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How to Start a Carpentry Business

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Start a successful carpentry business with our step-by-step guide! Learn how to plan, get licensed, market your services, and manage tools for growth.

Kyo Zapanta

Last updated: November 13, 2024 10 min read

Starting a carpentry business could be one of the best moves you make this year. Across the US, the demand for construction projects – and, of course, spending on such projects – are on the rise.

Let’s talk numbers because the numbers don’t lie!

The 2024 Construction Outlook reports a 14% increase in construction spending in 2023 – 7% for residential homebuilding and 20% for nonresidential spending.

Public projects like highways and streets grew by 26%, and manufacturing construction surged by 61%. With the Bipartisan Infrastructure Law driving a surge in public projects, the nation will need more carpenters.

However, according to the US Bureau of Labor Statistics (BLS), there’s still a shortage of carpenters despite the BLS also reporting that over 700,000 are employed in the industry. See the big picture now? 👀

Becoming a carpenter and setting up a carpentry business can offer promising opportunities if you take the right steps. But wrong moves can be fatal, and most small business startups will fail in their first three to five years.

So, let’s talk about how to start a carpentry business so you can fill in the gap. Here, we’ll cover:

A step-by-step guide to starting a carpentry business
The common pitfalls to avoid
Essential tools and resources to help you succeed in your new venture

Ready? Let’s go!

A Step-by-Step Guide to Start a Carpentry Business

This guide will walk you through each step of how to start a carpentry business, from creating a business plan to getting the right licenses and insurance.

These practical tips will help you build a strong, legal, and profitable carpentry business.

❶ Create a Business Plan

A business plan is the blueprint for your carpentry business. It can help you figure out what you want to achieve and how you’ll get there.

Your business plan should have the following:

Executive Summary: Provide a brief overview of your business and your main goals. Highlight your business focus without detailing specific services.
Business Description: Explain your business in detail. What makes your business unique, and who are your target customers?
Market Analysis: Research your market and competitors. What do your potential customers need? Identify gaps in the market that your business can address.
Organization and Management: Outline your business structure. Will you work alone, hire construction workers, or manage subcontractors? Plan your team structure; define the roles and responsibilities within your business. Consider attracting the new generation to your construction company.
Services and Products: Clearly list the specific services you will offer (e.g., custom work, repairs, installations) and any additional products.
Marketing Strategy: Explain how you will attract customers. Consider online marketing, local advertising, referrals, and partnerships with other contractors.
Financial Plan: Include your startup costs, projected income, and pricing strategy. Plan how you’ll manage your cash flow to maintain profitability.

Do’s and Don’ts of Writing a Business Plan

DO’s	DON’Ts
Research your market: Know your competition and potential customers.	Don’t ignore the money: Your plan should include detailed financial info.
Set clear goals: Make sure your goals and numbers are realistic.	Don’t try to offer everything: Focus on what you do best.
Keep it simple: Use clear and straightforward language.	Don’t forget marketing: You need a plan for getting customers.
Prepare for challenges: Have backup plans in case things don’t go as expected.

❷ Decide Your Business Structure

Choosing the right business structure is an important step when starting your carpentry business. It affects everything from taxes to your personal liability. Here are the most common business structures and their pros and cons:

Sole Proprietorship

This is the simplest structure where you, the business owner, are the only person responsible for everything.

Pros:

Easy to set up and run.
Full control over the business.
Lower setup costs and less paperwork.

Cons:

You’re personally responsible for any business debts or lawsuits.
Harder to raise money (loans, investors).
All income is taxed as personal income, which could mean a higher tax bill.

Limited Liability Company (LLC)

An LLC gives you the flexibility of a sole proprietorship but with more legal protection.

Pros:

Protects your personal assets from business debts or lawsuits.
Flexible management and fewer formalities than corporations.
Pass-through taxation, meaning profits go directly to you, avoids corporate taxes.

Cons:

More paperwork and higher setup costs than a sole proprietorship.
Annual fees and filings are required in most states.
Slightly more complex tax reporting.

Partnership

If you’re starting the business with someone else, a partnership may work. There are two types: general partnerships (in which both owners share everything) and limited partnerships (in which one owner has more control than the other).

