Why do you want to start a craft business? This is the first critical question you need to answer for yourself (a list of popular handicraft businesses is located at the bottom of this article)..
Handicraft Capitalism
The primary objective of starting a craft business is to turn a profit. Regardless of how much passion you have in your crafts, if your business doesn’t make money, the game ends quickly.
The objective of your home based craft business is to make a profit. The motivation of your business is to enrich some aspect of your customers’ lives with your craft products.
Huh?
In other words, focus first on providing craft products that your customers want. Do your research to evaluate the demand. If you’re confident that your products will sell, build a business around these products.
Getting Started
The very first step in starting a craft business is to do some basic market research.
- What is the demand for your craft products?
- What type of people will buy them?
- Where do these potential customers live?
- How much will customers pay for your product?
- What kinds of competition will you face?
Research is key. Unfortunately, most people who want to start a home craft business skip this crucial step. They like their crafts – everyone else will too, right?
Wrong!
Everyone may love your products and pay top dollar for them. But you have to do your research first. So where do you start?
First off, relax – market research doesn’t have to be complicated. In fact, it’s rather easy. But it does take some courage…and a very open mind.
Step 1 – Uniqueness Test
Is your craft product unique? If your home craft business is going to succeed, your craft products must be extremely unique, if not one-of-a-kind. This may sound harsh… your home craft business will fail unless your products are unique.
For example, let's say you want to start a scrapbooking business. Are your scrapbooks unique? Do you use creative processes or materials? Perhaps you have a flair for color.
Uniqueness and demand, unlike price and demand for commodity products, determine how well your craft products will sell. If a customer can’t differentiate your product from the competition's, there’s no reason to believe they will buy from you.
The appeal in purchasing handmade products is that they are unique. If you’re in the market for a new set of everyday, white coffee mugs, chances are you’re not going to go shopping at the local craft fair or a home based craft business.
Get on the internet and start researching your competition. How can you differentiate your products from the rest? Tap into your creative reserves and find ways to make your products truly unique.
Step 2 – Demand
Now that you’ve made it past the first step and have a unique product, test drive the demand. Here’s where your courage and open mind will come into the picture. You must be willing to accept (and build upon) constructive criticism.
You’ll need finished products for this step so if you don’t have any yet, develop a realistic prototype that incorporates the unique flair from the first step - the uniqueness test.
Arrange to show your product to five or ten friends. These friends will be your test market. Select friends who will be completely open and honest with you. You also need to pick friends that have some demand tendency for your craft products.
If you plan to sell custom dog collars in your home based craft business, your list of friends must own dogs. Perhaps your products are customized, embroidered baby pillows…yup, your list of friends must be parents (the newer the better).
Since you’re going to ask each friend if they would buy your product (and why), they need to have some favorable tendency towards your product in the first place.
Set aside 15-30 minutes with each friend in your test market group. At the beginning of each session, explain what you’re trying to achieve in the discussion. You’re goal is to get completely objective and honest feedback on your product.
Will they buy it?
During these research sessions, make sure to take plenty of notes. Ask the right questions…
- What do they like about the product?
- What could be improved?
- Have they seen similar products elsewhere?
- What concerns would they have when buying the product?
- Would they give the product as a gift?
At the end of your interviews, compare notes across each session. You’ll notice certain trends. You may have already noticed these trends during your interviews.
Incorporate consistent feedback into improved designs for your crafts.
Step 3 – Establish Pricing
Ok – so you’ve decided that there’s going to be a demand for your product. What’s next?
The next step in your sales preparation is to determine product pricing. This step is really easy to start, but a bit more difficult to perfect.
The best way to define a price range for your product is to simply go online (or go to a store that sells similar craft items). Check prices for your competitors. Establish a sales price range from highest to lowest dollar amount.
Finding the perfect price for your craft product is more of an art than science. You see, until you determine product demand that you see for certain price levels, it’s hard to calculate exactly the best price.
Pricing takes time and several iterations. Don't expect to get it perfect from the start.
It’s always easier to lower your price than raise it. We suggest selling your product with a starting price that's towards the higher range of your competitors. You can always lower the price. It's much more difficult to raise it.
Once a customer sees a list price, they’re always going to be more likely to buy your product if the price drops. Very rarely will they buy if you raise the price. This is why it’s important to start the price towards the higher end.
Step 4 – Begin Selling
Contrary to popular belief, the best place to start selling your handmade craft products is probably not on the internet. As a new home based craft business, it’s better to start selling your products through traditional retail outlets.
Start your selling at local craft fairs, farmer’s markets, and other similar venues. Approach local gift, art, or novelty stores and ask the store manager if he or she would be willing to carry one of your lines in the store.
Selling through traditional outlets for a couple months will provide you with time to better understand the market and your marketing. In other words, by selling face-to-face, you’ll gather additional, valuable feedback regarding what your customers like (or don’t) about your product.
Once you’ve made a few sales, then it’s time to open up an online venue. With face-to-face feedback in hand, it will be much easier for you to write compelling content that describes your product.
In addition to your sales content, your recent retail sales experience will also provide you with better ideas for how best to display your product in photographs and online feature sets.
Summary
Starting a craft business is a great way to make some extra money. And who knows, it may end up being your exclusive source of income. Better yet, your home based craft business may even be your ticket to early retirement!
Be reasonable when you start. Selling your craft products will take some research, planning, creativity and persistence. Sales won’t happen overnight. Don’t expect them to. Give yourself time and space to learn.
There’s also the business administration side of things that we haven’t covered in this article. Questions such as how to form a business, small business accounting, and sales taxes will also need to be considered in your handicraft startup.
Unless you’ve started a business before, you probably won’t have a clue about some of these questions. It’s easy to get a bit overwhelmed with some of the business aspects of your business.
Take it one step at a time. Make an appointment with your local small business development agency. They will be able to answer most of your startup questions. They can also point you to valuable local resources who can help you with the administrative tasks in running your home based craft business.
Handicraft Business Ideas
If you want to start a handicraft business but need some ideas, here are some of the more popular that we've run across:
<< Home | Craft Business
