Question
I am trying to set some financial goals for myself and was wondering what the range of income was for furniture makers/professionals who use the craft as their main source of income. Does anyone care to share a yearly average or range or what you wish you made? I love what I am doing and am going to do it regardless. There is just no "salary calculator" for this particular profession.
Forum Responses
(Furniture Making Forum)
From contributor F:
If you are just starting out, I think a realistic sales figure to shoot for should be $100k in sales per employee. Obviously you want to do more than this, but be realistic for your first year, and work towards steady growth of around 15% per year. Based on $100k in sales, only you can estimate your actual income. Take that $100k, subtract materials, subtract overhead, and there you have what’s left to cover labor and any profit. As you grow, I like to think you can produce about $150k to $200k in gross sales per employee.
Estimate your overhead like this:
Rent.
Heat.
Hydro.
Other utilities?
Phone and cell.
Internet and computer.
Advertising (just set a realistic budget that you plan to spend).
Vehicle (insurance, gas, repairs, etc.).
Business insurances.
Just about everything else you can think of that is required to run a business.
These are your hard costs for your overhead and are very easy to estimate. The hard part of estimating your overhead is the soft costs, or indirect labor. You need to figure how many hours per year you can actually work, usually around 2000. Now from that you need to figure how many hours you can actually bill for. The time it takes to do your marketing, bookkeeping, accounts payable, cleaning up the trash, picking up materials, quoting, meeting with clients, etc. are all hours you need to spend that you can’t bill the customer for. These hours are overhead, or indirect labor.
Rough numbers here - say you can work 2000 hours per year, and it is going to take you 500 hours per year for all that indirect labor or 25% of 2000. Now let’s assume you want to make an income of $60k per year. 25% of that $60k is $15k. You need to tack this $15k per year on to your overhead value.
The first year is the hardest as you don’t have any history to estimate from. Create an overhead calculation form, and treat it as a living document as the numbers should always be reviewed and adjusted as required. A good history here will help make your overhead estimates more accurate.
Now to make that $60k, you actually need to be able to bill for those other 1500 hours at $30 per hour. This means you need the sales. Now on top of this, you want the business to make a profit. I hope it’s not looking too scary yet.
So you need to figure:
Materials+labor+overhead+profit = selling price. This is the biggest mistake people make. They think profit is what’s left after you have bought materials. Spend some time, create a business plan, and the plan should help answer a lot of your question.
