Starting a craft business can be an exciting and rewarding adventure. You can start completely from scratch and learn new skills with the potential outcome of creating a viable business. If you already have a crafty hobby or particularly enjoy a craft, then you can perfect these skills and start selling!
Our ultimate guide talks you through what you need to know before starting your craft business and how you can improve your craft and create your brand. We discuss the legal aspects of starting a craft business and help breakdown the costs that are often involved.
What you need to know about starting a craft business?
Starting a craft business yourself is not a simple process, but if you do your research and put the time and effort needed in, it can be made far easier!
Understanding the market and product demand is a key first step, as well as researching your potential customers and what will be, your current competition. The more knowledge you have behind you before you start, the better!
A fairly important step to make at the start of your craft business journey is understanding product demand. If you are starting from scratch and are unsure what products you’d like to make and sell, search for the latest trends and see what’s currently popular. Try to focus on what you’re interested in.
If you already know what products you’re going to sell, research is still important. Look into trends by season or holiday, so you have a potential plan on how to market and adapt your product according to sales figures. You could also tweak your products to fit the current demand, which will in turn help increase sales.
Without customers, you don’t have a business. Your customers are what drive your sales, your social media accounts and your brand identity. Pay close attention to what your potential customers want from you or from businesses similar to yours.
Following the latest trends will give you a better idea of what your customers want, especially when it comes to colour, pattern and design. It could be useful to search for products similar to yours and see what questions are being asked about them. This will provide insight into what your potential customers will be looking for and how you can cater to their needs.
Researching your competition is a good strategy that helps you understand what you could be doing better for your business. Keep track of businesses of a similar brand to yours and those who sell similar products.
Following their social media pages can provide useful insight into how they run their business and what works for them. Some businesses may be using a new product to help them in their craft, such as a physical tool or online software. That product could possibly be useful to you! Seeing what other small businesses use to help them craft is a great way to gain ideas for your own business and to enhance your skills.
Remember, researching your competitors is not to be used to copy ideas, but to merely keep an eye on what they are up to and what strategies are working for them.
Creating a business plan
A hugely formal business plan may not be necessary when starting a small craft business, but it is a great way to plan out your business strategies and create yourself a clear pathway. There are plenty of tools and templates online that can help you write an effective business plan- utilize these to ensure that you have a plan that can keep your business on track.
Having a business plan from the beginning not only helps you to organize your business better, but it also serves as a great document to outline your business to future investors or other involved parties.
A basic business plan should include:
- A detailed summary of your business, products/services and brand
- Target market and analysis
- Sales plan
- Financial plan
- Future projections
You should refer back to your business plan for guidance when starting and running your craft business. Also, look into updating your business plan in the future when your company has changed and expanded.
How long will starting a craft business take?
This can vary massively. You have to factor in how long it takes you to make your products and whether, due to the nature of your goods, you can create surplus stock or have to create on-demand. If your products are reproducible, you may be set up quicker than someone who’s products are one-of-a-kind.
You shouldn’t feel pressure to have your craft business set up in a certain amount of time- focusing on making quality products is more important.
Allocate yourself time to create products, market and promote them and eventually ship them once you’ve made a sale. The only time limits you should stick to, are any times you have informed your customers of regarding product creation and shipping.
How long will it take before I start making a profit?
Again, this is dependent on many factors. Some of those factors include:
- How quickly you can make products
- How quickly you can sell products
- How many products you sell
- The price of your products compared to the price of materials
It is better to prepare for not making a profit for a while, than be caught out of pocket. You never know when your craft business will take off- take necessary precautions to ensure that you don’t go into any debt, but trust in yourself and your craft. Value your items fairly and don’t buy what you can’t afford- you can’t guarantee sales.
How much will it cost to start a craft business?
Here we break down some of the costs that are typically associated with starting a craft business and explain how these elements can be crucial to your success.
Insurance is an important factor to consider when starting a craft business. There are many incidents that could occur, even for a small business, that could be seriously financially damaging.
A few problems that a small business may run into include:
- Stock damage
- Equipment damage
- Injury or damage caused as a result of your product
These are problems that could be fatal to a new craft business. It is necessary to look into the differing insurance types to see what fits your business best.
CraftCover offers various types of insurance with prices that suit both you and your business. If you are wanting your craft business to grow, there will be added responsibilities that would be better protected by insurance.
Types of craft insurance:
- Public Liability Insurance
- Product Liability Insurance
- Craft Fair Insurance
- Craft Show Insurance
- Craft Stall Insurance
- Arts & Crafts Insurance
- Demonstration and Tuition
Each of these types of insurance cover different aspects of your craft business. If you are considering craft fairs and shows, you are usually required to have Public Liability Insurance before you can take part. Arts & Craft insurance can also be tailored to your specific craft.
Do I need insurance if I am only selling online?
