Starting a very small businuess

[Frosty]

On 3/6/2018 at 7:17 AM, ryancrowe92 said:

well what I should have said was I don't know if I'm going to make bbq items or stuff like j and s hooks. 

your right it is a skilled craft but can I really charge that for the quality of the work like if it take me 2 hours to produce lets say 5 then for those five I have to get 24 plus materials and the basic cost of the item which puts me around 30- 35 dollars which isn't bad really for a bbq fork or spoon. 

and this over head thing is it like the parts you don't know about or something like that 

 

Ryan: Good to see you posting again. I see you haven't changed your passion. I'm quoting this post of yours because of the last line. It's a huge hole in your boat. HUGE.

WHAT in heaven's name are you studying in your economy class that you don't even know what overhead is? If you have parts you don't know about or SOMETHING involved in your business you are a junk collector or failure. Do you know what the "Bottom Line" is? "Throughput?" "Income, outlay?" This stuff is so basic to ANY kind of work that not knowing is a game killer for starting your own business. Truth is it's a FRACTION of what you need to know to have a prayer.

Another important point has been touched on here but I don't know of anybody who does a better job of explaining it than Mike Rowe of "Dirty Jobs" fame. Deciding you want a business as a blacksmith is a dream for many folks. Expending a great deal of time, money and effort to attain your dream is a good thing. NO? 

No, it's the BIG LIE. Listen to Mike. https://www.youtube.com/watch?v=CVEuPmVAb8o

Frosty The Lucky.

 

[Marc1]

On 3/7/2018 at 9:47 PM, JustAnotherViking said:

I would interject that this is a bit of an extreme comparison and not quite applicable.

A boat would be a huge capital investment, and as you mentioned, the friend couldn't afford the running costs and upkeep in the traditional 'hobby' sense.

 

It's called an illustration, and I tend to use illustrations from my own life experience. 

The reasons and motivations to start a business are the maker or breaker of the enterprise. 

Another illustration from my life experience:

Most restaurants fail within the first year. Why? Because they begin with someone who is a good cook and is encouraged by others ... "You are so good, you should open a restaurant!"

Only problem is that the job of the owner, is not cooking but bringing bums on seats.

My friend's motivation with the boat was the fun of being on the boat, not the gruelling exercise of finding customers for fishing charter. 

The good cook's motivation is the alleged prestige of having a restaurant, and the failure comes from not knowing how to bring in the patrons and beat the competition. 

The fact that both my examples are of a more expensive nature, is irrelevant. It is not about the amount of the loss but about the wrong approach to what a business entails.

And by all means I am not saying that the OP has the wrong approach nor that it is not possible to make money blacksmithing.

It just seems to me ... and correct me if I am wrong ... that the OP would like to turn an interest in a hobby that he has yet to start, into a business. A bit of a long shot that is lacking all the intermediat steps. 

I wish Ryan all the best in whatever he wants to do. I only say this because I like him to keep in mind that a business is first and foremost a vehicle to make profits.

No profit no business.

The vocation and the idea that you must do what you like, pursuing your interests, was once at the forefront of the advice from the assorted education advisers, but proven wrong in the long run. It is feasibility and vision and a good eye for what others can not see, that makes for a good business and always did. 

A hobby on the other hand is defined by ... spending money in doing what you like.

Frosty ... thank you very much for that link.Iit is this politically incorrect reality check that our education departments lack. 

Thanks again

Here it is again in case someone missed it

 

[JHCC]

The first key question of any craft-based business is this: Do you make a product that people want to buy?

The second key question is this: What does it cost YOU to make this product? (This is your "incremental cost", which is your TOTAL expense -- tools, materials, fuel, building maintenance, insurance, lunch, etc -- divided by the number of pieces you make.)

The third key question is this: Will people pay MORE for this product than its incremental cost?

The fourth key question is this: Will people buy ENOUGH this product to cover your total cost?

Unless the answer to all four of those questions is YES, then your business will inevitably fail.

 

[rockstar.esq]

JHCC,

That's very well put.  I would add question five: If you answered "yes" to questions 1-4, do you know how to access the people buying?

