Are you interested in starting a craft business online? If YES, here is a complete guide to starting a craft business from home with NO money and no experience.
Okay, so we have provided you an in-depth sample craft business plan template. We also took it further by analyzing and drafting a sample craft product marketing plan backed up by actionable guerrilla marketing ideas for craft companies. In this article, we will be considering all the requirements for starting a craft business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Understanding the Craft Business?
- Starting a Craft Business Online – Market Feasibility Research
- Starting a Craft Business With No Money – Legal aspect
- Writing a Business Plan for your Craft Business
- Detailed Cost Analysis for Starting a Craft Business
- Starting a Craft Business Online – Technical and Manpower Details
- Starting a Craft Business Online – The Marketing Plan
- Tips for Running a Craft Business successfully
Understanding the Craft Business?
The craft industry encompasses goods that are handmade by artisans or those skilled in a particular trade. Small businesses engaged in the craft trade include everything from art galleries to handmade textiles to culinary products. Often, craft industry entrepreneurs operate independently and are not franchised. The industry usually relies on locally sourced supplies and community support to maintain a customer base.
Craft goods are all produced by hand by artisans. Beyond that, goods distributed by crafters can vary from handmade clothing to home decor items or works of art. Often crafters produce products with ties to historical or ethnic tradition. Retailers specializing in supplying artisans with supplies for crafting also fall under the craft industry umbrella.
Artisans work with a variety of mediums to produce crafts for sale. Many small craft businesses with one owner produce the product in their own homes, while larger operations may employ several workers. Craft businesses are the opposite of mass production, employing a hands-on approach to produce unique items for customers. Occasionally machinery may be used, but often these require operation by a skilled artisan. Retailers may opt to offer customization of products to further cater to customer demand.
Starting a Craft Business Online With No Money – A Complete Guide
- Industry Overview
Between 2000 and 2008, the crafts industry continued to thrive. The Internet was making it easy for individual sellers to find new buyers on the Web who wanted their art, handcrafts, and related products and services. Those in the retail crafts supply industry also found plenty of hobby consumers to buy their various supplies and materials.
- Interesting Statistics About the Craft Industry
It has long been known that America’s handcraft industry was making a significant contribution to the American economy, but there were no statistics to prove it until early 2001, when a crafts body in America released the results of its breakthrough study.
It confirmed what many industry leaders unconsciously knew all along: Craft businesses have long been important to this country’s economy, contributing nearly $14 billion a year. Although this industry has been hard hit by the current economy, it will bounce back in time, just as it has done after various other recessions in the past.
In 2001, there were then 106,000-126,000 craftspeople working in the United States. These business owners (79 percent of whom were home based) were generating sales of within $12.3 to $13.8 billion per year. The average gross sales/revenue per craftsperson was $76,025 and the Income from craft activities comprised 47 percent of household income on average, and 22 percent of craft households were deriving all of their income from craft.
Retail sales accounted for 52.9 percent of annual sales, with just over one-half of these sales being made at craft fairs. The average craftsperson derived 27 percent of annual sales from wholesale, and 11.2 percent from consignment to galleries.
There have been no new craft industry surveys by the finance or business agency since 2001 to tell us how the above facts and figures have changed through the years, but at least the 2001 CODA statistics proved to business and government leaders that craft was a viable and sustainable industry worthy of investment and support.
The survey also drew attention to the important relationship between crafts and cultural tourism. States that were armed with accurate statistics could then partner with economic development agencies to encourage growth and development of this important sector of home-based businesses.
Basically, the CODA study findings validated the crafts industry as a vibrant and growing network of small American businesses while drawing added attention to small and home based businesses in general.
Starting a Craft Business Online – Market Feasibility Research
- Demographics and Psychographics
Trade shows and craft fairs represent primary locations for craft artisans to sell their products. Other more established businesses may retain brick-and-mortar locations for craft sales, while some choose to base their operations on the web. Craft suppliers and producers increasingly elect to utilize social media to market their businesses and attract new buyers. Many crafters specialize in a niche area or product to establish themselves within the industry.
