How to Turn Your Craft Hobby into a Thriving Business

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Research and development

Starting out on your journey to launching a small business can seem a little daunting, but thorough research helps you learn who your customer is, where to sell, how to price and even where the potential gaps in the market are. From here you can start that all-important process of product development.

Identifying your customer is super important in helping you understand your target audience, and later, how to sell to them too. It can help to have a specific person or group of people in mind. Drafting a spider diagram of their likes, dislikes, interests and even their job and location help you build a strong customer profile.

You can utilise this information to start the research phase of your brand. Look to platforms like Pinterest, Not on The High Street and Etsy for inspiration thanks to their great range of detailed, small business insights. Look out for what’s trending on social media, and dive into what customers are searching for with the help of sites like Google Trends and Etsy.

For the development phase of the process, think about how you can consistently create your products to a high standard, and spend as much time as you need creating samples and mock-ups of your winning ideas to make sure they’re the best they can be.

If you need to, speak to a trusted friend or family member, or even a fellow small businesses owner, to get some constructive feedback on products. Sometimes when you’re too close to an idea or a concept, it can be hard to see the flaws, so insights from your peers can be invaluable. Utilise this throughout the process for maximum effect.

It's also worth researching and understanding the practicalities of being self employed and starting a business. There is lots of helpful information on the gov.uk website: Setting up - GOV.UK

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Calculate your costs

Costing your products is one of the most important parts of the process so be sure to set aside enough time in your planning phase to tackle this in detail. After all, making money is the part that takes your craft from a hobby to a business. Ensuring you get your calculations right will make this a lot easier to achieve.

To start with, look at the simple calculation of ‘materials + time + postage = price’ to work out a base cost. You’ll need to make sure there’s enough profit in there to cover things like wages (paying yourself and others) and new stock or materials (essentials for running your business). Here’s a bit more detail on what those areas entail:

• Materials

  Costing for materials seems simple, but make sure you include the details to ensure your costs are as accurate as possible. This includes:

  • Physical materials such as yarn, threads, paper, etc.
  • Essentials like stationery and tools (Cricut machine, laser, etc.) – you might not choose to charge in full for these each time, you could split the cost of this across your products
  • Workspace and bills – do you pay for a separate studio or do you power equipment? This all counts, so make sure to include this too!

• Time

  Time is the forgotten part of most independents’ pricing and it’s probably the most important commodity for a business owner. But how do you cost for your time?

  When you start to develop your samples, it can help to time the process, so you have an hourly breakdown of what each piece takes to create. Take that number and give it a monetary value. We want you to be charging AT LEAST minimum wage.

  Depending on what you’re comfortable with, you can play with this number, but before you give yourself a pay cut, think about how you can cut your time down first. Can you simplify? Can you outsource or ask for support? It’s very important you don’t find yourself working for free – you wouldn’t do it in an office so we’re not doing it in our small business either!

• Postage

  Now our rough costs are coming together, we need to make sure we can get it to our customers safely and well packaged. It’s up to you if you want to include postage in the price or if you want to have a ‘plus postage’ model but, either way, we need to add the cost on.

  Don’t forget to also add packaging, including tissue paper, labels, postcards, tape, etc. There are two options for listing postage on your website or online store:

  • Plus postage: The price of your product plus the cost of shipping the item listed separately
  • Including postage: The price of your product with the cost of shipping the item built in

Don’t forget to include hidden expenses, such as a proportion of your operational expenses (especially if you work from home). HMRC gives a clear indication of what you can and can’t claim for from a tax perspective so it’s good to get into the habit of not only being aware of these, but making sure your business is not footing the bill.

It can feel a little overwhelming to put a financial value on your work but it’s important to go through this process each time you create a new range or product. It’s much easier to reduce a price than to surprise your customers with an increase!

Finally, to sense-check your new price list, look at the wider market for competitor pricing to see if you feel comfortable with your final numbers. Can you even afford to add a little mark up to your prices to bring in extra revenue?

If you need to make reductions, source alternative suppliers to get costs down, or even look at removing any design or feature that isn’t integral. Where possible, we want to feel confident in our pricing. This will help to sell to your customer, so it’s important to strike a balance between being comfortable and realistic.

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Develop your brand

When it comes to creating the look and feel for your small business, we always urge small businesses to keep things simple.

Use a name that’s broad enough that you aren’t positioning yourself into too much of a niche. You want to keep space for creativity and avoid the need for pesky rebrands later on down the line.

If you’re stuck for names, try using platforms like ChatGPT or Google Gemini for suggestions. You can add in some ideas and attributes for your business and see what options it gives you to get the ideas flowing.

