10 Things you should know about starting a handmade business

10 things you should know about starting a handmade business that I’m betting no one has ever told you.

Have you watched countless videos and signed up for a ton of courses on starting and running a handmade business. I know I did when I started my handmade biz several years ago.

They all made it sound so easy didn’t they?

Just a reminder, I’ve had my own business since the mid-1980’s and I want to warn you starting and running a business is a LOT of work!

When you tell people that you have your own business they are usually envious and think it’s wonderful.

The reality is two-fold:

Yes starting and running your own handmade business, it’s wonderful. BUT, it also means a lot of effort and dedication on your part. Because you are working from home, you’re going to have to be extremely focused.

Unfortunately, it’s a cold hard fact – 90% of businesses fail within 5 years because the business owner simply gets tired!

This fact is from a book called eMyth Revisited. It’s an excellent book and I would highly recommend that you read it.

I’m not trying to scare you into thinking that your handmade business might not survive. It’s just a cold hard fact about owning your own business.

10 Things you should know about starting a handmade business

We’ll start with number ten and work our way down. Not a one of them has to do with how to sell your finished items. Instead, we’re going to focus on those behind the scenes things you should know about starting and running a handmade business.

#10 – There are people that will dive you crazy!

Dealing with the public (whether in person or on-line) can be tough.

As a designer you’ll have people that purchase a pattern thinking it’s a finished product. Or, they’ll email you with a zillion questions.

As a maker, you’ll have people that want a custom order only to never pay for it or complain about it when it’s finished. Or, they’ll haggle over your prices.

Make plans early on how you’ll deal with situations like this. Set your policies on refunds and support. Make them clear. Prepare yourself for the “I can buy this at Walmart cheaper”.

#9 – Believe in yourself and your business

One of the most important qualities of a successful handmade or creative business owner is believing in yourself, your products, and your business.

Believe in yourself - YES you canWhile it may be hard at times, you need to believe in yourself – even when others don’t.

The challenging start-up years will require you to have unwavering faith in your decision to step out on your own.

While it may be hard at times, you need to believe in yourself – even when others don’t.

And always align yourself with other businesses that also believe in you.  When you are in the early states of planning your new handmade business, don’t ask from your family or friends UNLESS you are 100% sure it will be positive and valuable. 

#8 – The “To Do” list NEVER ends

The sooner you come to terms with the fact that the work will never be done, the better.

Don’t let your work hours be dictated by the amount of work, because the amount of work will always exceed the hours in the day.

Instead, learn to prioritize and understand when it’s time to take a well-needed break.

#7 – You’ll have to wear many {MANY} hats!

Traditionally, the owner of a company carries the responsibility for the overall health and well being of a business.

Daily tasks revolve around big picture ideas and long-term strategies.

However, when you start a business, you will find yourself doing the most mundane tasks. You’ll not only be the CEO, but the HR manager, marketing manager, website developer, bookkeeper, and even the receptionist.

#6 – You won’t be able to do it all!

Eventually the time will come when you’ll have to either outsource specific tasks or bring on employees to help with the workload.

It may not be ideal financially, but keep in mind your time is extremely valuable.

Getting someone else to do everyday tasks that aren’t your strength, may be the best option for your business.

#5 – Other handmade & creative business owners will become your closest friends

10 Things about starting a handmade businessPeople walking a similar road to you will become your closest friends and allies.

Networking with other new business owners is extremely important, not only to your growth as a business, but also your personal well being.

You may find friends and family won’t completely understand your struggles, but like-minded entrepreneurs will be able to relate to the ins and outs of running of a small business.

#4 It’s lonely.

Starting a new business can be a lonely ride but it doesn’t have to be.

In the beginning, starting your own business can be incredibly isolating and you may find that your family isn’t as supportive as you hoped they would be. 

You need to ask yourself – and answer honestly:

How is my business going to impact my family? 

Honestly, your business will cut into your family life – nothing can kill your enthusiasm like indifference, skepticism, and just plain negativity coming from the people you care about the most.