List of Niche ideas in the Craft Business
One of the first things you should do when starting a new craft business is to decide what it is you want to make and sell. Many new craft sellers make the mistake of trying to start with too many Craft business ideas. The best way to build a business is to begin with one or two good ideas, and then expand from there in time.
To help you decide what products you will sell first, think about your specific skills. What crafts are you best at? For instance, if you are an expert at quilting, but you also dabble in knitting or needle felting, start with quilted items. You want to put your best foot forward, so you should make your first available merchandise of the very best quality that you can produce.
This will help your business to start off with a great public image, which will in time build your reputation. You can always add new product lines once you have been established for a while.
- Fine Arts
- Paper & Memory Crafts
- Needle Crafts
- Artistic Crafts
- Sewing Crafts
- Jewellery Making & Bead Crafts
- Floral Crafts
- Woodworking/Wood Crafts
- Food Crafting
- Scrapbooking & Memory Crafts Crocheting
- Card Making
- Home Décor Crafts
- Wedding Crafts
Level of Competition in the Craft Industry
The craft has grown more sophisticated with “a lot more out there” in supplies and tools than what was analysed in 2001
People used to do a lot more hand quilting, and piece together old fabrics, but now, in addition to computerized sewing machines that can cost several thousand dollars, but turn out precisely stitched items quickly, “There are beautiful batiks and higher-end fabrics that never were accessible to the ordinary shop.”
Interest in quilting, other forms of sewing and many crafts in general is increasing. At least one project a year is crafted in about 56 percent of American households, according to the Craft & Hobby Association, and the industry held steady at nearly $30 billion in annual revenue through the recession, when many other retail sectors declined.
Woodworking is the No. 1 hobby in terms of sales and food crafting such as cake decorating has risen in recent years to third place, just behind drawing, largely due to TV shows such as “Cupcake Wars. Crafters are motivated mainly by a feeling of accomplishment and a need to be creative.
List of Well Known Craft Brand Businesses
There are a lot of craft brands that have emerged in America over the last century. For the sake of keeping it short and simple, here are a few well-known brands;
- The Gambarinus. Co
- Boston beer
- Duvel Moortgat USA
- Firestone Walker. Co
- Oscar blues
- Rogue ales
- CraftWorks Restaurants & Breweries, Inc.
- Gordon Biersh
- Brooklyn Craft Company
- Michaels company
The past five years have transformed the Craft industry into one of the fastest growing and most popular creative segments in the United States. Although the industry mostly consists of many small-sized players, there has been increasing consolidation and expansion activity among entrepreneurs in the industry.
But both parts of the industry took a hit in early 2009 when the Consumer Product Safety Commission introduced a new law requiring that all toys, dolls, garments, and other children’s items (even self-published books) be tested for lead.
When that law took effect, countless thousands of individual sellers of such products probably just gave up and closed their home-business doors because they couldn’t afford the expensive lead-testing procedures now required in order to sell.
Because of this law, which also affected retailers the world over, Amazon automatically banned the sale of 2500 items on its site. Etsy sellers had quite a discussion on this topic, and those comments still remain in the site’s forum archives.
Of course, toys and dolls are just one segment of the huge arts and crafts industry. Millions of sellers are still out there offering their wares while trying to effectively deal with the economic effects of one of the worst recessions in America’s history. Although the crafts industry has been hard hit by the current economy, I believe it will bounce back in time, just as it has done after various other recessions in the past.
Is a Craft Business Worth Starting from the Scratch or is Buying a Franchise Better?
Craft franchises provide an excellent opportunity for turning your creative talent into a profitable business more than what you can achieve if you start from the scratch. As with any new business start up, franchise opportunities have their pros and cons.
If you have a creative streak coupled with an entrepreneurial spirit then opening a craft and gift franchises may be an option worth considering. There are plenty of franchising opportunities available, from designing baby shower diaper cakes to a full Build-a-Bear Studio. With so many options available, chances are you can find something that fits perfectly with your favourite artistic hobby.
