by Lisa McGrimmon
Smart, strategic small business management will help you avoid costly and time consuming mistakes and grow a business that's a great fit for your priorities and values.
Seemingly humdrum business management issues may not be the first thing on your mind when you decide to start selling crafts. However, once you resolve to get serious with your business, you quickly realize there are a whole string of choices you need to make to determine what type of company you want to grow and how you're going to do that.
Making smart, strategic decisions can help you build the kind of company that is right for you, plays to your strengths and brings joy into your life.
Yep! Good small business management decisions can do all of that.
Maybe you are analytically-minded and already excited about jumping into the planning aspects of building your company. If so, great! I won't need to convince you to dive into these tasks with your full attention and focus.
If you're not thrilled about the management aspects of building a company, and you'd much rather just get back to your studio where you can design and create, I'm going to challenge you to change your thinking!
Small business management isn't just a set of dull, bureaucratic tasks you must trudge through in order to get back to the creative work you love.
I'd challenge you to think of small business management as a set of tasks that are ultimately creative.
All of the practical and tactical decisions you make about your company come together to create a specific business that is uniquely your own. And if you are smart and strategic when you make those small business management decisions, you'll be in a better position to grow the kind of company that works for you.
TAKE A MINUTE TO CONSIDER...
Yes, some of those questions require a lot of thought, and it might not be obvious how the answers will help you with the practicalities of small business management.
The answers to those questions will form the foundation of your business and will inform every management decision you make.
Part one in the three-part series on assessing your craft business ideas teaches you how to clarify, and expand on your ideas, examines why you should come to the process with more than one idea, and shows you how to assess the risks versus rewards of your craft business idea so you can choose to develop the product that is best for your business.
Part two in the product development series looks at creating a prototype (pretty simple for most crafters), examines the importance of testing your prototype with your target customer, and looks at options when you want to keep your product discreet until you are ready to launch.
Part three in the three-part series on developing a new product for your craft business examines ways to research and assess your competition. Discover why you should research your competitors, and learn how to find competing products, know what customers are thinking about those products, and use that information to make your product the absolute best it can be.
Whether you develop a traditional plan or something non-traditional that fits you better, writing a business plan forms the foundation of your company.
It requires you to become very business minded and think through all of the practicalities of selling crafts including:
That depends on what your goals are for your company.
If you are trying to secure funding from any outside sources like banks or investors then, yes, you definitely need an excellent, traditional, formal business plan.
If you are going to fund everything on your own, then you might not need a traditional, formal business plan. But you might want one to help guide you with your decisions.
Even if you don't create a traditional business plan, I would strongly recommend creating some type of plan that works for your specific business.
In the first year of running my jewelry business, my mentor required me to write a formal business plan.
I would never in a million years have done that on my own if he hadn't made me do it. But I'm so glad I did! I learned a lot and prevented myself from missing important opportunities.
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I won't pretend to be an expert on how to write a traditional business plan. There are plenty of people who know more about that topic than I do. I will, however, share with you my own experience with creating a craft business plan.
You will also benefit from working through some of the more specific management decisions related to running your own business.
Here's how your business can benefit from smart strategic planning, and how to get started with your own craft business plan.
You might be surprised to know that the fact that you're selling crafts doesn't automatically mean you have a business. Your craft sales might be a hobby, and that's perfectly fine if it falls within your own personal goals for your business. Thriving empire, side hustle, or hobby - what's right for you?
Every new project you commit to will cost you time, or money, or both. Your time and money are limited and precious, so you need to make sure you commit them to promising projects that have a good potential to bring the rewards you want. Ask these 5 questions to determine if a new project is worth pursuing.
Doing Effective Things Well
Here's how I plan to stay focused on the most important projects with the best return on investment with my non-traditional business plan.
The decisions you make about how to price your crafts play a huge role in shaping your company.
Your pricing decisions impact (among other things):
Because your craft pricing impacts and is impacted by so many other factors, it's essential to think through your business goals as part of your pricing strategy. Here's how your prices are tied to your business goals, and how to ensure your pricing decisions lead you to create the type of company you really want.