Although you may not be attending craft events just yet, having public and product liability insurance is still essential to your small business. Your products affecting your customers can still cause a legal, public dispute and damages to your stock at home may not always be covered by home insurance. You may also want to cover your computer that enables you to sell online.
CraftCover can help you choose the right insurance plan for your business. Contact us now for further help.
Buying materials for your crafts requires more thought than often allocated. You may be considering having a stock room with enough materials to cover an influx of sales. This may be an expense that you are not ready for- having minimal stock whilst starting a craft business is both acceptable and sensible. Keeping track of your average sales is a good way to understand what stock levels you may need.
Once your business shows an increase in sales, expanding your stock is helpful in ensuring that your products are always available to customers. This can be done easily through bulk buying the necessary craft materials that you require for your products. It usually works out cheaper to bulk buy as long as your sales reflect, or will reflect in the near future, this decision.
If you are just starting out in your craft business, then the chances are you will be based at home. This is a cost-effective approach you can take when you are beginning to create your brand. Once you are making a healthy profit, you may consider renting an office/work space, warehouse space or even renting specialist equipment that you can go and use. This is a large investment and should only be considered once you are sure that you can afford it.
In the meantime, whilst based at home, making an effective work space is key to improving productivity and a healthy work-life balance. Try to separate your craft work from your rest spaces, so that you can alternate between the two easily. Increased focus will result in you producing higher quality products.
The price of your items could be the deciding factor in whether you make a sale, so you need to think carefully about how much you are going to charge. You should try to avoid extortionate prices but also shouldn’t sacrifice the quality of your crafts so that you can sell them cheaper.
Researching businesses that sell similar crafts to your own will help you to understand what customers are willing to pay. You could even conduct your own market research to gauge product prices. Don’t worry if you don’t get this right straight away, you can always adjust your prices once you are up and running.
Understanding shipping costs massively depends on the product you are selling. Factors that need to be included when deciding shipping costs include:
- Size of your product, therefore parcel size
- Weight of your product, therefore parcel weight
- Materials and their breakability
- Shipping location (locally and/or internationally)
- Shipping speed
These factors will each alter the price of shipping costs. You will need to take an average for each point and use those combined average parcel specifications, to calculate the right price to offer for shipping.
Alternatively, you can offer shipping that’s tailored to each order, making it easier to charge the correct price.
Understanding the legalities of starting a craft business
Figures from the Royal Bank of Scotland suggest that 1 in 5 adults in the UK are ‘hidden entrepreneurs’. This term applies to anyone that earns an extra income in their spare time, which includes selling your handmade crafts. Any exchange, whereby you receive money for your products or services, should be declared to HM Revenue.
If you have realised that your business should be paying tax, you need to give HMRC your income details as soon as possible. By voluntarily declaring your income you will still have to pay the tax that is owed, but fines will likely be reduced. To let HM Revenue know about your second income, you can fill out this online notification form.
Planning for the future of your craft business
Registering as a sole trader:
- Tell HM Revenue in advance of you starting your business
- Fill out a Self-Assessment Tax Return Form with your income details
- You will be personally liable for any problems or losses that affect your business in the future (hence why insurance is necessary)
- Cheaper in the short term
Registering as a company:
- Register with HMRC who will offer some protection – Offers structure in regards to responsibilities and ownership.
- More complex and requires more paperwork
No matter how small your business is, branding is a crucial element to success. Creating that brand identity for your handmade products can be one of the most successful marketing assets.
What do I call my craft business?
Think about why you want to start your business, who inspired you and how you are going to do it. A lot of brand names have deep rooted meanings related to their backgrounds or their specific products.
Before finalising your chosen name, it may be helpful to see if it has been taken, or not, online by using a name checking website such as www.namechk.com. Remember, the name you choose doesn’t have a lot of meaning until you give it a meaning and visual identity.
The design element of your brand is a hugely important factor when starting a craft business. Your branding is one of the first things a customer sees when looking at your social media pages, website or craft stall; alongside your products. Getting this right from the beginning will benefit your business greatly when you start selling.
Your logo will determine your customer’s initial reaction to your brand, so it is worth taking time out to create your ideal logo. Research your favourite brands and think about why you like them.
Also, think about how your logo will appear in situ, for example, what it will look like on price tags. You can design a logo yourself if you are confident enough- alternatively, there are many small brands and designers out there who you can commission.
Tone of voice
Do your products portray a cheeky or joking personality, or are they quite formal and sensible? Make sure the brand reflects the products. Remember, your brand voice isn’t always your own voice.
Tone of voice can also be enhanced by fonts and colours. If you’re innovative, maybe an edgy, sans serif font might work best. If you’re a happy, chirpy type of brand, think bold, bright colours.
One thing that many craft business owners overlook is just how important it is to take professional photos of products. You need to have images that capture visitors and give them a reason to purchase from you. You could hire a photographer or take pictures yourself using a high quality camera and good lighting.