Pros:

Easy and inexpensive to set up.
You share responsibilities, which can reduce the workload.
Pass-through taxation, like an LLC, meaning no corporate taxes.

Cons:

General partnerships make you personally liable for business debts and the actions of your partner.
Disagreements between partners can cause problems.
Sharing profits with your partner can be challenging.

Corporation (C Corp or S Corp)

A corporation is a separate legal entity. It’s more structured and is often used by bigger companies.

Pros:

Protects your personal assets from any business liabilities.
Easier to raise money by selling shares.
S Corp allows for pass-through taxation.
C Corp profits are taxed at corporate rates.

Cons:

Complicated to set up and run.
Requires more paperwork and legal compliance.
C Corp profits are taxed twice (once at the corporate level and again when distributed as dividends).

Remember that choosing the right business structure affects how you will manage your workforce, whether as 1099 contractors or W2 employees. Each has different tax and insurance implications that can impact your carpentry business.

Did You Know?

In August 2024, the U.S. construction sector employed over eight million people, the highest number in over two decades. This trend shows a strong link between construction investment and workforce demand.

❸ Get Licenses and Insurance

Securing the necessary licenses and insurance is important to legally operate your carpentry business and protect yourself.

Here’s a list of what you’ll typically need:

Required Licenses:

General Business License: Most cities and states require a general business license to operate.
Contractor’s License: Many states require carpenters to have a contractor’s license, especially for larger or structural projects.
Trade-Specific Licenses: Depending on the services you offer (e.g., electrical or plumbing work as part of larger projects), additional trade licenses may be required.
Building Permits: For certain jobs, like structural work, you may need to apply for building permits from local authorities.
DBA (Doing Business As) License: If you’re operating under a business name different from your legal name, you’ll need a DBA license.

Typically Required Insurance:

General Liability Insurance: This protects you from third-party claims like property damage or injuries that may occur on the job.
Workers’ Compensation Insurance: If you have employees, this insurance is required by most states to cover medical expenses and lost wages in case of workplace injuries.
Commercial Auto Insurance: If you use vehicles for your business, this insurance covers accidents and damages related to your work vehicles.
Tools and Equipment Insurance: Protects your expensive tools and equipment from theft or damage.
Professional Liability Insurance: Also known as Errors & Omissions (E&O), this covers you in case of mistakes or negligence in your work.

❹ Register Your Business

Once you’ve chosen your business structure, it’s time to register your carpentry business. This step makes your business a legal entity and allows you to access tax benefits and liability protections. Here’s how to do it:

Choose a Business Name: Of course, before you register your business, you must decide on a business one. Go for one that is unique but will give people an idea of what your business is.
Register Your Business Name: If you’re forming an LLC or corporation, you’ll register your business name as part of the state registration process. However, if you’re a sole proprietor or partnership using a name different from your legal name, you’ll need to file a “Doing Business As” (DBA) name with your state or county before completing other registrations. Make sure to check that your chosen name is available in your state.
Register with the State: LLCs, corporations, and partnerships need to register with their state government. You can usually do this through your state’s Secretary of State office or (less commonly) a business bureau. Most states offer online registration for added convenience.

If you’re a sole proprietor using your own name, you may not need to register your business. However, registering is recommended for legal protection.

Get an Employer Identification Number (EIN): If you plan to hire employees or run your business as anything other than a sole proprietorship, you’ll need an EIN from the IRS. This acts like a Social Security number for your business and is essential for filing most sorts of business paperwork.
Register for Local Licenses and Permits: Depending on where you operate, you might need a business license or permits at the city or county level. Visit your local government website(s) to check the specific requirements for carpentry.

❺ Setup Financial Systems

Setting up your financial systems is key to managing your carpentry business effectively. From financing your business to tracking expenses, here’s a quick guide to get you started.

Financing Options for Your Carpentry Business Start-up Cost

Getting the funds to cover your carpentry business’ start-up costs can be challenging, but there are a few widely-used options:

Personal Savings

Many new business owners use their personal savings to fund their business start-up costs.

Pros: No debt; complete control over your business.
Cons: Risk of depleting personal savings, which could be risky if the business takes longer to become profitable.