You’ll need to work harder to make daily connections, but you can make sure those connections count.

#3 – Be prepared for a roller coaster of emotions.

From your initial decision to start your own handmade business right through the very first sale or the first positive customer review, to all the milestones along the way – the world of a small business owner is exhilarating. 

The highs are high – but the lows are also very real. 

It’s important to always keep perspective and understand the end game. 

Be prepared for the lows by always celebrating the wins, even the little ones.

When you are starting to feel overwhelmed – take a break from what’s stressing you out and do something you enjoy. 

Quite often taking a break and coming back to the things that were stressing you out makes them feel not so overwhelming or unattainable.

#2 – Say HELLO to the 80+ hour work week!

Many small business owners are pumped to leave their traditional 9-5 full or part time jobs behind and become their own boss. 

But let me tell you from experience, the work hours rarely get better.

Getting a small business off the ground is hard work and the first few years require a lot of effort and many extra hours.

When my husband & I first started our software business in 2000 we each were working over 80 hours a week. 

I still work roughly 20 hours a week for the software business and at least another 30 or so between Fanciful Things and YarnyBookkeeper. 

Just remember, the pay-off will be worth it

Are you ready to hear the #1 thing that you should know about starting a handmade business?

Drum roll please……..

#1 – As soon as you make your first sale……you are a business!

There’s this myth that likes to flit around the internet like a butterfly that if you sell online (via Etsy or elsewhere), you’re considered a hobby and you don’t need to report your sales on your taxes. 

You might see variations of this myth.

It might start with something like, “I’m just a hobby so…”. Or it might not even involve the trigger word, “hobby”. It might be something along the lines of – “you don’t need to report your income for taxes until you make $X.”

I hate to rain on your parade – but it’s not true.

To be clear, any of you who think you fall into the hobby category, you should be reporting hobby income when you file your personal tax return!

The very minute you decide to open an Etsy Shop (or sell on any of the other online shops such as Facebook, Ravelry, etc.)  you ARE a business! 

And you will need to act accordingly – meaning you will need business licenses, will be responsible for collecting, reporting and paying Sales Tax, etc.

While the dollar amounts may be different between Federal and State – the IRS considers you to be a business for income tax purposes as soon as you make a sale and that you must pay self-employment taxes as SOON as you have net earnings of $400 or more.

So there you have it. 10 Things you should know about starting a handmade business.

Did anyone ever tell you these things? Do you wish they had?

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8 Comments

  1. One f the hardest things you will have to face is seeing your family buy items you can create from someone else. Because family can be your biggest challenge as well as your biggest supporter. Don’t give up on them just don’t let them tell you you can do what you love. One day they may become your biggest cheerleader and supporter or even work with you.

  2. this is great information to have.. i do have couple of things in mind but still hesitant because of all those other factors you mention 🙂

    1. Vidya – starting a business (and keeping one running) is a LOT of work. The overall thought process can be totally overwhelming. Good luck with your endeavors 🙂

  3. In business since the 80s? Congrats. That’s a cool decade, but I’m sure business was handled a little differently back then!

    Some very good points. You definitely need to be self-motivated, and be ok with alone time. Also, those 15+ hours days will happen, and you’re gonna need to set your own limits, or you’ll end up over doing it!

    1. Hi Samuel. Yes, business was VERY different back then. Everything was in person then. I used to drive 500 miles every week taking care of my bookkeeping clients. Internet was dial up. Ok, now I’m feeling old LOL

  4. Boy, do I agree with everything you said here! But one thing did surprise me. I also had heard that if you aren’t making an income (which would mean many more than one sale), you’re not in business and just have a hobby. And I was told $600 by a tax person, so I am glad I finally found out from you that I was mistaken – and so was she!

  5. Gosh did this list bring back memories of when I owned our interior decorating business! Now that I’ve downsized and only have the workroom and the Minky Blankets business it seems I’m still as busy as when hubby and I had the retail shop !

    1. LOL, no one ever tells you that running a business is never ending-do they? Some days I feel like the hamster running in the wheel!

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