Cabinet Shop Business Plan

A cabinet shop business plan built around the numbers a working shop runs on: a costed estimating method, the install-license and finish-room facts, and an editable 36-month financial model.

Cabinet shops are profitable when the pricing is right, and the margin structure behind that is not mysterious. In this bundle's base case a cabinet making business opens at about $45,000 in monthly sales, grows roughly 2% a month as designer and contractor relationships mature, and holds a 45% gross margin: materials and production labor together take 55% of every dollar, with materials at roughly 30–38% of revenue and the bench, CNC and install labor at 18–24%. Below that line sit about $9,000 a month of fixed costs, a $1,634 payment on the equipment loan, and a $7,000 monthly owner draw, and the shop covers all three at roughly $39,000 in monthly sales. Year 1 comes to about $610,000 in revenue and about $63,000 of net income after the owner has already been paid; Year 3 is about $981,000 and $230,000.

Owners who ask how much to charge per cabinet or per hour are asking the right question in the wrong unit. The trade prices residential casework per installed linear foot, roughly $150 to $450 by construction grade, door style, species and finish, and prices commercial millwork per bid against drawings and a specified AWI grade. Underneath both is a material takeoff, plus loaded shop and install labor, divided by 0.55. A mid-range kitchen with about $9,000 in materials and $6,400 in labor prices at $28,000 and returns about $12,600 of gross profit; a premium kitchen carrying $24,750 of cost prices near $45,000. The per-linear-foot rate card is built from your own job-costed work after the first handful of jobs. The error that sinks skilled builders is quoting installed work at shop-only rates, with the finishing time and the $800 of Blum hardware left out of the takeoff.

On what it costs to start: the plan's capitalization is about $135,000, a $100,000 equipment-and-buildout loan at roughly 9.5% over seven years plus $35,000 of owner equity, funding the shop buildout, a nested-based CNC cell with CAM software, the supporting machinery, a delivery vehicle, opening stock, first-year insurance, licensing and bonding, and a working-capital reserve of about $40,000. The realistic range for the trade runs $60,000 to $250,000, and most of the spread is one decision. A production CNC router runs $70,000 to $180,000 new and lets one operator produce the volume of two or three benchmen; a sliding-saw-and-bench shop enters far cheaper and suits low-volume, high-craft solid-wood work. The plan treats that as a modeled choice: a $90,000 machine carries a $1,400 to $1,700 monthly note, and displaced labor covers it several times over at four or five kitchens' worth of casework a month, not before.

Licensing turns on installation, not fabrication. A shop that only builds and delivers to a general contractor commonly needs a business license and sales-tax registration; a shop that installs crosses state contractor-licensing thresholds that vary by state, and the plan assumes you will cross one in Year 1. California is the worked example: a C-6 Cabinet & Millwork or B license for installed work above $1,000 in combined labor and materials, with a $25,000 contractor bond. Florida, Arizona and Nevada run their own regimes; verify the current rule before you install anywhere. The shop floor carries its own regime regardless of state: OSHA machine guarding (1910.213), spray finishing (1910.107) and hazard communication (1910.1200), NFPA 664 for combustible wood dust, EPA TSCA Title VI and CARB Phase 2 formaldehyde limits on the composite panels you buy, and fire-marshal sign-off on the finish room. First-year insurance, licensing and bonding is budgeted at roughly $4,000 to $12,000.

The year is a two-hump curve: January and February near 0.85× the run-rate, April and May near 1.10×, September and October at 1.10–1.15×. The base case opens in deep winter, so the earliest months sit near $38,000 in sales, just under break-even, before the trend and the spring pickup lift them; the $40,000 reserve exists for those weeks. Materials and wages go out before the deposit and progress payments arrive, so the playbooks hold to a 30–50% deposit before materials are ordered, a progress payment at finishing, the balance at install, and a weekly cash routine, with commercial millwork handled on its own terms because its 5–10% retainage can sit for weeks after the work is done.

The single operating insight the playbooks are built around is that the finish room, not the CNC, is the usual constraint. A shop batches by process (cut and nest, edgeband, bore and assemble, finish, deliver and install), the spray booth gates throughput, and production is scheduled backward from install dates through finishing. Hiring follows the same logic: the second cabinetmaker comes when booked backlog holds above six weeks, a dedicated finisher comes next, and office help arrives as sales push past roughly $80,000 a month against one CNC cell.