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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 01-26-2007, 10:14 AM
Rob Frink Rob Frink is offline
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Not interested in the business side of things..?

I think this forum cn be terrific resource for all of us involved in the industry with the ide of gnerating income.

...but ..nobody is posting...

There are so many topics that can be addressed, shared and learned from everyone. This forum is all about the green rewards $$$ that come from our hard work in the shop and on the road.

Doesn't anyone have any questions or concerns from the business/administrative side of the industry..?

For example:

How do you handle sales tax...in your state and when out of state at a show?

Do you ship out of the US...what services do you use?

How do you accept payment?

If you are full time, do you have a health insurance plan...any tips on low cost small business plans?

How about taxes....investements, capital aquisitions...?

How about liability insurance/protection ... does it cover your products as well....how about your employees...? Any tips for getting this set-up?

I don't really intend for you to answer these questions....they are just posted to stir the pot a bit and generate some action here in this forum.

What's on your mind about your business...you know, the stuff that keeps you awake at night.

-Rob


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  #2  
Old 01-26-2007, 12:41 PM
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NJStricker NJStricker is offline
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Rob, As a newbie here I've often wondered why this forum received so little use. I suppose many here are involved with the actual construction of a knife that we don't think to talk about the business side. I suspect that the majority here are hobby makers, though I don't know how accurate that is.

I have a question I can ask:

Let's say you are a hobby knifemaker. You don't want to go full time, heck, you'd be happy to just sell enough knives to pay for your hobby and put a little extra jingle in your pocket. What's the best way to do that without taking up a lot of your time (i.e. losing weekends at a gun or knife show)? Ebay? Set up a website? Word of mouth and a few judicious donations to local groups?

Nathan
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  #3  
Old 01-26-2007, 05:21 PM
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tmickley tmickley is offline
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Quote:
Originally Posted by Armory414
...I have a question I can ask:

Let's say you are a hobby knifemaker. You don't want to go full time, heck, you'd be happy to just sell enough knives to pay for your hobby and put a little extra jingle in your pocket. What's the best way to do that without taking up a lot of your time (i.e. losing weekends at a gun or knife show)? Ebay? Set up a website? Word of mouth and a few judicious donations to local groups?

Nathan
one I can answer. 100% of my knives have been sold through my website. I showed one time at a gun show sharing a small table with a friend and I only did it to hang out with him. If you are going to sell on the net, you HAVE to take great pictures. The better your pictures are, the easier the knives are to sell.
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  #4  
Old 01-26-2007, 05:51 PM
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Andrew Garrett Andrew Garrett is offline
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Just an observation:

The unfortunate thing about eventually going full time, is that by the time you've achieved that level of success, you already own all the very expensive, high quality machines that you would have been able to avoid paying big taxes on had you had a biz license to begin with.

Funny how that works.

On the internet:

I have sold no knives (to my knowledge) as a direct result of my website. I suspect that can traced to exactly what Tracy said. My pictures eary on, stunk! They are getting to the passable point, and I am still improving. However, I find myself in that place where I don't believe that the quality of my knives is at a level where I can charge an addition $150+ to cover the cost of professional photography, as much as I would love to be able to. Someday..., hopefully soon.

My sales are still in the co-worker realm. I work at a hospital..., so the market has a lot of potential.


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  #5  
Old 01-26-2007, 07:12 PM
dmarx dmarx is offline
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Ok, I?m not really qualified to comment on the business of knifemaking, but I have been running a part time business for 10 years now. I do computer builds, repairs, networking, etc. One of the questions I can answer is whether it?s worth forming a business for a part time/hobby type business. Ask yourself this question: Do I want to make money? Or do I just want to make knives? There is a difference and they?re not mutually exclusive.

I hear many hobbyists say they?d like to make enough to pay for their habit. (they want to make money, whether they?ll admit it or not) Others have stated they enjoy making and giving them away. (Obviously not interested) Others dream of going full time. ($$$$$$)

If you?re answer has the words ?making money? in it, then you HAVE to register as a business. The small amount of hassle is far outweighed by the benefits. If you happen to know an accountant, definitely talk to them. They will give you the lowdown on what you would miss by not forming a business. It took me less than a day to get everything done, and I live in NY! The steps are very easy once you know how, and the BBB walks you right through it.

Benefits? Andy, you?re website is an Advertising Expense. Books, magazines, videos, are Training Expenses. Tools, supplies, equipment are all expenses. Big items like the KMG get depreciated over a few years. And it goes on. Your obligations will be to collect sales taxes and turn the collected taxes over to the state, and to keep a set of books. That's it!

Off the soapbox now.

