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How do I write a woodworking business plan?

Executive Summary Give a brief overview of the woodworking industry. Discuss the type of woodworking business you are operating. Detail your direct competitors. Give an overview of your target customers. Provide a snapshot of your marketing strategy. ... Offer an overview of your financial plan.

growthink.com - Woodworking Business Plan Template [Updated 2022] - Growthink
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Woodworking Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their woodworking companies. If you’re unfamiliar with creating a woodworking business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan. In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a woodworking business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your woodworking business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.

Why You Need a Business Plan

If you’re looking to start a woodworking business or grow your existing woodworking company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your woodworking business to improve your chances of success. Your woodworking business plan is a living document that should be updated annually as your company grows and changes. With regards to funding, the main sources of funding for a woodworking business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for woodworking companies. Need to attract potential investors? Quickly and easily complete your Woodworking business plan by downloading Growthink’s Ultimate Business Plan Template and creating your plan and financial model in just hours

How to Write a Business Plan for a Woodworking Business

If you want to start a woodworking business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your woodworking business plan.

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of woodworking business you are running and the status. For example, are you a startup, do you have a woodworking business that you would like to grow, or are you operating a chain of woodworking businesses?

Give a brief overv iew of the woodworking industry.

Discuss the type of woodworking business you are operating.

Detail your direct competitors. Give an overview of your target customers.

Provide a snapshot of your marketing strategy. Identify the key members of your team.

Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of woodworking business you are operating. For example, your company might specialize in one of the following types of woodworking businesses: Plywood manufacturing : this type of woodworking involves manufacturing the plywood to be used for material for housing, ships, vehicles, and furniture. It is an economical, factory-produced sheet of wood with precise dimensions. Wooden furniture making: this type of woodworking manufactures wood that is commonly used for beds, sofa sets, cupboards, dressing units, sitting arrangements, tables, etc. Wooden jewelry making: this type of woodworking uses technically upgraded machinery to produce wooden contemporary jewelry. Wooden interior: this type of woodworking manufactures the wood used for the interior part of a room, such as wooden flooring, wall, ceiling, etc. In addition to explaining the type of woodworking business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

When and why did you start the business?

What milestones have you achieved to date? Milestones could include the number of customers served, the number of items produced with positive reviews, reaching X number of products sold, etc. Your legal business structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here. Quickly and easily complete your Woodworking business plan with Growthink’s Ultimate Business Plan Template and complete your your plan and financial model in just hours.

Industry Analysis

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In your industry or market analysis, you need to provide an overview of the woodworking industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the woodworking industry educates you. It helps you understand the market in which you are operating. Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends. The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that. The following questions should be answered in the industry analysis section of your woodworking business plan:

How big is the woodworking industry (in dollars)?

Is the market declining or increasing?

Who are the key competitors in the market?

Who are the key suppliers in the market?

What trends are affecting the industry?

What is the industry’s growth forecast over the next 5 – 10 years?

What is the relevant market size? That is, how big is the potential target market for your woodworking business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your woodworking business plan must detail the customers you serve and/or expect to serve. The following are examples of customer segments: furniture stores, home builders, contractors, and individuals. As you can imagine, the customer segment(s) you choose will have a great impact on the type of woodworking business you operate. Clearly, individuals would respond to different marketing promotions than home builders, for example. Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve. Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.

Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other woodworking businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes large home improvement stores, tool shops, and craft or hobby stores. You need to mention such competition as well. For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

What types of customers do they serve?

What type of woodworking business are they?

What is their pricing (premium, low, etc.)?

What are they good at?

What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them. The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

Will you provide custom items and designs?

Will you offer products that your competition doesn’t?

Will you provide better customer service?

Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.

Marketing Plan

Product: In the product section, you should reiterate the type of woodworking company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide plywood manufacturing, wooden interior products, wooden furniture, or wooden jewelry?

Price: Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products you offer and their prices. Place: Place refers to the site of your woodworking company. Document where your company is situated and mention how the site will impact your success. For example, is your woodworking business located in a busy retail district, a business district or purely online? Discuss how your site might be the ideal location for your customers.

Reach out to websites

Distribute flyers

Engage in email marketing

Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows. Everyday short-term processes include all of the tasks involved in running your woodworking business, including ordering and sourcing wood, designing products, billing vendors and/or suppliers, etc. Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to sell your Xth product, or when you hope to reach $X in revenue. It could also be when you expect to expand your woodworking business to a new city.

Management Team

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To demonstrate your woodworking business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company. Ideally, you and/or your team members have direct experience in managing woodworking businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed. If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a woodworking business or successfully running a small craft store.

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not. In developing your income statement, you need to devise assumptions. For example, will you produce 5 items per day, and/or offer custom designs? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your woodworking business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt. When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a woodworking business:

Cost of equipment and wooden supplies

Payroll or salaries paid to staff

Business insurance

Taxes

Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Appendix

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your factory location lease or a list of products you plan to manufacture and sell.

Summary

Writing a business plan for your woodworking business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the woodworking industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful woodworking business.

Woodworking Business Plan FAQs

What Is the Easiest Way to Complete My Woodworking Business Plan? Growthink's Ultimate Business Plan Template allows you to quickly and easily write your woodworking business plan. How Do You Start a Woodworking Business? Starting a woodworking business is easy with these 14 steps: Choose the Name for Your Woodworking Business Create Your Woodworking Business Plan Choose the Legal Structure for Your Woodworking Business Secure Startup Funding for Your Woodworking Business (If Needed) Secure a Location for Your Business Register Your Woodworking Business with the IRS Open a Business Bank Account Get a Business Credit Card Get the Required Business Licenses and Permits Get Business Insurance for Your Woodworking Business Buy or Lease the Right Woodworking Business Equipment Develop Your Woodworking Business Marketing Materials Purchase and Setup the Software Needed to Run Your Woodworking Business Open for Business

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

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