Opening a franchise involves a significant investment. While the initial expense may range from a thousand to a few hundred thousand dollars, many people find that the investment is worthwhile. Many craft and gift franchises offer name brand recognition that can be very challenging to obtain on your own as a home grown business.
Choosing to go the franchising route does have its benefits. Having a turnkey system to work with eliminates the need for costly trial and error. For those without a business management background, a franchise can provide not only the supplies you need to get started, but also the training you need to handle the business end of the franchise.
If you have tried to run your own craft related business in the past you probably know that finding a product that is both marketable and profitable is a difficult task, and that’s before you try to calculate your time into the equation. Choosing one of the successful craft franchises means that the market has already been tested, and if people were not buying the product, it is safe to assume the company would not have grown to the point of offering franchises.
Possible Challenges and Threats of Starting a Craft business
Turning your hobby into a business can be very rewarding. If you perform professional grade workmanship and friends and family have often told you that you should sell your art, then it may have crossed your mind to open your own crafts business. To start a business, you need to develop a solid plan and complete all necessary legal paperwork.
If you are going to depend on this business as your sole source of income, it is important to be prudent in your completion of all of the work required in the development of a profitable business. Challenges you may face while trying to start a craft business may include
- Identifying a craft that will be the base for a profitable business
- Naming your business
- Obtaining permits a d license
- Obtaining a business bank account
- Setting up an area to make the product and run the business
- Purchasing materials
- Marketing your items
Starting a Craft Business With No Money – Legal aspect
- Best legal entity for a craft business
A crafts merchandising business is a retail shop such as a gallery, craft store, online shop or boutique. You purchase goods from other artists or crafters and in turn sell the goods to the end user – a consumer like you or me. A crafts manufacturing business makes the tangible arts and crafts products that are sold either to merchandisers or directly to the customer.
In most cases, arts and crafts businesses are both merchandising and manufacturing companies. You handcraft your products and sell them yourself either online, at shows or in a storefront. A serious consideration, this involving deciding how you want to legally set up your business. You have the following options to choose from: Sole proprietorship, Corporation and a Flow through entity
List of Unique Catchy Craft Business Name ideas
Artists come in many forms, and being crafty is a whole different art in itself. If you’re crafty, you can see new life in a pile of junk and turn something completely ordinary into something extraordinary: You have the knack of making ugly things pretty.
But what will you call your craft business? How can you convey all this in a few words? Well, here are some catchy names that you may want to start out with in your business;
- Out of the Box Crafts
- Craft n’ Creations
- Handy Mandy
- Dreamy Designs
- Two Can Craft
- Hot Hands Crafts
- Happy Crafts
- The Scrap Shop
- Crafts Unthreaded
- The Craft House
- Craft Machine
- Clip n’ Snip Crafts
- The Art Box
- Buttons and Bows
- A New Angle Crafters
- The Kraft Lady
- Craft Angels
- Lovely Lady Crafts
- Heavenly Handmade
- All Tied Up Crafts
- Green light Creations
Choosing the Best Insurance Policy for your Craft Business
The craft industry is enjoying a real boom right now. With the rise of shopping locally and DIY projects, many customers are eager to support small businesses that handcraft their own wares. From artisan candle makers to expert knitters, these small handicrafts start-ups are helping to change the way many people thing about commerce. And with this shifting attitude comes more opportunities for you to expand your crafts, handicrafts, and candle sales business.
But even in the relative safety of your home office, your business can still face risks that traditional business entities face. A tornado could destroy your merchandise – a cost which your Homeowner’s Insurance won’t cover, as these policies explicitly exclude business-related property. A deliveryman could slip on your slick porch while delivering the day’s mail and pursue your business in court for medical expenses.
- General Liability Insurance.
- Property Insurance.
- Inland Marine Insurance.
- Business Owner’s Policy.
- Workers’ Compensation Insurance.
- Commercial Auto / Hired and Non-Owned Auto Insurance.
- Cyber Liability Insurance (Data Breach Insurance).
