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A crafty business

Setting up a craft business
Setting up a craft business

Setting up a craft business

So now you have a new hobby making craft and gift items, and you really enjoy doing it.

Then one day someone says that you ought to sell them! But could you? Would you like to branch out and turn your hobby into a business?

Do you think that you would still enjoy your hobby if you had to make things to order or to build up a stock? If the answer is yes, then you have a chance of turning your favourite hobby into a business.

Check out other craft businesses
There are many people who have set up their own business based on crafts that they started as hobby, just have a look on Facebook and type in the search ‘handmade’ and there will be a long list of pages that are advertising their wares.

Search for 'Handmade' on Facebook

Search for ‘Handmade’ on Facebook

Is it really as easy as that? It can be, but you need to find a niche in the market. Unless you are really lucky, you are not likely to hit it big in the first month.

I ‘fell’ into my business, after I had made myself a handbag and purse, something I had wanted to do for a long time – it was more of a challenge to myself.

As I also work full time, I used my handbag for work and people remarked on how nice it was. Then one person said: “Please can you make two for me?”

That was the start! But once you have started, there are then many other things that you need to think about, because once you have sold something and made even the smallest amount of profit – you will need to share it with the tax man!
Next page pricing

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Pricing

A price tag showing pound symbols

 

A price tag showing pound symbols

What will you charge for your goods?

So by chance or design you have decided to start your craft business, but where do you go from here?

You have been asked to make an item, but how do you work out how much you need to sell it for?

How to get a price
One way of trying to find a price is by looking at other craft businesses and have a look at what they are charging, have a look at the craftsmanship and the quality of their materials. See what people are willing to pay for their goods, particularly if they are not particularly well sewn or made.

Working out a price
You can try to work out how much it costs to produce each item, including the time it takes to make and any other expenses. This will give you an amount to start at, do you think what you have worked out is reasonable?

Probably not, it is easy to think that people won’t be willing to pay that amount for something that you have made.

Ask friends and family what they would be willing to pay for your goods, what price would they suggest?

It is very difficult, as many people think that handmade and homemade mean cheap!

What to include
Quite often when starting up a business like this, to get the sales, you will need to cover your material costs, but you will never be able to fully cover the costs of your labour.

But you can always start off at a lower price to get the interest, and then increase the price slowly as the business gets off the ground.
Next page It’s a taxing business

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It’s a taxing business

Don't forget to register with Inland Revenue

 

Don't forget to register with Inland Revenue

Don’t forget to register with Inland Revenue

So now that you are selling, you have started your business.

You must now decide what type of business you will be, and you must register to pay your taxes!

There is more information on the Inland Revenue website.

There are three different types of businesses to choose from:

  • Sole trader
    Quick and easy, just start and let the Inland Revenue know
  • Partnership
    If there is more than one of you working together, this is an option
  • Limited company
    A much more formal company structure with many advantages but more paperwork

You also need to think up a name. Most times you can think of any name that suits you and your business, particularly if you are registering as a small business.

If you are registering as a Limited company, you will need to check with Companies House to see if the name you want is available.
Next page Insurance is important

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Insurance is important

Buying insurance is vital for your business

 

Buying insurance is vital for your business

Buying insurance is vital for your business

Now that you are in business and selling products you need to get yourself insured, particularly in this culture of suing.

Cover yourself
We live in an increasingly litigious society which means that, perhaps more than ever before, creative business owners need to consider purchasing business insurance.

This is really important if you are considering selling at craft fairs, shows, public events, open studios, workshops etc.

There are two main insurance types you should look at:

  • Public Liability Insurance: covers you against claims made against you by a third party for accidental injury to people (including death), accidental loss or damage to other people’s property and, depending on the policy, may also cover legal fees, costs and expenses, hospital treatment claimed from you (check the small print!)
  • Product Liability Insurance: covers you in the event that you are held liable for damage or injury arising from defects in your product, design or manufacture, even if you have not been negligent.

Legally products must be “fit for purpose” so if you make or supply a faulty product which causes damage or injury to someone (this includes products which are given away and not just sold) you may be subject to a claim against you for compensation. This type of insurance, however, won’t necessarily cover you against financial losses to a business or person caused by a faulty product you made, supplied or repaired so check with your insurer.

How much do I need to insure for?
This is one of the most frequently asked questions and ultimately will come down to a personal judgment as to what is appropriate for your particular business but, generally speaking most insurance companies offer insurance between £2 million to £5 million as relatively standard.

If you shop around you will find an insurance company/broker that will give you a good package not just for your premises and goods but also to cover you if someone should hurt themselves, either at your craft stall or by your product.

Here are some places that you can start:

Next page Marketing your wares

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Marketing your wares

A virtual shop on Facebook Handmade by Shelley
A virtual shop on Facebook Handmade by Shelley

You can set up a virtual shop on Facebook

Being effective in your marketing will make potential customers aware of your work and therefore increase your chance of making sales.

Many craft people choose to use social media to promote themselves or set up a website.

This can be very beneficial, and you don’t need to leave the comfort of your home.

But there are other ideas for getting yourself known apart from the internet, these include:

  • Printing and distributing your leaflets, you can print an A4 leaflet
  • Putting a postcard in shop windows
  • Selling through local retailers
  • Advertising in newspapers and magazine
  • Selling to large organisations like factories, office etc
  • Advertise in directories

If you provide work of good quality at a competitive price this could lead to repeat business.
Marketing your craft work will be made easier if you have a clearly defined range of products to offer potential customers and a strong brand identity for your business.
Next page Using Facebook as a tool

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