From the April 2002 issue of Startups

It's a common fantasy, and why shouldn't it be? It sounds amazing: Instead of forcing your crafting time into nooks here and there--after dinner, before the kids wake up, on the weekends--you'll start a business so you eat, sleep, breathe and, most important, live off your hobby.

But such is life that nothing is as easy as it seems. You may have the skills to create wonderful handiwork, but starting a successful crafts business calls for much more than that. "[There's] a separation [between] those who are crafting for fun and extra money and those who start out with the idea, 'I intend to make money from this, so I'm going to do it right,'" says Barbara Brabec, a homebased business expert and author of Make It Profitable! "And I've always said in all my books that the people who succeed are those who have a financial reason to do so."

So here's your first step: Decide why you're really starting this business. "If you're doing it for love or extra money, that's fine--you can have a lot of fun. You can make enough to keep yourself in craft supplies for the rest of your life, but you're never gonna bring home the groceries," says Brabec. "If you're in it because you actually need to supplement your family income, then you need to get serious."

And what does getting serious entail? Read on to find out how to get started.

Start reading. You don't necessarily need an MBA to succeed in a crafts business, but knowing how to wield a mean needle isn't enough. "It's not necessary to have a business background, but if you don't have one, [it is] necessary to read up," says Susan Brandt of the Hobby Industry Association, which counts crafts manufacturers, publishers, distributors and retailers among its members.

Brandt suggests visiting your library to find business magazines and texts as well as checking out community resources like adult school classes. "If you can visit some large gift centers or markets, try to find people who'd be willing to talk to you from noncompetitive areas," adds Brandt. "There are a lot of very generous people who remember that somebody helped them when they started."

10 Steps to Startup

  1. Find out about zoning regulations, licenses and permits.
  2. Acquaint yourself with IRS regulations.
  3. Register the name of your crafts business with local officials.
  4. Call your telephone company.
  5. Open a checking account for your business.
  6. Obtain a retailer's occupation tax registration number.
  7. Learn about federal regulations applicable to your crafts business.
  8. Set up a good record-keeping system.
  9. Make sure you're properly insured.
  10. Decide which printed materials you need in order to do an effective promotional and selling job.

Source:Handmade for Profit (M. Evans & Co.) by Barbara Brabec

Researching Your Marketing, Prices and Sales Outlets

Research your market. Your friends and family may gush over your work and even fork over $15 for an item, but will others? This is where market research is imperative; don't assume there's a market for your handcrafted wares until you find it. Go to crafts fairs, scour the Internet, read trade publications, and again, talk to other crafters to see what their experience has been.

There are several reasons to thoroughly research your market: to determine your competition, to find the best outlets for your products and to see whether your products will sell. For example, research your local craft malls, and you may find--as Brabec has--that their popularity isn't what it once was because of competition from imported and sometimes sub-par merchandise. And this is exactly the type of thing you want to avoid. "The reality is that in order to be successful, you need to have an unusual product that isn't likely to have a competing product made by a machine," says Brandt. "You need to have something that you can make quickly but that isn't apparent or easy for someone else to make or copy."

Jenny Hart has hit upon just such a product with her hand-embroidered portraits that she sells via her website and Yard Dog Gallery in Austin, Texas. An exhibited artist since age 17, Hart originally got the idea to embroider images about seven years ago after seeing embroidery work done by a psychiatric patient. "My approach to [my business] has been a little different since my product is currently available [only] by commission," says Hart, who began her "pretty barebones operation" just five months ago by coding her own site at www.sublimestitching.com.

In her research, Hart didn't find anyone doing similar work online. "My next step was to figure out who would be interested in my work," says Hart. She then e-mailed hundreds of webmasters with related sites (vintage fabric, retro-themed, embroidery, etc.) to request link exchanges and spread the word.

Fast Fact
Craftspeople who have employees generally have higher incomes than those who don't, averaging $58,417 (vs. $32,624), according to a May 2001 survey by The CraftsReport.

Determine where you'll sell your products. While looking for online outlets for her unique products, Emilie Autumn found that the Internet was a great source of information for her business, Fancy Deluxe Co. "I spent long hours researching art, marketing and auction sites as well as websites of successful artists," says Autumn, who's been selling handcrafted apparel, paintings, toys and furniture since 1991. She went online in 2000 and currently runs the business from Grass Valley, California, with the help of her husband, Ryan Cassano. "I would write [the artists] and ask them a million questions!" Autumn adds.

These web efforts paid off; link exchanges with like-minded sites and participation in online auctions helped her site find both traffic and media coverage. (We found her online, too.)

