Business Sense Part 1: Setting Goals

As I promised in an earlier post (The Truth About Owning Your Own Business), this is the first installment of my “Business Sense” series.  If you are thinking about starting your own craft business, this series will provide a little advice on how to go about doing so, what you will need to know and share some of the learning experiences I’ve had.  

The series will cover the following main topics:
> Setting Goals
> Research
> Things to Think About 
> The Road to Success

Since there is so much to talk about, this post is only going to cover the first topic of Setting Goals.  There are four questions you will want to ask yourself:

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	No face to face contact Shipping (costs, travel, time)
Craft Shows / Fairs	Face to face interaction Travel	Set up / Clean Up Long days Weather dependent Travel
Consignment	Someone else does the selling	A percentage of your sale goes to the consignor
Retail Stores	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).

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 3 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.