I just have a general question about starting a rodbuilding business. I know from what I've read on the forum section and seen in the photo section there are a lot of small and maybe even some medium businesses on here. This is for anyone who wishes to answer. How long after getting into custom rodbuilding did you decide to make it a business? How many of you were still holding down a full-time job while building rods on the side? How many waited until they retired before starting their business.How many rods do you figure you build a year? I know these are a lot of general questions. :-) I made up my mind if my health holds up that I'm working toward this as a business. My wife kind of frowned when I mentioned it to her but, I informed her that with any successful business it takes capital to make capital. She basically gave me two years after retirement to get it kicked off and profitable. I think that's fair, in the meantime I'm still honing my skills. I've learned a lot in part to this website and other rodbuilders but, working on the details of the craft. I welcome any tips, comments and criticisms.

Thanks
Arthur

Making a lot of money building custom rods is tough. The few that have managed to do it well generally build very few rods, but command very high prices for their work. The only other avenue is to crank out a lot of rods, putting yourself in competition with the mass production companies, which you really can't compete with.

I'm sure you'll get more feedback. Guys do this on many different levels.

.........

I can relate my personal experience on this journey. Like many others, I started this as a hobby, and worked at it for several years before making the plunge to starting the business. I was getting more requests for rods from family and friends than I could accommodate so it was either shut it off or try to make a profit. I chose to start the business 10 years ago. I was still fully employed at my day job, with the distant idea of making this a supplement to my retirement income and maybe a way to stay out of the tavern.

The Administrative stuff:
If you've never started a home business before, I would spend some time reading on the Small Business Administration website for the Feds and your state Dept. of Revenue. They have a lot of information you'll need in order to comply with the various regulations needed to start any business. For the Feds, the minimum you will need is to apply for a Tax ID (EIN). Also, you'll need to register your business with the state you live in, and possibly the city and county you live in as well, depending on your local requirements. The Feds have a one time fee and your state probably requires business license renewal every year or 2. You can request wholesale terms from suppliers, only after you have these registration numbers in hand.

You should open a bank account that is totally separate from your personal accounts. This will be important to track the health of your business as well as keeping good financial records. Also on the record keeping front, you should be prepared to develop good discipline of tracking all your transactions, both on the purchasing and revenue side. You can use Excel or another spreadsheet program initially but it's worthwhile looking into an accounting software package like Quickbooks in the future.

You'll need to be prepared to pay Federal excise tax quarterly, and probably file estimated tax payments quarterly, depending on your level of income. If all of this is daunting to you, it would be highly advisable to visit with a tax accountant that is familiar with small business. It's also really good reading to review the article on Federal Excise tax in the Library. Tom did a great job explaining this.

Assuming you have considered all this and still want to proceed, it's a good idea to sit down and write out a simple plan on how you will market your business and track customers. It could be as simple as word of mouth and grow the business slowly as you build clients, or you could be more aggressive with website, facebook and maybe show booth presence. Keep in mind that the more you market, the more money you will need to invest to fund this. Sometimes you can build your presence on fishing forums by answering questions on rods and rod repair. Many of us have used the repair side to gain customers for new rods so you should consider if you want to go this route as well.

Inventory management:
A lot of builders become hoarders of blanks and parts, buying material on sale or closeout and accumulating inventory without any customers on the other end. I can tell you that this is a great way to burn up all your available cash or credit and would advise against it. There are a number of high quality distributors that have good stock and delivery performance in most cases so the need to stock material at your shop is really not necessary. There are exceptions such as if you are in a specialized market and need to order minimum quantities, etc but I would avoid spending an extra $500 on inventory just to get a bigger discount. You'll end up selling this inventory at a loss or building and selling below cost to recover your cash. It's best to build the discount and delivery from the distributor into your pricing and lead time to the customer.

Pricing:
if your quality supports it, make sure you maintain a profit margin in every rod. I wouldn't charge anything less than $100 in profit and that is too low in all but the simplest rods. keep in mind you are using your time to source, investigate and ship material. If you keep good records, you'd be surprised how this profit margin gets eroded by hidden expenses so track everything you can.

All this assumes that you've developed the skills needed to make your rods attractive to new customers and want to stick with this as a business. New customers are wary of custom builders because they come and go, and warranty issues are difficult with builders that are no longer in business.

I'm sure there are more questions. If you are careful and track your business, you don't have to invest a lot of capital to make it profitable. Your growth will be slow however if you only depend on word of mouth so lay out a plan and decide how to proceed.

Good luck!

Terry

WOW Terry, I expected some replies but, you really have educated me on starting a small business and I appreciate it greatly. Thanks for taking the time to do this. Your info will serve as an outline to the business side of custom rodbuilding for me.

Thanks Tom for your input as well. You have looked inside of my mind because, I do and am going to get this off the ground and I've seen some of the major rodbuilding companies start small and seem to be customer oriented only to later go to mass production and the quality of the product they put out for the masses is extremely poor quality and customer service goes right out the window. In part that is what turned me to building my own. Getting rich and mass production is not where I want to go. I just want to build the best product I can, give myself and whatever customers I end up with a quality product at a competitive and fair price (competitive as it relates to custom rodbuilding).