I think there are a whole lot of otherwise viable business plans that get stuck on question five.  People who take the "build it and they will come" approach are rarely successful.  Despite what we see in media, it's awfully difficult to get noticed in the online market.  Any time the barrier to entry is lowered, the competition at the bottom ranks grows.  Every sale opportunity is like throwing a scrap of food to a pack of starving dogs.  One, maybe two dogs will get the scrap, but several will mortally wound one another in the fight.  Survival at that end of the market is day to day subsistence.  One false move and you're done.  Oh, and sometimes the scrap is poisoned because the clients are starving too.

Ryancrowe92, 

I would like to suggest a different approach.  The "straight line" you've drawn between your interests and becoming an entrepreneur are completely understandable.  While there are a lot of difficulties in starting a business, there are people who overcome them.  I've seen really hard working and intelligent failures, and I've seen fools that were successful beyond all reason.  The deciding factors are timing and opportunity.  

Imagine the business plan in terms of an archery hunt to feed yourself. 

Now it's technically possible to just lob an arrow into the woods hoping it will bring down your quarry.  That didn't take too much skill or time, but odds are good that you'll lose an arrow.  Since you've got to supply them yourself, every lost arrow depletes your ability to continue the hunt.  That can get to a situation where you're finally in range of a broadside buck with no arrows in your quiver.  In business we call that an "opportunity cost".

OK, so let's say you're more exacting, so you do some target practice.  That's fine for a little while but it's gonna be hard to improve your marksmanship when you are hungry. Your hunger is overhead.  If you don't have food in your pantry (income), you'll eventually starve.

So that's got a down side.  Alright, let's say you go to the nearest forest and just shoot whatever presents itself because you're no longer particular about getting fed.  It turns out that the small game is quicker and harder to hit.  Maybe you bag a few but you'll break arrows in the process (outlay).  When pursuing small game like rabbit, your eyes are always be on the ground so you won't notice the rare buck that was within range until it's running away.   

So far, none of this seems to be working out so well.  Yet there are hunting magazines with pictures of rich guys posing next to their trophies, what gives?  Well, the rich guys can afford to hire guides and pay ranches to deliver them within range of a trophy.  The real "stalk" for these hunters is picking the right outfitting company.

All of that is very frustrating which is understandable so consider the following.  A whole lot of farmers shoot a deer on their own property.  See, they're "hunting" for the right opportunity every day at work.  They take the pressure off their target practice by feeding themselves via the farm.  These are the guy's who say "it doesn't take much" to be a productive hunter.

Sure, once you factor out the property access, constant scouting, and perhaps nine months of planning based on years of experience, it just takes one shot to put a deer in the freezer every hunting season.  Heck, they've probably killed all their deer with the same arrow.

To apply this to blacksmithing, I have an example.  There's a blacksmith near me who used to work for a super high-end construction company.  They built for the wealthiest of clients.  He was a quality assurance and safety guy for the company so he was always on the sites, often in contact with the clients.  The clients wanted specialty everything, including stuff that he could make as a blacksmith. Being at the right place (opportunity) at the right time (timing), he was able to take his hobby to full-time employment.  While that's awesome, it's worth mentioning that he spent 30+ years working his way up in construction before that window of opportunity opened for him.  Most of which occurred in significantly better economic conditions than we have today.  Still, I think it's only fair to call his plan a success because he never gave up, and he never went hungry.

 

[JHCC]

10 minutes ago, rockstar.esq said:

I would add question five: If you answered "yes" to questions 1-4, do you know how to access the people buying?

That is an excellent point. When I was a professional furnituremaker, I was way out in the woods in Vermont, and we NEVER had a retail customer come to our door. ALL of our business was through furniture stores (for our production work) and interior designers (for custom pieces) with whom we'd worked hard to build up good relationships.

(And before you ask, yes: we failed. Not because we were bad craftsmen (we were decent) or because we didn't make a good product (it was excellent) or because people didn't want our stuff (we were constantly busy with a significant backlog) or because we didn't have a market for our products (we sold through mainly through high-end stores in Connecticut and NYC, with custom work getting shipped as far away as California) -- we failed mainly because we were lousy at analyzing our costs and pricing. As a friend of mine put it, if you're buying watermelon at fifty cents each and selling them at three for a dollar, you're not going to improve your profits by buying a bigger truck.)