All of that hard work into developing your brand’s identity would go to waste, should you not use it consistently. Be sure to follow strict guidelines so that you portray the same image on websites and business cards as to what is used on the business’s social media.
Where will I sell my products?
There are many places where you can sell your handmade goods- choosing the right places is an important factor to consider for your business. Selling your products can be done successfully both in-person and online.
Exhibiting your crafts
Craft fairs and shows are a great way to sell products and promote your brand. There are usually great exposure opportunities and chances to be invited to other, more exclusive craft events. If you are confident in your craft, have an established brand and the necessary insurance, you are ready to start exhibiting!
There are plenty of sites that notify you of upcoming craft events. Take note of all the events you would like to attend in good time, and look into their application processes for participating.
Check out our quick tips on exhibiting your crafts here!
Selling your crafts online
Selling online not only gives you the chance to sell to people all over the world, but is also a cost effective way of marketing your company. It’s important to check that your insurance policy provides cover for selling into foreign countries, particularly the US and Canada.
If you choose to sell products on your own website, you will need to have one that not only looks good, but is also functional for users. This means ensuring that your customers can find what they want on the website with minimum hassle.
There are a variety of sites that can help you sell your products. These fall into different categories:
Your own pages such as a website, a Facebook page or an Instagram page. These pages aren’t specifically for selling, but you alter them to suit your business. These are the pages that you can typically get most creative with, and have most freedom with in regards to content.
These are sites or apps whereby you create an account for your business and upload your items ready to sell. Marketplaces such as Etsy, Folksy, Ebay, Depop, Facebook Marketplace and Amazon Handmade are all free to list on- though some take a percentage of your sales.
These options are great starting points for small businesses as they are easy to set up and maintain, and are popular sites where you could generate lots of sales.
These marketplaces are slightly different to the ones listed above. Not every craft will work on these sites. Sites like Redbubble, Zazzle and Amazon Marketplace take your designs and print them on the customers desired product (such as t-shirts, posters or mugs).
This works well for designers, as there is little to no work to be done once the design is created and uploaded.
How do I promote my products?
Promoting your own products is crucial to the success of your small craft business. When your brand name isn’t widely known (yet!), it can be difficult to be seen over larger companies. Promoting your products in-person and online through many different formats will help to spread the word about your products.
There are a few ways in which you can do this:
Establishes you as a reputable brand and allows you to sell away from third-party sites. Setting up a website is not always that simple however, and can require help from a professional. You may want to look into this once you feel as though your business is more established.
A wonderful tool that promotes your brand and allows you to express your feelings and opinions on crafting. If you have the time for it, starting a blog can be simple and effective. You can promote your goods, promote other craft businesses you like and offer tips to other crafters. Blogs may not generate lots of sales but they can establish a loyal customer base and can potentially get picked up by larger bloggers or journalists.
There are plenty of online guides that can help you set up an email list. If you send follow-up emails to your customers after a purchase, or send those customers future emails regarding your business, offers you have or events you are attending, you can potentially find that many of these customers return. The added personalisation is often favourable to customers, especially when buying from a small brand.
Not all of these elements are necessary or suitable for your business. You need to decide what will work best for you, and go for it!
Utilizing social media
Social media is a vital source of communication between you and your customers. Billions of people use social media each day, which is why more and more businesses are utilising it as a marketing tool.
Your following won’t grow over night and you will have to put time into making social media work for your business, but it is definitely worthwhile for any craft business that wants to maximise their sales.
With around 1.35 billion monthly active users, Facebook is great for showing off your products, linking them to your website and getting involved with ‘Facebook Groups’, which are, in essence, communities. There’s a lot to explore on Facebook, including targeted advertising options at an additional fee.
Twitter should be kept quite chatty and requires the most amount of posts per day in order to get interaction. However, it’s a great site to see what your competitors are up to and gain insight into how you can appeal to your target audience.
Pinterest is great for sharing tips and inspiration with the occasional product image- just be sure to use your product selling platform’s link when uploading images.
Instagram is good for humanising your brand. Topics such as ‘behind the scenes’ and close-ups of products tend to go down a treat with audiences on Instagram. It’s worth spending time typing out hashtags in the description to allow people to find your pictures and increase your following.
Get your craft business started!
Now you should have all the knowledge, skills and support to start your own craft business. Be brave, have faith in your products and abilities and get started! We’d love to hear all about your business and how you are getting on, so let us know!
If you would like some extra support in your new craft business venture, take a look at our Business Advice section where we provide guidance relating to craft businesses, insurance and products. We also have a business news section that could reveal important information to you about the craft business industry.
If you are looking for support for your craft business, Craft Cover provides specialist insurance for handmade businesses throughout the UK. If you want to ensure your goods from theft, loss and damage, we can help!
Please call 0345 463 3003 or email firstname.lastname@example.org to speak to one of our friendly experts.