Question
I currently work for a construction company and love my job. I am planning on taking the rest of my apprenticeship with the company and then parting ways to set up a cabinet/fine furniture shop.
Unfortunately, so far this sounds like any other young woodworkers dreams are. However, unlike many I am sure I have the determination and knowledge to make this dream reality. I was just wondering if any of you had any tips or information on the legal side of owning a business? I've read endless articles on contracts, liens, advertising but I still haven't studied the accounting aspect of owning a business. How does a woodworker deal with taxes and what kind of taxes? I currently live in the province of Manitoba, Canada but I would imagine American accounting information wouldn't hurt.
Also, this may seem like a silly question, but how does one know if a specific area has a market for another cabinet builder. I've looked in the local phone book to see if there are many cabinet makers but there appears to be only a few. Any ideas how to check this out for sure?
Forum Responses
(Business and Management Forum)
From contributor S:
Well, your English is pretty good, but as you say, the tax system in Canada is, as of today, a bit different than it is here in the states. You will need to consult with a local accountant familiar with small businesses, and better yet, one that has worked specifically with a cabinet shop before. Our tax laws are different in every state, so advice from one location may not work in another.
In the book they state something to the effect that of the 31 aspects of marketing position in the marketplace is by far and away the most important. That is what you should spend 90% of your time searching for. When you truly find a niche the rest of the aspects tend to fall into place.
According to Mr. Peterman there were three reasons for this failure:
1. He grew faster than his management systems could support.
2. He strayed from what he was good at.
3. He failed to communicate his vision in a way that was useful to others.
I would consider this to be very instructive information. Mr. Peterman would probably not have learned these things had he not failed so miserably in business.
I do agree with contributor R. Take business courses. Many of us fail not because we are not good technicians. We can design, fabricate, and install wonderful projects. But, if we don't have the business side taken care of, we will fail. Maybe not immediately, but sooner or later, if we don't learn the business side, we will fail. Take the advice of adding business courses to your formal education. No, they will not teach you everything. Some things will need to be learned by trial and error. Everyone and every situation is different.
However, there are a lot of things in common that will be addressed in business classes. Oh, and the teacher that has had failed businesses? Is there another community college nearby? Does he teach all of the classes you might want to take? It is very astute of you to learn about your potential instructor ahead of time. That by itself indicates your ability to succeed. Now, find a way to get the knowledge you need either with him, without him, or in spite of him. He might be able to teach you what you need to know while mentioning some of the things that caused his businesses to fail. Maybe all of the failures were beyond his control. There are uncontrollable events and forces in the market place. Disaster planning can only prepare a business for so much.
One more comment about that teacher. Bad news travels faster and stays longer than good news. Maybe he had some successes that folks don't know or mention. Maybe he really is a better teacher than businessman. You could always make an appointment during his office hours and go talk to him about which courses you are considering. You may learn, firsthand, that he and his course can offer you what you need.
As to, employer-employee relationships, the same can be said about employees believing that their bosses are idiots. Are you making him money or is he supplying you a job. Either way, the relationship has to be mutually beneficial or it is flawed. The relationship ultimately equates to consideration for consideration. Being successful in business is not about how many times you fail, or your feelings, it is about times you succeed and make a profit; whether on each sale or over the lifespan of the business. With experience you will get better at being successful. With education and experience you can shorten that time. Profit is not a curse word for a for-profit business, and many employees don't understand the difference between gross and net profit.
2. Buy good quality equipment, either used or new, but stay away from the cheap stuff. Good equipment is efficient and produces a higher quality product.
3. Hire one good employee to start; someone with a good work ethic and some brains. Contrary to what some say, there are lots of smart hard-working employees out there. If you treat them decently, they will stay with you.
4. If you need some financing, you might try the Business Development Bank of Canada. The bank has lots of money at the moment as they are still trying to "stimulate" the economy.
5. Take the time to produce a quality product and maintain good relations with clients. If you start cutting corners, you will end up in a low quality market niche with accordingly low prices.
6. Be prepared to stick with it through possibly 5 lean years as you establish a market and reputation.
