AHAHAHA! BUSINESS PLANS!

[waspwood]

Am Im sure many of you may know the pain of turning passion, practicl and creative tallents in to a business plan is mind numing, im not going anywhere with figures, I HAVE NO IDEAR! one thing that comes up on the cash flow projector is electricity bills!!! so any idear on how much a small workshop takes to run a year? im looking at 3hp table saw, bandsaw, 3hp planner thicknesser and all the daily grind of power tools!
is it worth changing to 3phase, is it much cheaper for that 1extra h.p? including installing cost(£?)
so far it will be a 1man show making 1off comissions for house hold furniture...working with ply/mdf soft & hardwoods ...boxes cd racks doors coffee tables and kitchen tabels...and have no idear how to project these figures ...what am i doing im so bad at £
cheers waspwood

 

[miles_hot]

I would suggest that as you are a one man operation only one major machine will be in operation at any one time. As they are all within an order of magnitude the same sort of wattage pick the biggest beast and use that to work out the cost of running all the machines

If you are expecting to use the machines (rather than hand tools) to produce stuff you could make some gross assumptions around the amount of time per day machines would be running. I'm not experienced in this but someone else might shoot me down but could you think in terms of in an average "working" day:
Preparing stock: 0.5 day
Glue up: 0.25 day
Finishing: 0.5d

Thus you could think of having the machines running for half the time you're actually making stuff. Note that the dust extractor would also need to be on during this time...

Obviously all the time you're in the shop you'll be heating and lighting it so for that working day assume that the lighting is on for 8 hours and the heating for say 3 (it'll be more in the winter but you'll not have it on full time even in winter - assuming you have some form of insulation).

So for a working day your power needs will be:
4h - big beast
4h - extractor
8h - lights
3h - heating

Look at the power figures for the big beast, your extractor, the ligh bulbs/strips and the heater and use these to workout the kW/hour and hence the units you'll be using and ring your supplier up to find out how much each unit costs you (or look at your bill) and you'll have the cost of working for 8 hours in your shop.

Have a search on the site for threads about 6-12 months ago about going it alone etc where some spectacular advice was given, one thing I seem to remeber was that a pretty significant amount of time should be allowed for marketting and meeting people. If memory serves this was at lease 2 days a week (could be more) so if we assum a working week of 6 days this means that the above power calculation should only be run for 2/3 of the time you are allocating to working.

In a typical office year there are 220 working days (total less weekends and bank holidays) and I usually expect people to be around for only 180 of them (sick and holidays). Obviously you need to work out your personal numbers here.

Hope this helps.

Miles

 

[wizer]

Alan Peters' book "Cabinetmaking, a professional approach" is essential for what you're doing.

 

[big soft moose]

i'd also suggest a trip to your local chamber of comerce / buisness link who will give you free advice

if you are going to suceed in self employment you need to address being "so bad at £££" as however good a woodworker you are you will otherwise be doomed to failure and insolvency

 

[big soft moose]

In a typical office year there are 220 working days (total less weekends and bank holidays) and I usually expect people to be around for only 180 of them (sick and holidays). Obviously you need to work out your personal numbers here.

Hope this helps.

Miles

um - i think you have deducted weekends and bank holidays (or leave) twice mate

52 x 6 = 312 , minus 5 bank holidays makes 307 working days per year. Four weeks leave (which is generous for a self employed craftsman) makes 287 working days . allow maybe two weeks sick and that still leaves 277

mind you the OP does also have to factor in that as a one man band not all his time will be spent in the workshop , there will also be time spent dealing with customers, delivering product, dealing with supliers, and of course doing the dreaded admin

so taking all that into account maybe 180 workshop days per year is about right after all

 

[big soft moose]

Am Im sure many of you may know the pain of turning passion, practicl and creative tallents in to a business plan is mind numing, im not going anywhere with figures, I HAVE NO IDEAR! one thing that comes up on the cash flow projector is electricity bills!!! so any idear on how much a small workshop takes to run a year? im looking at 3hp table saw, bandsaw, 3hp planner thicknesser and all the daily grind of power tools!
is it worth changing to 3phase, is it much cheaper for that 1extra h.p? including installing cost(£?)
so far it will be a 1man show making 1off comissions for house hold furniture...working with ply/mdf soft & hardwoods ...boxes cd racks doors coffee tables and kitchen tabels...and have no idear how to project these figures ...what am i doing im so bad at £
cheers waspwood

you could also approach the buisness plan from the other end - ie how much can you reasonably make from your type of project - then deduct your living expenses mortgage etc and how much do you have left

what can you afford to run on that figure etc ?

