How to Start a Craft Business with No Money
When a craft business is a side project, it often means there’s some sort of a shortage of time and money.
When I started my handmade business, it was because I was tired of working for someone else, not having enough creative control, and I wanted something bigger and more meaningful to work towards.
My (now) husband and I were living in a tiny 1-bedroom apartment, saving to buy our first home (a two-bedroom condo). So I was definitely short on money.
I worked full-time, Monday to Friday, and was trying to maintain relationships by not always saying “no” to hanging out with people. So I was also short on time.
Even years after we purchased our condo, adjusted to our new living expenses as home-owners, and saved up enough money for me to take the leap and work on my handmade business full-time, there was still a lack of time and money.
No matter how big or small your business is, there will always be a desire to have more time and money to spend on it.
However, there are ways to be strategic about how you spend money and time on your business and how you build a business to ensure you spend less money but make more.
How To Start A Craft Business With No Money
- Know the legal side of starting a craft business
- Choose a profitable target market
- Focus on one category of product
- Build a strong USP
- Build a strong brand
- Focus on one marketing channel
- Focus on one sales channel
- Work your numbers
- Be consistent
What’s most important when starting a craft business with no money is that you focus and prioritize.
>> Focus ensures you’re not wasting time and money trying to make something for everyone and ending up with the majority of products not selling.
>> Prioritizing ensures you’re spending the time and money you do have on tasks and products that are more likely to give you a return on investment, instead of chasing after low-value tasks (like commenting on Instagram posts to build followers).
Obviously, you can’t start a business with absolutely NO money. You do need some to buy materials and start making sales.
What’s more important is what you do with that little bit of time and money.
>>Should you pay to have a logo designed?
>>Should you spend your time growing a Facebook page? Or should you focus on Instagram?
>>How do you get your products seen when you don’t have money to spend on advertising?
The following steps will help narrow down what’s important for your crafting business and how to best spend your time and money when you’re bootstrapping it.
Step 1 – Know the Legal side of Starting a Craft Business
Just because your craft business is small, you’re running it from home, or you don’t have many sales yet, doesn’t mean there aren’t laws you must follow.
Each home crafting business is different and the laws you must follow will depend on several factors, such as:
- What you sell
- Where you operate your business
- What you name your business
- Where you sell your products (e.g. are you shipping them to other provinces/states or countries?)
- How you sell your products
Here’s a guideline for the common laws handmade businesses must follow:
Step 2 – Choose A Profitable Target Market
Choosing who you want to sell to is the most important part of starting a business. Choosing a target market that isn’t profitable, or making products without thinking about who they’re for and simply hoping anyone will buy, is likely to lead to a big waste of money.
A profitable target market is a group of people that are easy to find and market to, and are more likely to buy products that are suited to them (I’ll share examples in a minute).
Think of your products as a gift to consumers.
Now imagine the type of gift you would love to receive.
>> Would you prefer a gift that was picked with you in mind and caters to your tastes, style, interests, etc.?
>> Or would you prefer a gift that was picked without anyone in particular in mind and could work as a gift for anyone?
Of course, we all love gifts that are chosen for us based on what we love.
But when you create products without thinking about who they’re for, you create products that don’t feel special to anyone.
Finding a profitable target market doesn’t cost money. It just requires your time to research good target markets. But it does ensure you’ll hit the ground running and will be more likely to sell what you make.
Let’s look at some examples.
A Profitable Target Market
One example of a profitable target is golfers.
>> They’re profitable because they spend money on products related to golf.
>> “Golfers” is a good target market because it defines a group of people who can be easily found (in large quantities) and marketed to.
A golfer will spend money on a golf-related item because they’re a golfer.
You can also easily find groups of golfers. If you make golf-related products, you can market them in golf magazines, on golf blogs, in golf Facebook groups, using golf-focused hashtags on Instagram, etc. You can also sell your products in golf shops or at golf events. These are places you’re guaranteed to find your customers.
A Non-Profitable Target Market
You don’t want to go after a market that won’t be profitable for you. That will be a waste of money.
The most common mistake I see craft business owners make is targeting a vague market.
For example, someone who sells jewelry may say their target market is: women in their 30’s.
This is an example of a target market that isn’t profitable.
It’s not profitable because there’s nothing about that target market that suggests they will buy a certain type of product.
Women won’t spend money on womens’ products simply because they’re a woman; there must be a stronger connection.
