Furniture manufacturing is an idea worth investing in. Furniture is always in demand, it needs to be updated periodically!
Before creating a furniture production, it is necessary to determine the consumer segment on which you will target your product: premium, medium or economy. The choice of equipment, suppliers and even the place of organization of production will depend on this choice. For more information on how to organize a small furniture manufacturing business, see this article .
The furniture is manufactured according to the standards that need to be developed at the first stage. This preparation takes a lot of time and effort. But after everything is put on stream, the profit will be stable. Therefore, the very idea of organizing the production of furniture has great prospects.
At the initial stage, it is important to draw up a decent business plan.
Furniture production business plan: features
1) Furniture is made to order. Therefore, it is important to take into account the wishes of customers, follow their tastes, offer new models that will be in the “trend”;
2) It is important to provide feedback from customers. To do this, it is necessary to create an opportunity for customers to give their feedback about the products and the service that is offered to them;
3) The success of a furniture manufacturer largely depends on which retail chain of furniture stores will present its product. The wholesale price of products can be set independently independently. It is also worth considering how to regulate the retail margin on your product.
Furniture production business plan: starting investments
The bulk of the cash investments at the start of the business will need to be made in the purchase of equipment and materials for production.
The cost of implementing a furniture production business plan consists of the following main costs:
- One of the first at the start of production is the question of its placement. To accommodate a small production, you will need a room with an area of 50 to 200 m2. The cost of renting such a room for the first 2-3 months (until sales begin) will cost you — from 300 thousand rubles.
- Purchase of equipment. This is the most difficult part of the entire furniture production business plan. At the initial stage, in conditions of limited funds, you can stop at acquiring a simple tool: a drill, a screwdriver, a hammer, an electric saw, a set of drills … This approach will allow you to create only a small handicraft production at the initial stage. The cost of a set of tools will range from $100,000 to $200,000. For more serious hardware with embedded software, design capability and a manufacturing program, you will have to shell out at least $1-2 million.
- A significant cost item is the purchase of components, raw materials and fittings for the assembly of finished furniture. To assemble the first batch, you will need at least $1 million.
- The salary of employees at the initial stage (before the first sales go) will be about 500 thousand rubles.
In total, you will have to invest from 2-3 million dollars in the production of furniture at the initial stage.
Furniture production business plan: economic indicators of the project
Furniture manufacturing is a fairly profitable business. You can set a margin up to 100% on your finished products. The profitability of furniture production is at least 40%.
Payback of the project is 2-3 years. This is due to the fact that significant investments will be required at the initial stage.
The main risks of organizing furniture production
- Equipment breakdown – Equipment downtime during a large order can be costly. Therefore, it is necessary to conclude a contract for the maintenance of equipment, as well as the deadlines for the execution of urgent repairs;
- Recruitment is the most significant moment in the organization of furniture production. The best option is when the business owner himself is a professional in the business he is engaged in. If this is not the case, then you will have to hire such professionals or attract competent partners. In any case, you become dependent on other people who are more literate in furniture production;
- The choice of suppliers of materials and components — the future of your business also largely depends on the solution of this issue. First of all, it is necessary to select several potential suppliers and conclude supply contracts with them. You can also start working with several suppliers. While interacting with your partners, you will be able to evaluate: the speed of execution of delivery orders, the prices for components and accessories for your furniture, the reliability of your suppliers. After a few months, you can always choose the best supplier and work with him;
- Competition is a risk in any business. As they say, if you are afraid of competitors, then there is nothing to do in business. Therefore, at the start, you need to carefully study your competitors, understand what their strengths and weaknesses are. And on the basis of this analysis, create your own production, which is different from others. Read about what to do with competitors in the furniture industry here .
The main steps in preparing a business plan for the production of furniture:
1) The choice of premises. This business requires, first of all, production and storage facilities. Their approximate area is usually about 50 to 200 m2. It is also possible to use an office or retail space to display finished samples with an area of not more than 50 m2;
2) Purchase of equipment. Here, as mentioned above, it all depends on your financial capabilities. At the initial stage, you can limit yourself to buying a woodworking tool;
3) Recruitment. The furniture production management apparatus may include: a manager, an accountant and a sales manager. All these functions at the initial stage can be performed by the owner of the business. Equally important are good designers, carpenters, fitters, glaziers, drivers, storekeepers. At the start, you will need a staff of no more than 3-5 employees. Medium-sized furniture production can employ up to 30 workers.