 

[Richard Findley]

Hi Waspwood,

To give you an idea, here's my situation:

I have set up my business in a small indusrtrial unit, workshop is aprox 30ft x 12ft and 2 floors. I have 3ph table saw, lathe, extractor, bandsaw, p/t, oil filled rad, compressor and a heater thingy with a red glowing bulb (don't know it's technical name but it works pretty well!!) and strip lights.

Last year I was working for myself 2 days a week and 3 at another business and paying £58 per quarter on a standard economy 7 deal. This year I have gone up to 3 days for myself and bearing in mind that this quarter is the cold one, my latest bill was £92 so this works out pretty well that on a 5 day week the bill would probably come out at something like £145 a quarter, I may however be able to get it a little cheaper if I shop around but I don't know yet. This is with British Gas.

I hope this is of some help to you with your forcasting. As a guide I try to work on getting £150 a day and I found that on 1 day a week it pretty much covered overheads but nothing left for me.

HTH

Richard

 

[JonnyD]

Hi Waspwood I run a small workshop and The electric is generally about £750 a year with the bills being a bit more in the winter as we use electric heaters in the spray and drying room.

The workshop is about 30ft X 60ft and the running costs for rent rates insurances electricity consumables etc is £200 a week to give you an idea.

Cheers

Jon

 

[matthewwh]

With all due respect the electricity bill is a pimple on the bum of a business plan. Look up Porters five foces on google for the level of information that your bank manager is interested in.

Signed commisions and approved maquettes plus a thorough understanding of your customers long term needs will impress him/her far more than a thorough understanding of electrical consumption.

Although the base rate is 0.5% you should expect to pay around 12% for a business loan at the moment. (yes you are paying for their past ineptitude, someone has to and you are a producer not a leech - live with it). Alternatively there has never been a better time to approach private investors directly, the best you can get as a saver is about 5%. Offer a private investor 8 or 10% on an interest only debenture and they will be hard pushed to find a better deal - especially if they buy some of your more expensive kit directly so they own it and you are effectively leasing it back from them for the interest on the deb.

Cashflow is your primary fundamental and only concern for the first three years, profit is something to begin worrying about from year four onwards.

If you want to have a chat give me a call on 01295 780003.

 

[Eric The Viking]

With all due respect the electricity bill is a pimple on the bum of a business plan. Look up Porters five foces on google for the level of information that your bank manager is interested in.

Signed commisions and approved maquettes plus a thorough understanding of your customers long term needs will impress him/her far more than a thorough understanding of electrical consumption.

Although the base rate is 0.5% you should expect to pay around 12% for a business loan at the moment. (yes you are paying for their past ineptitude, someone has to and you are a producer not a leech - live with it). Alternatively there has never been a better time to approach private investors directly, the best you can get as a saver is about 5%. Offer a private investor 8 or 10% on an interest only debenture and they will be hard pushed to find a better deal - especially if they buy some of your more expensive kit directly so they own it and you are effectively leasing it back from them for the interest on the deb.

Cashflow is your primary fundamental and only concern for the first three years, profit is something to begin worrying about from year four onwards.

The above is really good advice!

I'd add a few thoughts:

1. Avoid the chamber of commerce - they want money for most things and typically are mainly mid-sized (i.e. bigger) companies with an agenda that is accordingly also different.

2. If you can, find a business evening class. It's not always the case that 'those who can't, teach' and the basics of book keeping, marketing, etc. will be really useful. It's also really useful to discuss with your fellow students - often people running small businesses themselves who can share experiences.

3. Don't trust banks. I've just had a hugely expensive run-in with a High St. bank over their costs. They operate in a world that is frankly ridiculous to ordinary business, can levy charges we couldn't dream of, and treat their customers with a disrespect that beggars belief.