At a minimum, the following branding should be enough to get you started:

• A simple logo – Consider a clean, legible font that looks premium to avoid having the expense of a graphic designer. You can use apps like Canva or Adobe Express to try a range of mock ups.
• A colour palette – No more than four or five colours that you can pull through to your website and brand to keep things consistent. Consider adding this treatment to your logos too so you can mix things up from time to time and keep things fresh.
• Packaging – We urge independents to keep this as simple and cost-effective as possible. Try plain packaging and add some personal touches with things like coloured tissue paper. This way you can keep costs to a minimum but use things like stickers and stamps to add some personality.
• Business cards – These are especially important if you’re going to be at markets as it’s a great way to drive new and potential customers back to your sales platforms of choice.

As you learn and grow, it’s likely your branding will too, so don’t let this be the stumbling block to living your small business dream. You can make a new postcard, sticker or design part of your marketing – customers love to see behind the scenes!

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Choose your sales tool

There are a lot of options when it comes to where to sell your products – from online platforms like Folksy, Not on the High Street and Etsy, to building and running your own website. You may also choose to go down the route of selling in person at markets and pop-ups or look at getting your items stocked in shops.

• Online sales platforms (Etsy, Not On The High Street, Folksy)

  These are online spaces for small businesses to sell their wares using pre-populated fields, with a built-in algorithm that will (when utilised well) help to drive sales.

  Pros: Helps to drive sales using the built-in algorithm; household names with active user base.

  Cons: Can be competitive due to the large number of small businesses on the platforms; keyword focused so a basic understanding of SEO (search engine optimisation) is required; seller fees can be high.

• Ecommerce website (Shopify, Squarespace, Wordpress)

  A build-your-own platform that can be developed and designed with more flexibility, with the option to have a personalised shop, blog and even booking system.

  Pros: More flexibility for design look and feel; more competitive fees than seller platforms; a range of shipping and delivery options.

  Cons: Need to drive your own custom to the shop; some level of design skill is required; upfront set up can be lengthy and time consuming.

• In person (markets, fairs, pop-ups and retail stores)

  Make sales in person at local markets and fairs or seek out opportunities to have your worked stocked in pop-ups and retail stores.

  Pros: A great way to meet with and sell directly to customers; showcase products in person; gain feedback and insight into what works and what doesn’t.

  Cons: Depending on the market; sales are not always guaranteed; can be expensive to take part; long days on your feet.

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Market your brand

Now you’ve got all the essentials for running your business, it’s time to tell the world about it! Marketing is an essential part of any business and, although it can seem daunting, you don’t need to be an expert to drive sales to your brand.

From getting the word out via social media platforms or a regular newsletter to honing your SEO, getting creative with your marketing. Investing time into it will drive sales, engage a community and build your brand.

Here are a few of our favourite options for small businesses:

• Social media - Your dream customer could be just a scroll away! From Instagram to TikTok, there are a range of social media options that are free to use. To get the best out of your chosen platform, ensure you’re thinking about your customer and where they may be more likely to come across you. If you’re using multiple platforms, be sure to repurpose content to keep your workload to a minimum.
• Newsletters - Newsletters are a great way to market directly to your customer, with no pesky algorithms to get in the way. This sales technique lands directly in their inbox, helping to drive sales. Plus, using one of our recommended platforms like MailChimp, you can link to your online sales platform for a pounds and pence breakdown of how much each email makes you.
• Blogs - If you’re focusing on search engine optimisaition, blogs full of detailed information and search terms can help your brand to climb to the top of those all-important Google rankings. Try websites like Google Trends and Answer The Public to see what solutions potential customers are already searching for so you can reverse-engineer results featuring your business.
• Word of mouth - Having customers advocate for you is your biggest brand superpower. Word of mouth is a free, super-effective marketing tool. Offer incentives such as referral schemes to maximise shares and spotlight customer content on your social media feeds to encourage others to do the same.

Don’t feel like you can only choose one marketing platform! In fact, pairing multiple platforms in the correct way can be the key to success. For example, using Etsy and the built-in algorithm can be a great place to get started and gain some initial sales, but why not include a discount code for money off their next order if they shop directly from your website? This can be a good solution to drive organic traffic away from platforms with high fees and over to your own website.

Sometimes you may also need to try a few different platforms and combinations before you find the right one for you. Make sure you keep a record of what works and what doesn’t so you can learn and grow from this.

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Set your goals and intentions

Setting honest, structured goals is an important practice in your business. After all, how else will you measure the success and tangibility of your small business? Set realistic, trackable goals and make time each month to check in with yourself and tweak them when you need to.

Some things you can implement from the beginning to ensure success:

• Track growth and sales targets – Perhaps you’re looking for a monthly increase in followers or growth in your sales targets? What can you put in place to track and improve this to ensure it happens?
• Research and development – This shouldn’t just happen at the beginning of your small business journey. In fact, making sure you’re consistently looking to grow and improve is an important part of running a successful brand.
• Reward your success – Once you’ve decided what good looks like to you, think about how you’ll celebrate hitting your goals! Incentivising yourself is a great way to give you something to work towards and it’ll keep you motivated.

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Bonus step: Join Hobbycraft Plus

If you’re looking for support in the form of educational, practical seminars, online networking sessions AND 15% off online and in store, then take Hobbycraft Plus on your small business journey.