You can always purchase a ready business. The yield of such investments or acquisitions, as a rule, exceeds 60% annually. The average cost of business is around $270 thousand.
The prices for furniture goods usually vary depending on the material used during the production process. To draw the overall picture, the next information is provided: a couch with two armchairs and a sofa cost about $550-$600, walls for living rooms are relatively the same, the set of kitchen furniture can be found for $500, bedrooms cost not less than $500 as well.
The pros are:
We can distinguish the following groups of furniture:
- for operational purposes: household or public areas;
- technological features: collapsible, sectional, non-separable, built-in, bent or braided;
- functional applications: office furniture, furniture for sitting and lying, furniture for eating.
If the scope of business is small, you have to choose the ownership type between the sole proprietorship and LLC. The first one is easier to register, however, the detailed consideration of the limited liability company provides a lot of significant advantages. Individual entrepreneur is responsible for remaining without any means while the owner of LLC risks only own contribution. LLC is rarely perceived as a short-lived company. When registering LLC, you can always hire a chief executive or top manager to do other projects, occasionally controlling his activities.
Look at the following sales data for different types of furniture:
The average cost of purchasing equipment for the production of furniture is not less than 136 thousand dollars, while for the built manufacture - $28 thousand.
Speaking about distribution channels, the primary role is now played by traditional sales mechanisms through various retail institutions. Large shopping malls with the total area of 10 thousand square meters holding more than 1,000 items of furniture in all styles are great channels, for instance. Among other alternatives, I can name network salons, created by the manufacturer for selling only self-made products, mortar stores that can be owned by a particular manufacturer as well as company engaged in the sale of furniture, furniture sections within diversified shopping centers, and direct sales. There are a large number of alternative sales channels: set the presentation stands right on the street, in crowded places, particularly near the metro stations; promotion of concrete products in areas where its direct consumers.
Target audience. Final consumers (retailers) - active business people with an average income that up-date their furniture every 2-3 years;
End-users (wholesalers) - large state-owned enterprises, hotels, restaurants, office buildings, etc.
Intermediaries - specialized furniture stores, interior design, design Studio.
In order to register a LLC, you will need the following materials:
1) Company’s (brand) name;
2) The treaty establishing this LLC, Supreme court ruling;
3) Statutory documents, the list of activities, the amount of authorized capital not less than $300, which can be made through cash or property (office equipment, office furniture, etc.)
4) Information about the Director and the chief accountant (copy of passport, identification number, address, phone number);
5) Details of the Bank holding company’s account;
6) State payment records.
The development of furniture start-up will require a significant investment in the purchase of corresponding equipment.
Here is a list of all necessary tools for high-quality furniture production:
• electric drill
• screwdriver that works both on batteries and from the network
• electric jigsaw
• manual mill
• sanding machine
• electrical mechanical saw
• industrial dryers
• set of drills, cutters, and knives
• carpentry hand tools
By equipment types, we can specify the following categories:
Band saw. These machines are used for cutting wood or metal.
Drying equipment. It is needed if you are going to produce wood.
Woodworking - various milling machines, including milling and copying, drilling, splicing, etc.
Glass: cutting, slicing, for working edges, sandblasting, drilling, engraving, etc.
Metal processing: cutting, drilling, polishing, welding, cutting.
Sewing equipment. It is necessary for sewing various items of furniture.
Additional tools: drills, screwdrivers, upholstery staplers, hammers, planes, pliers, screwdrivers, etc.
The consumables for this type of start-up may amount to $8,000-$10,000.
The primary raw material for manufacturing of furniture is a high-quality wood obtained from the
forest. Generally, dry woods are recommended for these purposes. Forest wood is easily available in the market. Other types of wood used in manufacturing furniture are:
Raw material wood is easily available from the forest reserve which comprise of almost 42% of the total area.
As far as raw materials for furniture manufacturer mostly consist of various wooden elements, the prices are also very different. We can notice micro leather, polypropylene, fake leather, crocodile leather (the most expensive one), and synthetic leather on the list.
The prices for them vary between $2-$5 per meter.
Among the most demanded raw materials for furniture workshop, we can see hardwood lumber, hardwood plywood, particleboard, softwood plywood, particleboard, MDF, softwood lumber, LVL, and LSL. Below an average annual production of furniture is provided:
Unit Price Qt in units
Bed set 53,000 185
Dinning set with chairs 51,000 165
Sofa set 32,000 90
Misc Furniture 10,000 82
Office furniture 47,000 178
The minimum set of areas for this business includes a workshop, finished product warehouse and administrative space.
For the built-in furniture production we will need a shop with a minimum area of 200 square meters at an average rent rate of about $80 per square meter annually), warehouse not less than 250 square meters with the rent rate of $70 per square meter annually), head office with the size depending on the entrepreneur’s ambitions and expectations. For a small company, you will need at least 100 square meters premise with the average rent rate of $80 per square meter annually. When building own distribution network (i.e., salons, stores), the manufacturer of built-in furniture will need a retail space of 30 square meters. The rent for it ranges from $400-$1200 per square meter annually. Thus, the minimum cost for the rental of various premises for a furniture producer makes up more than 45 thousand dollars annually.
The furniture industry demands only high level of staff training and prep. The company, which manufactures furniture, must consist not only of foremen with the average salary from $300 to $1000 monthly, but fitters with 250-300 dollars monthly wages, carpenters ($250-$500 per month), glaziers ($200-300$ per month). Do not forget about the supervisors, sales managers, drivers, couriers, warehouse staff, shops staff, programmers, designers, executives, etc. The staff of a small furniture firm usually consists of 35-40 people. The costs of their labor amount to 10-15 thousand dollars per month. The organizational structure of such company is often based on classical linear functional circuit providing vertical subordination.
A general list of workers that will be needed to start the production:
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