4. Build a forecasting spreadsheet that covers about three years. Put BAD numbers into it (excessive costs, poor sales, broken machinery needing replacement, etc.). Include a decent chunk of money for promotion (advertising) activity. Try to include every expense you can think of.

5. Always be pessimistic about the number of customers you'll attract. In your area, how many people are there? Of those, how many might want your cabinetmaking (and can pay for it!)? Of those, how many are you likely to be able to contact with your marketing activity, so they're aware of your existence? Of those, how many will order from you (and may be prepared to wait for you to make them something)? That's your realistic customer base, and of those, how many can you serve in a year, and what average profit must you make from them to survive? If that number makes your work expensive, you may have a problem (but not always).

If the numbers suggest you can make your business work on that basis, good. If they say you can't, then remember: there is no safety net.

 

[beech1948]

Waspwood,

It sounds like you need someone to hold your hand through your first business plan.

They are not as difficult as it seems. The approach should be to take small steps, be logical and be realistic. be damned realistic and be bloody realistic.

The basics are as follows:-
Turnover is --VANITY
Profit is ------SANITY
CASH is ---survival.

I have written over 40 business plans from the simple to the maximally complex, I am not an accountant however.

I am prepared to offer you time to put one together with each of us working on it.

This will be free and I will treat you with utmost confidentiality and honesty.

PM for my phone number and email address if you are interested.

Some of the advice above is good but I suspect too general for your needs.

regards
Alan

 

[jeffinfrance]

hi waspwood,

be careful starting a business now unless you have some capital behind you (in which case now is the perfect time to start a business). last years "credit crunch" was just a practice run for what is store for the working class.

DO NOT BORROW ANY MONEY FROM BANKS FOR THIS VENTURE, THEY WILL EVENTUALLY TAKE EVERYTHING YOU HAVE!

my advice, reduce your fixed overheads to as close to zero as possible. (i left the uk to do this, no mortgage, free workshop) ask freinds and family for investment as you will be able to offer a far better return than their retirement plan. factor in tool investment with each job and grow very slowly.

and as already said....electric is the least of your worries as you are only using it when you have a customer who will pay you.

all the best,

jeff

 

[Doctor]

I'd take up beech1948 offer, no one knows what you want the business to do, most of the advice offered here just reflects how people set their business up, which can vary dramatically from one business to the next, I would have no issues seeking to borrow big bucks from the bank to ensure I got a lucrative job but others would not borrow for all the tea in china, it's just horses for courses.
You may want to grow slowly or take the risk and be a vast empire in 5 years.
My one bit of advice is, I have seen people take years to write detailed business plans and the business folds in months and I have seen geezers start business with ideas on the back of a *** packet who now own mansions.
A lot of it is determination and grit, but the number one rule is, business first, do not be lulled into thinking that because you are a good craftsman thats enough.
Good luck
:lol:

 

[Shane]

Best of luck dude

I walked out of my job the day before the financial meltdown in september 08 and spent 6 weeks looking for employement. After no luck I decided to start up on my own with no money, no business plan and no customers. I could either sit on my a*se and moan or get out there. Money is still tight but I now have a fairly well equipped workshop and nice customers. I didn't borrow any money from any establishment, and never will.

As said already, each business model is different, mine only consisted of bloody mindedness

 

[waspwood]

thankyou all so much for the advice, though i don't really need my hand held, the idear of lending so much£ was is daunting, with no power tools or machery i quess biteing the bull for all of it was to much of a overhead, things have changed slightly since dropping in the question about it all, i found great premisis, and now found a possible fellow wood worker to share space with all cutting costs, so yer take it eazy on ones self first thing first...
but sadley i will have to approach the **** sorry bank...as for settup costs for bench ,minor tools and all...so thankyou all for advise and for calming my arse down!!! waspwood

 

[ondablade]

A little after the fact, but i have a business plan template i used in my manufacturing consulting business with manufacturing companies - it's at a level somewhere between Porter's forces and something more specific. i.e. you would have to do a bit of thinking to figure out all the items that apply under a given heading.

It's again more general than something made for a woodworking business, and there's no guarantees everything that will effect you is there, but it's also available by e-mail should anybody want a copy.

ian