How to start a furniture business: a founder's playbook

Starting a furniture business is an exciting venture that combines design creativity and craftsmanship with business savvy. The market is a multi-billion dollar industry with steady demand for pieces across homes, offices, and even the hospitality sector.

This guide will take you through the practical steps of validating your business concept, building supplier relationships, acquiring equipment, and securing funding to help you launch a successful furniture business in the U.S.

Step 1: Plan your business and validate your idea

First, define your niche. Will you build custom reclaimed wood dining tables or affordable flat-pack furniture? Your choice here dictates your target customer, material choices, and price points. Research trends on Pinterest and attend trade shows like High Point Market to see what sells.

To understand the competition, you can use databases like Statista for market reports. Also, analyze the websites of other furniture makers with a platform like Ahrefs to see their popular products and marketing approach. Many new owners skip this, creating pieces nobody is searching for.

Break down your startup costs

Initial investment can range from $10,000 to over $50,000. A workshop lease might be $1,500-$5,000 monthly. A solid set of initial woodworking equipment could cost $5,000-$15,000. When you budget for materials, add 10-15% for waste—a detail that often surprises new builders.

Here are 3 immediate steps to take:

• Define your ideal customer and one specific furniture line to start with.
• Analyze three competitors to map their product offerings and prices.
• Create a draft budget that lists your top five anticipated expenses.

Step 2: Set up your legal structure and get licensed

Choose your business structure

You might want to consider forming a Limited Liability Company (LLC). It separates your personal assets from business debts, a protection you do not get as a sole proprietor. This is a key step before you make your first sale or sign a lease.

Filing for an LLC with your Secretary of State can cost between $50 and $500. With an LLC, profits and losses pass through to your personal income, which simplifies tax season. This structure offers a good balance of protection and simplicity for a new business.

Secure the right permits

Once you have a business structure, get an Employer Identification Number (EIN) from the IRS. It is free and acts as your business's tax ID. You will need it to open a business bank account. Next, apply for a state seller's permit to legally collect sales tax.

A detail many overlook is local zoning. If you plan to work from home, check with your city clerk to ensure your property is zoned for commercial activity. You will also need a general business license, which typically costs under $100 annually.

Also, be aware of federal regulations from the Consumer Product Safety Commission (CPSC). They set safety standards for products like dressers, which must meet tip-over requirements, and upholstered furniture, which has flammability rules. Compliance is not optional.

Here are 4 immediate steps to take:

• File for an LLC with your state to protect your personal assets.
• Apply for a free Employer Identification Number (EIN) on the IRS website.
• Contact your city or county clerk about a business license and zoning permits.
• Register for a seller’s permit through your state’s department of revenue.

Step 3: Secure your business insurance

Key insurance policies for your workshop

General Liability insurance is your first line of defense. It protects you if a customer is injured by your product or in your workshop. A $1 million policy is standard and can cost between $400 and $900 annually. This policy often includes product liability coverage.

Next, you need Commercial Property insurance. This covers your workshop, tools, and inventory from fire or theft. Many new owners forget to insure their equipment for its full replacement value. Be sure your policy reflects what it would cost to buy everything new today.

If you plan to hire anyone, even part-time, you will need Workers’ Compensation insurance. It covers medical costs and lost wages if an employee gets hurt on the job. Woodworking has specific risks, like tool injuries, so this coverage is a must-have for your team.

Also, consider Commercial Auto insurance if you use a vehicle for deliveries or material pickups. Your personal auto policy will not cover business-related accidents. This is a detail that can create major financial problems if overlooked. You might want to check with The Hartford, Hiscox, or Next Insurance.

Here are 4 immediate steps to take:

• Get a quote for a $1 million general liability policy.
• Inventory your tools and equipment to get an accurate commercial property quote.
• Check your state’s requirements for Workers’ Compensation insurance.
• Ask your auto insurer if you need a commercial policy for your vehicle.

Step 4: Secure your workshop and equipment

A good starting point is a 1,000 to 2,500 square foot space. You will want to confirm it is zoned for light industrial use, which allows for the noise and dust your work will create. Many new owners get stuck with a lease in a zone that prohibits their work.

When you review a lease, ask the landlord about installing a dust collection system and confirm the availability of 3-phase power. Some heavy-duty machines require it, and a building upgrade can be a large, unexpected expense. You can often negotiate these terms before you sign.

