We earn commissions if you shop through the links below. Read more
Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on May 3, 2022
Investment range
$4,550 - $10,600
Revenue potential
$62,000 - $250,000 p.a.
Time to build
0 – 3 months
Profit potential
$50,000 - $75,000 p.a.
Industry trend
Growing
Commitment
Full-time
Here are the most essential aspects to consider when starting a carpentry business:
Starting a carpentry business has pros and cons to consider before deciding if it’s right for you.
Trends
Challenges
Startup costs for a carpentry business range from $4,500 to $10,000. Costs include a website, tools, and a down payment on a van or truck.
You’ll need a handful of items to successfully launch your carpentry business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150–$200 | $175 |
| Business licenses and permits | $100–$300 | $200 |
| Insurance | $100–$300 | $200 |
| Business cards and brochures | $200–$300 | $250 |
| Website setup | $1,000–$3,000 | $2,000 |
| Tools | $1,000–$1,500 | $1,250 |
| Truck or van down payment | $2,000–$5,000 | $3,500 |
| Total | $4,550–$10,600 | $7,575 |
The average rate for a carpentry business is $60 per hour. Your profit margin when you’re working by yourself should be about 80% since customers pay for materials.
In your first year or two, you could work 20 hours per week, bringing in $62.000 in annual revenue. This would mean $50,000 in profit, assuming that 80% margin. As your business gains traction, you might grow to have projects that take 80 hours a week. At this stage, you’d hire staff, reducing your profit margin to around 30%. With an annual revenue of $250,000, you’d make a healthy profit of $75,000.
There are a few barriers to entry for a carpentry business. Your biggest challenges will be:
Now that you know what’s involved in starting a carpentry business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research carpentry businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a journeyman carpenter or a carpenter who builds custom wood cabinets.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as structural carpentry or furniture building.
This could jumpstart your word-of-mouth marketing and attract clients right away.
As a carpenter, you could do all sorts of projects for customers including:
The average rate for a carpentry business is $60 per hour. Check prices in your local area to make sure you’re competitive. After your business costs, you should aim for a profit margin of about 80%.
Once you know your costs, you can use our profit margin calculator to determine your markup and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market may be residential customers or construction companies. You can market to residential customers on TikTok, Instagram, and Facebook. You can connect with construction company owners on LinkedIn or find them on Google or Yelp and give them a call.
In the early stages, you may want to run your business from home to keep costs low but as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Here are some ideas for brainstorming your business name:
Discover over 380 unique carpentry business name ideas here. If you want your business name to include specific keywords, you can also use our carpentry business name generator. Just type in a few keywords, hit Generate, and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool below. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to carpentry businesses.
If you’re willing to move, you could really maximize your business! Keep in mind that it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your carpentry business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number or EIN. You can file for your EIN online, or by mail/fax. Visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a carpentry business.
Starting a carpentry business requires obtaining a number of licenses and permits from local, state, and federal governments.
States have different licensing requirements for carpenters. Some require a specific carpenter’s license, and some require a general contractor’s license.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your carpentry business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Jobber, BUILDXACT, Octopuspro, to manage your estimates, projects, schedule, and invoices.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech savvy, you can hire a web designer or developer to create a custom website for your business.
However, people are unlikely to find your website unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Today’s customers are inundated with buying options, so you’ll have a real advantage if they can quickly grasp how your carpentry business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your carpentry business could be:
You may not like to network or use personal connections for business gain but your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a carpentry business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in carpentry for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in carpentry. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a carpentry business include:
At some point, depending on your business’s size and needs, you may need to hire all of these positions or simply a few. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Carpentry is an art as well as a trade and can be very gratifying work. It has all sorts of applications, so starting a carpentry business is full of opportunities. The market for carpentry services has grown and should continue to grow, so there is definitely good money to be made. It will require hard work and a passion for your craft, but you can build a lucrative business in just a year or two.
You’ve got business knowledge in your toolbelt now, so it’s time to start building your future by launching your successful carpentry business!
Carpentry businesses charge about $60 an hour for services, so it can be very profitable. You just have to have a passion to do great work, and you can grow your business.
You can take inexpensive carpentry courses online through Udemy. However, some states require a carpentry license and have their own approved educational providers and other requirements. Check with your state government to learn the requirements.
Yes, carpentry has a future, as it is a skilled trade that is essential to many industries, such as construction, woodworking, furniture making, and home improvement.
Generally, carpenters in urban areas or regions with high construction activity tend to have more opportunities and potentially higher wages. Major cities with booming construction sectors or areas with a high demand for custom carpentry work, such as luxury housing markets or commercial developments, often offer higher earning potential.
To differentiate your carpentry business from competitors, consider strategies such as specializing in a niche area of carpentry, such as custom furniture or woodworking, to attract customers seeking unique craftsmanship. Emphasize the quality and craftsmanship of your work, highlighting your attention to detail and precision.
Published on December 1, 2022
It’s usually cheaper to have a corrupted hard drive or a defective battery replaced than buying a new laptop, which could be twice as expensive.Th ...
Read Now
Published on July 21, 2022
The US handyman industry is worth a stunning $4 billion and growing, with demand for all variety of domestic services on the rise as the number ofho ...
Read Now
Published on July 13, 2022
As the US economy regains strength in the wake of the pandemic, the construction industry is anticipating strong growth with plenty ofopportunities, ...
Read Now
No thanks, I don't want to stay up to date on industry trends and news.
Comments