The Craft Business
The success of Etsy just goes to show how many people there are out there who love the craft they do–so much that they want to make things to sell. They are not always seeking to establish a business empire, but just to fund or supplement their income. I know about this personally having a partner who does just that.
There are 400,000 micro businesses on Etsy. Newer is the small Tucson, AZ based company, ArtFire, with a passion for handmade, art, and indie business. As an interactive handmade market place and craft community they aim to support your business and your brand with innovative features and functions. They utilize a system of site design they call Community Directed Development (CDD) which put members in control of the development of functions and features of the site.
ArtFire contrasts with Etsy that is much bigger and has over $50 million of VC money in the business. Etsy has a mission to enable people to make a living making things, and to reconnect makers with buyers. There are less than 1,000 people who make more than $30,000 a year and average sales amount to just under $800 a year, but that’s hardly the point. In any event many Etsy crafters also sell by all sorts of other means like Craft Fairs and Markets.
Similar sites are being set up–like Folksy that was created with the aim of showcasing the work of independent UK artists, designers and crafters. The site launched in summer 2007 and has risen to become the main UK based site for crafters.
Subsidize your craft, or make a living?
Many crafters subsidize doing the craft they love by selling what they make. Often this is on sites like Etsy, or at Craft Fairs. That’s great and can be fun or frustrating. BUT if you want to create a real business from your craft, you need to think about creating a business, separately from making your stuff.
What constitutes a business? An entity outside yourself. That does not mean losing control, but seeing the operation as one which could in theory survive without you. For instance, you don’t put the car ‘on the business’, if it does not need one. Sure, you can charge milages at the approved IRS rate, so that you can reduce your profits when you complete a Schedule C with your tax return. Do not raise a bank loan simply to pay for someone to make a website. Go back several steps and ask yourself what business you are actually in and who your customers are.
Develop a real understanding of the value you are creating and write a so-called value proposition (ask me if you can’t picture how). A value proposition is a description of what value you will deliver to your customer, but that’s not all. You need to think through what your business model will be. Business model, ugh! No, it’s quite simple really. How will you deliver the value to customers.
Here’s a tool to help you do that. It’s called the business model canvas and if it baffles you, either ask me, or take a trip on a search engine.
Big business in small packets
In the UK, the total market–buyers plus potential buyers–for craft is 26.5 million people or 63% of the adult population of England. If the percentage is replicated in the US, that would be a market of 145 million people. Not many markets are bigger than this. The numbers of buyers is huge, but of course, there is no question of mass marketing here. Buyers of craft products tend to be older and female.
Currently, browsing in ‘real life’ at a shop, gallery, air or exhibition is the most popular source of information for people interested in buying a craft object. Craft fairs, shops and markets were chosen as their preferred suppliers for craft. Online craft retailers and individual makers’ websites are used or considered by a significant minority of the craft market, and their stated willingness to buy online indicates latent potential in this area. At least this is according to a study of the craft business in the UK by Morris Hargreaves McIntyre in 2010 for the Crafts Council.
While the total size of the craft market may be huge, most of the businesses are solopreneurs and hence micro-enterprises that will always be selling in penny packets. The great opportunity that is presented to anyone wanting to do a craft business is that you have no leviathans with whom you have to compete.
Top Ten US Craft Segments by Sales
- Woodworking/Wood Crafts $3.322 billion
- Drawing $2.078 billion
- Food Crafting $2.001 billion
- Jewelry Making $1.446 billion
- Scrapbooking & Memory Crafts $1.440 billion
- Floral Decorating $1.303 billion
- Crocheting $1.062 billion
- Card Making $1.040 billion
- Home Décor Crafts (Non-Sewing) $948 million
- Wedding Crafts $803 million
These figures are for 2010 (published in 2011 by the Craft & Hobby Association) and ranked the top ten crafting segments based on consumer spending and household participation which collectively represent 19% of the craft segments and 53% ($15.443 billion) of total industry sales. The study also found that 56% of US households crafted at least once during 2010, contributing to the $29.2 billion U.S. craft and hobby industry.
