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 step guide to starting your cabinet 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 cabinet making business?
The startup costs for a cabinet making business range from about $2,000 to $10,000. Where in this range a particular new business’ expenses fall depends partly on what type of woodworking shop and tools a business owner already has. The expenses go toward:
- A workshop
- A truck
Business owners who have limited funds available can keep costs minimal by purchasing the essential tools used rather than new. A two-car garage can also suffice as a workshop at first, and a truck can be rented to deliver cabinets when they’re ready.
What are the ongoing expenses for a cabinet making business?
The ongoing expenses for a cabinet making business are manageable. They include the cost of materials, paying for a workshop, vehicle expenses, employee wages, and equipment depreciation.
Who is the target market?
The target market for a cabinet making business is largely contractors, home builders, interior designers, and architects. Although property owners are the people who ultimately pay for cabinets, these professionals are the gateways to property owners. Property owners will ask for recommendations, and many will use the cabinet maker that their contractor, builder, interior designer or architect recommends.
How does a cabinet making business make money?
A cabinet making business makes money by selling finished cabinets. Cabinets might be sold individually, or a set fee may be charged for a project.
How much can you charge customers?
Cabinet prices are often discussed in terms of linear foot:
- Stock cabinets cost between $60 and $200 per foot
- Semi-custom cabinets cost between $100 and $650 per foot
- Custom cabinets cost between $500 and $1,200 per foot
Most cabinet makers end up earning between $40 and $70 per hour, and the cost of cabinets tends to be about 30 percent of a the total price to remodel a kitchen.
How much profit can a cabinet making business make?
A cabinet making business can earn a significant profit. Making five cabinets per day, a custom cabinet business could bring in between $2,500 and $6,000 daily. Making 2,000 stock cabinets per day, a large company might earn between $12,000 and $24,000 per day.
How can you make your business more profitable?
Many cabinet makers also make vanities and offer cabinet refinishing. Some business owners also get into countertops and/or furniture.
What will you name your business?
Choosing the right name is very important. 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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your cabinet making business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
For most small businesses forming an LLC is a great option, but if you still want to weigh all your options check our our article, What Structure Should I Choose for My Business?
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.
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 cabinet 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 cabinet making business is generally run out of a workshop. 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 cabinet 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 cabinet making business will be in compliance and able to obtain a CO.
Labor Safety Requirements
Cabinet making and installation involves the use of tools that can be dangerous if used incorrectly. Therefore, it is important that your business follows all labor safety requirements which can be found here.
STEP 7: Get Business Insurance
Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
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 cabinet making business
Aside from giving cabinets away for free, the best way a cabinet making business can market is by networking with other professionals in the industry. Meeting people in-person, explaining what a particular cabinet making business offers, and providing referrals or examples will eventually lead to relationships that provide work.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
How to keep customers coming back
As long as a cabinet making business provides quality cabinets on time and on budget, professionals will continue to recommend the business. Contractors and other professionals have little reason to risk their reputation on an unknown competitor when they already have a good relationship with a cabinet maker.
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 Cabinet Making Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Anyone who enjoys woodworking and has an eye for detail may enjoy running a cabinet making business. Making cabinets involves working hands-on with wood, but all measurements and cuts must be precise.
What happens during a typical day at a cabinet making business?
Cabinet making business owners spend a lot of time making cabinets, which involves measuring, cutting, fastening, and gluing. When not actually building cabinets, business owners may be designing cabinets with customers, or delivering and installing finished cabinets.
What are some skills and experiences that will help you build a successful cabinet making business?
Business owners must be skilled woodworkers, and they specifically need experience building cabinetry. Prospective owners who don’t have this experience may learn the necessary skills by:
- Working for an existing cabinet business
- Completing an apprenticeship with an experienced cabinet maker
- Taking cabinet-making classes at a local community college or vocational school
- Enrolling in online cabinet-making courses
- Reading books on cabinet making
Penn Foster offers a diploma in cabinet and furniture making, and the Woodworkers Guild of America has many videos on cabinet making. Jim Tolpin’s Guide to Becoming a Professional Cabinetmaker is one of the most highly recommended books on the subject, and he has also written Building Traditional Kitchen Cabinets.
What is the growth potential for a cabinet making business?
How large a cabinet making business can become depends partly on what type of cabinets the business makes.
Businesses that specialize in custom cabinetry usually remain small and serve a defined geographic area. They might build 5 cabinets in a day.
Businesses that offer stock cabinets can ship finished units throughout the country. They may manufacture 2,000 cabinets in a factory each day.
TRUiC's YouTube Channel
For fun informative videos about starting a busines visit the TRUiC YouTube Channel or subscribe below to view later.
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.
What are some insider tips for jump starting a cabinet making business?
Contractors can provide regular work for cabinet making businesses, but few contractors are willing to subcontract with a new company.
One way business owners can get contractors’ attention is by offering to put in cabinets for free on a project. Offering a free set of cabinets lets the contractor pocket more profit or charge less to the property owner. This may just be enough of an incentive to convince a contractor to work with a new business.
While many business owners may not want to give away so much for free, getting a contractor to trust a business can provide a great long-term return on the initial investment of materials and labor.
How and when to build a team
A cabinet making business can be run as a one-person operation, but many businesses bring on one or two employees. In addition to any employees who help in the workshop, a business also needs someone experienced in cabinet installation. The most beautifully built cabinets won’t look right if they’re installed improperly, which is why having a skilled installer is so important.