I thank the both of you for your input and information.

Arthur

One thing Terry didn't mention that I think is real important is to be in a market area that can support your business.

Where I live, I cater mostly to blue collar guys that simply don't have the disposable cash to spend on rods at the profit margin I determined I need to have a viable part-time business. Instead, I had to find customers that could do more volume with simpler builds. We have a strong charter fleet in our area and catering to their needs is how I stay in business. I do get the occasional one-off build but the bulk of my work is charter fleet work.

Now, if I lived along the coast near a wealthy metropolitan area, I would probably have a completely different business model to match the potential clientèle.

To be successful it really helps to know your fishery, and your fishermen. it's entirely possible that your local market may only be able to support a hobby level business unless you are highly motivated to branch out of your local market.



Edited 1 time(s). Last edit at 02/10/2014 01:44PM by John E Powell.

I would suggest

make a web site ( to test the waters )

There are a lot of inexpensive places to do so Now ya got to pay ( check prices ) to get your site up on Search Engines ( first page ) Most do not even go to the secount page Show your work Pictures Give what you think is good for you -- garrantee your work ?? Whatever

Do you have a ( SHOP ) some place to keep the dirty lath work away from the clean finish work very important
Also several wrappers or a Drum dryer Check out the shops many here have on the photo page They look lik a operating room

See what the Market will pay -- or what you will Except for your work

Understand there are so many suppliers and places that Teach how To Build A Rod and many are learning how

Bill - willierods.com



Edited 1 time(s). Last edit at 02/10/2014 02:21PM by bill boettcher.

Good adds by John and Bill.

One of the most important services a rod builder can provide is to match the right blank and rod to the customers fishing method and species. This means you have to have some experience in the suspect fishery, or have access to reliable sources that do have the experience. This is a step above just building a rod.

Knowing your market is important. I'm lucky living in NW Oregon, in that there are many fisheries and fishing methods to support the rod industry. The other horrible thing is that I have to fish all these methods to research for potential customers. It's a tough life but someone has to do it.

Terry

I thought that was a really good point that Terry made about being able to match the rod to the customer's fishing method and species. I picked up a customer last year who initially bought one rod from me to see if I knew what I was doing. He asked for a rod to skip worms under a dock. I talked with him and asked him several questions to get length, type, grip, etc. from him. Once he fished with that rod, he immediately ordered 8 more. He is a tournament guy who actually lives 1.5 hours from me. He had been using a very well-known and expensive factory rod(s) and recently two of those rods broke while fighting fish (small mouth). He was frustrated with that and wanted to know if my rods would break that easy. I took that opportunity to ensure that he understood what High sticking was and actually demonstrated what NOT to do with rods. He fished all summer with my rods, no breaks or failures. He called me last month to make sure I would be ready for his orders within the next month or two for this next summer. Not only that, but his partner now wants a few from me because my guy put one of my rods in his hands and let him fish with it. I did not have to sell anything. I use quality blanks and quality components. I take my time ( I get a little faster with every build). I even wrote a letter to the blank manufacturer about this because I was so amazed at how well the rods sold themselves. If you can build a quality rod and get it into a tournament fisherman's hands, it will do wonders for your business. I can tell you that if I did not know what "skipping" meant or "shaky head" I probably would not have sold one rod. Whatever your market is, it is a MUST to know the terminology and how to match rods to what the customer is looking for.
Word of mouth is like gold when it comes to guys who fish all the time or fish for competition.
I had tried putting rods in stores as well. Sold a few, but not enough to keep supplying the stores. I do not build as a full time job. I am a social worker full time and build rods as a second form of income. I do not rely on my rod building business money to pay bills though because during the winter I do not get much business. I get a few orders for Christmas presents (custom, decorative rods) but not really any orders from tournament guys in winter. It is seasonal for me. Summer time I usually have to work on rods every night plus weekends to get them done in time. I never rush though. If a customer tells me they need a rod by a certain date and I know that I will have to really rush to get it done, I will tell them up front that I may not be able to meet their deadline. I have never lost a customer for telling them that either. They can usually make due with another rod for that application until I get their new one finished. I remind them that this is done by hand, with thread and that epoxy takes time to fully cure, etc. I doubt that I will ever have enough business to "make it" as a rod builder full time and be able to quit my "regular" job. That's OK with me though. Like many builders will tell you; If you are doing this to get rich, you will most likely be very disappointed.
I wish you the best in your endeavor. Don't sacrifice quality for speed, don't cut corners, don't use components that you would not use on your own rod. Remember that your time, skill, and knowledge is probably worth more than you can sell the rods for. Don't cheat yourself by selling low just to beat the price on someone else's rods. Good customers will pay what it is worth. It took me a while to make myself charge enough to make a little profit.
Finally, this forum is the absolute best place to get real advice and help with just about anything. The builders here have taught me so much more than I ever learned from helping my father build rods as I was growing up. That's my 2 cents.

