3 Common Reasons Craft Businesses Struggle

There are a lot of specific reasons a small creative business will struggle to succeed. 

I’m not covering everything that can sink a business, but rather 3 common mistakes that will set you up to struggle.

 

1) Selling entry level products

“Entry level products” are products that require basic/beginner skills to make and almost every craftsperson in your field can make them. 

For example, most soap makers can make a bar of soap; fewer can (or do) make lotions, serums, facial cleansers, etc. Most jewelry makers can create beaded jewelry; fewer are metalsmiths who can forge metal. Every knitter can knit a plain scarf; fewer can knit more complicated patterns, designs, or articles of clothing. 

If you think about entry level jobs, there are typically more candidates than there are positions, so people who are hiring have an abundance of options. They’re also positions that don’t pay very well. 

The same scenario applies when you’re selling “entry level” products. Consumers have an abundance of options, and they’re not willing to pay very much for the products. 

If you’re planning to sell a product that’s fairly easy to make and the majority of craftspeople in your field can make it, you need to find a unique angle for your products.

For example, most soap makers start by creating a basic bar of hand/body soap. If I were to start a business and only knew how to make basic bars of soap, I might:

>> Find a cause to support (e.g. use ocean-themed ingredients (ocean water, sand, seaweed), make my bars look like the ocean (soft blue with white waves on top), and donate a portion of profits to an ocean cleanup charity).

>> Target a unique market (e.g. target sports fanatics by creating soap that looks like common sports equipment. Or target wine enthusiasts by creating soap that’s infused with wine).

>> Solve a specific consumer problem (e.g. soaps that exclude ingredients that are common allergens, such as scent-free, or free of synthetic fragrances, or sulfate and paraben free, etc.)

Research what’s already out there and find a way to be unique. 

Unfortunately, “being your designs” is not enough to stand out; every handmade business is selling their unique designs (unless they’re copycats).

You must think of the consumers first. 

Consumers don’t care about you; they care about what your product can do for them. 

So focus on the specific group of people you want to serve (i.e. not “women”, that’s not specific. But rather women who have Dachshunds, women who are vegan, women who like to camp) and find ways to tweak your product so it screams “I’m made for you!”.

It doesn’t have to be complicated. Simply changing one ingredient/material/product feature, the shape or color, the product packaging, etc. can take a basic product and make it unique and FOR a specific type of consumer.

 

2) Expecting customers to just show up

If you don’t have a plan for how you will gain customers, you’re setting yourself up for failure. 

Relying on others to bring customers to you (e.g. selling at craft shows and relying on organizers or setting up a shop on Etsy and expecting Etsy to send you all your customers) or expecting that simply having a social media account and posting about your products each day will result in sales, is a sure way to fail.

These methods can work to help you gain customers, but not without a strategic plan.

For example:

Craft shows

If craft shows are going to be your main path to customers, you must choose the events that attract your target market. You must also have a plan for capitalizing on each shopper who stops at your booth. Craft shows are labor intensive and they can be expensive. So to ensure they’re profitable, you should be marketing to all your shoppers. Have a way to get in contact with them after the event and ensure they feel encouraged to find you after the event. 

>> Check out: How to get Craft Show Shoppers to Remember your Handmade Business & How to Grow your Newsletter at a Craft Show (& Make Sales After the Event)

Etsy

Many people are successful on Etsy, but the majority aren’t. And I believe, that’s mainly due to their mindset going in. The majority of people think they can simply open a shop, list some nice items, and Etsy should send shoppers their way. Etsy is a competitive marketplace and if you want a piece of the Etsy-customer-pie, you must implement a strategic keyword strategy.

Know which keywords your target market (or Etsy’s visitors) are typing into search bars and build listings and a shop that aligns with those searches. Or, analyze Etsy’s popular subcategories and the listings that are at the top of the results, then find a way to be as good as, or better than those listings. 

>> Check out: Etsy SEO: 3 Easy Steps to Boost Traffic  and How to Increase Traffic to your Etsy Shop and How to Find (popular) Things to Sell on Etsy

Social media

There are millions of social media accounts competing for consumers’ attention. If you want your target market to follow you and interact with your posts, you need a strategy. Unless you have an innovative or truly unique product, posting a picture of your latest creation every other day is not enough to attract the number of people to your online shop that you’ll need to make consistent sales.

Again, you must think of your target market first. If you choose your target market properly, you’ll know what they’re interested in. Create content that aligns with that interest so you gain their attention and they want to follow your account, like your posts, share and comment. Then, you can mix promotional messages in, which they’ll be more likely to see and pay attention to.

For example, if you target people who own Dachshunds, you know they’re interested in Dachshunds. You may post cute photos, funny videos, and memes of Dachshunds, share tips on caring for Dachshunds (non-promotional content…but it’s content that piques your target market’s interest). Then every 3-5 posts, promote one of your Dachshund-themed products. 

>> Check out: 5 Steps to Viral Social Media Posts for your Handmade Business

 

You cannot have a “if I build it, they will come” mentality when it comes to your small craft business. 

Expect that gaining the attention of new customers will be the hardest part of your job so you’re prepared for the effort that will need to go into it.

 

3) No profit plan

So many people are shocked at how high their Etsy fees are (How Much Does it Cost to Have an Etsy Shop? (Unexpected fees)) and how little money they actually make each month after fees are deducted. 

On the other side, many people aren’t even aware of how much money they’re losing through craft shows. They count their money at the end of an event and if they made more than their booth fee, they call it a win. 

But there are so many other craft show expenses aside from booth fees, not to mention your wages for the hours spent preparing for, selling at, and packing up from a craft show. 

>> Check out: 10 Costs of Selling at Craft Fairs

Unless this venture is a hobby for you, you need to pay close attention to your numbers and make growing your business’s metrics your first priority.

>> Check out: 5 Business Metrics to Track Monthly

You must know exactly how much time and money you’re spending on your business (wages and expenses going out) and how much revenue is coming in. 

There should be money leftover each month after you pay your hourly wages and all your expenses. 

These are your profits. 

Why do profits matter if you’re paying yourself an hourly wage? 

>> Chances are; you’re not being paid much higher than minimum wage. And you deserve more than that for all the effort you put in. Plus, you’ll need more than minimum wage if you hope to build a business that’s your main source of income.

>> Profits also allow you to grow your business. That leftover money allows you to spend more on materials, marketing, and other expenses than you did last month. So you can make more products, run more ads, and list more items so your sales can increase. Without profits, your business will stay on a hamster wheel (unless you’re dipping into your personal bank account to grow your business).

>> A business doesn’t stay on an upward trajectory. It will go through slow months and even slow years. Profits ensure that you have a nest egg to keep your business afloat even when sales aren’t coming in. 

Get a rough idea of ALL your business expenses and then ensure your prices are high enough to cover all those costs and leave you with a healthy profit margin or you can sell high volumes of your product to produce higher profits.

>> Check out: The Right Way to Price a Handmade Product (Step-by-Step Formula)

Constantly look for ways to lower your production and material costs.

You must also pay attention to your overhead expenses.

Not just the things outside of production you spend money on (e.g. Etsy fees, craft show fees, shipping packaging, marketing material, etc.) but also the HOURS you spend on tasks outside of production time. 

>> Check out: How To Protect Your Business’ Bottom Line

 

Avoid these 3 common mistakes and you’ll be setting your craft business up for success!