The Craft Business at the Individual Level
Of course the huge number of sales masks the tiny level of individual crafter’s sales. The individual craft business owner is probably only aiming to make pocket money. Some have bigger ambitions, but when they look into booth fees, display materials, ticketing, let alone the untold hours actually making things, they discover that they are making no money at all.
Crafters often start by really enjoying what they do and imagine that starting a craft business is easy. It is not and the business end requires as much dedication and sweat as the craft itself. Nothing will sell itself, so you have to get out there and keep getting out there. It will take quite a while to find the right venue to sell your products, but keep trying.
One natural way to sell is through craft shows. You’ll find that not all craft shows are the same: they vary from church bazaars and Christmas gift fairs to focused craft fairs with long pedigrees, like one local to me called the Newfane Heritage Festival that has 90+ juried arts, crafts, & specialty products. The booth prices and skill level of vendors vary enormously. Some are juried and some are not. Some are limited to crafts and others will allow food and other vendors. You will have to find out what works for you.
It’s the same with other marketing channels for the craft business. If you think that going the retail route makes sense, be aware that while you may get higher volumes, you will probably get lower prices. The retailer needs a markup. Craft retailers and tourist shops may be right for you. On the other hand if you are making things that appeal to particular interest groups, then a specialist retailer will make sense. You may even find that businesses in a complementary field make sense, like a woodworker who makes cheese boards selling to a cheese store or the cheese department of a grocer.
Here is an incomplete list of sales channels to think about:
- making product identity versions of your products for companies, sports clubs, schools;
- piggy-backing on other craft business sellers whose products relate to, but do not compete with your own;
- sell at shows of interest to those likely to buy your products; if you have developed a bridle decoration, it would be natural to go to horse shows or competitions;
- build your own website; don’t be daunted, there are lots of easy ways to do it–my preference is for the Web Hosting Hub because it’s inexpensive and has easy ways to make a site;
- if you want to make a fortune, good luck; if you clear $5 on each product, you’ll need to sell 200,000 of ‘em to make $1 million, but maybe a simple version of what you make might sell in volume;
- see if you can put up posters in your local general store or coop;
- try Uncommon Goods–an online marketplace offering creatively designed, high-quality merchandise at affordable prices; they are, like Startup Owl’s company Venture Founders, a B Corporation;
- don’t forget eBay and CraigsList;
- here’s a helpful article on How to Sell Your Art.
Your own web search will reveal a huge number of places you can get help. Some of the ones I found helpful are:
- The Artful Crafter–Eileen Bergen, MBA offers all kinds of helpful tips and articles–see her craft business section.
- Free Craft Fair–Business Resources for Crafters.
- Craft Marketer–James Dilehay offers tips, advice and news on the Craft Business. It is really worth following his blog. It’s packed with good stuff and you can browse past blog posts by category.
Buyers of crafts are likely to be motivated by the ideas and stories behind a piece or its perceived beauty, Don’t be shy about declaring the passion for what you sell and why you do what you do. On the other hand, just doing the craft is not the whole story, there has to be a plan to make a business from your craft.
Here are some good books to help you do those two things:
- The Handmade Marketplace: How to Sell Your Crafts Locally, Globally, and On-Line
- Craft, Inc.: Turn Your Creative Hobby into a Business
- Craft Inc. Business Planner
- The Savvy Crafters Guide To Success: Turn Your Crafts Into A Career
- How to Make Money Using Etsy: A Guide to the Online Marketplace for Crafts and Handmade Products
- Country Living Crafting a Business: Make Money Doing What You Love
- The Boss of You: Everything A Woman Needs to Know to Start, Run, and Maintain Her Own Business
- The Crafts Business Answer Book & Resource Guide: Answers to Hundreds of Troublesome Questions About Starting, Marketing, and Managing a Homebased Business Efficiently, Legally, and Profitably
- The Right-Brain Business Plan: A Creative, Visual Map for Success
- The Creative Entrepreneur: A DIY Visual Guidebook for Making Business Ideas Real
- Crafting a Successful Small Business: Making, marketing and merchandising