Starting a small craft business can seem like the perfect blend of getting paid and doing something you enjoy.  However many hobby crafters find it difficult to change their perspective to think like a business and fail to even plan business borrowing options to keep their business operating in slim periods.  Yet, there is a growing trend of people making their living from home businesses and craft businesses are ideal cottage industries.

How to Assess Your Craft Opportunity

Can you make money at this craft?  That’s the main question a businessperson will ask even before they consider how much they enjoy the activity. There is also a cost analysis done and a business plan is written. If a knitter might want to sell sweaters they would estimate the wool yarn could costs, maybe $10.00 a skein times 10 skeins, for a sweater which is $100.00 for materials.  They then calculate the total cost in man-hours to figure out how much the sweater costs to manufacture at home. For instance, 20 hours of knitting at a wage of $7.50 per hour, costs $150.00 in labor bringing the total to $250.00.  You can use more luxurious yarns or a fancier pattern but that increases materials cost or knitting time. If similar sweaters sell for much less on the market the price will not be sustainable to make a profit and be able to compete in the open market unless it is something truly unique. A unique product or one that fills a niche can overcome this problem.  For instance, a hand-knitted christening bonnet, which is also a keepsake or an heirloom, might take less time to make and sell for a higher price point.

Alternate Streams of Income

Can your product be sold in different formats?  Artist Brad Foster makes very detailed black and white line drawings.  Creating the images takes Mr. Foster many hours but he uses them in several different ways so his time is well spent.  He sells his originals though an average shopper might find them pricey.  His prints go for $25.00, $45.00 if they’re matted, and themed coloring books are even less.   Other craftspeople teach their craft to make an income, post how-to videos online, or sell supplies to create alternate streams of income.

Getting Down to Business

Can you treat your craft as a business?  Making jewelry can be great for gifts or getting the look you want.  In just a couple of minutes you have a lovely pair of earrings.  Making 50 or 100 pairs of earrings for a show takes longer.  It’s easy to allow interruptions to nibble away your time when you work at home.  Other people often don’t respect your need for stretches of time to finish tasks.  Your attitude affects the people around you: if you take your crafting job seriously, they will too.  Have a studio, keep specific work hours, don’t answer your cell phone or surf the web. Typical workplace behavior can help you keep your focus.

Become a Business Owner

Can you keep up with the paperwork?  Craft businesses are businesses.  Find out the regulations in your area.  Keep records of expenses such as booth rental, which are part of the overhead your sales need to cover.  Track parts cost and production volume to set your prices appropriately.  Open a bank account for the business to keep money organized.  Get a tax ID number and file taxes.  Make your business a good citizen. Ultimately, it is the business owner that looks at all the angles mercilessly that ends up being profitable while the craftsperson may remain just a hobbyist.