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Buying A Combination Woodworking Machine Or Used Machine .pdf



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Content
1. Which Is Better Buying A Combination Woodworking
Machine Or Used Machines?
2. Used Industrial Woodworking Machinery Makes it
Easier to Start Your Own Company
3. Your New Woodwrking Business - Knowing What To
Charge
4. Do You Have What It Takes To Turn Your
Woodworking Hobby Into A Business?
5. Starting a Business in Woodworking? Discover the
Hidden COSTS That Threaten Your Business

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1. Which Is Better - Buying A Combination
Woodworking Machine Or Used Machines?
Whether you're starting a new woodworking business or taking your
existing business to the next level, affording the necessary
woodworking machinery can be a major concern. Like other
vocations that require specialized machinery, the prospect of starting
or upgrading a woodworking business can be an expensive one; so
much so, in fact, that some woodworkers give up on a new or
existing business without fully investigating their ability to buy
equipment at lower than expected prices. To get the best prices on
commercial woodworking machinery, woodworkers have two
options: they can purchase used woodworking machinery or they
can purchase a combination woodworking machine that features
two or more equipment functions in one unit. Below, we look at the
advantages and disadvantages of each option.
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Buying a Combination Woodworking Machine
Advantages: A combination woodworking machine is to
woodworkers as a Swiss army knife is to outdoorsmen. Instead of
being weighted down with as many machines as you have
woodworking needs, combination machines allow you to economize
on woodworking space and the overall price of your equipment. As
one might expect, the cost of combo machines is largely based on
their number of functions, with those that offer the most costing the
most. A quality combo machine that offers fewer features can cost as
little as $5,000, whereas one that offers the highest range of features
can cost roughly $30,000.

Disadvantages: Although combination machines are typically
engineered to offer commercial grade dependability, they rarely
offer the durability required by industrial grade woodworking, where
machines remain mostly in use instead of mostly at rest. In addition,
combination machines have little hope of meeting the production
rate of a truly high demand woodworking operation, which explains
why they are usually purchased by smaller woodshops.
Buying Used Woodworking Machines
Advantages: The advantages of buying used woodworking
machinery depend on the machinery, with industrial grade machines
offering the best value due to their lengthy useful lifespan. When the
prospective dependability of a used woodworking machine is
properly assessed, its significantly lower price than a new machine (a
40 percent discount isn't uncommon) is extremely attractive. Thus,
the primary advantage of properly assessed used woodworking
machines is their delivery of new machine quality at a used machine
price.
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Disadvantages: If you plan on purchasing individual machines, you'll
need the space to accommodate them, which can mean moving out
of your woodshop and into a warehouse style work facility, which
might be your plan in the first place. Other than spacing concerns,
the biggest disadvantage of purchasing used woodworking
machinery lies with its purchasers and not the machinery itself: the
potential to inadequately assess a machine's dependability. A proper
assessment of a used machine's dependability follows three steps:
assessing the seller's reputation at the Better Business Bureau (BBB);
requesting a copy of a machine's official maintenance record; and

conducting a first hand inspection of the machine or having an
expert third party conduct the inspection.

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2. Used Industrial Woodworking Machinery Makes it
Easier to Start Your Own Company
With the recent trend in company layoffs, more people are becoming
interested in starting their own business, and it's easy to see why.
Although starting your own company means that you have to
generate your own business, it also means that you'll never be called
into a boss's office and told that you have to find another way to pay
your mortgage. When starting their own company, most people
choose an area of business that they have experience in. For
example, hobbyist woodworkers and employees of woodworking
companies often decide to start their own woodworking business.
However, if this describes you, then you probably realize that there's
a hurdle to starting your own woodworking company besides
drumming up business: the cost of commercial woodworking
machinery.
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When you start shopping for commercial woodworking machinery,
the sticker shock can be severe. For instance, a high capacity CNC
router can cost hundreds of thousands of dollars. So, what do you
do? Take out a second mortgage based on your business prospectus?
You could, but a smarter idea would be to shop for used industrial
woodworking machinery. If you're like most woodworkers who
decide to start their own company, then you probably want to open
your production line with new machinery. But if your machinery will
be industrial grade, then you may as well save money and purchase
it used.
Unlike domestic grade machinery, commercial grade machinery is
designed to stand up to years of commercial level use without

needing frequent repairs. As long as the machinery is well
maintained and is used according to its purpose, you can expect it to
function well past its indicated lifespan. With this in mind, there is
still the question of exactly how much a used industrial woodworking
machine costs. In many cases, a used industrial woodworking
machine can be purchased for around half of its original sticker price.
But if you're thinking about purchasing a top level CNC router, that
still means that you might pay into the six figures. But you have to
ask yourself this: as you start your woodworking business, will you
really need a 5-axis CNC router whose size requires a warehouse-like
work setting?
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Unless you have a commercial sized work floor and a long list of high
demand clients in place, starting with woodworking machines whose
purchase price doesn't pressure you to build a large clientele in an
unreasonably short amount of time is the smartest choice. As your
company grows, you can always use your profits to upgrade your
machinery to meet demand.
As you shop for used woodworking machines, the key to investing
your money wisely is ensuring that a machine has been properly
maintained. Companies that care about their machines always
maintain a logged service maintenance record for each machine. By
asking to see its maintenance record, you can ensure that a used
woodworking machine will meet your business and economic needs
at the same time.

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3. Your New Woodwrking Business - Knowing What
To Charge
When selling your wood projects, what you charge for your final
product is an important aspect of your woodworking business. If
your prices are too high, you will lose customers, but if your prices
are too low you risk the ability of having a profitable business that
will provide you with the necessary income. This is a challenge that
faces many woodworkers when starting a new woodworking
business.
A good formula for determining a good price point for any specific
product is to calculate the costs of materials, shop supplies, shop
expenses and any subcontractor fees.
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The total of these expenses is multiplied by whatever number that
gives you a product price that is equal to your anticipated profit and
your costs combined. Although this is pretty basic, it can be a little
tricky.
Here's a simple way to calculate all of the cost factors involved.
First, base your material costs on the price of the wood used and add
15% for waste. Add in any cost of fasteners, hardware and shop
supplies like sandpaper, thinners, solvents, etc.
The next step is to come up with an overall hourly rate for your shop.
The best way to do this is to combine your shop expenses with what
you want to charge for your own time and labor.
Start by calculating all your woodworking business shop expenses
like rent or mortgage, utilities, machinery maintenance, advertising
and any other shop related costs. The easiest way to come up with

an hourly figure for your own time is to determine how much you
would be earning if you worked for somebody else.
An average month has 4.33 weeks, and if you plan on a 40 hour week
that comes out to about 175 hours a month. Add up all of your shop
expenses and divide that total by 175. Now take that number and
add it to what you want to charge for personal labor and you now
have your shop's hourly rate.
You now have a basic outline of how to calculate prices for any of
your products. Here is a simple example:
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Let's keep the numbers simple and assume that your shop expenses
are $875.00 each month. That would come out to $5.00 an hour for a
175 hour month.
Now add you're your personal labor charge. Let's use $20.00/hour
for this example.
So the shop's hourly labor rate would be:
$5.00 + $20.00 = $25.00
The materials for this project cost $300.00 and the time spent was 30
hours. Your price for the project should be:
($25.00 x 30) + $300.00 = $1050.00
At this point, you need to determine whether or not you are going to
add in any amount for your profit margin. This is important to any
woodworking business and should be added. The industry standard
is 15%.
For this example the profit margin would be 15% of $1050.00 or
$157.50 and you would add this to come up with a final price.


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