Business Loans

Small businesses often seek out loans from banks or credit unions to access funding with lower interest rates.

Pros: Banks and credit unions offer loans specifically for small businesses, often at lower interest rates.
Cons: Requires good credit and may involve strict repayment terms. Failure to repay could hurt your credit or result in losing collateral.

Small Business Grants

Grants provide non-repayable funding for eligible small businesses, but they are highly competitive.

Pros: Grants don’t need to be repaid, and several are available specifically for small businesses.
Cons: Highly competitive, and the application process can be time-consuming. Grants are often limited to certain industries or demographics.

Crowdfunding

Platforms like Kickstarter allow businesses to raise funds by appealing to friends, family, and the public.

Pros: Platforms like Kickstarter or GoFundMe allow you to raise money from friends, family, and the public.
Cons: Success depends on how well you market your campaign. If there’s little public interest, you might not reach your target.

Outside Investors

Investors provide significant funding for businesses in exchange for equity or future returns.

Pros: Investors can provide large sums of money, which can help you grow faster.
Cons: You may have to give up equity or control in your business, and investors often expect high returns on their investment.

Managing Your Financial Systems

Open a Business Bank Account: Keep your personal and business finances separate. A dedicated business account makes it easier to track expenses and income.
Use Accounting Software: Tools like QuickBooks or FreshBooks help you manage invoicing, expenses, and taxes. They also help generate financial reports to track your progress.
Hire an Accountant: For more complex financial needs, a professional accountant can help with tax filings, compliance, and long-term financial planning.

Top Tips

Track every expense. From tools to software like Workyard, it’s important to log all your purchases to stay on top of your budget and avoid overspending.

See how Workyard can help control your business budgets

❻ Purchase Tools and Equipment

To run a successful carpentry business, having the right tools and equipment is crucial. Here’s a list of essential items every carpenter needs:

Basic Tools:

Hammer: A carpenter’s best friend for framing and general construction work.
Tape Measure: Accurate measurements are critical in carpentry.
Hand Saw and Power Saw: For cutting wood, a combination of both is ideal for various tasks.
Chisels: Perfect for detailed woodwork and shaping joints.
Level: Ensures everything is straight and properly aligned.
Screwdrivers and Power Drills: Essential tools that are not just for driving screws into wood efficiently but with other tasks too.

Power Tools:

Circular Saw: Useful for cutting through large pieces of wood.
Jigsaw: Great for cutting curves or detailed shapes.
Nail Gun: Speeds up framing and trim work.
Sander: For smooth finishes on wood surfaces.

Specialized Equipment:

Table Saw: Needed for larger projects requiring precise cuts.
Planer: For leveling wood surfaces.
Workbenches and Clamps: To stabilize materials when cutting or assembling.

Software Tools:

Software like Workyard helps you accurately track employee hours, project timelines, and job costs. It’s great for organizing tasks and managing crews in real-time.

Top Tips

Buy quality tools: Invest in durable, high-quality tools that will last longer and save you money in the long run.
Start small: Purchase only the tools you need to complete your current projects and expand as your business grows.
Maintain your tools: Regular cleaning and sharpening will extend the life of your tools and keep them in top working condition.

Boost carpenters’ productivity with Workyard’s precise time clock

See how it works

❼ Market Your Business

Marketing your carpentry business effectively is key to attracting clients and growing your reputation.

Before you create a marketing plan, it’s essential to understand your market. Ask yourself these key questions:

Who is my target market? Are they homeowners, other contractors, or businesses?
What problems do my target clients face? Are they looking for custom work, repairs, or new construction?
What services do my competitors offer? How can I differentiate myself to stand out?
What’s my unique selling point (USP)? Why should clients choose me over others?
How do my clients find services? Do they search online or visit physical shops?
How will they find me? What platforms or methods will I use to reach them?
How do my clients prefer to communicate? Should I focus on phone calls, emails, or social media?
Am I competitively priced? How does my pricing compare to others in the market?

These questions will help you build a solid foundation for your marketing strategy and ensure that you connect with the right clients.

Once you have a clear understanding of your target market and the strategies that will set you apart, it’s time to take action.