Other sales outlets for crafts include craft fairs, craft malls and classified ads in crafts magazines. Entrepreneurs with really unique products like Hart's and Autumn's might find representation in galleries or retail outlets.

Price for profit. Again, research can help you solve one of your most potentially sticky dilemmas: what to charge. "The minute you start to do [your craft as a business], you discover you don't love it as much when you're being paid 10 cents an hour," says Brandt.

To avoid this monetary nightmare, do your homework before you invest time and money. "The primary mistake [beginners] make is to look at their product and say 'I wouldn't spend more than $10 for this," says Brabec. "They price based on their own pocketbook, which is a very big mistake because most crafters aren't very rich. What they have to do is research the marketplace and see what others who are making similar products are charging for their wares."

When determining how much a product costs to make, you have to count material costs as well as overhead like utilities, business licenses, accountant fees and more. "If you find out you can only make 10 products a day and it costs you $10 to buy the materials, then that's $100. You can sell them for $15. Is your day worth more than $50? And that's before you start deducting [your overhead costs]," warns Brandt.

The Real Deal on a Crafts Business

  • Startup costs: as low as $50 (excluding the cost of a computer and craft materials)
  • Equipment: craft supplies, marketing materials, a computer, shipping and packaging supplies if you're selling online or through mail order

Advice From the Pros

When we interviewed fresh-to-the-game stitching entrepreneur Jenny Hart, we asked if she had any questions for the other entrepreneurs and experts featured in this story. Here is their advice:

Jenny Hart: How important is it to write a business plan? Is it only necessary for a business that will be looking for a loan or investors?
Susan Brandt: In short, very. A business plan is what you must start with--and then check your progress against at various intervals. Keep in mind, though, a business plan is a living, breathing document. You shouldn't change it gratuitously along the way...but as you get into business and your vision becomes clearer, there may be appropriate alterations to make along the way.

Hart: I feel like it's easy to look for business using the Internet. What are some of the most effective ways to draw business out of cyberworld?
Brandt: It's really not so easy. There's an awful lot of competition just to get people to find you. Ironically, the best ways to do that are by using the very media that is the antithesis of the web: mailing and print advertising. TV, too, if you can afford it. If you can get [your business] on local [cable] TV or radio, you have the opportunity to promote your site. If you can get a friend with an allied or noncompetitive traditional business to distribute cards with your [URL], so much the better.

Hart: How do I navigate the transition from working 9 to 5 while starting my homebased business and then doing that business full time?
Brabec: There's no easy way to do this. Most new home business owners put in up to 80 hours a week, dividing their time between their job and their business until something gives and they have to make a decision about giving one or the other up. If your job income is essential to your personal lifestyle, do not, under any circumstances, quit your job until you are sure you can bring in enough money (profit) from your homebased business to meet your needs, because you cannot assume that more time will translate into more income.

First, you must have a solid plan for how you're going to spend your extra time to make and sell more products or start sideline activities to add to your income, such as teaching or writing. When you can prove to yourself on paper that you could double or triple your current income if you only had more time, quitting your job then becomes truly a matter of faith in yourself and your abilities.

Tip: Include in your plan the "worst-case scenario" if you should fail. If you can live with that possibility, you don't have much to lose. Above all, do not rely on anyone else to tell you what to do--particularly family and friends. In the end, I believe we must all trust our "gut reactions" since they rarely fail to be right.

Everything Else

It's impossible to state here every single thing you'll need to do to get your new business off the ground; books have been written on the subject (Brabec's, for instance). To get her Ardenvoir, Washington, handmade soap business started, Cheri Marsh created a name and logo, designed an e-commerce site, and created a line of products. And though she's been in business for more than four years, her challenges haven't ceased.

"I live about 80 miles roundtrip from the nearest town," says Marsh, who started The SoapMeister LLC in 1997 after friends and family expressed interest in the soaps she created for her sensitive skin. "It's very difficult to find raw materials and near impossible to have them delivered. Juggling manufacturing in with everything is a challenge, as the soap must cure for four to six weeks prior to sale; that entails estimating needs two months in advance." To combat these challenges, Marsh plans to relocate and expand her business so she can have easier access to potential employees, manufacturing materials and offline customers.

So take a long, hard look at your favorite hobby before you decide to turn it into a business. Do you want to associate accounting, fulfillment, licensing, marketing and all the other components of a successful business with what you do for fun? If the idea of the public enjoying your handiwork and you taking charge of your own life via your craft makes all the hours of research and hard work worth it, then get going. The world is waiting for your artistic touch.

Next Step

Ready for some serious research? Start with these resources:

Books

Industry Associations

Magazines