Start a Wool Making Business by following these 10 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 Wool Making Business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 much can you charge customers?
- 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 Wool Making Business?
Initial costs for this type of business vary, depending on what steps in the manufacturing process you choose to take part in. Assuming you’re involved in every stage of the wool making process, you’ll need to invest in:
- Farmland, animals, and equipment - Consider how many animals you need to meet production goals. Prices vary depending upon the size of the land and the number of animals you wish to have.
- Production space - Existing businesses report needing a minimum of 10,000 square feet. Rent and utilities average $4,500.
- Production equipment (scouring equipment, carding tools, pickers, and dyeing equipment) - Many of these tools have both manual and automated options. Each item starts at a minimum of $495.
- Payroll - To keep production numbers up, you will need to hire a team to manage every stage of production, from farming to dyeing and marketing.
- Education and training - $1,000
- Business software - $250
- Marketing strategy - This should include a website, printed and online literature, and paid targeted ads.
Successful wool makers indicate the minimum startup costs for a small wool production business that purchases the fleece from local farmers is $7,500. The maximum spent is $67,000, and the average is just over $37,000.
What are the ongoing expenses for a Wool Making Business?
As with any business, you will need to budget for ongoing expenses each month. Again, this depends upon what steps of production your business takes part in and what steps you hire another party to complete. Standard business expenses include:
- Land expenses - upkeep and taxes. Costs vary depending upon location.
- Feed costs, if you raise your own sheep.
- Workspace - Rent/loan repayment, utilities, and maintenance. Costs vary depending upon the size and location of your production space.
- Equipment maintenance, repair, and replacement - Depreciation should also be factored into your business’s budget.
- Fuel and oil
- Ongoing education
- Business software
- Website maintenance
- Marketing materials
Industry leaders recommend regularly calculating your cost of production to ensure the business is operating efficiently and profits are maximized.
Who is the target market?
Your target market depends largely on your business goals. Some wool makers produce yarn that is sold in craft stores. Others sell yarn as a raw material, which is turned into fabric for making clothes and shoes. When developing your business plan, it’s important that you consider your production goals, as well as short and long-term business goals. This will help you identify your target market and develop a marketing strategy.
How does a Wool Making Business make money?
Wool-making businesses generate revenue through the sale of each product. Some purchase the fleece from farmers and process it from there, while others do everything in-house.
How much can you charge customers?
There are several factors that should influence your prices: the type of wool, material costs, equipment costs, and labor costs. Consider these numbers to get to your break-even point. The standard markup for retail yarn is 50%.
How much profit can a Wool Making Business make?
The wool-making industry is scalable and can be highly profitable with the right business plan. If you sell your wool as yarn, at $80.32 per pound, and sell 2,500 pounds per month, your monthly gross income is $200,800. Subtract the ongoing business expenses to determine your net profits.
How can you make your business more profitable?
To maximize profits, it’s important that you really get to know your product well. Each time you add a new type of wool, you and your staff should be highly educated on the product before sending it to market. This will keep production levels higher and maintain customer confidence.
Many wool-production businesses elevate profits by managing their own ecommerce websites and partnering with large clothing and shoe production companies.
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.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your Wool Making Business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a Wool Making Business
As previously mentioned, there are various types of fleece, each with its own appropriate use. Therefore, it’s important that you are knowledgeable on the subject. This knowledge will prove to be a powerful marketing tool, as it positions you as a thought leader in the wool industry.
When a customer calls with questions, use your communication skills to gather information regarding what they are looking for in a product. Make sure they understand their options and select the right product for their needs.
Your knowledge should also be transferred to written form through your business’s blog, advice sheets, newsletters, and social media posts. Guest speaking engagements at relevant conventions are another effective marketing tool. Speaking engagements will help solidify your spot as a thought leader and create meaningful networking opportunities.
How to keep customers coming back
One of the pros of entering the wool-making industry is its high customer retention rate. There are also several business models and pricing tiers that can be implemented, each of them reaching a different target audience. The key is to understand your options, identify who you wish to serve, and learn everything you can about that aspect of the industry. Doing so will ensure you consistently produce quality products and develop strong business relationships.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Wool 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?
Do you enjoy working with animals? Do you feel passionate about the transformation process of turning an animal’s fluffy coat into textiles? If so, starting a wool-making business could be the ideal business venture for you.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a Wool Making Business?
The specifics of your day will depend on what parts of the process you do in house and what steps you hire other people to handle. Assuming your wool making business does everything in house, you can expect a normal business day to include the following:
- Shearing the animals - This is typically done every year at the end of winter
- Managing the farm and employees
- Cleaning, carding, and spinning the wool
- Dying the wool - Some customers need raw wool, which is then woven into fabric. Other customers need it dyed.
- Customer Service — Communicating with customers regarding their needs, answering questions, and addressing concerns.
- Filling orders
- Customer service
- Administrative duties
- Implementing and overseeing the marketing strategy
What are some skills and experiences that will help you build a successful Wool Making Business?
Behind every successful business is an innovative entrepreneur. Someone with a growth mindset, always looking to improve their processes and products, will excel in this field. Launching a successful wool-making business requires both industry knowledge and the ability to lead.
Communication skills, both written and oral, will also prove critical in helping you achieve your short and long-term business goals. The International Wool Textile Organisation and the American Wool Council offer a wealth of information and support for both established entrepreneurs and those just entering the industry.
What is the growth potential for a Wool Making Business?
The textile industry is profitable and poised for long-term growth. By 2029, the global wool and yarn industry is expected to reach over $50.5 million, with an annual growth rate of 4%. The key to success is strong business acumen, a firm understanding of the industry, and industry connections.
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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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
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 Wool Making Business?
While no formal education is required, it’s important that you understand the intricacies of this industry. For example, there are a number of different sheep breeds. Each produces a different type of wool, and each wool is appropriate for manufacturing different products.
Calculating your cost of production is a key strategy for understanding production efficiency.
This industry has a high customer retention rate and offers an opportunity to make meaningful business connections. Therefore, industry leaders urge entrepreneurs new to the industry to seize all networking opportunities. They also recommend careful selection of the clients you work with. Remember, you’re providing an invaluable service and will hopefully work with each customer for years to come. Make sure you partner with people whose business goals align with yours.
How and when to build a team
Given the work you are doing, you will likely need to start building a team during the planning phase. There are many moving pieces to this type of business and each one will contribute to your success. Every member of the team must possess the knowledge and experience to perform their job well. If one cog breaks down, the entire system slows and your customers are in danger of not receiving their product on time.