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The Business of Knife Making A forum dedicated to all aspects of running, managing and legal operational issues relating to the custom knife making and custom knife selling industry.

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  #1  
Old 04-03-2009, 09:22 PM
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DaveRuhlig DaveRuhlig is offline
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Knifemaking - a business?

I started knifemaking for the same reasons as the rest of you - it's fun and I get a great sense of accomplishment with every blade I finish. I've been at it a few years now and to date never sold a knife. I've even taken a few custom orders without charge. Well, after meeting with my accountant this afternoon I'm considering making my highly non-profitable hobby a business. So, my question is..... Have any of you "part-timers" taken the plunge and made your hobby an official business? I guess if I take the plunge I'll have to sell a few knives and even show a profit in at least 2 of the next 5 years to keep the IRS happy. I know it's a stretch to think I may actually make money in even 1 of the next 5 years, but if I don't I'll still have fun right? Any advise?
-Dave


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Old 04-03-2009, 09:33 PM
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Andrew Garrett Andrew Garrett is offline
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Tattooing used to be a 'hobby' for me.

Now it's a job. So, I had to get a new hobby--knifemaking.

I wouldn't want to make the same mistake again unless I could dedicate myself to it full time.


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Old 04-03-2009, 09:48 PM
Frank Niro Frank Niro is offline
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If you have the full freedom of doing what you want ,when you want, without doing it because you have to, it can be great !!! Frank


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Old 04-04-2009, 06:19 AM
Wade Holloway Wade Holloway is offline
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Dave I think it might be a good idea to be able to write off allot of tools, handle material and steel. I gather from your comment about the accountant that you are doing this for the tax relief. Hope it all goes well for you.
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Old 04-04-2009, 11:18 AM
Jim Dannels Jim Dannels is offline
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Dave: I have taken a hobby and turned it into a part time job twice.
And as Andrew mentioned, think it through seriously.
I used to enjoy lawn work and gardening, and turned that into a parttime business.
When it became a job I did not enjoy it as much and quit.
Since I have been carefful not to allow my hobbies to become work.
At the same time I would encourage you to pursue it if you really want to.
But be a business man, be sure to consider all costs when pricing your work.
The cost of all materials used, wear & tear on your equipment, lights and heat in your shop, everything! and consider replacement of equipment in your pricing as equipment does breakdown right when you have a delivery deadline and you have to have a cash reserve for repair or replacement.
One of the reasons I got out of lawncare was worn out equipment and not having the cash onhand for replacement.
If you go for it, your accountant is your friend consult with him often!
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  #6  
Old 04-05-2009, 02:35 PM
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DaveRuhlig DaveRuhlig is offline
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Thanks guys!

Wade- tax relief is exactly what I'm looking at.

Let me be clear, I'm not talking about quiting my day job and living in my shop, just making my hobby "official" in the eyes of the IRS. Knifemaking could never be a full time job for me even if I wanted it to be. I don't have the talent, patience, or desire to do it full time. The fact is I spend a lot of money and a lot of time (more than many spend on their primary business) on this hobby. I've done it long enough that I'm not ashamed to show someone what I've made anymore. According to my accountant if I take it to the next level and actually sell a few pieces many of my expenses could be written off.

I appreciate the words of caution and realize some of the fun may be lost when I can't just give everything away, but I'm hoping that whatever fun is lost will be replaced by the joy of a smaller tax bill.

-Dave


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  #7  
Old 05-31-2011, 08:41 PM
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CJS Knives CJS Knives is offline
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i am really suprised that there arent more replies to this thread.

i too have turned my hobby into a business. i am not full time, and dont see myself going there, but want to run a sucessful business.
the main reason for selling knives was so i can afford to make more! now i have orders backing up, and i am looking into taking business classes and hiring an accountant.

i did a search on this topic to get some more advice


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  #8  
Old 06-02-2011, 09:45 AM
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Geno Geno is offline
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Busy ness of knife making

Making knives is fun, business is WORK.
Taxes, marketing, photography, tools, materials, and time are the figures not often seen.
If you show NO profit for 5 years, IRS may leave you alone.
Marketing takes 1/3 of your budget, web pages and such.
Photography is a key to selling, good pics are a must.
I have been collecting tools for 30 years and one day I hope to have all I need.
Materials can cost a lot, or you can use junk. What "type" of work do you want to leave behind? A modified lawn mower blade with a wooden handle is not going to bring a 4 digit price tag.
Time is the largest factor over looked. Time spent making , AND time waiting to sell it.

DOING EVERYTHING YOURSELF saves money but takes more TIME.

All that said, custom knives are a luxury, not neccessity. Knife sales are unpredictable and the economy plays a big part in how well things sell.
If you sell low, it costs, and if it takes too long to sell, it costs.

As a business, the odds are against a handmade craft.
The passion of your heart must lead you. My job is to warn you.

In my 30 years as a knife maker, deversity has been a big key. This craft is always changing, and America was built on "supply and demad" principles.
"Know what your customers want", then give it to them.

Going full time is where the work begins. Be sure this is how you want to spend your time.
Hope it helps, and God bless us in our obsessions.
Geno
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  #9  
Old 05-15-2012, 08:01 PM
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smithy smithy is offline
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Geno, you are right on the money. When I decided that I didn't want to wear a tie anymore 35 years ago, I opened my own jewelry studio. I am retiring to a home shop to start making knives, but I will add my $.02:

It's not the person that makes the item, that makes the money...it's the person that "sells" the item.

People wanting to start their own business have a problem with being the "maker" AND the "seller".

And make sure your accountant knows what will throw up a red flag on a return. You can adjust your business accordingly...
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