A key aspect of managing the workflow and the inventory was the BOM (Bill of Materials) and Process Flow Diagram. With these, the operators were able to understand all the parts that went into the finished item (the bill of materials) and how to put it together. For every part produced, you needed to have both of these documents, and as you made improvements in the process (something good companies do to keep ahead), you updated the documents.

As I look at pursuing my side hustle, I’ve listed the items that I think I will start with, but now I have to determine how to build the items, what materials are necessary, and what those items might cost. Its only with this information (and an idea of the time/labor to build) that I can come close to identifying how to price my materials.

Here is an example – the tea box I just built for Mrs. 39 Months for Christmas.

I worked through the materials I was going to need to build the item:

Description L W T
Cherry 48      6      1     
Maple 30      8      1     
Poplar 12      6        1/2
Poplar 60      4        1/2
Hinges      
Shellac      

I then had to work out a “cut list” for the final dimensions for each of the parts:

Description Qty L W T Material
Front & Back Pieces 2 13-1/2″ 4-5/8″ 1/2″ Cherry
Side Pieces 2 6-1/2″ 4-5/8″ 1/2″ Cherry
Top Panel 1 12-1/2″ 6″ 1/2″ Mahogany
Bottom Panel 1 12-1/2″ 6″ 1/2″ Poplar
Bottom tray front & back 4 6-1/8″ 3-1/4″ 1/4″ Poplar
Bottom Tray Sides 4 5-7/16″ 3-1/4″ 1/4″ Poplar
Bottom Tray Center pc 2 5-7/16″ 3″ 1/4″ Poplar
Tray bottoms 2 5-7/8″ 5-3/16″ 1/4″ Poplar

Finally, I had to work out the process to build the item:

  1. Joint/Plane/rip/crosscut side, top & bottom pieces
  2. Cut side & back pieces into large blocks to “wrap” the grain around
  3. Cut grooves for the top & bottom – 1/8” (router or tablesaw?) into front, back & side pieces
  4. Cut groove in top piece
  5. Clean up grooves with 1/8” chisel, so bottoms are flat
  6. Cut rabbet in bottom piece with dado set
  7. Crosscut side, front & back pieces to final length
  8. Cut the 45 degree angles in front & side pieces
    • Start from side for grain match
    • Cut first 45-degree for each
    • Put measure on stop block to cut 2nd 45 degree
  9. Dry fit front, back, sides, top & bottom
  10. Sand all pieces (100/180/220)
  11. Glue up bot with painters tape on all four corners, then clamp up after checking for square.
  12. Use bandsaw to make cut for lid
  13. Sand off machine marks
  14. Layout hinge mortises and cut (see FWW article on this)
  15. Shellac finish
  16. Steel wool
  17. Wax over the top

Armed with this information, I can at least try to price out what the materials will cost to build (wood, hardware, finish, etc.)

From there it will be time to determine the labor needed to build – but since that can be affected by the quantity you are building at one time (and thus being able to do the same step for multiple items, saving time). This will be based on the “Economic Order Quantity,” a manufacturing term which considers proposed inventory levels, expected sales, etc. to identify the optimum amount you want to produce at a time. We will handle that in a future email.

So the planning goes on. I’ve been watching some YouTube videos on pricing and marketing your projects. Continuing in the “research” phase of TKD Woodworking.

Move info later. Thanks for all the suggestions!

Mr. 39 Months

Starting Something New

As part of my plan to transition to FI, and to pursue what I want to versus working the rat race, I’ve decided to start working on my side hustles and researching to eventually move into a different field. As many folks have stated in their FIRE journey’s, its not that they want to stop working, its that they want to work in something that they love. That is what I’m going to do, and I’ll try and chart some of my progress here.

One of the areas I want to work at is in starting up and running a business, even a small, side-hustle one. My thought is to start in a small one centered around one of my favorite hobbies, woodworking. My plan would be to make items for sale at craft fairs and online. I also wanted to go through some of the thoughts and work here, including the numbers, so people could get an idea of the process (and offer advice & counsel on what I’m doing, if it fits them).

In reading through the book Street Smarts, written by two individuals who have helped guide entrepreneurs for decades, the first question they ask at the beginning of potential entrepreneurs is “why do you want to create and build this business?” Along those lines, I laid out the reasons why I wanted to start up this business:

  1. Learn how to work business numbers and run a business by them (P&L statements, Expenses, budgets, Capital spending, etc.)
  2. Improve my woodworking skills
  3. Learn to develop website
  4. Develop my marketing skills

Adding/improving these skills would help me move onto the next business I was planning on moving to (more on that at a later date). So what steps do I think I need to start with here?

  • Create a list of potential items I could make and sell, both online and at craft fairs
  • Determine material costs for those items
  • Determine Tools/Jigs necessary to build those items
  • Determine time in would take to manufacture those items

From that, I would at least have some idea of my material costs, and be better able to build a budget. My list of potential items to start is:

  • Photo Holder
  • Picture Frame
  • Cutting Board
  • Tea box
  • Fast boxes
  • Shaker carry box
  • Campaign collapsible bookshelf
  • Craftsman bookshelf

So the next step for me is to work out the other three items for each piece I want to produce. We’ll see how it goes.

Mr. 39 Months