This is where so many craft businesses go wrong. They think: I’m making jewelry for women. Almost every woman wears jewelry, so there are millions of women I could sell my jewelry to. But when they set up at a craft show or list their jewelry on Etsy, they quickly realize that just because you make a product for women and get it in front of women, does not mean they’ll buy.
It’s also not a good definition of a “target market” because there’s no way to specifically find women in their 30’s.
Women don’t group together just because they’re the same gender or fall into the same age bracket (there has to be a common interest that pulls them together). They’re not forming groups on Facebook, or following Instagram accounts based solely on the fact that they’re female and in their 30’s. There aren’t blogs focused on topics about women in their 30’s or shops targeting women in their 30’s. Instead, they’re targeting women who practice yoga, or women who follow fashion trends, or women who are pregnant.
Let’s say you have $100 to place an ad somewhere and you want to be sure you reach women in their 30’s who are guaranteed to be interested in your product. Where would you place that ad? It would be impossible. Women in their 30’s have an extremely wide range of interests in products.
On the other hand, if I was selling products made for a profitable target market, such as female golfers, I could place an add in a women’s golf magazine, or at a local golf course, or on a golf-focused blog, or through a female golf influencer on Instagram, and be guaranteed to reach people interested in my product.
When you add one key element to your target market, such as golfer, yoga, bride, pregnant, etc. THEN you can narrow in on them and easily find them.
I’ll teach you what that key element is in HOW TO FIND A GOLDMINE OF CUSTOMERS.
Right Market Wrong Product
Now let’s say I’ve chosen a profitable target market, perhaps female golfers. That information isn’t beneficial unless I make a product that actually appeals to my target market.
Sure, “women golfers” tells me where to find my target market (golf courses, golf shops, reading golf magazines, watching golf videos, golf events, etc.) but now I must present a product they’re sure to buy.
Instead of making regular jewelry and putting it in front of female golfers, I would make golf-themed jewelry and target women golfers, they’re much more likely to buy.
HOW TO FIND A GOLDMINE OF CUSTOMERS will help you find the perfect target market, if you need help in that area.
Step 3 – Focus on One Category Of Product
In the earlier stages of my handmade business I sold:
- Rice heating bags
- Sleeping Masks
- And I’m sure many other odds and ends I’ve forgotten about
That much variation ate up a lot of my time and money.
>>Think about the different materials I needed for each of those projects. I made a small number of each product, which meant, I couldn’t purchase materials in bulk to save costs.
>>I also needed a different pattern for each product and time to perfect it before I was happy enough with the end product to make multiples and sell it.
>>That many types of products also meant a lot of switching between materials, tools, patterns, techniques, etc. and an inability to be efficient with my production time.
As I slowly weeded out products, I started to see more profits and a more efficient business. I had to really think about my vision for my business, what I wanted to be known for, and what I had a passion to make.
Pajamas didn’t exactly get me excited and neither did aprons. I’m not a big cook and I’ve never even owned an apron so why was I trying to understand and make aprons for people who did?
I was trying to build a business around things I could make and what I thought people might buy at a craft show.
I wasn’t focused. I hadn’t thought about what I really wanted; who I wanted to serve, what I could see myself making over and over, or what I wanted to grow my business into.
Offering too many types of products is the biggest and most common mistake craft business owners make.
Determine what category of product you really want to make and be known for.
Don’t try to be a “one-stop-shop”, or a business that offers a wide variety of gifts for all occasions, or a business that sells one category of product but for a BIG target market (e.g. jewelry for all women).
Don’t even try to build, for example, a “bath & body” business at this point. Offering bar soap, cleanser, toner, lotion, cream, bubble bath, bath salts, and lip balm is way too much for a bootstrapping business to take on.
Instead, focus on building a bath OR body business. Or better yet, something specific within one of those categories.
>> Maybe offering the most luxurious line of bubble baths in the bath category.
>> Or a line of cleansers under the body category.
>> Or the most moisturizing tinted lip balms that protect lips from the sun and wind
Based on those examples, you can see how creative you can get within one category, or even sub-category of product.
When you’re building your craft business part-time with little money, get as narrowed and focused as possible with your products.
- You’ll build a name for your business much faster
- You’ll cut down on wasted materials and products that don’t sell
- You can buy materials in bulk
- You can become more efficient in all areas of your business
- The quality of your work improves
- You become an expert and the go-to for __________
What’s the one type of product you’ll focus on?