- Studio insurance
Protecting Intellectual Property in the Craft Business
Designing a product is hard work – the result of training, experience and the creative process. You also must be a smart businessperson exploring creative alternatives to keep your cost to market low.
After you take so much time bringing your idea to life, it is vexing beyond belief when you discover your arts/crafts design or promotional copy is stolen. In the arts and crafts world, imitation is not the most sincere form of flattery; it’s a potential drain on your gross income and your ability to support yourself.
Ways to protect your ideas and property may include:
The most relevant aspect of copyrights for arts/crafts businesses is that they protect the written word. Your arts/crafts ideas and designs aren’t protected by the copyright law, although the way in which they are expressed may be – thus the importance of protecting your written word. The written word is automatically copyrighted for the life of the author plus seventy years. However to perfect your copyright, it must be registered.
A trademark is a unique symbol, word, or phrase that identifies your product. Two symbols designate a trademark. One is ™ and the other is an R inside a circle ®. Of the two, only the ® indicates that a formal registration with the U.S. Patent and Trademark Office (USPTO) has been completed.
One day you get a thrilling telephone call – a manufacturer wants to license one of your arts/crafts products and mass-produce it under their company name. This is a great way to make money but there are many different issues you need to address when licensing your design. For example, will you receive artist credit? How are you to be paid – a flat fee for the design or royalties based upon sales? What about any non-compete clauses? Due care must be taken to weigh all aspects of the contract to make sure you’re not actually losing money by licensing your product.
Patent protection has been available to artisans since the late 1800s to protect both the ornamental or surface design of the product and also how the product works. In order to receive a design patent you must have invented an arts/crafts design that has a ‘new, original, and ornamental design for an article of manufacture’.
The patent approval process usually take quite a while (ergo the phrase “patent pending”). Most arts/crafts businesses will be better served by copyrighting their work. However, this is a complex subject that is best discussed with your attorney should you think you may benefit from seeking a design patent.
Is Professional Certification Needed for a Craft Business?
There are some businesses that thrive when one is a duly certified person. However, in the crafts business, there might not be a strict law that covers this. Indeed the craft industry has no specified certification but Individuals who plan to start their own craft businesses or who are currently majoring in marketing or information systems could benefit from earning a few certificate. These certifications includes
- Customer Service and Sales Certification (CSCS)
- Advanced Customer Service and Sales Certification (ACSSC)
- Arts and crafts trainer certification
List of Legal documents Needed for a Craft Business
It is really vital that you are equipped with the right kind of insurance before you start out, so that you don’t risk being clamped down on. If you’re in business, you need a business license. It’s not dependent on what you make or sell, or if you make a profit or not. Several licenses may be necessary, depending on where you sell and to whom. You also might need additional licenses if your craft is food-based.
Your first step is to find out if you need a business license. If you plan on operating a home-based business and live within city limits the best place to check is with your city business license office. Otherwise, check with your county business license office. If you need to get a business license, you also need to check for zoning issues. You will not be able to get a business license if your business address is not zoned for the type of business you want to run.
Normally, the county will require you get your city license first if you need one. Bring it with you when you apply for your county business license. The good news is that most counties rubber stamp your county license application if you’ve already gone through the licensing process with your city.
Writing a Business Plan for your Craft Business
Starting a craft business is about more than spending your day pursuing your hobby. By taking a professional approach to making and selling your crafts, you will need a business plan to guild you.
Having a passion for arts and crafts is a great place to start, but that does not mean you should completely overlook the importance of having a solid plan to back up your interests. While being passionate about your product is a great place to start, you need to put a plan into place that will help you to start, build and grow your business.
After putting all the pieces into place, implementing them is much easier, and your excitement for your passion project will translate into a passion that is reciprocated by your customers. Your business plan should contain or more of the points listed below:
- Executive Summary
- Mission Statement
- Product/Service Descriptions
- Marketing Plan
- Financial Information
- Executive Summary
- Final touch
Detailed Cost Analysis for Starting a Craft Business
When preparing to start a new craft business, there are many important things to keep in mind. But one thing that you will want to consider fairly early in the process is the cost of starting the business. How much of a budget will you have to work with and what do you actually need to buy?
