Start a barrel making business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your barrel making business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a barrel making business?
Initial costs for opening a barrel making business will mainly reflect tools, materials and, potentially, a rental space as a workshop and storage facility. Wood and metal banding can be relatively inexpensive, with pricing depending on the type of wood used and availability in your region. The tools needed will be a mix of hand and power tools with circular and mitre saws, jigsaws, planers, and sanders representing many of the power tools and hammers, chisels, and other woodworking and finishing hand tools comprising the hand tools. You will also need a fire source, such as a propane cooker or small flamethrower, for the “toasting” process of the barrels, in which the inside is fired to help seal and flavor the barrels. Additionally, you will need insurance for the business and yourself or workers, a business license, rent, and utilities for your workshop and a few delivery and work vehicles for hauling raw materials, as well as finished products.
What are the ongoing expenses for a barrel making business?
Material and shipping costs will comprise a majority of your overhead, as well as rent and utilities, as needed.
Who is the target market?
Your target market will mainly consist of breweries, wineries and distilleries. By creating products these companies are looking for, you wildest likely fill a niche, which has little competition.
How does a barrel making business make money?
The wholesale and retail sales of barrels and casks generates the revenue for a barrel making business.
How much can you charge customers?
Individual barrels will often run between $350-450, with more specialized wood, such as French oak fetching upwards of $1500 per barrel.
How much profit can a barrel making business make?
With the demand for quality wood barrels on the rise, the potential for earnings can be quite high. If a barrel business averages $400 per barrel and sells 400 barrels per year, their gross returns will be $160,000.
How can you make your business more profitable?
Although a majority of your barrels will go to liquor manufacturers, there is also a residential and commercial application for barrels as furniture and themed installs, such as table bases, chairs and coffee tables. Some older or damaged barrels may also be resold as planters for flowers and gardens. Finally, there is also an industry in refurbishing or reselling used barrels. If a barrel is of a certain wood, it may be more profitable or cost-effective to repair or refurbish for resale. Many craft beer companies are also using bourbon, scotch, and cognac barrels to flavor and infuse their brews. This trend is starting to cross-pollinate to numerous types of spirits.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your barrel making business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a barrel making business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Certificate of Occupancy
A barrel making business is generally run out of a workshop or factory. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a barrel making business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your barrel making business will be in compliance and able to obtain a CO.
Labor Safety Requirements
Because barrel making involves the use of potentially dangerous tools, it is important that you and your business follow all labor safety requirements which can be found here.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a barrel making business
Online blogs, a website, and social media outlets are some of your best initial marketing steps. Then, beat the street and make personal connections with the alcohol companies. Once you establish yourself, consider local billboards or a sign outside your warehouse. Your products will draw customers, once you become more well known but, remember that your business will always rely on the reputation you cultivate, which is why every customer, either long term or potential, needs to receive your best, most professional attitude and outward appearance.
How to keep customers coming back
Professionalism, courteous interactions, and quality products, delivered on time and as requested will usually keep most customers loyal to your business. Especially considering the demand often exceeds the supply options, you simply need to maintain a reasonable production number and never over-promise what you can’t deliver.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Barrel Making Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Experienced or knowledgeable woodworkers and carpenters are excellent fits for a barrel making business. Since most barrels are used in the packaging of different beers, wines and liquors, beverage industry experience would also be a bonus for a barrel making business.
What happens during a typical day at a barrel making business?
Since the focus of a cooperage is to make barrels, much of the day to day business will consist of the forming and carpentry of barrels, as well as the finishing and aging processes. The bending of the wood slats, in addition to the gathering of materials for barrel construction, will also occupy a good amount of the daily schedule.
What are some skills and experiences that will help you build a successful barrel making business?
As barrel making is hands-on wood crafting, carpentry skills are necessary. Experience in steaming or soaking and bending wood is also necessary to help successfully get started with minimal training. Banding and finishing the barrels also takes a careful touch and should be performed by someone with an eye for detail and meticulous craftsmanship. It is also advisable to be knowledgeable in small business management, as you will more than likely be creating and steering this ship with only a few resources to guide you. You will need to be well-spoken and able to address potential clients with a clear and concise message about the virtues of your products and company.
What is the growth potential for a barrel making business?
The demand for barrels for craft beer and wine, as well as liquors, is on the rise. More and more spirits companies are returning to wooden barrels for storage and aging of their products. Fortunately for barrel makers, the demand is growing, but the field of cooperage companies is small, which means a barrel company may be able to position itself as the barrel supplier for quite a few businesses. And, since demand is growing, so should the potential for growth in this field.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a barrel making business?
A majority of your revenue will stem from sales to beer, wine, and liquor companies. You should familiarize yourself with the various breweries, wineries, and distilleries in your area. Set up meetings with owners or representatives and take some samples of your work. Your initial push will be to create outlets for your creations. Without buyers, your barrels will simply gather dust. Research local and regional beer, wine, and spirits organizations and industry trade shows. Find out who your high end craft spirits companies are, as many of these companies will often be looking to add a more traditional flare and flavor to their products. Finally, create an online presence for yourself and constantly push content to keep your name and reputation known and relevant.
How and when to build a team
As you begin your new barrel making venture, you will more than likely want at least a few other assistants or partners to help shoulder the burden of production. Barrel making is a craft, so you will need individuals who equally possess woodworking experience and related skills. The quality of your work needs to be consistent, so set up a training regiment and production quality standards for all employees to adhere to. As you grow in size, bring on more barrel constructors, which will allow you more time to market and promote and focus on the financial aspects of a growing business.