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Craft Guide - Running a Craft Business

Many people enjoy making hand crafted products as a hobby and some would like to generate an income by selling what they make.

If you would like to develop a craft hobby into a craft business, it is important to consider whether there is sufficient demand for what you make, if you can sell what you make for a profit and how you are going to find your customers.

Product choice will depend upon what your craft skills enable you to make and what people want to buy. Good places to look for inspiration include craft shops, gift shops and relevant magazines. Also you could ask friends and relatives what things they would consider buying. If you attend craft fairs, in addition to seeing the work of others, you might make useful contacts in the craft community and find new craft materials suppliers and additional outlets for your work. You might decide to improve a product that already exists or develop something new, to meet an opening in the market. You could enhance your existing set of skills and expand your product range to meet market demand.

Pricing requires you to combine costs such as materials, tools, packaging, distribution, stationery, utility bills and the amount you pay yourself for the time you spend working on the business. You should also take account of any tax that you will have to pay.

Once you have calculated your unit cost and compared it to the going rate for similar craft products, you can decide how much you are going to sell your work for. Too high a price could make you less competitive and reduce sales, whilst too low a price could increase sales but reduce profits and even cause your business to run at a loss. Your aim should be to find the right balance, which provides you with a good cash flow and a healthy profit. By reducing your costs or improving your productivity, you could increase the profits needed to invest in the growth of your business and help with finances during any periods of low sales.

Effective marketing will make potential customers aware of your work and increase your chances of making sales. If you provide work of good quality at a competitive price this could lead to repeat business. Marketing your craft work will be made easier if you have a clearly defined range of products to offer potential customers and a strong brand identity for your business. If you sell your work through retail outlets they will want to position your product line in a particular section or department and will increase the cost of your products to cover their profits.

You could decide to sell your work online, either through your own Web site or by using an auction company such as eBay. Another good place to market and sell what you make might be craft fairs. They have the advantage of enabling you to meet and talk to existing or potential customers and get feedback on your range of products.

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