Step 4 – Build A Strong USP
A USP stands for unique selling position, which is how businesses set themselves apart.
For example, EOS started the company selling lip balm. The lip balm ingredients and scents weren’t anything new. Burt’s Bees had been selling lip balms made with natural materials years before EOS hit the market. But EOS changed the shape of their packaging. Instead of the typical tube, EOS sold lip balm in egg-shaped pods. That became their USP.
A USP is beneficial when starting a craft business with no money, because it allows you to spend less money on marketing. When your business has something that stands out, it markets itself and brings customers to you.
Imagine a restaurant relying on people randomly walking down their street at the right time of day, being hungry and having time to stop in for a meal.
A restaurant being known for offering the best mac & cheese dishes and people going out of their way to visit the street the restaurant is on because they can’t get anything like it anywhere else.
That’s the “IT” factor we need to create for your business so sales come to you deliberately and effortlessly; not randomly when your products happen to be in the right place at the right time.
You’ll spend a lot of time and money trying to market and sell a product that’s very similar to other products already on the market.
When you have something unique about your product that people are actively searching for and have to come to you to get it, your business can grow on its own.
People don’t typically search for a “cutting board” because it’s a product that doesn’t require much searching. You can find a regular cutting board at any kitchen store, grocery store, or Bed Bath & Beyond.
Starting a business that makes regular cutting boards doesn’t have a USP.
But people do search for a specific type of cutting board, such as a “personalized live edge cutting board” or a “charcuterie board” or “state cutting board”.
If you start a business selling Personalized Live Edge Cutting Boards, it not only gives your business and products a USP, it also brings more customers to you because they’re searching for your products.
It also cuts down on the competition so your products have a better chance of being found in a search.
>>Searching “cutting board” on Etsy brings up over 45,000 listings.
>>If you search “personalized live edge cutting board” it brings up just over 200 listings.
From there, you could further find a way to make your personalized live edge cutting boards stand out from what other people are making (e.g stain your boards a different color than the typical live edge cutting boards, use a different font, style, or technique to personalize the boards, add a special touch when they’re ordered such as all orders include gift wrapping, a personalized card and can easily be sent directly to the recipient since most are ordered as wedding or house warming gifts).
Your “IT” factor may be something your business was born with (e.g. you’re making a product that not many people sell) or it may be something you need to build (e.g. EOS putting regular lip balm in egg-shaped packaging). It may also stem from the market you target or the niche of product you focus on. For example, let’s say I decided on “women golfers” for my target market and lip balms as my category of product. The fact that I make lip balms specifically for golfers would make my business stand out from other businesses that sell lip balms.
Finding the right “IT” factor takes time and strategy. It’s not something that can be briefly covered in an article but I can get you started on finding yours through the free email course BEAT LAST YEAR’S SALES.
I’ll also walk you through the entire process in HOW TO SELL HANDMADE BEYOND FRIENDS & FAMILY.
STEP 5 – Build A Strong Brand
A brand is something a lot of business owners think they can ignore in the beginning and implement once they’re making more money.
But a brand is what helps you establish that “IT” factor or your USP. It helps tell consumers why they should choose your products. And it helps you make more money, so it shouldn’t be put off.
As you’ve probably heard (over and over): your brand is not your logo.
Your brand is represented through your logo, but that’s just one small piece of it. Your brand is about how your business and products make people feel (to put it simply).
- Help shoppers remember your business
- Encourage shoppers to buy
- Increase the perceived value of your products (so you can charge more without having to spend more)
- Build loyal customers who buy again and again
Branding doesn’t have to cost you more money, it just requires you to be thoughtful. For example, if I wanted my brand to have a feminine and elegant feel, I would use soft pastel colours, script fonts, delicate materials, elegant wording/product names/product descriptions/etc.
Instead of choosing any color or font that looks good for your logo, labels, website text, etc. think about the feel you want your brand to have and which colours and fonts convey that feeling.
I’ll teach you more about building a brand and all the areas to apply your brand to your craft business in HOW TO SELL HANDMADE BEYOND FRIENDS & FAMILY.
Step 6 – Focus On One Marketing Channel
Marketing is essential for every business. You don’t need much money to do it (e.g. you don’t have to spend money on ads) but it definitely deserves a good portion of your time.