- Enough supplies and materials – $1,500
- Business cards – $200
- A good camera (if you have plans of selling online too) – $300
- A website – $500
- A new computer – $1000
- Sampling equipments (like wall pegs and pins) – $200
- Miscellaneous – $1000
It will cost you $4,700 to start a home based craft business which of course would spare you the amount supposed for leasing. It will cost $29,301 to start a medium size craft business and $63,098 to start a big size craft business.
- Financing your Craft Business
Of all the decisions start-up business owners have to make, the decision of how to finance one’s business has to be the thorniest. Do you beg, borrow or steal the money? Who can afford to finance a business these days? There’s no easy solution, especially in this economy. But the fact is hundreds of thousands of people have started craft businesses and galleries, sometimes on the flimsiest of budgets. With care and planning, you can too.
- Personal savings
- Credit card caveats
- Family and friends
Choosing a Suitable Location for your Craft Business
What are the factors to consider when choosing a business location? How do you conduct a business location analysis? What’s the importance of location to a business’ success?
Choosing a business location is an issue most entrepreneurs approach with a pinch of salt. Many small business start-ups, in order to reduce expenditure usually settle for a cheap location. Others believe that location doesn’t matter provided the product is right.
However, getting a good location in the craft business is very critical to the success of your business but this can prove quite difficult because one of the challenges of starting a business successfully is getting a good business site. But in other to get a site that can make you a formidable opponent to your competitors, you need to consider the ideas listed below;
- Demographics and Psychographics
- Good road network
- Let your location boost your brand awareness
Starting a Craft Business Online – Technical and Manpower Details
Craft Technology is focused on practical skills as well as knowledge of technology used in current building practice. There are a number of aspects to Craft Technology: sustainable building techniques, conservation, building information modelling, and practical skills in roofing and joinery.
To have a well known craft business, you need to have technical skills in the specific areas of design, woodworking skills, building technology, and business knowledge. Building technology covers the various aspects of technology that make up the fabric of a building, from passive housing details to pneumatic systems.
The focus on workshop skills develops key problem solving techniques, creative abilities and leadership proficiencies in real time, with solutions designed, tested and used on scale model examples. The manpower requirements of your craft business would surely depend on the size and work in your business.
The Production Process of a Craft Business
In the craft manufacturing process, the final product is unique. While the product may be of extremely high quality, the uniqueness can be detrimental as seen in the case of early automobiles.
Given that craft production requires an intimate knowledge of methods of production from an experienced individual of that craft, the connectedness between trades’ people is highly evident in craft communities. The production of many crafts has a high technical demand, and therefore requires full-time specialization of the skill-set in the form of workshops, or verbal, hands-on training.
The verbal interaction between teacher and student encourages strong social bonds, which ultimately leads to cohesive communities, typical of modern day craft communities.
Starting a Craft Business Online – The Marketing Plan
- Marketing strategies for a craft business
We know that big companies plough huge sums of money into marketing their brands and their products, and whether we like it or not; it works! How else would we know about the funny names of products, what they do, and who sells them etc.? A business is a business no matter what its size. Therefore, the same rules still apply to folks who work at home in their backyards (just on a slightly smaller scale).
- Word of mouth
- Get sufficient business cards
- Leverage the Internet
- Get out outside
- Get yourself a blog
- Get yourself your own logo
- Get yourself a strap line
- Get yourself some labels
- Get yourself some stationeries
Finding the Right Product Pricing for your Crafts
This is often one of the hardest parts of running a craft business – once you have made your product, how do you know what to charge for it? If you set the price too low, you might be actually losing money by the time you factor in all costs of production – so this is really one of the most important things to get right.
- Calculate your production and manufacture costs
- Calculate your labour
- Do your research
- Experiment and tweak
Once you have your base production cost, you can now determine what sort of mark up you would like to add to your item. Mark up is defined as the amount added to your cost price to arrive at a selling price and is a commonly used technique to use in determining how much to charge for your products.
Mark up can be typically be defined as a percentage – a mark up of 100% would be cost price x 2.
