With every up and down of the economy, there is never a shortage of cottage industries, including in the home improvement sector. If you have the necessary skills, starting a home-based carpentry business can be an appealing option with low overhead, no shortage of work and low stress.

Choose to Generalize or Specialize

Choose your niche and use your forte to make money. If you specialize in finish carpentry, then play up that aspect. If you prefer inside work over outside work, then target that market. If you're a generalist, there is a lot of competition out there, so you'll have to think outside the box and look for the sweet spot. You can base your carpentry business strategy on price, your availability outside of traditional business hours or even on your solid reputation.

Research Home Carpentry Business Requirements

Do your homework. Check with your local zoning commission to see what (if any) local ordinances regulate running a carpentry business in a residential zone. Check with your homeowners insurance company to see if your current policy covers a home-based business. Also purchase umbrella liability insurance since you'll most likely be working at other people's houses and will need protection in case something goes terribly wrong. You may also have to register your business with your city or town, so make the rounds at town hall and visit the different offices that may concern your business.

Just don't attempt to start a home carpentry business without obtaining the proper licenses, permits and insurance.

Get Your Workshop Ready

Set up your workshop. It can be in a garage, a barn or a basement. As long as it has ample space to work, the proper electrical requirements, enough light and provides easy access to the outside world, you're good. Of course, you can always build your own.

Outfit your vehicle with every tool and supply you think you might possibly need for onsite jobs. The biggest time killer in a contractor's day is the time spent having to travel to pick up tools or supplies, so keep things on hand and save a few hours of your time weekly.

Of course, you can't anticipate every tool need, nor can you reasonably own every tool you'll ever need, especially while your business is young. When you get a job that requires a highly specialized tool, you can generally rent it from a home improvement store.

Brand Your Home Carpentry Business

Brand your carpentry business by creating a professional brochure, website and business card. Put your logo, cell phone number and website on your service vehicle, carry business cards with you at all times and if local zoning laws allow it (and your clients have cleared it), post a sign outside your work sites.

Advertise Your Home Carpentry Business

Advertise, advertise, advertise. Get the word out that you're a viable option in the field. Use all available avenues to promote your business, including social media advertising, advertising in the local papers, advertising with a direct mail coupon company and trying to get press in the local paper — either through a new business piece, or even as a home repair columnist. Get refrigerator magnets printed and make sure each of your clients gets a few.

Spread Word About Your Business

Generate positive public relations for yourself by donating your services to local organizations or charities that need skilled craftsmen for special projects. Getting your name in the news for sponsoring a day of AmeriCares or helping rebuild a local recreation center will more than pay dividends in the good karma department, as well as be a major source of free publicity.

Good customer service and goodwill goes a lot farther to improve a company's reputation than most people think. Offer discounts for payments in cash, as well as discounts on future jobs for referrals.

Get a Good Accounting System

Make an appointment with a good accountant who has experience with small businesses like yours. Set up a comprehensive bookkeeping and accounting system, and resolve to use it daily to record all your transactions, from purchasing supplies to recording payments received. Your accountant should also be able to give you guidance on the best way to set up your business to accept credit and debit cards.

You are responsible for paying income and self-employment tax on your earnings. So good records are essential to ensure you pay only what's due, and no more.