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Starting A Craft Business From Home

Updated on November 19, 2013

How To Start A Home Business

Have you found yourself in a position where you love making crafts but have run out of room in your home to display them? Or, your relatives have already become saturated with your generous gifts of handiwork? Maybe it is time to take your talent a step further and go into business for yourself.

It can be especially easy if you already have all of the equipment needed. If you are already used to making a certain craft, half of the battle is already accomplished. If a craft business is a brand new venture and you have yet to come up with a craft, it will take a little more time and energy to get started.

Going from a craft hobby to a business is going to take some more space and planning. The very first and most important step is to write a business plan.

Writing A Business Plan

The business plan can either be formal, as needed if requiring financing from a bank, or informal for your own guide. Starting out formal is not a bad idea. Even if you are starting out small, you never know what you have the potential of growing into.

Organizing the Plan:

  1. Summary: Give a short description of your business and a summary of how it will potentially operate.
  2. Detailed Plan: As a craft business, you will most likely want to establish it as a sole proprietorship. This is the most simple to set up. Find out what you need to do in your state to get started and put that in your plan. Most likely you will just need to file your name or DBA (doing business as) with your local government. Write down your craft skills and your plan to make your business function. Next, think about space.  Do you have room for storage?  Do you have an office and adequate work space?  Make a plan to provide for these.  Include short term and long term goals.
  3. Financial Plan: This is the most important part of the business plan and the most necessary part for securing a loan if needed. You will want to include all sources of income and also list materials and supplies already owned. This would include office and workshop equipment and furniture. Provide a profit and loss projection based on estimated sales and expenses and overhead costs.  Determine start up costs which can include equipment, supplies, business cards, stationary, show fees, or remodeling.
  4. Marketing Plan: Outline the various ways you intend to sell your craft. How many craft shows are held each year in your area? How many craft stores will take your type of craft? Figure out how much competition there might be.

Come up with a price that will bring you a profit.
Come up with a price that will bring you a profit.

Pricing Your Craft

 The obvious goal of a craft business is to make enough revenue to cover all expenses and make a profit.  To start with, you will want to buy your supplies smart.  Since you will be buying in bulk now, you are at an advantage.  Try to buy from wholesalers if you can.  Typically, you just need to provide your tax id number (social security) and meet their minimum order.  Other options are to buy from craft supply stores when they have sales.

Whether you make one item or several different items, you will need to come up with a cost of goods sold for each item.  This is the cost of all materials and labor put into the item.  You will have to determine a labor cost based on the time you put into it and how much value you put on that time.  You can add in overhead costs if you want which is a percentage of the utilities, craft show fee, etc..which is used to operate your business.  Next add in the profit you want to make and this gives you the total sales price.

Once you come up with your price, take a look at the competition.  You may need to adjust the price up or down accordingly.  If you are too high, you won't sell anything.  If you are too low, you will constantly be replenishing.  This may take some trial and error at first.  If your quality is better than the competition, go ahead and price it higher.  People are willing to pay for quality.  At the same time, if your quality isn't up to par, don't expect to get a premium price.

Market Your Craft

Craft Fair
Craft Fair

Craft Fairs

Craft fairs are a fun and easy way to get into the business. Most art and craft fairs are run in the summer outside in tents. Another popular time is in the late Fall up through the holiday season in malls, schools or other large indoor facilities.

There is some equipment needed to take part in these fairs. A tent with removable sides is a must. Display tables, tablecloths, a couple of chairs, and a cash box are pretty much the only other items needed.

Fees for craft fairs can run anywhere from around $25 to $500 depending on the size. If you have a higher priced craft item you can more than make your money back at the larger shows. However, if you are selling dollar items, you may want to stick with the smaller shows or shows with a lesser fee.

You can find craft fairs by searching online for craft shows in your area. Normally there is listed a person to contact about reserving a spot. Sometimes you need to do this a year in advance for bigger shows and some require your craft to be approved. Your local paper will also list craft shows needing crafters. Once you get in to a couple, you start finding out about more through the other crafters. It doesn't take long and you have more contacts about shows than you will need.

Arts and craft fairs are a great way to meet people and get feedback on your craft. A lot of times you end up trading art with other crafters or artisans. It is fun to come home with a profit plus treasures!  Keep track of sales made at each show on a spreadsheet.

Craft or Specialty Stores

If you are going to sell to a store, there is some additional paperwork that you will need to have. When you go in to make a sale you will need to fill out a sales order. This will include the customers name, address and telephone number. You will list the quantity of one or several items that they wish to order along with the sales price. Include the delivery date required.

It will now be a priority to fill that order. This is a done deal so that is good but it can also make your crafting assignment more like a tedius production line. The pressure is on to get it done. To make sure that you have a repeat customer, fill the order in a timely manner.

Once the order is complete, deliver it along with an invoice. You can write the invoice directly off of the sales order, just include the appropriate sales tax. You will be responsible to pay sales tax quarterly. Determine whether you want the invoice paid on delivery of the goods or if you are willing to give terms. Keep track of all sales orders, invoices and cash received on separate logs or excel spreadsheets.

For more craft business information, check out my blog at Rustic Crafts & Chic Décor.

Are You Ready To Start A Home Craft Business?

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