Being a handmade seller can be a lot of fun and can even be a profitable endeavor that allows you to quit your 9-5 to make and sell things daily.
There’s never been a better time to start making and selling things online. The internet has made it easier than ever to reach customers all over the world, so handmade sellers are no longer limited to selling off tables at farmer’s markets.
Customers are also becoming more aware of how important it is to support small, local businesses, especially things that were made with love and care through sustainable practices. Luckily, starting your own craft business isn’t that complicated if you follow the right steps to get your business up and running. Read on to find out more!
Step 1: Craft a Business Plan
Start creating a business plan
Your first step may not seem very thrilling, but your business plan doesn’t need to be something boring you need to present to banks and investors. Your business plan simply needs to be a guide that states what you plan to do, your goals for the business, who you plan to serve, how you plan to do it, and get your brand story (what led you to this point) down on digital paper for the first time.
You should take the time to search for possible competitors, particularly on Etsy, to see what it is that they are doing well, what their customers are saying in reviews, and how much they are charging for their products.
Decide which products you can make which are likely to sell
You can then decide on what products you are best at making right now and those that can be made at a reasonable cost to you to ensure you will have a good profit margin. You will be able to expand your product base as you learn new crafting skills, but for now, stick to what you know.
Define your ideal customer
You also need to think about who you want your ideal customer to be and what they are likely to use your products for. This will help you with marketing when the time comes and will allow you to streamline your products.
Try to go beyond simple demographics and think about the other things they like and why. Add this profile to your business plan.
This is also a good time to check out any regulations you should be aware of such as Good Manufacturing Practice (GMP) or CPSC compliance if you are making children’s clothes, as well as research laws and regulations in your specific state or country.
Get a bookkeeping system in place
Also, examine your accounting and bookkeeping needs. You may think you don’t need to get this in place before you start making money, but it will be a big mistake and you’ll end up scrambling to get something together when you start making sales.
Don’t forget that handmade products require materials that cost you money first, so you need to manage your bookkeeping from the very start. Craftybase will manage your inventory and your finances all in one place so that you can spend more time creating.
Step 2: Register Your Craft Business
Choose your business name
Once your business plan is created, you can decide on a name for your business. You may already have a great name in mind, but if you need a little help we have put together a breakdown of the best name generators for your handmade business.
Create some basic visual branding
With your business name decided, you can create a logo, or have one created for you if graphic design isn’t your thing and you have the budget, which will reflect your brand story. Make sure it is something you are happy with because you will want to use it everywhere! On your products or packaging, on social media, on your online store, and at craft fairs. You can find logo designers on Etsy or a site like Fiverr, or you can create one yourself with the help of an easy-to-use tool like Canva.
Register your business
Next, register your business and apply for any licenses you need, if applicable. Registering your business is straightforward, and usually costs less than $100 to register. This will protect your business name and allow you to open your business bank account.
Make sure you look up what’s necessary for your business in your state. You can find out about the different business structures here. Most will find it beneficial to register as a single-member LLC, as it gives you legal protection but allows you to file your taxes as if you’re self-employed. Check out our blog post on choosing the right structure for your handmade business for help with this step.
Alternatively, you can pay a business to do the registration for you.
Apply for your EIN
With your business name registered, you need an EIN to pay taxes and get a business bank account. Read our guide here to learn more about how to apply for a sales tax number
Open a business bank account
Now you have your EIN, you can open a business bank account (and start thinking about how you are going to pay yourself - it’s never too early for this!).
Set up your Etsy store (or any other ecommerce platform)
It is now the exciting time to set up your Etsy store, or any other eCommerce platforms you’d like to sell on, and get to making your products!
Step 3: Test Your Handmade Product Range
Make a proof of concept
Before you start selling your handmade products, you need to make proof of concepts and try to document your process to ensure you know how long each product will take to make. This is crucial to figure out how long it will take to get the product out to the customer so you can charge correctly.