[ThomasPowers]

I have a friend who was a professional swordmaker in the 1980's; 2 year backlog on orders at times, selling high end items, (a knife usually went for over US$1000!); and he told me some years his "profit" was based totally on how he depreciated his tools for his taxes.  He had a good business coach as his fatherinlaw used to manage a business in the car industry.

The usual problem in running a Craft Business in the "business" part; not the craft part!  Check to see if the SBA (small business administration) is offering any workshops you can get to---your teacher should be surprised and pleased and you can start working on becoming a businessman that sells his craft output!

[ryancrowe92]

18 hours ago, Frosty said:

Ryan: Good to see you posting again. I see you haven't changed your passion. I'm quoting this post of yours because of the last line. It's a huge hole in your boat. HUGE.

I haven't changed just needed some time to straighten out some stuff. getting back into the swing of things been very busy almost got a nail done. 

18 hours ago, JHCC said:

The first key question of any craft-based business is this: Do you make a product that people want to buy?

The second key question is this: What does it cost YOU to make this product? (This is your "incremental cost", which is your TOTAL expense -- tools, materials, fuel, building maintenance, insurance, lunch, etc -- divided by the number of pieces you make.)

The third key question is this: Will people pay MORE for this product than its incremental cost?

The fourth key question is this: Will people buy ENOUGH this product to cover your total cost?

Unless the answer to all four of those questions is YES, then your business will inevitably fail.

 

that is exactly what I've been saying all along 

[Latticino]

5 hours ago, JHCC said:

we failed mainly because we were lousy at analyzing our costs and pricing

Basically the same thing happened to me with my glass craft business. Likely wouldn't have lasted 10 years if I didn't have a working wife with good family plan health insurance. Finally had a kid, didn't want the added stress of inconsistent income, and couldn't put in the usual 60 hr weeks and responsibly do my part as a parent in a 2 earner home.

[ThomasPowers]

I was setting up to be a professional blademaker and then got married and got two kids as boot and we had two of our own and so I had to get a "real job".

A lot less stress with a steady income and benefits!

[Irondragon Forge ClayWorks]

Another thing to consider is taxes. A business will have to be registered with the state, collect sales tax on items sold and paid to the state. Thinking of skipping that little detail can have dire consequences.

Also take a look at this thread.

https://www.iforgeiron.com/topic/17986-uk-workshop-and-public-liability-insurance-uk/?tab=comments#comment-584678

 

[ryancrowe92]

14 hours ago, Irondragon Forge & Clay said:

Also take a look at this thread.

That is for the united kingdom and if it is a self employed business i don't have to claim any money made under the table and i don't have to worry about workers comp and benefits because this is like one of those places that aren't official but are made by craftsman its not like I'm opening shop on main street. 

you should probably ignore that and I'm gonna say I'm a long way from starting a business 

also I'm getting my drivers license during spring break so yeah that's going to be wonderful now i can go places 

 

[JHCC]

3 minutes ago, ryancrowe92 said:

if it is a self employed business i don't have to claim any money made under the table and i don't have to worry about workers comp and benefits because this is like one of those places that aren't official but are made by craftsman

You need to be very, very careful. The only time "I don't have to" is true is when the IRS says it's true.

[Irondragon Forge ClayWorks]

Also the UK and US liability/tax laws are very similar, ask me how I know.

[ryancrowe92]

really so how do you pay workers comp and benefits on what little money i make with working the forge.

that would put me out of business 

 

A portion of this comment that contained political content has been removed.
  -- Mod34

 

[Irondragon Forge ClayWorks]

You are missing the point. You don't have to pay workers comp or have benefits when self employed and no employees. You do have to collect & pay taxes though.

[rockstar.esq]

 

On 3/15/2018 at 11:36 AM, ryancrowe92 said:

 

that would put me out of business 

In some ways, that's precisely the point of the many regulations, taxes, and insurance requirements. 

These things are barriers to you because you haven't planned beyond "start now and hope for the best".  Past experience has taught society to protect itself from entrepreneurs who haven't considered the many ways their shortcomings can hurt others.  Punishments tend to be severe to deter others from taking the same shortcuts.  