Stock your workshop

You do not need to buy everything new. A professional-grade cabinet saw can cost $3,000, but a quality used one might be half that. Focus on a few core machines first.

• Table Saw: $1,000 - $4,000
• Jointer: $500 - $2,000
• Planer: $500 - $2,000
• Bandsaw: $500 - $1,500

For materials, you can open accounts with national suppliers like Rockler or Woodcraft. Also, find a local lumberyard. They often provide better pricing on bulk hardwood and may not require a minimum order, which helps manage cash flow when you start.

Here are 4 immediate steps to take:

• Research commercial properties zoned for light industrial use in your area.
• Price out a core equipment package, comparing new versus used options.
• Ask potential landlords about the electrical capacity and ventilation options.
• Locate one national supplier and one local lumberyard to compare material costs.

Step 5: Set up your payment processing

Establish your payment terms

For custom work, a 50% deposit upfront is typical. This secures materials and your time. The final 50% is due upon completion or delivery. This structure protects your cash flow and builds client commitment from the start.

You will want to outline these terms in a simple contract or invoice. It should detail the project scope, total cost, and payment schedule. This simple document helps avoid misunderstandings with clients down the road.

Choose a payment solution

You need a way to accept credit cards, debit, and digital wallets. Many new owners get hit with high fees from solutions that have monthly charges or require expensive hardware. Average commission rates often hover between 2.5% and 3.5% per transaction.

For furniture businesses that need to accept payments on-site or on-the-go, JIM offers a streamlined solution. With JIM, you can accept debit, credit, and digital wallets directly through your smartphone—just tap and done.

At just 1.99% per transaction with no hidden costs or extra hardware, it is particularly useful to take deposits during in-home consultations or final payments on delivery. This approach avoids the higher fees common elsewhere.

Getting started is straightforward:

• Get Started: Download the JIM app for iOS.
• Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
• Access Funds: Your money is available right on your JIM card as soon as the sale is done—no waiting for bank transfers.

Here are 3 immediate steps to take:

• Draft a standard payment term policy, such as a 50% deposit.
• Create a simple invoice template that outlines project scope and payment due dates.
• Download the JIM app to see how it works for on-site payments.

Step 6: Fund your business and manage finances

Explore funding options

The Small Business Administration (SBA) is a good place to start. An SBA 7(a) loan can fund equipment and working capital, while the Microloan program offers smaller amounts up to $50,000, which is perfect for initial material purchases.

To qualify for these loans, lenders often want to see a credit score above 680 and a strong business plan. Interest rates typically float 2-5% above the prime rate. You might also look for grants from your local arts council, which offer funds you do not repay.

Calculate your working capital

For the first six months, you may need $15,000 to $30,000 to cover rent, materials, and marketing before sales become steady. Many new owners underestimate this runway and run out of cash just as they are gaining momentum.

A simple way to avoid future headaches is to open a dedicated business bank account right away. Using your personal account for business expenses makes it difficult to track your profitability and complicates tax filing. Keep them separate from day one.

Here are 4 immediate steps to take:

• Research the SBA 7(a) and Microloan programs on the SBA website.
• Calculate your six-month working capital needs, including rent and materials.
• Search for small business or artisan grants offered by your city or state.
• Open a dedicated business checking account to keep finances separate.

Step 7: Hire your team and set up operations

You will likely start as a one-person operation. Your first hire should probably be a part-time Workshop Assistant. This person can handle sanding, finishing, and shop cleanup, which frees you up to focus on complex fabrication and client relations.

A Workshop Assistant typically earns $15-$20 per hour. Once orders increase, you might hire a Skilled Woodworker. With experience in joinery and finishing, they can command $20-$35 per hour. Post clear job descriptions on sites like Indeed that detail these responsibilities.

A mistake some owners make is to neglect formal safety procedures. While woodworking has no mandatory certifications, you should provide OSHA 10-hour safety training. It covers machine safety and reduces your liability, creating a safer workshop for everyone.

Streamline your workflow

To manage production, you can use a project management platform like Trello or Asana. Create a board for each custom piece. This helps you track its progress from material sourcing to final delivery and keeps your client updated without constant emails.

