Turn Your Craft Hobby into a Homebased Business

There is a big gap between crafts as a hobby and crafts as a business. It is only the traditional artists who earn their livelihood from crafts as a business. But these artists are not equipped to run a crafts business in today's market conditions. They neither have the capital nor the marketing skills to turn their crafts business into a profitable cottage industry. However, you can do so if you apply yourself.

Skills and qualifications: You need not have a degree in business administration to start a crafts business. But you certainly need to be market savvy. You should know everything about book-keeping, inventory management, pricing and promotion. Of course, you need to know your craft.

First steps: Before you start your crafts business you must find out about zoning regulations, licenses and permits. You must acquaint yourself with IRS regulations as well as federal regulations applicable to your crafts business. You need to register the name of your crafts business with local officials and obtain a retailer's occupation tax registration number.

You must also research your market. You must visit crafts fairs and crafts malls to find out what is selling; read trade publications, and talk to craftsmen to learn about their experience. You must also research your competition. Internet is a great place to research products. It is also quick and efficient. Spend as much time on the net as possible to find out how sites are selling products. Don't start a business in an area which is already crowded. You will be forced to compromise on costs, and your per customer acquisition costs will soar.

Pricing strategy: There are two aspects to any pricing strategy for a crafts business. The first is the actual costs. You need to add every direct and indirect cost, including invisible costs like your efforts to promote the business. You should also remember costs like business licenses, accountant fees and promotional costs. Based on this, you can arrive at a per unit figure. Now add your expected profit to arrive at the sale price.

After this, check this sale price with the price being charged by other craft makers. You have a problem if this price is more than the price being charged for similar products. Your product may not sell. If you lower the price, it may become financially unviable. You therefore should work on those products that are competitively priced and which deliver good returns.

You also need to draw a business plan. This gives you a clear idea of your start up costs and returns. The business plan must be revised from time to time, to keep it in tune with the growth of your business.

Promotion: You need to promote your crafts business. The best place to advertise your products is the Internet. It gives you an instant worldwide market. However, you need to spend money on web advertising to be noticed. A good idea is to invest in Google ad words and pay per click advertising. These keep your ad budgets small, and you get targeted advertising. You should also invest a small amount in mailing and print advertising, and maybe cable TV if you can afford it.

Full-time or part-time: A crafts business should ideally be part-time. You should look to quit your job only when the business has started generating enough money to meet your expenses.

Branding: It always pays to brand your crafts business because branding gives your products an extra respect. It also helps you launch a new range of products if the existing brand name is well accepted.

Funding: You should avoid funding because most crafts businesses can be started for $100 to $500. Your first priority should be to fund your crafts business from your own resources. You must realize that you are converting a personal hobby into a source of income. You can always seek funds when your business reaches a stage where it needs rapid expansion.