In this day and age, going digital is a must. We’re not saying you don’t need a brick-and-mortar shop, but you will want to have a digital presence because 67.1% of the global population uses the internet, and 76% of consumers look at online presence before physically visiting companies.

So, here’s how you can start marketing your carpentry services.

1. Create a Professional Website

Your website serves as your digital storefront where potential clients can see your services, pricing, and contact information.

Tips:

Use simple website builders like Wix or Squarespace to create a clean, mobile-friendly site.
Include a portfolio section showcasing your previous work with high-quality photos.
Add client testimonials and clear contact information for easy booking.
Optimize for SEO by including keywords like “local carpenter services” or “custom carpentry,” perhaps with your city or region’s name as well. Many searches for “carpenter near me” are really searches for “carpenter in my-location,” with “my-location” being a stand-in for the name of your city or area.

2. Leverage Social Media

Platforms like Facebook and Instagram are great for showcasing your work and engaging with local communities.

Tips:

Post before-and-after photos of your carpentry projects to attract attention.
Use Instagram Stories to show real-time progress of your work.
Join local Facebook groups related to home improvement or construction, and share your services there.
Run local Facebook ads targeting homeowners or contractors in your area.
Explore other platforms that your target clients might frequent, like LinkedIn, YouTube, or X, and establish your presence in these communities.

3. List Your Business on Local Directories

Many people look for carpenters through online directories or Google searches.

Tips:

List your business on Google My Business so it shows up in local search results.
Add your business to online platforms like Yelp, Angie’s List, and Houzz, where people often search for carpentry services.
Ensure your contact info, hours, and location are accurate and consistent across all listings.

4. Partner with Local Contractors and Builders

Establishing relationships with local general contractors or builders can lead to ongoing projects.

Tips:

Attend local contractor meetups or join builder associations like the National Association of Home Builders (NAHB).
Offer referral discounts or partner rates for consistent work.
Drop off business cards at building supply stores, where contractors and DIY homeowners shop.

5. Use Word-of-Mouth and Referrals

Word-of-mouth is powerful in local communities, especially for skilled trades like carpentry.

Tips:

Ask satisfied clients to refer you to friends or family and offer a small discount or incentive in return.
Leave business cards and/or flyers with clients after each job, making it easy for them to recommend you.
Follow up with past clients and ask for reviews (especially on Yelp, which has some of the strictest moderation) you can share on your website or social media.

6. Leverage Job Management Software

Software like Workyard helps you manage projects efficiently, improving customer satisfaction and leading to more referrals.

Tips:

Use Workyard to track job costs, communicate with clients, and schedule projects smoothly.
Showcase how well you manage projects for clients by offering clear timelines and updates.

Carpentry Business Pitfalls to Avoid

Starting a carpentry business can be rewarding, but the statistics show that many construction companies struggle to survive. Recent data reveals that only about 56% of construction businesses make it through their first five years, with survival rates dropping to 30% or lower by the tenth year.

An older study by Harvard’s Joint Center for Housing Studies found that smaller construction businesses fail at much higher rates than larger firms.

Let’s take a look at the most common reasons for carpentry business failure so you can avoid them:

Growing Too Fast Without Systems in Place

One of the most common reasons for carpentry business failure is rapid growth without the necessary systems to support it. According to the Joint Center for Housing Studies, smaller contractors often struggle to scale properly.

As your business grows, ensure that you have efficient systems for managing projects, finances, and employees to avoid becoming overwhelmed.

Underestimating Financial Needs

Many carpentry businesses fail because they underestimate their startup and operational costs. The BLS reports that businesses with small payrolls have a much higher failure rate than larger ones.

Account for all costs — from tools and materials to insurance and marketing — so you don’t run out of funds too quickly. Take advantage of software that can help you track costs, revenues, and basically every process that your business entails.

Neglecting Market Research

Jumping into the business without fully understanding the market can lead to failure. The carpentry industry is fragmented, and competition is tough.

You need to know who your competitors are, what services are in demand, and what pricing strategies will keep you competitive.

Lack of Focus on Specialization

In an industry as broad as carpentry, offering too many services can dilute your efforts. Businesses that specialize in a niche (e.g., custom cabinetry or residential renovations) often fare better than those trying to do it all.

