Author Topic: Questions related to starting up a side business  (Read 2818 times)

birdman2003

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Questions related to starting up a side business
« on: August 01, 2014, 02:41:00 PM »
Recently I have started a side business (making custom furniture) out of my garage.  I guess it's not officially a business yet, most of the things I've made are for friends and family.  But now my neighbors have started seeing some of my projects, and requesting that I make similar items for them.  I am also thinking of starting up an eBay or etsy or CL account to sell to the public.

I have some questions related to starting a side business that perhaps you could answer:

(1) At what point do I need to get a separate credit card / bank account?  I don't have a lot of direct expenses besides my time.  I usually have the customer buy the materials required.

(2) How do you value your time?  At my day job, my salary translates to between $30 and $40 an hour.  But I don't know what I should charge for time spent on side projects.

(3) Do you charge by the hour or do you charge by the job?  I would think charging by the job would be fair.  It would incentivize me to improve my methods and finish the job sooner so I can earn more.

Thanks!

J Boogie

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Re: Questions related to starting up a side business
« Reply #1 on: August 01, 2014, 04:16:44 PM »
I'm at a very similar stage.  I make a similar amount at my day job and I've sold probably just over a dozen pieces, only for people I know, at an average of $400 each or so.  I rent at a community woodshop which has its pluses and minuses.

I'm probably not better suited to answer your questions than you are, but here's my take:

1) I don't worry about anything like that, I've never asked for money up front since they're friends/family.  I track the expenses like all my expenses so I know how much the wood costed me if I want to factor that into the price I charge.  And I sincerely doubt the IRS gives a crap about the nickels and dimes we'd pay in taxes after you factor in all the expenses we could deduct, so I don't bother with that either.

2 & 3) I think you have the right idea.  It's not your customer's fault if you take extra long to build something.  If I know something is gonna be a pain or take a while to build, I give them a pretty high price.  Shoot, if I don't like the design they want, I give them a prohibitive price and offer a design I like better at a price they like better.  I also consider how it would look in their space.  That's the beauty of doing something you love on the SIDE (or being FI), you can actually do something you believe in without worrying about having enough.

Also, I don't plan on using eBay or etsy because of shipping eating away at profits - not to mention they're a bit of an amateur trap.  Hairpin legs and "shabby chic" everywhere.  There are exceptions though; JeremiahCollection, hedgehouse.
And I'd wager a guess that very few go to CL looking to spend a decent amount on custom furniture.  They might scour CL for something like an Eames or Risom, but I know guys that have built tables and dressers that have been on CL forever. 

When I don't have a waiting list of friends/fam to build for, I might look into an option like that... but I'd rather not.  Honestly I'd rather give something away and feel like a million bucks than spend half the cost to ship it or wait for a call on CL. 

My plan is to grow my business slowly and surely, eventually working my original designs into some of my projects.  Whenever I have a full line of original photo worthy designs built, then I'll consider myself open for business to the public.

Rather than trying to hawk my furniture via eBay/etsy/CL, I'd rather rent it out to home stagers, event planners etc if it doesn't sell right away.

Well, however far you want to take it, all the best.  Keep us updated with your milestones.

Edited to list exceptionally good etsy furniture builders.
« Last Edit: August 01, 2014, 04:21:39 PM by J Welterweight »

birdman2003

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Re: Questions related to starting up a side business
« Reply #2 on: August 22, 2014, 02:48:17 PM »
Well a few more orders have come in.  I looked at some competitive prices from Pottery Barn furniture and put myself in the ballpark.  I'll try to keep a good record of my input hours for these initial jobs to see what I'm actually paying myself.

Freedom2016

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Re: Questions related to starting up a side business
« Reply #3 on: August 22, 2014, 04:39:21 PM »
If it were me, given that it is virtually cost-free to get a separate CC and open a separate checking account, I would do it now. Makes the paperwork easier when you have clearly separate business and personal funds.

Thegoblinchief

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Re: Questions related to starting up a side business
« Reply #4 on: August 22, 2014, 06:07:21 PM »
If it were me, given that it is virtually cost-free to get a separate CC and open a separate checking account, I would do it now. Makes the paperwork easier when you have clearly separate business and personal funds.

Also, there will be situations when a supplier might require a business card to sell you anything, or to get a better price.

Only you can decide how much your labor is worth, but craftsmen undervalue their time ALL THE TIME.  It's probably the single biggest reason for business failures. Talent can only take you so far if you can't make money.

theconcierge

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Re: Questions related to starting up a side business
« Reply #5 on: August 22, 2014, 06:10:29 PM »
Etsy is a lot better to sell custom items - forget eBay!


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