Especially when you are starting out, emotions can quickly get in the way of making good pricing decisions. Placing a price on your handmade products is also placing a value on your skill and creativity. Here's how to price logically and profitably, not emotionally.
To take the emotion out of pricing decisions, I personally like to start off with a craft pricing formula to get a ball park idea and to ensure I've taken all costs into account. Some people don't love the idea of using a formula, and it often won't provide all of the information you need to consider. However, I think it is a very good starting point for pricing your crafts. The number you come up with using a formula isn't set in stone. You can always adjust the price if it doesn't seem quite right.
Have you ever sat down and thought about all of the costs you encounter to create and sell your handmade items? You might be surprised! My mom recently talked to me about selling a crocheted blanket she made. She said it cost her $20 in materials, so she'd like to get at least $20 for it. Arghh! Mom! We really need to talk. Here's an account of the full costs involved in selling a single handmade item.
Once you delve into the topic of pricing your crafts, you'll probably discover it's a bigger subject than you realized. It has a significant impact on your business, so it's worth investing some time learning as much as you can.
There are two books that I'd recommend on the subject. They each have different strengths and strategies, so ideally, I'd suggest reading both.
The ebook EBAY Auction Power has a lot of smart insights into craft pricing that you probably haven't read anywhere else.
This book focuses on describing how to get premium prices by selling handmade items in an auction format.
I'd recommend this book even to those who don't think they want to sell in an auction format because it has excellent advice about increasing the perceived value of your work so you can command higher prices no matter how you sell your crafts. Here's my review of this fascinating book.
How to Price Crafts and Things You Make to Sell is the other book I'd recommend on this topic. It is a thorough book that covers more traditional craft pricing strategies and scenarios.
Its strength lies in the depth it goes into in considering pricing issues connected to more traditional craft selling venues like juried shows, wholesaling, and selling online in a non-auction format.
The book isn't just about pricing. It goes much deeper to show you how to make your business as profitable as possible. Here's my review.
You almost certainly need to improve your inventory management. Here's how better inventory management can help you grow your business, and what you can do to implement a new inventory management solution, or improve the system you use.
Craft professionals have very specific needs when it comes to inventory management software. You typically deal with all kinds of raw materials, as well as finished products. You may be selling at a variety of venues, which present different record keeping challenges.
Here's how to assess your own inventory management needs, and find the best solution to fit your specific situation.
I learned a lot about my business when I got serious about tracking inventory and raw materials. Here's what I've learned and how I changed my own business to improve and simplify my own business inventory management system.
Your business name is often the first thing your customers will see, and it can have a huge impact on their expectations.
You want to send all of the right messages with your company name, so you'll need to know exactly what type of message you want to send before you start to brainstorm company names.
The process of registering your business varies depending on where you live. When I went through the business name registration process, it was simple, fast and inexpensive.
Registering your company is a smart small business management decision, and in some locations, it is absolutely necessary if you want to sell crafts at juried art shows because you'll need to display your business registration / vendor's permit in your booth.
Registration is usually necessary for establishing wholesale accounts. If you have wholesale accounts with major supply stores, you will usually be able to purchase items at 50% off the regular retail price. That savings can be a crucial difference in the profitability of your business.
If you're looking for more in-depth information on choosing a business name, I've written a series of articles about naming your business. You'll find them right here in the business marketing section of this site.
Here are several resources that I've found useful for building a small business.
Are your online business accounts kept safe with strong passwords? Can you easily retrieve your login information if you need to? If you haven't developed an effective strategy to manage your passwords, check out the resource I use to keep my accounts safe.
Links to plenty of resources, products and services I have used to build my own business and you can use to build your own business.
Links to places where you can find data that you may need while researching your business and government supports for building a business.
It's extremely important to keep your costs as low as possible without skimping on quality. Here's how to establish accounts with major wholesale suppliers to get your craft supplies at a discount to keep your costs low.
Small Business Management for Craft Professionals