Whether selling homemade crafts is your dream business or a fallback in tough times, financial success requires a solid plan. Here’s how to get started.
Do your research
Before you start any business, it’s essential to understand where you fit in the market and how your competition operates. Research should include:
- Your unique selling proposition: This differentiates you in a crowded market, so start by identifying it.
- Who else is creating the same product? Where are they selling it and how much are they selling it for?
- Know your costs: Raw materials, supplies, shipping, overhead (don’t forget listing fees) and labor (yes, you get paid for your time).
- Do you have exclusive or better than average access to materials? Do you already own equipment that gives you a leg up? Have you developed a new, better process?
- Identify challenges: Is your product extremely fragile? Does it have a shelf life? Does it require you to create a demand, rather than satisfy an existing one?
[Read more on how to research your competition.]
Identify your business
Once you’ve established what kind of craft you are going to make and who your competition is, it’s time to start your business. Here’s how to do that:
- Choose a name that communicates information about your product(s), then Google it. Is the name in use on Etsy, Instagram or Facebook? If it is, could confusion cost you business or damage your reputation?
- Choose a business type. To register your business name, you need to decide between a corporation type, such as a sole proprietorship, partnership or LLC. Take the time to investigate the differences. Be sure to plan for the future.
- Open a business bank account.
- Determine your sales channels. You may sell on your own website or, more likely, on an existing platform like Etsy or Artsy. Or you may choose to sell via social media like Instagram. Research each option and decide what makes the most sense for you, your product and your target customer.
[Read: Turning Your Hobby Into a Business: 3 Entrepreneurs Offer Advice]
Before you start any business, it’s essential to understand where you fit in the market and how your competition operates.
Build your inventory
Once your business is up and running, it’s time to build your inventory. Inventory management — knowing what to make and how much of it — is a science in itself, and a skill you will develop over time. Be sure to consider where and how you’re selling when you determine your inventory mix and quantity. Two options to consider are:
- In-person sales: Whether you’re renting space in the mall, attending craft shows or lining up consignment arrangements, more inventory will lend your new business legitimacy. Create enough to avoid a panic situation when a buyer falls in love with your product, but not so many that you can’t respond to feedback or unexpected shifts in customer preference.
- Online: Given that you will have a few days to ship a product, you may feel comfortable keeping fewer in stock. Time and money might be better spent marketing. Make sure whatever customer expectations you are setting match your inventory replenishment capabilities.
Run your business
Running a business requires the donning of a lot of hats. Identify the ill-fitting ones and concentrate on those. If you need help, enlist it. Three areas to focus on when running your business are:
- Marketing. You know what makes your work stand apart from the crowd. Now tell the world. Perfect your product photography. Invest in the right equipment. Study not only your competitors posts, but those of successful marketers in other spaces and emulate their work.
- Bookkeeping. Set up a system to record your expenses. You should know exactly what each piece costs to produce. Tracking purchases of raw materials and supplies will help you price your work and identify bulk buy opportunities. Knowing what’s profitable will tell you what products to concentrate on.
- Packing and shipping. Your work doesn’t stop with product creation. Once sold, your handiwork deserves proper presentation and protection. If you’re selling online, the right packing materials can make or break your profits. Be sure your choices are brand consistent.
[Read: 5 Easy Ways to Use Social Media to Promote Your Business]
Selling something you made by hand can be emotionally rewarding. A business plan — well written and thoughtfully executed — can make it financially rewarding as well. Read more about how to write a business plan here.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Want to read more? Be sure to follow us on LinkedIn!
Event Recap: Mastering Leadership Skills
Watch the replay from our latest Roadmap for Rebuilding event, where the panel discusses how to best manage employees and build cohesive teams.
Published May 12, 2020