Budgeting and Small Business Advice for a New Crafter

As you begin thinking of your expenses, crafting supplies, advertising expenses it can all seem too overwhelming, and at this point we lose a lot of potential crafters. By being honest, and upfront with your budget and business plan your business has a much better chance in succeeding. Keep your budget grounded and allow for unexpected costs, or circumstances you had not thought of. Part of keeping your budget grounded, is also realizing that with an online store you may not see a large profit margin for the first year or so. The reason being is you are competing with literally thousands of other talented crafters out there, and you need to establish yourself in the online market before you will start see a steady stream of traffic and repeat business.

Most crafters who start out have a low start up budget or no start up budget at all. Keep this in mind as you start to advertise your site, so be conservative as you first start out so you are not starting your business off being in debt. The goal is that your crafts or crafting service will eventually pay for all your expense including advertising, supplies and marketing and still leave your something left over.

Make sure when first starting out that instead of making thousands of crafts to sell to your clients only start off with a few, and see if your products are selling. A lot of times crafters will blow their budget trying to stock up on their crafts only to find out that some of the items are not big sellers. This is where your research comes in to play. As a new crafter I always advice that you research your market, meaning try to see if there is a market for the particular craft you are wanting to sell, and is there a demand. Is your new product something that is going to catch the eye of potential customers, or is your product something that might be sitting on your shelves one year from now. While doing your research you can email other crafters and ask them for their opinion on your products. Are your products something the crafters think will be a hot seller, or something that will spark the interest of potential customers?

As with any business there are going to be times where you come up with a great craft or crafting service that you think will be HUGE seller, only to find out it wasn’t. But the key is to not go over the limb buying inventory so that your loss is a minor one. As with any business this will always happen to us at least once, hopefully the materials you purchase can be put to use on other crafting projects so you are not out of pocket a ton of money in supplies. Start your business off on the right note by using a simple spreadsheet or purchasing accounting software so you are keeping a very detailed record of how much you have spent. This is crucial to keep you on your budget, to help you price your items by knowing the exact cost of each item and it also helps you to manage your marketing expense so you do not go over budget.

One of the things that I have noticed a lot lately with new crafters starting out is that their budget is so tight they do not allow for any advertising expenses. This could your undoing of your business. In a sea of literally thousands of crafters, how is someone going to find your site unless you market your site through advertising? Not only should you utilize all the free advertising venues I have discussed in the past, but you should also advertise your site on craft marketplaces to help draw targeted traffic to your site. As rule of thumb it is always good to allow twenty percent of your budget for advertising costs. This will help to improve your search engine ranking by bringing targeted traffic to your site, and also help to get your site seen by potential customers.

As your business starts to develop you can start to adjust your budget to allow more money for advertising costs by cutting down on your inventory costs as your products will already be made and ready to sell. The important rule is do not go over budget or dig yourself a hole your business cannot pull out of. By being conscious of your spending, you can keep your budget in tow and allow yourself to start running a profitable business in no time.