Dave
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  #6  
Old 01-26-2007, 10:56 PM
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NJStricker NJStricker is offline
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It almost sounds as if you either jump into the pool or you don't. I'm not talking about going full time. But, it sounds like if you want to make money--even to pay for belts, equipment, supplies, etc.--then you need to invest. Invest in a website to promote, better quality equipment and better quality materials to have a better quality product to sell. Which means you need to sell more knives to pay for the website, the equipment, the supplies. . .
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  #7  
Old 01-27-2007, 06:41 AM
dmarx dmarx is offline
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I think the answer to that is yes and no. There aren't too many ways of making money on this planet that don't require some degree of investment. But nothing says you have to make all the investment in one shot either.

The most important thing is to come up with a timetable and a plan. And then stick to it. Without goals you won't get anywhere. You don't need a formal plan that takes 3 months to make if you're just a hobbyist/part timer, just a set of goals you want to achieve and a timetable to achieve them. Write them down and hang them in your shop. Read them often. When you reach the first milestone, pat yourself on the back and move on to the next. You'll be pleasantly surprised to see how well it works.

I'll be posting my thoughts on websites later. I have about 7 years experience in design, development and marketing as part of my computer business.

Dave
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  #8  
Old 02-15-2007, 01:18 PM
DanCampbell DanCampbell is offline
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Is this common?
My wife is a CPA and is concerned about me selling knives and some kid / knucklehead hurting themselves and suing us for everything we own. I really just wanted to sell a few at first to see how it goes. I don't know where to start with actually starting my own business. I'm just not sure how it works.
Dan
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  #9  
Old 07-18-2007, 12:55 PM
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Les Robertson Les Robertson is offline
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HI Dan,

Use these letters with your wife...LLC. Limited Liability Company.

As the name implies..your company will have limited liability. You...will have none.

Get an attorney to write up a nice little disclaimer. Something along the lines of:

1) You must be at least 18 to purchase a knife.

2) Knives are sharp and as such are inheritantly dangerous. Please use the knife for it's intended purposes (cutting) and exercise due caution while doing this.

3) ETC.


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  #10  
Old 08-07-2007, 10:49 AM
dave Stifle dave Stifle is offline
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Dave,

A question on setting up a business. I don't sell many knifes, primarily because I don't try. If I set up a business, how long could I declare a loss before the IRS got on my %**? In other words, just by the act of setting up a business would I not be putting myself in the position of having to "produce?" in order to keep the IRS happy? I hope you understand my question, I do, but that doesn't mean you or anyone else will.

Thx,
Dave
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  #11  
Old 08-08-2007, 02:52 PM
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Les Robertson Les Robertson is offline
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Hi Dave,

As someone who has been full time in custom knives for the past 12 1/2 years, I understand your question completely

Two thing;

1) The quicker you become a business the quicker you will make more money and take advantage of the numerous tax breaks out there.

2) Find a CPA locally and buy an hour of his time. Each state has its own guidelines for a business. The CPA will provide you with the best way to structure your business to best take advantage of the opportunities for business's.


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  #12  
Old 08-08-2007, 05:53 PM
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B.Finnigan B.Finnigan is offline
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I have been a small business owner for over 15 yrs and my number one observation is get help. It seems the more artistic someone is the less business savy they are. I can't even begin to tell you how many very talented and skilled artisans I have seen that could not keep thier business afloat.

You can take many additional steps to protect yourself aside from forming an LLC or C corp. You want to protect the business assets as much as your own. The corp should be in heavy debt to you with a payable on demand note protected by a UCC-1 business lien. The UCC-1 is public info and attorneys search those records before starting legal action. They do not want to see a corp. under a huge debt burden and tend to not go after them.

It is a simple process and a UCC-1 lien can be filed for $10 and is good for 5 yrs. It can be done online now and will take three minutes at the most. It gives you superior lien to the corporate assets if you have to bankrupt the corp. Bankruptsy stop lawsuits dead in thier tracks. The idea is to make your business very un-appealing to any attorney since they work on commission usually. They will not usually start legal action against an entity unless they are fairly certain they will get their 30% slice of your pie.

A corporation must be managed as a corporation or a judge can easily pierce the shield. Document the corporate minutes and have any official paperwork notarized.

Last edited by B.Finnigan; 08-08-2007 at 06:47 PM.
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  #13  
Old 08-16-2007, 08:26 PM
Lori Ristinen Lori Ristinen is offline
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Quote:
Originally Posted by dave Stifle
Dave,

A question on setting up a business. I don't sell many knifes, primarily because I don't try. If I set up a business, how long could I declare a loss before the IRS got on my %**? In other words, just by the act of setting up a business would I not be putting myself in the position of having to "produce?" in order to keep the IRS happy? I hope you understand my question, I do, but that doesn't mean you or anyone else will.

Thx,
Dave

Dave,

My father-in-Law used to work for the IRS. He has told me that if you show a loss of more than about 4 or 5 years in a row, the IRS might get a bit curious and want to check you out. I don't know a lot about it myself. I would imagine it would also depend on how much of a loss you show, how big of a business you have, etc.

Lori
www.LoriRistinen.com
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