Do you have a knack AND a passion for crafts, and are desperate to quit your 9 to 5? Well, we've got some good news for you. The global handicraft industry is expected to be a sector worth $1,864.1 billion by 2032.
With consumers becoming increasingly eco-conscious, the demand for one-of-a-kind handmade goods, which are also sustainably produced, has never been higher. With all this in mind, you may be tempted to take the plunge and start the craft business you've always dreamed of.
Here's a step-by-step guide to help you get started when launching your craft business!
Starting a craft business 101
Define your niche by conducting market research
Before starting a business, you need to have a proper think about what your niche is, whether there's demand for your product, and who your competitors are. Essentially, your niche is the specific segment of the market that you can target with your product.
It's about finding a unique selling point (USP) that sets your business apart from the rest and appeals to that specific audience.
Start by reflecting on your skills and what you're passionate about. Then, brainstorm to see how you can apply these skills to create products that are different from what's on the market.
Say you're passionate about making candles. While there are thousands of online shops selling candles, you notice there's a demand for vegan candles. Once you've noticed this gap in the market, it's time to conduct some market research. This is when you gather as much information as possible about the market you want to compete in.
Look at trends, consumer preferences, and the type of product currently on the market. Find out who your competitors are, what products they're selling and how they typically accept card payments from their customers.
Focus on differentiation
Most importantly, try and identify what your target audience wants, and what their unaddressed needs are. All this plays a huge role in determining whether your online business idea is viable or not. It can also help refine your idea to make it more marketable.
Let's take the vegan candles idea as an example. Say you've found a few established competitors, but you've noticed there's a demand for scented vegan candles that these competitors aren't addressing. Instead of creating products that are already on the market and therefore competing with these established competitors, you might want to focus more on this niche to start with.
This ensures you build a solid customer base before you try to compete with the big dogs.
Create your product
Once you've identified your potential niche and what your target audience is looking for, it's time to do the actual handiwork. If you're marketing yourself as a sustainable craft business, you also need to make sure you use environmentally-friendly materials.
Do your research on which environmentally friendly material would work best for your product. Look for recycled, organic and locally produced materials whenever possible and make sure that all your suppliers source the raw materials ethically. Don't be afraid to test different materials! After all, quality products are the reason why customers keep coming back for more and recommend products. So make sure you are satisfied with your final product before you put it on the market.
Create your branding and marketing plan
In addition to doing what you do best (i.e. designing and creating the actual product), you also need to think about branding. Having a lot of craft small business ideas is all well and good. However, without a brand identity, your craft business is doomed to failure.
Your brand identity conveys what your craft business is all about. This includes your mission, values, and unique selling point (also known as USP).
These important characteristics are then reflected in all your business' visuals and messaging including your:
- Logo
- Brand colours
- Website / online storefront
- Product descriptions and design
- Social media profiles.
If branding and marketing don't come easy to you, start by asking yourself questions like:
- Why does my target audience need this specific product?
- What are the values that guide my business?
- What characteristics, colours and tone of voice do I associate with my business?
- How do I want others to see my brand?
And, most importantly: What's the story I want to tell?
Once you've answered these questions and cemented your brand identity, you're in a good position to create your marketing plan, i.e. the strategy that will get your products in front of your target audience. This overarching plan should include:
- The channels that you'll be using to reach your audience
- The type of content and brand messaging
- Your marketing budget
- Your measurable goals
Your marketing plan should adhere to your brand identity and take into account your target audience. In this way, you ensure that the channels you invest your marketing budget (and time) in are actually the ones your target audience uses, and you don't end up spending precious resources on marketing channels that aren't useful to your business.
Register your business
Now, on to the less "fun" things: registering and setting up your business. This will vary depending on your location, country and state regulations. However, if you're selling crafts from home in the UK, you need to register your business with HM Revenue & Customs.
You can set your business up as a:
- Sole trader - You run the business as an individual
- Business partnership - You run the business with one or several business partners
- Limited company - The business is a separate entity, and your liability depends on the amount of share capital you invest
If you're a sole trader or partnership, you need to register with HMRC for tax purposes. On the other hand, if your business is a limited company, you're liable for corporate tax and also have to register your business with Companies House.
In addition, check if you need to register your business for VAT, open a business bank account and opt for insurance. Each set-up has its own tax and legal responsibilities, so do your research and talk to a professional before making your decision.
Set up a financial plan
Financial planning goes a long way towards setting your craft business up for success. Start by estimating your startup costs. This includes materials, website or online storefront costs, packaging, shipping costs, and so on. Include both one-off and recurring costs to ensure you have a thorough estimate of costs.
By calculating your expenses, you get a better idea of how much each item should cost. Calculate the cost of the material, your time and the overhead for your product and then settle on a price that gives you a decent profit margin.
Check your price against what your competitors are charging. You may also need to consider market conditions, trends and consumer demands.
Once you've estimated your costs, create a budget to track profits and losses. Use this budget to estimate revenue, allocate funds for each aspect of your business, monitor spending and establish sales goals.
Doing all this from the get-go is not only critical for your new business' financial health, but also keeps you accountable and avoids any financial problems in the long run.
Choose your online storefront
If you've reached this final step, congratulations! You're well on your way to turning your dream into reality, but not before you choose your online storefront.
You can either go for an established marketplace like Etsy, or set up your own storefront using platforms like Shopify or BigCommerce.
With marketplaces like Etsy, you have access to a pre-made storefront and the platform's existing customer base. Setting up your own storefront requires more work in terms of brand and customer base building. There's no right or wrong answer, as it all depends on what your vision for your business is.
To recap
Starting a craft business - or any business for that matter - is not for the faint hearted.
However, by defining what your USP is, creating high-quality products, responding to your target audience's concerns, and keeping your finances up to date, you can reap the benefits of being your own boss while spending your days working on something you're truly passionate about.
