If you plan to turn your passion for creating crafts into a full-time business, learn five tips to help your craft business succeed.
Start with what you love.
Craft business owners don’t start their business to earn money: rather, they decided to make money from doing what they love. In starting a new business, you will experience many ups and downs and it will take time before you can build the business to the level that you can actually live off from its earnings. The passion that you have for your craft can help you sustain the level of interest in the business and push you to work at it until you succeed.
Spend time knowing your market.
Before you even start your business, you need to find out if people will buy your items, and if they will buy it at a profitable price. Many entrepreneurs make the mistake of turning their hobbies into serious business, only to find that the market is too small to make the business profitable. Your business can only survive if it generates enough demand to sustain it.
Never assume that there is a market for your products: find them first.
Visit craft shows, flea market, talk to other crafters, and read trade publications. Go to eBay and look at whether similar products are selling, and at what price. Some crucial information you need to look out for: check whether similar products are now being made by machines and mass-marketed; or whether imports from China or other foreign countries are lowering the price or demand for handcrafted items.
Find out where to market your products.
Should you sell on the Web or in flea markets? Should you present your products at craft shows? Or should you sell in all these markets? You need to determine where you will sell your products. The ideal would be to select the outlet that will allow you to reach the most number of customers at the least cost possible. Many crafters are opening web sites to reach the global market, then their set-up tables at flea markets during weekends. Others have found online auction sites as the best place to sell, or at least to dump excess inventory, including items returned.
Start slowly, but surely.
This is particularly important if you are starting on a very limited budget. If you do not have enough resources, you have little room for trial and error. It is best to first know what the market wants before spending too much on inventory, supplies and marketing. You also need to know how to cost-effectively run your business and learn the skills that you need to manage your cash flow. Craft businesses often take about two years before they show major profits.
Price your products right.
How to price the products is often a challenge for craft business owners. You do not want to price yourself too low that inadequately covers your costs; but you also do not want to overprice yourself out of the market. The key is to price for profit.
There are several ways to determine the right price for your products. First, add up all your costs, including raw materials, labor, overhead (rent, heating), licenses, marketing expenses, profit, and others. To compute your labor costs, decide how much you (or your employee) will be paid per hour to produce products, then multiply this hourly rate by the number of hours a week that will be spent producing crafts. Add your labor cost to the cost of materials per piece, and then divide by the number of products produced in a given time period to get the price per piece.
Second, you can approach other retailers and artisans offering similar products. Research the marketplace and compare prices in stores, galleries, and on the Web. If your price is more than similar products, you may need to reduce it by cutting hourly price, finding less expensive supplies or by increasing your production time. If your price is significantly less than similar products, you may want to consider raising your price.
Recommended Books on How to Start a Craft Business
- Craft Business Power: 15 Days To A Profitable Online Craft Business
- The Crafts Business Answer Book: Starting, Managing, and Marketing a Homebased Arts, Crafts, or Design Business
- The Handmade Marketplace: How to Sell Your Crafts Locally, Globally, and On-Line
- How to Sell Your Crafts Online: A Step-by-Step Guide to Successful Sales on Etsy and Beyond
- The Crafty Superstar Ultimate Craft Business Guide
- Craft Ideas: What to Sell at Craft Shows
- Starting a Craft and Gift Shop for a New Mom!
- How to Start a Craft Business
- How to Start Retailing, Marketing and Promoting Homemade Products
- Global Wholesale Distribution and Price Market Research