Specializing allows you to become an expert in your field and build a solid reputation.

Inconsistent Cash Flow Management

Poor cash flow management is another common reason carpentry businesses fail. Many carpentry jobs involve delayed payments, but your expenses continue.

Without proper financial planning and cash flow tracking, your business could face cash shortages, which would make it unable to cover operating costs.

Avoid these common pitfalls and stay focused on building a strong foundation for growth to give your carpentry business a better chance of succeeding in a competitive and challenging industry.

Start your business right with Workyard—track, manage, and grow effortlessly!

See how it works

Tools and Resources for Carpentry Businesses

To run a successful carpentry business, you need the right tools and systems to manage your projects, team, and finances. Here’s a quick list of essentials:

Project Management Software: Tools like Trello help you organize tasks, track jobs, and communicate with clients efficiently.
Time and Employee Tracking: Workyard is perfect for tracking employee hours, labor costs, and project timelines, ensuring your jobs stay on budget.
Accounting Software: QuickBooks, FreshBooks, or Xero can make managing invoices, expenses, and taxes easy and will give you real-time insights into your finances.
Expense Tracking: Use apps like Expensify or Zoho Expense to scan receipts and keep track of business spending (some accounting apps can also do this).
Scheduling and Job Tracking: Workyard streamlines job scheduling, material tracking, and client communication.

Understanding and managing labor costs in construction is crucial for your carpentry business. With tools like Workyard, you can efficiently track employee hours and project timelines, ensuring that your labor costs are always aligned with your budgets.

It eliminates the guesswork involved in managing crew and budgets, ensuring that your business runs smoothly and efficiently.

Ready to streamline your carpentry business? Try Workyard for free and see how it can help you stay organized and grow your business!

FAQs

How do I start working in carpentry?

To start carpentry work, you’ll need to learn basic carpentry skills, which can be done through vocational schools, apprenticeships, or online courses. Hands-on experience is key, so look for opportunities to practice by taking on small projects or working alongside experienced carpenters.

You’ll also need to invest in essential tools, such as hammers, saws, and measuring tape, to get started. Building a portfolio to showcase your work is important for attracting clients as you develop your career in carpentry.

Does carpentry make good money?

Yes, carpentry can be a profitable profession. Skilled carpenters, particularly those specializing in custom furniture, renovations, or construction, can earn a good income.

Your earning potential as a carpenter depends on factors like your skill level, the demand for carpentry work in your location, and the type of projects you take on. Many successful carpenters grow their businesses by taking on larger, higher-paying jobs over time.

How do I market myself as a carpenter?

Marketing yourself as a carpenter involves showcasing your work and skills. A great way to do this is by creating a professional website or portfolio to display completed projects. Social media is also a powerful tool for sharing your work and reaching potential clients.

Word-of-mouth referrals from satisfied customers can help build your reputation, and networking with contractors, builders, and other professionals in the construction industry can lead to more work opportunities.

What is a freelance carpenter?

A freelance carpenter is someone who works independently and takes on projects from clients without being tied to a long-term employment contract.

Freelancers manage their own schedules, set their rates, and work with a variety of clients. This allows for more flexibility, but it also requires strong business skills, including project management, client relations, and marketing.

What are some good examples of carpentry work?

Carpentry work can include a wide range of projects. Common examples include furniture making, cabinet installation, wood framing for buildings, door and window installations, and deck building. Carpenters also handle repairs, renovations, and custom woodworking projects for residential and commercial properties, making the field versatile and in-demand.

Is a carpenter a trader?

Yes, a carpenter is considered a skilled tradesperson. As a member of the skilled trades, carpenters specialize in working with wood and related materials to create, install, or repair structures. They are often classified as part of the construction trade alongside electricians, plumbers, and other professionals who perform specialized work.

What type of business is carpentry?

A carpenter typically works in the construction or home improvement industry. They may run a small business as a sole proprietor or operate as independent contractors.

Carpenters provide services such as woodworking, installations, custom builds, and repairs for residential and commercial clients. The business can vary in size, from a one-person operation to a larger company with a crew of carpenters working on multiple projects.

Carpentry businesses prefer Workyard for time-tracking, scheduling, cost management, and more.

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