As you build your team, aim to keep labor costs between 20% and 30% of total revenue. This is a healthy benchmark for the industry. If your labor costs creep higher, you may need to adjust your pricing or improve production efficiency.

Here are 4 immediate steps to take:

• Draft a job description for a part-time Workshop Assistant.
• Look up local providers for OSHA 10-hour safety training.
• Create a sample project board on Trello to map out an order.
• Calculate your target labor budget based on your sales forecasts.

Step 8: Market your business and acquire customers

Build your online presence

Start with visual platforms like Instagram and Pinterest. Post high-quality photos of your work, including detail shots and pieces in a styled room. A common mistake is to use poor lighting. Use natural light whenever possible to make your furniture look its best.

Next, set up a free Google Business Profile. This puts your workshop on Google Maps and helps you appear in local searches like "custom furniture near me." Encourage your first clients to leave reviews. Aim for at least five reviews to build initial trust with potential customers.

Find your first customers

You might want to partner with local interior designers or real estate agents. You can offer them a commission, typically 10-15%, for referrals that lead to a sale. This can provide a steady stream of qualified leads without a large upfront marketing spend.

Also, create a simple portfolio website on a platform like Squarespace. Your goal is to convert visitors into inquiries. A good conversion rate for a portfolio site is around 2-3%. Track your marketing spend to understand your customer acquisition cost for each channel.

Here are 4 immediate steps to take:

• Set up an Instagram account and a Google Business Profile for your business.
• Identify three local interior designers to contact for potential partnerships.
• Build a simple portfolio website using a platform like Squarespace.
• Ask your first few clients for reviews on your Google Business Profile.

Step 9: Price your furniture for profit

A straightforward method is cost-plus pricing. Add your material costs, your labor, and your workshop overhead. Many new makers forget overhead, which includes rent and utilities. A good rule is to add 15-20% of your material and labor cost to cover it.

For example, a table with $400 in materials and 15 hours of labor at $30/hour ($450) has a direct cost of $850. Add 20% for overhead ($170), and your total cost is $1,020. This is your break-even point before you make any profit.

Now, apply a markup. A 2x to 3x markup on your total cost is standard in the industry, which creates a gross profit margin of 50-67%. Using our example, a 2.5x markup on $1,020 sets your retail price at $2,550. This covers your profit and business growth.

Also, look at what the market will bear. Browse Etsy and local galleries to see what similar pieces sell for. Avoid the temptation to price too low just to get a sale. This can devalue your brand and make it difficult to build a sustainable business.

Here are 4 immediate steps to take:

• Calculate the total cost for one signature piece, including overhead.
• Set an hourly rate for your labor based on your experience.
• Research the prices of five similar furniture pieces online.
• Decide on a standard markup (e.g., 2.5x) to apply to your costs.

Step 10: Establish quality control and scale your operations

Your reputation is built on quality. Create a simple checklist for every piece that covers joint integrity, finish consistency, and dimensional accuracy. You might want to aim for a customer return rate below 2% as a quality benchmark.

For materials, you can look for suppliers with Forest Stewardship Council (FSC) certification. This signals a commitment to responsible sourcing and can be a strong selling point for your brand. It shows customers you care about more than just the final product.

Know when to grow

A good signal to hire is when you consistently have an order backlog of more than 4-6 weeks. This shows demand is outpacing your capacity. A mistake some owners make is expanding before their processes are solid, which often leads to a drop in quality.

Once you hit a revenue milestone, like $100,000-$150,000 annually, it may be time to invest in a larger space or more advanced equipment. As you grow, an inventory management platform like Katana can help you track materials and manage production orders.

Here are 4 immediate steps to take:

• Create a quality control checklist for your signature furniture piece.
• Ask your lumber supplier if they offer FSC-certified wood.
• Set a 6-week order backlog as your trigger to post a job opening.
• Explore an inventory management platform like Katana to see its features.

Conclusion

You now have a solid plan to launch your furniture business. Remember that your reputation will be built one perfect joint and smooth finish at a time. The details matter most. You have the blueprint, now go build your legacy.

As you meet clients, make payments easy. A solution like JIM turns your smartphone into a card reader, so you can accept payments anywhere for a flat 1.99% fee. It is a simple way to manage your cash flow from day one. Download JIM.