Choose one platform and method that best resonates with you and your customers and focus on that.
You cannot be on every social media platform and build a thriving newsletter, and send out powerful press releases that get you featured on the local news.
You must start with one.
Which social media platform do you understand and enjoy using?
If it’s Instagram, focus your efforts there and don’t even worry about trying to grow your following on Facebook, Twitter, or Pinterest.
If you can’t stand social media, maybe attending networking events, speaking in front of people, or being interviewed is more your thing. Choose a marketing platform and method that aligns with that.
Which forms of marketing align with your goals?
For example, if you want to build a thriving Etsy shop, your marketing must be focused online (e.g. social media, getting linkbacks, or building a thriving newsletter…HOW TO START, SEND, & GROW A SUCCESSFUL NEWSLETTER will help with that). If you want to get into retailers, you’ll need to work on creating beautiful lookbooks and getting face time in with shop owners.
Choose one marketing method and master it. Once you have it down, you can layer another form of marketing on top.
Step 7 – Focus on One Sales Channel
There are several ways to sell your handmade products but the most common are:
- At craft shows (tips for being successful at that are here)
- Online using a marketplace (such as Etsy)
- Online through your own website
- Selling wholesale through retailers
Using ALL is not an option when you’re short on time and money.
Choose one sales channel based on your goals and preferences.
>>Do you love the idea of getting out on weekends, chatting with people and being surrounded by other makers? Craft shows are a good fit.
>>If weekends are packed with getting your kids to soccer practice or dance recitals, selling online may be the route for you.
>>If you have a goal of getting your products into stores across your city, focus on reaching out to retailers.
In some situations, you may need more than one sales channel. For example, if you want to sell at craft shows but also want shoppers to be able to buy from you after an event, you’ll need an online sales channel.
In this case, focus the majority of time and money on craft shows and find the quickest, cheapest, and easiest way to set up and maintain an online shop (I think Etsy is the best fit for most businesses, here’s how to determine if it’s worth it for you).
Consider which sales channel is a fit for you and your goals, and one you should spend the majority of your time and money on.
Step 8 – Work Your Numbers
You must be conscious of how much time and money you’re putting into your business and how much money it’s bringing back in.
In THE SUCCESS PLANNER, I cover all the ducks you must have in a row to run a profitable and organized business and how to track time and money, as well as calculate the ROI (return on investment) of each task you spend time and money on.
The most important numbers you must pay attention to in the beginning are your profit margins.
If you want to build a business and make money from it, you cannot make products that have little or no profit margins.
Imagine buying a product for $10 and then reselling it to someone for $10.
Sounds ridiculous right?
Why not keep the $10 in your pocket and skip running around town to buy and sell the product?
Most craft business owners think they’re making money with the sale of a product but they’re essentially doing a lot of work to break even, or worse yet, lose money and not even realize it.
Let’s say I make a bag and the materials cost me $20 so I price it at $50. Sounds like I should be making a decent profit with that sale.
But let’s think about the time and money it took me to:
- drive to the fabric store
- look at different options
- get my fabric cut
- gather my notions
- stand in line to pay for my materials
- drive back home
Maybe that’s an hour of my time and a bit of gas money.
- unpack my fabrics
- get out my pattern
- make a bag
- photograph it
- tag it
- upload photos
- create a listing
- share it on social media
- answer shoppers’ emails about the bag
- package it once it sells
- drive to the post office
- stand in line to pay for shipping
- drive back home
Let’s say that’s 2 hours of my time (and that’s being very conservative).
To make my product and complete a sale from beginning to end, it requires 3 hours of time.
If I subtract my material costs ($20) from the retail price ($50), I’m left with $30.
If I divide that $30 by 3 hours of work, that means I’m earning $10/hour.
We haven’t even gotten into other business costs that aren’t directly associated with a sale but must be covered (e.g. website hosting fees, printing business cards, sewing machine maintenance, etc.), which would reduce my wage per hour even more.
$10 an hour is not enough for your time.
It also leaves NO profit.
I may want to get paid $20/hour AND I definitely want money left after paying my costs and wage. Selling the bag for $100 would cover the $20 for materials, $60 for my time, and leave me with $20 of profit.
Make sure you work your numbers when designing a product to get your costs down (here’s how to reduce your costs to increase profits) and your retail price high enough to cover your costs, pay you a decent wage, and leave you with a profit.
