So, when you decide to begin the long and hard journey of making a hobby a business, there are so many questions and many more confusing answers. I decided to talk to some of the local business owners in my area, especially those who are makers, and they are a wealth of information. Truly, these local business folks are a great resource that some people don't realize they have. Here is what I have learned:
1. Don't get in too over your head, but realize that there may be investment costs.
It is easy to get excited about your new business adventure and go all out. Remember, this journey takes time, sometimes even years to before it is a sustainable income. Take baby steps but don't underestimate yourself. Obviously, to make money you must spend money, but try not to spend money on things that can wait or you can find cheaper elsewhere. For example, I am working on getting a better functioning website than I had before. I used WordPress and NEVER got it up and running because it was too complicated for me. I should have done more research before making the investment into the website. Honestly, so far, Wix is proven to be much easier to use. Since I did not take my time and weigh my options, I have to pay for another website hosting service that is easier for me to use. The question I had about the website is when do I pay for the business site or even the personal site? Etsy siphons money from makers and can have some downsides to it but to get an e-commerce website going can have a big upfront cost!
I have decided to publish my site as a free site for now until I decide if I actually like using Wix, then decide if I want to upgrade.
2. Create solid footings that you can build your business on.
Even though it is good to weigh options to find the cheapest option, quality is also important. When I asked local business owners, I got mixed answers on whether to invest in the expensive resources (such as an e-commerce site or expensive branding) to build on. Some said to take the cheap options for as long as possible, and the others said to start with quality as a standard practice. It always goes back to the fact that you must spend money to make money. I am still not sure about the website thing, but I spend extra to get quality business cards, video and photo set-ups, and crafting goods/machines.
3. Make sure to properly price your goods.
Many makers price their goods as hobbyists rather than business owners, which does not help those of us who hope to make a profit. I have learned that it is more worth it to sell less as a higher profit than more at a lower profit. Obviously, there is a balance.
In their blog post Pricing my craft item — how much should I charge? David Radloft gives this formula:
Price A= cost of supplies + hourly wage x working time
Price B= cost of supplies x3
Price C= (Price A + Price B)/2
Now I hate math so much, but it is important to get pricing right because without a profit you will never grow as a business. So I made an example using some of the make-up bags I make:
Price A= 5.85 + 14 x 0.5 = $12.85
Price B= 5.85 x3 = $17.55
Price C= (12.85 + 17.55)/2= 15.20
I sell my make-up bags for $15 in person, but I add $1.50 on Etsy due to fees and charges. So I wasn't completely off, but at craft shows some customers think it is still too much money to pay for a handmade good. Which, when you stop to think about that opinion, is sort of hurtful. Essentially, saying that it is overpriced may be saying, "your time is not worth a decent wage."
Now, let us consider pricing WITHOUT paying myself on said make-up bags:
Square payment processing= 2.6% + 0.10 = $0.64
Materials= $5.85
Shipping= $5 to $8 (since Etsy insists that makers offer free domestic shipping)
Overhead Costs= ???
Woah, wait no one said anything about overhead costs. Why do I need to charge my customers overhead costs? Well, considering that my sewing machine costs a few grand, my serger another grand, the cost of my card swiper, website fees, advertising, and ALL of the things required to sew things. There are irons, ironing boards, sewing needles, scissors, machines, thread, and more. It adds up after a while and it has to be funded somehow. So can a maker really afford to undercharge for their items??
4. Learn from established creators.
Watching the process of other makers gives you ideas of what to expect and tips about the mistakes they have made. Also, make sure you see what they looked like when they started because if you compare yourself to what they look like after 5-10 years of being a maker, you will set yourself up for failure and disappointment. For example, Kamui Cosplay has her old videos still on her youtube channel where she was in a small apartment with crappy video equipment. The important thing to do is start. You have to get through the suck to get to the final product. The journey may be slightly easier in the digital era because you can look as the mistakes of creators and avoid them!
The same concept applies to local makers and business people.
5. Network, Network, Network
Finally, the more peers in your nitch you know, the more connections you have as support and advice. Knowing other makers allows you to learn new skills, resources, and possibly more advertising opportunities. I strive to create positive connections in my community because of my personal values. We are stronger together than apart and the more welcoming and positive exchanges we make, the more likely the community will radiate positivity and openness!
Networking has allowed me to learn from a leatherworker through work exchange, learn how to start a business, sell through local game stores, and have a wider community reach.
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