David Dosser
Coshocton, OH

My husband is starting a Rod building business and his target market is the military, law enforcement etc. retirement gifts, customized to their service. He was inspired by someone who made him a rod to commemorate his time in serving in Iraqi freedom and Enduring Freedom. In determining the cost of goods sold I am a little confused. Is the thread and epoxy part of the raw material or supplies as you may not use a whole bottle of epoxy or spool of thread or marbling compound. How do you figure that into the cost. Thanks and can't wait to take the class at the Expo concerning rod building as a business but am trying to get my taxes done for 2013.


Kim

I charge a fixed amount for consumables like epoxy, CP, thread, etc. You can determine how much epoxy and other items you use on each rod and divide that from the full cost of the epoxy set, spool of thread, etc. For example: if you pay $10 for a 4oz two-part finish epoxy, you can figure that you use about 4ml of epoxy on each rod. It will take some math for sure. Or you can just charge a set amount for consumables per rod, like $3 or 3% of the total, etc. These are not real numbers, just examples.
Mine is set in an Excel spreadsheet for 3% (which I can change if needed, like on an 11ft rod or a really decorative rod where I use more epoxy and thread).

David Dosser
Coshocton, OH

As a follow up to many of the above comments I live in the nexus of freshwater fisheries, in 30 minutes I can reach lake Erie or Ontario and both the upper and lower Niagara River is in my back door. I have world class warm and cold freshwater fishing everywhere, but I personally only fish the coldwater lake Ontario fishery, so that is what I build for. It's what I know so that is what I do. If someone comes to me looking for something I don't consider myself to be an expert on (like a rod for warmwater freshwater species) I refer them to another local rodbuilder who specializes in that fishery. He sends me customers looking for coldwater species gear.

Because we each only build what we know very well, we both enjoy a strong reputation in our area and a stable part-time clientèle with a lot of repeat business. Neither of us are the most prolific builder or top-notch thread artists, but we coexist in a small blue collar market because we found our niche in the industry and stick to what we know.

Can some of the rod builder please tell me or us how you handle warranty claims?
Do you replace a broken rod for free? Do you charge a replacement cost? Or no warranty at all?

Thanks for any info.

Joel Conner

Regarding COGS:
Rod building supplies that you do not inventory such as thread, epoxy, finish, etc are supplies that are part of COGS. This would be part of the calculation of how much you spent on purchases for the year, along with anything you do inventory. This is different than office supplies, which would be a deductible expense against your business but not part of COGS.

Warranty:
I've simplified my warranty to the following:
For the first year after purchase, I will charge a $20 processing fee to repair/replace and covers materials and workmanship. After the first year, it's a $50 processing fee.

Terry

I have sustained my family very well for many years with this work, however I do not know as it happens in the USA with Custom Rods. Maybe it's good to be here for something new. Leveraging ... how to make friends in in the U.S. guarantees?

Marco ( Brasil)

Marco Antonio (São Paulo) ( Brasil)

Time + Materials + Overhead + Profit + Mark-up = Price.

Time is best looked at as what you would have to pay someone else to do the work if you were unable or too busy to fill the order yourself.

Material is obvious, but as others have said, don't overlook the little things like thread and finish.

Overhead is the cost of renting your space and running it...If you work from home, that's fine. You still have paper and forms etc. What about bookkeeping and other cost? You should calculate a cost right from the beginning because you hope to grow to the point where you need a larger space, or you move into a Condo etc. Many craftspeople go out of business because they become too successful. When they need a rented work space the sudden increase in their prices, to cover these costs, drives their clients away.

Profit is a small non negotiable percentage, over the other costs, that makes this endeavor worthwhile.

Mark-up is often something like 100% or 150% of the first four costs, to set a wholesale price and another 100% to reach the retail price. You need two prices because shopkeepers will expect a discount. Stores are offered many deals by the big rod companies...Buy 5 get one free etc. This two price system could also let you offer an incentive to a fishing club or to a friend who would promote your rods outside of your area etc. If you don't figure this in, you won't be able to sell profitably through others.

If, when you plug in your numbers, you don't think your product will bring the price indicated, that's a good clue you have a hobby not a business.



Edited 1 time(s). Last edit at 02/13/2014 07:04PM by Garry Thornton.

Try this

Go to Google and search base Rods -- any type you want to build
take a look at the prices they are selling for

Now go and check out -- YOUR parts - blank - guides - thread - finish - and any CUSTOM Features you care to put on the rod And your cost A lot of companies are building NICE blanks for a good price

How much do you think you should get paid - per hour - or for the rod Completed
60 hours on a thread wrap - Well Done - At $ 5 an houre Do the math Will they pay ???

The first question I ask is - what do you think - or feel you will pay or want to pay This ends the conversation Quickly

I just had some one ask for 9 rods changed to a Sprile Wrap
he was either - Kicking The Tires - and just checking prices I would strip the guides off - refinish the blank - Save any decales - Replace the guides ------ No Gooooo

Do Some Research

Bill - willierods.com