Just because you have a profitable product does not mean you’ll have a profitable business.
You must think about your profits for every part of your business (here’s how to run a profitable handmade business)
When you spend time or money on a task, does that task result in sales? And if so, how much?
(There are some tasks that won’t return money (e.g. paying bills or taxes), in which case, you should be as efficient as possible.)
Let’s say you have $20 left from a sale after you cover all your material costs, hours to make the product, Etsy listing fees, and packaging costs. If you spend 5 hours on Facebook per week (at $20/hour for your wage), that’s another $100 you must cover.
Your time on Facebook must result in 5 sales to break even, and more than 5 sales for your time on Facebook to be profitable.
There is a startup period when you’ll have to put more time in than you’ll be paid for.
For example, the first time you post to Facebook you’re not going to make a sale. You must first spend time setting up your Facebook page, growing a following, and finding what types of posts your followers pay attention to.
When there isn’t an immediate return on time or money investment, you should be considering the potential for return on investment down the road and how to be as efficient as possible until then.
Consider your return on investment potential before you:
- Make a new product – does it align with your “IT” factor and your brand? Does it have a purpose in your offering? When I made pajamas, bags and aprons, nothing worked off each other. No one thinks: “oh right, I need a new apron” when they’re buying a new bag and no one uses pajamas, a bag, and an apron together.
- Have 1000 business cards printed – do you have a plan for how the design is going to ensure people hang onto it (HOW TO KEEP YOUR BUSINESS CARDS OUT OF THE TRASH) and a plan for how you’ll distribute them?
- Sign up for a craft show – is it a good fit for your products? Does the event’s marketing target your ideal customer? How are they marketing and what type of traffic are they expecting? How many hours is the event and do you have the potential to make enough sales within those hours to cover the cost of the event, including your wage for the hours you spend driving to, setting up, selling, tearing down, etc.? More on estimating the potential of a craft show in MAKE MORE MONEY AT CRAFT FAIRS.
When you’re short on time and money, you must be strategic with how you spend it. THE SUCCESS PLANNER will help you will all aspects of that and help you organize your business.
Step 9 – Be Consistent
Starting a business is a lot of work, no matter how much time or money you have. But when you’re working on your craft business after you’ve already worked 8 or more hours in a day, or after a 40-hour week, you need a bit more motivation to show up.
The key is to show up and do the work when you can, even when you don’t particularly feel like it.
You’re going to require a lot of motivation, but you won’t need it all at once.
Don’t wait for huge rushes of motivation; it will come in small waves. And the best way to not impede those small waves is to make sure you’re not overwhelmed.
If you follow the steps in THE SUCCESS PLANNER, you’ll define a goal, create a plan to reach that goal, and then make a list of small projects with even smaller tasks that ensure you reach it.
Those tasks should take an hour or two. That ensures you can complete them in one session and that they don’t make you feel overwhelmed when you think about starting them.
How much motivation do you need to clean your entire house, top to bottom, including wiping down baseboards, walls, and windowsills?
A lot right?
But how much motivation do you need to wipe down your kitchen counters?
Not as much.
You probably wouldn’t think twice about it. And once you’ve started a task, it becomes much easier to keep going.
>>Don’t make your to-do lists, goals, or expectations too big.
>>Don’t be too hard on yourself.
>>Don’t look for big waves of motivation, take action on the little sparks of excitement.
>>Don’t look too far ahead.
Your business will achieve success one tiny step at a time.
That was a lot of information to take in, but I hope it was helpful!
And the point I want to stress is:
You cannot do it all, so what you spend your time and money on must be thoughtfully chosen.
There also isn’t a one-size-fits-all guideline for what a business must spend their time and money on.
This article outlines the areas I’ve found most important through years of running my businesses. Use them as a guideline but put your spin on them. Think about your goals and vision for your business, your strengths and weaknesses, your potential for return on investment and make decisions based on them.
If you’d like to keep the learning going and enjoyed this article, I think these two ebooks will be helpful to you:
>> HOW TO FIND A GOLDMINE OF CUSTOMERS
>> HOW TO SELL HANDMADE BEYOND FRIENDS & FAMILY
Thankyou so much for the helpful info!
It makes sense and has come at just the right time for me as I am trying to get organized in a handmade business .
That’s great to hear! Thanks for reading 🙂