How to start a craft business

The key steps for learning how to start a craft business are:

What is a craft business?

Austerity chic: thanks to the current economic dip, crafting really is ‘in’. Think crochet, soap, cross-stitch, jewellery-making, and wooden toys. Or pottery, glassblowing and tapestry. For hobby suppliers, it’s big business, and growing exponentially. According to figures released by speciality craft and hobby store HobbyCraft in December ’09, cake baking alone was up 85% year-on-year while knitting sales were up close to 28%.

And this trend shows no signs of waning. In July 2011, HobbyCraft reported an 18% jump in pre-tax profits, year-on-year, driven by the growing popularity of crafts. Sewing and knitting groups such as Stitch London are popping up all over the country. Homebaked is fast becoming the only way to go: so why not go for a piece of the cake?

If you are one of the recession’s newly converted crafters, or even if your mother or grandmother taught you to crochet, knit, sew, bake and rag rug long ago, you could well have found yourself thinking: there’s more to my craft skills than those throw cushions I zipped up for the lounge. And you’re right. The skills you take for granted could well become a promising venture.

Many crafters take time to come round to this way of thinking. Crafting ambitions can be unfairly dismissed, as Amanda Ryan of craft gifts shop Maisielu.com explains: “I never thought of using these skills as my source of income because throughout my academic years ‘helpful’ careers advisers told me I needed a proper job in an office with computers and business profiles!”

But when you think of it, this home-based, low investment business has much to recommend it: self sustaining organic growth is not to be sniffed at. Meanwhile, the growing number of online marketplaces, such as Notonthehighstreet.com and Folksy, are offering crafters more cost-effective routes to market than ever before.

So whether you’re a dab hand at felting, a knitting fanatic, or a screenprint superstar, keep on reading to see if it’s for you.

Who is starting a craft business suited to?

Crafts businesses and mums… the cliché holds true to a certain extent. Start-ups in this area are often powered by mothers who want to stay at home to be a full-time parent to their children. Joanne Dewberry, of party bags and toys craft company Charliemoos.co.uk, explains: “A lot of craft business owners are mums who suddenly have more time on their hands and start crafting for a hobby. Then they end up with loads of finished products and the best thing to do with them is sell them!”

Of course, you don’t need to be a mother to go in to the area. Don’t worry if you’ve not gone to art school, and don’t be overly concerned if you have no professional training in your craft either. You don’t necessarily need this to start up a business. Many successful businesses are powered by the enthusiasm of talented amateurs. “One of the factors that held me back from starting my own craft business was the belief that I didn’t have the correct background,” Amanda Ryan of Maisielu.com admits. “Most of the craft orientated businesses that I liked and researched had been started by people who had completed degrees and had suitable contacts in this market…”

But if you research the various structures a business can take, you will find a ‘new wave’ of craft businesses taking off. There has been a surge in numbers using on-line market places specialising in the hand crafted area; such as Etsy (take a look at our dedicated guide on how to start an Etsy shop), Misi and Folksy. “Looking at the array of people from amazingly different backgrounds on these sites helped me understand that to set up a craft business all you have to know is your craft,” Amanda explains. “Everything thing else can be researched, and gained through experience and the helpful knowledge of others.”

Joanne agrees: “I have totally self taught to sew. My first sewing machine was a child’s tiny £10 sewing machine which my hubby bought me for Christmas! I know what I like and I just find out how to do it.” Even though she had no ‘craft’ background, Joanne had the wherewithal to make things work. Before she had her children and set up her own business, she worked as a nursery manager. She believes this, and a number of relevant courses, has afforded her all the background business knowledge required, and now mentors through the Prince’s Trust.

Fiona Morris of Samigail’s Handmade Personalised Gifts had a similar experience. Not only did she lack a craft background, but she was unsure how she could make a viable business out of any craft in her repertoire. “Even when I was a solicitor, I always enjoyed lots of different types of arts and crafts,” she says. “But at the time I couldn’t think of any class that I did that really would be commercially viable.” Then she found pyrography. “I just taught myself that, and then a friend of mine said they would work as a gift for her children’s teacher at Christmas. In that way I realised I had a commercially viable product!”

So as long as you enjoy the hobby, and you have the requisite equipment, then that’s all you need to set up a craft business. Don’t let any perceived cliquishness turn you off.

