Business Series Part 1: Setting Goals

Today I'm starting off a series of blog posts on how to start take your handmade business to the next level.

The first step in any business is to set goals, so this is where we will start.  I wrote this a few years back (you can find it in an old post), but these rules still apply, so I'm bringing them back to life in this post.  Ultimately you need to ask yourself (and answer) four questions.  

1.  BUSINESS OR HOBBY?

How you set up and run your craft business should be determined by your income goal. Will it be a main source of income? A secondary source of income? Or just a way to make a little extra spending money?

If you are planning it to be a main or secondary source of income you will want to yourself up as a legal entity (Sole Proprietorship or LLC).  I won’t go into the details, but I can tell you that while a Sole Proprietorship is less complicated to set up an LLC offers more protection of your personal finances.  Either way, when you set yourself up as a legal entity you can benefit from buying supplies wholesale. 

If you are just looking for a little fun and extra spending cash  you may want to consider yourself a hobbyist.  As a hobbyist, there is no need to get involved in setting up an official business and you can even benefit from some tax deductions.

You should absolutely talk to your accountant to help you decide what would be best for you. 

2.  WHAT WILL YOU SELL?

Chances are you already know what it is you want to sell. Even so, you need to think about whether you will sell only one item, many versions of that one item, or have a line of different items. Knowing exactly what you will sell is going to help you plan better.  

Make sure to research, research and research some more before jumping in.  Know who your competition will be, know what it will take  to get yourself going, know what suppliers you will need to make it happen, know the initial investment you will need to make.  I will touch on the research aspect more in my next installment! 

3.  HOW WILL YOU SELL?

There are so many options all have their benefits and downsides:

	Pros	Cons
Online	Endless customer base Easy Home-based operation Made to order	No face to face contact Shipping (costs, time) Web Savy
Craft Shows / Fairs	Face to face interaction Travel	Set up / Clean Up Long days Weather dependent Travel Need inventory
Consignment	Someone else does the selling	A percentage of your sale goes to the consignor
Wholesale	Someone else does the selling	Mass production – lower profit margins

How you sell your goods will be personal preference for the most part, although keep in mind, some items do sell better when it can be seen, touched, felt, etc.  Analyze your product and your customer base to decide what will be the best selling venue for your product(s).

Make sure to weigh the pros and cons of each selling venue.  You may want to try a few out to see how they work for you.

4.  WHAT IS YOUR LONG TERM GOAL?

Finally, even if you are years away – you want to think about where you want this all to go.  Do you want to keep the business small or do you want it to grow into something more?  It is important to know this from the beginning because your future goal will be your guide and roadmap in making decisions.  Someone who is just working to make enough cash for a trip is going to make different business decisions than someone who wants to open 5 stores across their state within 5 years.   Even if your long term goal changes over time, it is important to always know what that goal is at that time.  Without goals, you can’t move forward!

Knowing the answers to all of these questions is the first step of being successful in your venture. My suggestion is to write all your thoughts and goals down.  As you set yourself up and run into roadblocks, you can go back to these initial questions and thoughts which may help you.

My next few posts in this series will focus on selling online since I can offer the most information in that area.  Stay tuned!