Possible Ways to Win Competitors in the Craft Business
Creating a great product isn’t enough for craft business success; you’ll need to know how to promote your business, organize yourself and make smart strategic decisions in other to out scale your competitors.
- Think outside the circle
- Make your customers part of the business
- Envisage good marketing skills
- Let your artefacts or goods speak for you
- Employ worker with good human relation skills
- Have an astonishing location
- Be versatile
Creative Ways to Increase Customer Retention in the Craft Business
A large pool of repeat customers is a scenario every business should be working towards. A customer with a good story to tell or an awesome product to show will surely come back with a dozen ore people who could be family or friends. Ways to increase customer retention and make your brand super lucrative may include;
- First class buying experience
- Stay in contact
- Don’t ignore dissatisfied customers
- Show you care
- Educate customers
- Up sell and cross-sell
- Know your customers
- Implement loyalty programmes
- Try display advertising retargeting your customers
- Work together
Strategies to Boost Brand Awareness and Create a Corporate Identity for your Craft Business
Having a well known craft business brand is what all craft entrepreneur is praying to build but it isn’t something you can fetch from the rivers, but by your hard works and creativity. Spread the word about what you’re making and the business issues you’re facing.
Offer interesting angles or hooks, and you can find your way into blogs, onto the TV news and radio talk shows, and into newspapers and magazines. Here are seven ideas on how to boost your craft business brand awareness and boost cooperate identity;
- Be active in Interest, Facebook and all other social media
- Don’t hesitate to discuss your business problems and how you’re solving them.
- Share your social media stories
- Create Google Alerts for the types of crafts or artwork you’re selling such as woodworking, knitting, stained glass, etc.
- Submit press releases and photos to the New Products sections of magazines.
- Scour the National Public Radio website for programs that might want you as a guest
- Offer to write a guest blog post for bloggers whose audiences are part of your target market.
Creating a Supplier/Distribution Network for your Craft Business
The most expensive part of creating any craft project is the craft supplies and tools you need to buy in advance. At some point most serious crafters begin to take a good hard look at the money they’re making with craft fairs and craft sales and start comparing it to their expenses and quickly realize that the one item the most money is spent on is the craft supplies themselves. This means, of course, that it makes sense to try to get your craft supplies at the lowest cost available.
That’s where buying paper, paints, wood pieces, ribbon and lots of other arts and crafts supplies “wholesale” can really help a professional craftsman or women or even a small craft store owner who is starting out. But you can’t just walk into any arts and crafts supply store or visit any craft supply website and really buy things wholesale. It’s all a little more complicated than that.
The word “wholesale” is thrown around a lot these days and is often used as a substitute for “cheap” but that’s not really the true meaning of the word. Normally when you buy wire or beads or ribbon or anything from a craft supply store you’re buying small quantities from the store.
If you are making lamps or decorating lampshades, LampsPlus has white and off white Lampshades in sets of 8 far cheaper than you could get around town. Delphi Glass has a wide variety of craft supplies priced for wholesale accounts and retail buyers.
Most “true” wholesale establishments will only sell to you if you have a store or you’re serious about buying a lot of arts and craft supplies at once. Most have minimum order amounts. Most require that you have a real registered business with your state commerce department as well as a “wholesaler’s license” which can usually also be obtained through your state. A wholesaler’s license basically allows you to buy items from wholesale centres without paying sales tax.
Tips for Running a Craft Business successfully
With some diligence and hard work, you can run your craft business frugally and sell your craft items online and in the real world. Keep in mind that your craft business is a business. Therefore, your goal should be to bring more money in than you spend to keep it running. When you achieve that goal, you’ll have a profitable craft business and you can build upon your success with more success.
Seek out sales channels that require no expenses unless you make a sale, and diversify your portfolio so that if one sales channel dries up, you still have other income streams. Start small and take one step at a time.
- Host craft shows
- Set up a Website with an E-commerce Store
- Always use the social media to your advantage
- Go on Consignment
- Become a wholesaler
- Become an online craft vendor