Getting your business started

When you are setting up your craft business, the most important choice is, of course, the craft you choose. There are many popular craft areas, and it’s a competitive field. So it’s extremely important to differentiate your offering.

“In terms of crafts, there’s a lot of people who make handmade cards,” Fiona Morris of Samigail’s Handmade Personalised Gifts notes. “I know when I go to a craft fair or a school fair, there are a lot of stalls with handmade cards, and a lot of stalls for jewellery. If you want to go into business in craft, you would be wise to think about an area that isn’t already saturated in the craft market.” Find a unique selling point, like Fiona has. She says she always knew she wanted to personalise items for people, and make something very special and particular to them.

It’s imperative to research your product well, too. When determining which craft to go into, Fiona searched on Google for the products she had in mind, looking for what was already out there and how hers might be different. It’s a good idea to look for the products that actually sell. “Ebay is very good for checking up on products that sell well,” Fiona advises. She suggests you might check for prices too, “obviously bearing in mind that your product might be different, so it might have a slightly different price. But for a general guideline for what sells at what price, it works!”

You need to know your market, also. If you’re producing wedding jewellery costing hundreds, for instance, you should not aim to sell at a school fair, or a Sunday hall market! There are other reasons to do careful product research, though. “It can prevent copying others’ designs,” according to Amanda Ryan of Maisielu.com: “You may not do it on purpose but with certain jewellery suppliers selling to lots of makers you can end up with very similar products.”

It’s not a good idea to rule out all copying, however. Once you have decided on your craft, you’d be well advised to seek the advice of fellow crafters online. It’s easy to source very specific advice, according to Fiona. “A lot of people use online forums, in particular, mum’s forums. Some of them have a separate section for business. And the crafting forums give great advice.”

Crafting forums will be full of people who have gone through similar experiences to you in setting up their own businesses, and can give you avenues to finding out things like public liability and insurance specific to crafters. “You can Google a lot of things,” says Fiona, “but finding craft insurance was one of the things I struggled with. Searching the specific craft forum really just solved that very quickly.”

Amanda Ryan of Maisielu.com agrees: “The greatest thing for someone setting up a craft business is website forums: the sales sites all have them for sellers to discuss business together.” Importantly, forums are also often frequented by customers who are hoping to seek out artisans for commissions. “The sites I used most was Crafteroo, a forum for crafts people most of whom run their own businesses,” Amanda advises, “and UKHandmade, an online magazine for craftspeople.”

If you’re starting your craft business from home, check out the insurance you might need as a home-based business owner.

What does it cost to launch a craft business?

If you need to invest substantially in anything for your start-up, it will likely be in equipment for your chosen craft, and perhaps a website to sell your produce. If you’re a beginner it’s not advisable to go for new top of the range equipment. Not just in case your things don’t take off, but because it’s possible to find good equipment second hand. “You can try looking in your local charity shops,” Joanne Dewberry of Charliemoos.co.uk suggests. “You’ll find lots of people buy all the equipment, give up or never use it. It’s a great way to get started.”

Crafting does not usually require a great deal of investment to start off with. Often, you’ll already have most of the initial stock and equipment from practising your hobby. This was the case for Amanda Ryan of Maisielu.com: “I was lucky that my business was a hobby first so I already had a lot of supplies and equipment,” she says.” I think a lot of craft businesses evolve this way giving the owner a good start up stock.”

Business grew in an organic manner, and very intentionally so, for Fiona Morris of Samigail’s Handmade Personalised Gifts, too: “I was very aware that I was going to start the business on a very tight budget. Except for the initial expenditure in a basic pyrography iron and some wood blanks, at every stage of growth the business has paid for itself.”

Organic growth is certainly something to aim for, but at the very early stages, investment needs will vary according to your craft, your equipment and the kind of stock you need to order in. Like any business, it is advisable to have a buffer in place.

Selling your craft products

In terms of bringing your crafted items to market, there are many ways and means. Fiona recommends starting off at school fairs, and church fetes as well. It’s a good way of spreading word-of-mouth. Someone may buy something from you directly, and perhaps go on to seek out your site.

Of course the site of sale will depend on what your product is. It may need a street presence, or sell better in an established local shop. It may be more suited to craft fairs at seasonal times. If you’ve done the correct research you’ll know. But mistakes can be costly, so be fastidious.