There's an old quote attributed to G.K. Chesterton that applies here.

"Don't ever take a fence down until you know the reason why it was put up".

I don't want to presume to know what you're thinking.  I can imagine that if I were in your position, I'd feel frustrated by all these barriers, up to and including posts like mine that discourage people from just winging it in business.

I could see that as a social or professional  fence trying to contain my ambition.  Maybe folks are threatened by my ability, or my insight, or my talent.  Maybe they built this fence to protect their own interests.  OK, maybe that's true. 

But what if they built this fence to protect something they care about?  What if they knew that the world is cruel and unforgiving of failure?  What if they saw me stumbling as I tested my boundaries?  Maybe the best question is this.  "What would it look like if people were trying to keep me from making a mistake?

How would I know the difference?  Well for starters, I might ask myself if the people building the fence stood to gain something from keeping me contained?  I might also ask myself what value I hold to people inclined to protect me.

Speaking for myself, I'd say you're valuable to me because you're driven to make something of yourself.  The world needs people with purpose and skill.  I can relate to that ambition as much as I revere blacksmithing.  You're also valuable to me because you gave me an opportunity to share life lessons so you don't have to repeat my mistakes.  In that way, you could give my struggle(s) meaning.  I try to teach others to repay those who taught me.

 

 

 

 

[Buzzkill]

If you plan to operate a legitimate business, even if you are self-employed, you had better get used to the idea that you will need to spend a LOT of time doing paperwork, possibly more time than creating products to sell at first.  Some of it is required by law.  Some of it is necessary to make sure you are profitable. Some of it is necessary to serve your customers.  Regardless, your skill and passion for what you are doing, while helpful, will not automatically make you a success.

[Gerald Boggs]

My normal time split is 50/50.  It actually works out pretty well.  I forge for a while and than take a long coffee break and do some of the non-forge work, then back into the forge for another round.

[Frosty]

Ryan: Much of the point we who have experience with being self employed, mine through my Father is. It takes a PLAN and like so many folks all you have is an idea.

Being an under the table enterprise does NOT excuse you from paying taxes or observing the law! At best you might get away with fines and penalties AFTER paying up with interest, at worst it can mean jail time. 

I'm pretty sure your school assignment isn't to actually start a business but to make a competent business plan. This little feature is what you completely lack at this point. Rockstar is a professional at evaluating competent business plans or he couldn't hold a job as an estimator. Assessing competent businesses is what they do.

Perhaps if you do the assignment well you might have a chance of operating a business but not till after you CAN plan all phases.

Frosty The Lucky.

[ForgingH]

On 3/6/2018 at 10:01 AM, ryancrowe92 said:

well the thing about the etsy page is one you have to have a bank account,which I'm getting very soon.

I really hate to say this ( I'm 16) but you can't sell on esty if you're under 18 unless you're using parent's bank account, payment, account, etc. On the other hand, that gives us time to improve product quality. The one thing about any business is to diversify. Sincerely best wishes and good luck.

ForgingH.

[Michaelr]

I wish you the best in achieving your goal. I have to say that nowadays it is tough to start a business. It's imperative to choose the right niche. Also, it is hard to find suitable investors because we are in a deep crisis because of the COVID-19 pandemic situation. I would advise you to find all kinds of benefic opportunities for you. I can recommend working with [commercial link removed]. These guys will help you achieve a very nice contract with a factory that will produce some materials at a very accessible price.

Edited June 29, 2021 by Mod34
Commercial link removed per TOS

[ThomasPowers]

I don't think that a person starting out a blacksmithing business as a school kid needs a factoring company for Federal contracts just yet.

[TWISTEDWILLOW]

Oh come on Thomas if he lands the right contract he could sell the government nails at a $100 a pound, hammers for $500 and nail pullers for at least $200. All he needs is a very nice contract with a factory that can produce his wares at an accessible price…

[JHCC]

I believe you mean "multi-directional, manually activated impact generator".

[TWISTEDWILLOW]

Now that’s the best marketing description for a hammer that I think anyone could ever possibly come up with. I nominate JHCC to be your head of sales In your new found company. He’s gonna make you millions.