If you have been making crafts for a while and selling occasional items to friends and family, it is not unusual to start considering whether setting up a small craft business might be possible. There is a limit to how many items you can make by yourself, give away as a gifts or sell to friends, and making some money on your crafts can help recoup what you have spent out on materials and give you a profit.

It is a big step to move from crafting as a hobby to crafting as a business, even if you are only going to do it a part-time basis. When making money is involved, you will need to pay more time and attention to what you are spending out on materials, the time it takes to craft items and where you are going to sell them, not least finding a suitable market for your items.

Clothkits founder Anne Kennedy

Planning your business

Before you launch your business, it is beneficial to take some time to plan what you are going to do and how you are going to do it. It is useful to look at the existing market in your area and see what crafts and handmade goods are available and where your products will fit in. Visit craft fairs and markets, take a look at relevant shops and galleries, or browse what is available online.

Think about what your USP – unique selling point – will be. A USP helps a business stand out from the crowd, and that’s especially important if there are  already similar small businesses around. Consider who your customer will be – are you going to aim at a specific sector of the market or a certain age group – and why they want to buy your product. Even if you create unique or quirky product that you love, it would not be a business success unless other people  want it to buy.

Find your own way of presentation your crafts

When you are making products, you will need to ensure you can consistently get all the necessary materials and supplies, and at a reasonable price.So look around at the wholesale options and explore the possibilities on offer. Be ware sometimes you will find offers that may seems too cheap – remember that using inferior materials that would not last is hardly beneficial.

Etsy website screenshot

Deciding where and how you will sell your goods are vital too. For small craft businesses, very good option is online selling on own website or some of other websites (Etsy, Folksy or Not On The High Street), in galleries or shops or by running craft parties. Renting your own business premises, such as small shop or unit, may appeal but can be costly option, at least for a start.

Money and finance

Before you go too far with your plans, you should think of all important issues of money and finance. There will inevitably be a lot of costs when you are setting up your small craft business, and you will need enough funds to cover the initial outlay.

The important task will be tracking of your expenditure – simple spreadsheet listing of your outgoings (all money you have been spent) and income (all money that you make) can help you to control your finances.

It is recommended to set up a separate bank account for your business, so you can keep your finances separate from household bills and expenses. Also you should keep  receipts for everything you spend – you will need these when it comes to doing accounts.

Janine Nelson in her London mosaic studio

HMRC has rules and regulations about the amount of money you can earn each year before it becomes taxable. For 2011-12, the current personal allowance figure stands at £7,475. Although it may sound a lot, this covers all income you make – which includes any earnings from an existing job. You  will need to register as self-employed with HMRC.

Business basics

In order for your business to function, be organized and run efficiently, there are few basics that you may need to invest in:

• Storage equipment to keep your materials in order and to safely store crafts you make.
• Files and folders to store and organise invoices, accounts and order details.
• Business card or other stationery to promote your craft  business
• Office equipment, such as computer, printer and phone.
• A camera for taking photos of your crafts to display online or to make a photographic portfolio
• Equipment for use with making crafts.
• Setting up of your business website by yourself using tools such as Mr Site or with the help of professional web designer.

Home studio with tidy storage shelf

Pricing your craft

People often struggle with the decision of the price of their products. Ideally, the price should reflect the cost of the materials you used and the time taken to make the item, plus also make you a  profit. However, you may find it useful to test different price  points, especially at the beginning. For example, introductory offers, discounts or special deals can help draw attention and attract customers.

Promoting and advertising you craft business

You need to promote your business to make it successful. Word of mouth and personal recommendations are great, but there are plenty of other ways to promote your work:

• Press release to local media – magazines, newspapers, radio or tv
• Posters and leaflets
• Adverts in local media or relevant directories
• Online advertising, such as banner ads on relevant websites or Google Adwords
• Stand at craft shows, markets or fairs.
• Offering to be a guest speaker for local craft groups or shows
• Blogging about your business, and using social networking (Facebook or Twitter) to spread a word.

Craft studio and display area

Further information

For more details please visit links:

HMRC – www.hmrc.gov.uk

HMRC newly self-employed helpline – 0845 915 4515

Business Link – www.businesslink.gov.uk