“I chose to sell through Misi and Folksy first,” says Amanda Ryan of Maisielu.com. Both of these are British run craft selling websites. There are others like Notonthehigstreet and Etsy too. “These fitted my needs,” Amanda explains. “With minimal set up costs, you can set up a store within their site, list your products and off you go! You get support from their forums, an online presence, get to test your products on a target audience and all for a very cheap fee and commission rate.”

These kinds of sites are excellent. But do not take it for granted that they are for you as they’re not suited to every craft business. With Maisielu.com, the products are small, so it was not cost effective for Amanda to open a high street store with huge overheads. Your business, should it be a pottery or a wicker workshop, for instance, could benefit from a studio shop, or artisan workspace.

Many crafters set up their own website. It is possible to build your own site at home for free, as Amanda ultimately did. “I felt the major breakthrough for my craft working as a business was when I launched my own website. Selling through my own space rather than sales sites, I don’t have to pay fees to others.” Even if you are quite technophobic, the process is not extraordinarily difficult. “I used create.net,” Amanda says, “a website template company. They were on hand if I ever had questions and made it a joyful project.”

Fiona also built her first site, but she was not entirely happy with the result. “You can do things very cheaply,” she explains. “I started with a free website and really that is something I regret. I wish I had gone for website hosting that I have now, straight away. I wish I had not bothered with the free website!” It’s worth considering all of the services you’ll need a website to offer your customers: it may be worth investing in a site to ensure usability etc.

If it is going to form a central facet of your business, and you want to encourage repeat custom, it is important to have a good quality site. Have a mailing list and a newsletter too. Look into Twitter feeds and set up a Facebook account – this can link to your online store. Make sure your site boasts a range of features including customer and or/community forums, news updates and images, as well as your basic online ‘shop’.

And if you are getting a site built, or hosted, do watch how much you pay. “My hosting costs about £60 a year,” says Fiona. “But there are a lot more expensive ones out there.” If you are on a budget, watch details such as this.

Depending on how you choose to sell, there can be sellers’ fees, commission taken, insurance, and fete table costs. There can be studio rents, utilities, and so on. You also have to consider Paypal fees, accountant fees and tax, too. Like any business, once you look into it, there is a great deal to arrange. “But none of these should put you off your business idea,” Amanda advises. “These things just need to be researched and managed.”

Similarly, there is much to consider in terms of pricing your product. With a craft business, you must take into the equation not only the cost of materials but also how much time you have put into a product. And weigh up your target market. High end clients will expect to pay a premium for handmade products.  “Don’t pitch yourself too low,” Joanne Dewberry of Charliemoos.co.uk warns. “When the work starts flying in and you’re up making at all hours and the cash tin is empty you’ll struggle to raise them up higher.” So make sure you get your pricing right.

Research is key to this. You have to decide where you want your products to be stocked and what price ranges are the norm for your business. Galleries can take up to 50% in commission and table costs can be high at the best craft fairs. “So think outside the box,” Amanda advises. “Do open house events where your living room is your studio and invite friends and family round for the afternoon. Or hire a small venue for the evening for your own gallery evening, and send pieces to local magazines with covering letters for fashion shoots.”

The possibilities are endless. In your business set up as well as your craft, it pays to be creative.

Tips and useful contacts

Top tips

Value your customers

“Try to value your customers,” advises Fiona Morris. “Word of mouth has gone a long, long way for me. Value the quality of product, but also value your customers. And that way you’ll get more customers coming back.”

Seek out positive advice

“Surround yourself with people that have positive attitudes and will give you constructive advice,” Amanda Ryan suggests. “I find the worst aspect of a craft business is the negative comments people can make. Some people don’t understand how much time and resources can go into a hand crafted product. They think it should be the same price as a mass marketed item!”

Join online craft forums

“There’s a huge amount of support that’s on there from genuinely very kind people,” Fiona advises. “They are in the same boat as you.”

Price carefully

“Don’t forget to cost for your time,” warns Joanne Dewberry. “Or you’ll find you’ve worked all hours and have made no money. Buy in bulk and steer clear of shops such as HobbyCraft where you will pay high street prices and thus have no room for profit!”   Phone your local tax office “I know a lot of people are scared of the tax office. But it’s really a wonderful resource,” Fiona says. “They genuinely want to help you. They send you out quite a lot of things just so you don’t get lost with you tax and your National Insurance….”