Optimize your processes
See if you can find solutions to make your products more quickly without having to sacrifice quality. Just make sure that your customers know how long it will take for them to receive their order. Many people are willing to wait for a handmade product if they know that they are getting a quality piece.
Find the best materials at the best price
This testing period also gives you the opportunity to find materials for the best prices so that you can maximize your profit margin. Consider buying in bulk wherever you can as this is how you are most likely to get the best deals.
Test your product and processes with family and friends
When your prototypes are complete, ask friends and family for feedback on your products as they will be able to provide you with valuable criticism on what could be improved.
Just make sure you ask the right people - someone disinterested in your product or who is generally not positive may say something negative that knocks your confidence. Remember that the only opinion that matters is that of your ideal customer.
Track your material and production costs
Keep track of how much it costs you to make each product and use this as a base cost, adding on your overheads and labor to determine your final prices, ensuring that you are making a profit. Look at our pricing guidance, as well as our blog post on setting the right price for your handmade products for help with this.
Step 4: How to market your crafts
Learn about SEO
The next step is to market your crafts. One of the most important parts of marketing online is SEO (search engine optimization). Getting this right will ensure that you are rated highly on Google as well as sites like Etsy, which will drive more organic traffic to your store (“organic traffic” means you didn’t have to pay for them with an ad).
We have put together this guide for Etsy sellers to make the most out of SEO.
Prioritize photo quality
It is also important that you take good quality photos of your products as it shows professionalism and ensures that your products look as close as possible online to what the customer will actually be receiving. Make sure that, along with these quality photos, you take the time and effort into listing a catchy name for each product along with accurate descriptions.
Consider offline avenues
Other ways to market your handmade products include making the most out of the available social media platforms by posting regularly and attending craft shows and offline markets where you can showcase your products. The internet is a wonderful tool, but these in-person events can be highly valuable. Make sure you have some business cards handy with your website or Etsy store address on it so interested people can find you later.
Consider working with influencers
If you can afford it, it can be well worth considering contacting relevant influencers that can help you promote your products and make more sales. Just make sure that you think carefully about who you choose. Unless you have a big budget, sending gifts to big influencers is a good option, as is giving your products away for free to micro and nano influencers (those with a following of less than 100,000 or less than 10,000 followers).
You may also want to look into securing consignment agreements in local stores to expand your reach and become well known in your local area. With wholesale, you will get paid for your products outright whether they sell or not, whereas with consignment you will only get paid if your products sell. Either way, selling in a shop gives you the benefit that the marketing and selling are taken care of for you so that you can put more focus on your product line.
Read our guide on how to start selling your handmade products via consignment »
Explore selling your handmade products wholesale
If you have a product that can be made in larger quantities, it’s a good idea to explore selling via wholesale channels as it can be a good reliable revenue stream.
See our post on tips and tricks you need to know when selling your handmade products wholesale »
Step 5: Start the Handmade Production Line
Keep track of your inventory management
When the orders start rolling in, ensure that you have the right materials on hand to make your products as and when the orders come in. Craftybase will help you with inventory management so you can keep track of what products and materials you have in stock in real-time.
Your inventory is automatically managed so that you always know what materials you need to purchase, ready for the next order.
Document your processes
Be sure to document your processes for each of your products, taking down what goes into each of your products. Maintaining accurate Standard Operating Procedures (SOPs) (find out how to create SOPs here) will be useful should you wish to employ staff later down the line.
You must regularly assess your material prices as you may be able to find lower prices elsewhere, making sure to buy in bulk wherever you can.
Now You’re in Business!
There you have it! 5 steps to a handmade business that’s as organized as it is successful. When you follow our tips, you’ll find it easy to scale your business and find greater levels of success.
Make sure that you continue learning, experimenting, and growing to ensure that your business continues to find greater levels of success.
Most importantly, don’t get discouraged if it takes some time to get the ball rolling. You must have patience. We’ve covered these 5 steps quickly, but it may take you 1 to 6 months to get everything up and running, depending on where you are in the journey now. It can take time to start getting sales, but this gives you the time you need to perfect your products and when that first order comes in, you will be on your way!