Online Woodworking Manufacturing & Retailing
Online Woodworking Manufacturing & Retailing
4123 Reed Blvd.
Big River, Saskatchewan S7J 1G9
This business plan was written for a special needs person who has excellent woodworking skills. His wooden creations are marketed and sold online to help provide for his keeping and care.
With the evolution of the internet, operating a business from remote regions allows anyone with a product an instant market.
Some of the most frequently purchased items over the internet are games and electronics. However, there are many niche areas that are viable as long as the fundamentals are correct.
Unique and well-made wood products are one of those niche areas. They are both easy to manufacture and highly profitable, as long as quality and cost of materials are closely monitored.
As a test, we posted a few custom wood products for sale on the internet. The result was phenomenal. The items sold quickly for a retail price that allowed both the retailers and the manufacturer to make a profit. In most cases, the retailer was able to sell the item for 30% more than a local retail store.
We also posted a few items on some auction websites to see if there was a market there as well. To our amazement, the items sold fairly quickly for the predetermined asking price. The only downside to this method of sales is the cost we had to pay to list the items and to receive payment for them. If the item did not sell, we were burdened with the cost of listing the item. If the item did sell, we were burdened with both the cost of listing the item and the cost of the common online payment systems.
These additional fees are important to consider. If, for example, we posted 100 items at an average cost of $1.50 per item, our listing cost for these 100 items would be $150.00 per 7-day period. Our cost to post the same items on the auction site would be $600.00 per month. Now let's consider that of the 100 items we list on the auction site, we sell 20% of the items. A percentage commission is then paid to the auction site for the sale of the item and the use the site's payment system. The total could result in an extra cost of 10% per item that sells.
Here is a detailed example:
- 400 items posted on website (100 per week)
- $600 per month posting fees ($1.50 per item)
- 20% of all items are sold, or a total of 80 items
- If each item sells for $29.00 and has a manufacturing cost of $7.00 per item, the profit would be $22.00 per item before fees
- Our total profit would be $1,760 before fees
- Less the 10% processing fee and posting fees, our net profit would be reduced to $984 for the month
This $984 looks reasonable, but we must also consider how much time it takes to manufacture, package and ship the items.
It took a total of 3 days to produce these 100 items. Based on this result, the maximum number of items that could be produced in any given month would be 660 items. At a retail price of $29.00, the revenue potential per month is $19,140.
We realize that working at maximum capacity every month will most likely not happen. Therefore we are planning to produce and sell at a rate of 30% of this maximum figure, or approximately 200 items per month. This figure is realistic for both manufacturing and sales.
The products that we will produce for this business are as follows:
- Artist easels—all sizes and configurations
- Artist stretched canvases—custom and standard sizes
- Art boxes to carry art supplies
- Picture frames—pre-made, small sizes
As we go forward, we realize that this list may change—some of these products may no longer be viable or we may discover a market for additional products. Our main goal for any items we produce is to keep our manufacturing cost down, while producing good, quality items.
Equipment & Services Required
- Table saw
- Mitre saw
- Jig saw
- Band saw
- Scroll saw
- Compound mitre saw
- Sander—edge, table, palm, etc.
- Router table
- 2-in-1 air nail gun
- Exhaust ducting and air quality control
- Blades and saw supplies
- Table-top HD corner framers clamps
- Picture framing pneumatic nail gun
- Air dust collector and piping equipment
- Altos mat cutter
- Logan mat cutter
- Fletcher mat cutter
- Wood vice
- Wood shaper
- Bar clamps
- Wood chisels
- Ratchet clamps
- Workshop counters—26 feet total
- Office desk
- CAD software
- Internet connection
- Accounts with all online auctions
- Various types of wood
- Cardboard for mailing
- Packing tape
We will be setting up the business in a small town called Big River in Saskatchewan, Canada. The population is approximately 700 people and the town is about 100 miles away from the closest city (Prince Albert).
Here is a list of amenities the town has to offer:
- Two gas stations
- Four restaurants
- One food store
- Three convenience stores
- One lumber supply store
- One hardware store
- One electronics store
The major employer in the region is Weyerhaeuser Mill; it employs over 400 people from the region. The average salary is around $60,000. Mostly of a blue color demographic, the region has a vibrant economy.
|Start up budget & costs|
|Table saw||$ 400|
|Miter saw||$ 250|
|Jig saw||$ 100|
|Band saw||$ 300|
|Scroll saw||$ 200|
|Compound miter saw||$ 400|
|Sander-edge, table, palm, etc.||$ 500|
|Router table||$ 250|
|2 in 1 air nail gun||$ 250|
|Exhaust ducting and air quality control||$ 500|
|Blades and saw supplies||$ 100|
|Table top HD corner framers clamps||$ 200|
|Picture framing pneumatic nail gun||$ 200|
|Air dust collector & piping equipment||$ 250|
|Altos mat cutter||$ 500|
|Logan mat cutter||$1,200|
|Fletcher mat cutter||$ 800|
|Wood vise||$ 200|
|Wood shaper||$ 300|
|Bar clamps||$ 200|
|Wood chisels||$ 300|
|Ratchet clamps||$ 300|
|Workshop counters (26 feet total)||$ 200|
|Office desk||$ 300|
|CAD software||$ 300|
|Internet connection||$ 40|
|Various types of wood||$1,000|
|Cardboard for mailing||$ 100|
|Packing tape||$ 20|
|Power hook-up||$ 150|
|Natural gas hook up||$ 150|
|Taxes for town||$ 200|
|Business license||$ 100|
The main goal for this company will be to provide the owner with a source of reliable as well sustainable income for long period of time. If at any time the business grows to the point where it requires help, we will hire the required staff to do the work.
The products will change over time as we fine-tune the business; so will the areas where we practice business. It is our intention to run the sales arm of this business online, therefore allowing us to focus strictly on manufacturing and leaving the retailing up to the internet.
MARKETING & SALES
We will produce a series of products as samples. Over time, we will start listing them on our website and on online auctions. As the products sell, we will continue to add more items to our inventory list.
We will remove slow sellers or items that require too much effort for too little profit potential. Therefore, we will only produce products that are profitable.
As mentioned above, we will use the internet to sell 100% of our products. We will also accept sales to retailers who want to buy our products to resell in their store, as long as there is enough profit in it for us.
The items will be sold on the following internet sites:
- Our own website
- Yahoo Auctions
- Ebay auctions
- Amazon Auctions
- Another 20 smaller online auctions services
- All the free classified websites we can find
The competition for our products is fairly strong. If needed, we could reduce our price to beat the competition, thereby increasing our market share and sales. With our flexibility with top line pricing, we are very confidant that we will find a nice market that allows us to succeed and survive in this business.