Published August 23, 2022
Do you or someone you know enjoy a hobby such as working with textiles – weaving, spinning, tie-dye, fabric bleaching – or crafts/artistic items made of wood, bamboo, glass, jute, soil, etc.?
Many talented artisans have been creating handicrafts as a hobby for centuries, locally and nationally. There’s no need for “technical training” to start a business selling your works. And the good news is that there’s a nationwide demand for handcrafted goods.
Now is a great time to get started if you’ve ever dreamed of turning your crafts hobby into a business.
But there are a few things to consider.
It’s essential to understand the critical differences between doing something for fun and doing it as a for-profit enterprise. Suppose you create pottery as a hobby; you can spend hours designing and making pottery. But once you turn that hobby into a business, you not only need to make time for the creative aspects of the company, but you must devote hours to things like marketing, managing, selling, pricing, hiring, and juggling finances.
What to watch out for when turning a hobby into a business?
Do it! This does not mean just blindly jumping in and opening your doors. You have to do your homework (see below). But if you spend too much time thinking about it, it’s easy to get overwhelmed. And you end up doing nothing.
So do something every day to propel your startup.
Do your homework. You’ll need to learn how to price your goods, manage your time, and discover all the things you don’t know, so you can ask the right questions and find the right solutions.
Talk to people who’ve successfully launched a business from a hobby, or chat with a SCORE mentor.
Find a SCORE mentor to discuss any questions you have about this or other aspects of starting up a small business. Many SCORE volunteers in Chester and Delaware Counties are small business owners too!
Do understand your strengths and weaknesses.
Don’t spend your precious time tackling tasks you can quickly and affordably outsource to a freelancer or independent contractor. For example, suppose you’re launching a new website to promote your new business or sell your products online. In that case, you will likely save time (and time is money) by outsourcing the design of your site. You’ll need to learn the basics of search engine optimization (SEO). Still, it may be better to outsource your ongoing SEO as well. The same goes for marketing and other essential business tasks as well.
Do consider where you plan to sell your crafts. You can start small by selling at local fairs.
Do embrace technology. Your handicrafts business may be based on techniques that are centuries old, but modern technology can be a lifesaver. There’s an app for nearly everything you need, whether it’s social media management, bookkeeping, or more.
Do seek advice. You don’t have to do this on your own. Are there others in your community who’ve launched businesses selling their crafts? Are there social media communities or other groups focused on doing what you want to do? And, of course, you can find a SCORE mentor who can guide you.
Warning: one big don’t:
Don’t treat your business as a hobby. To succeed, you need to develop a business mindset. Treating it like this is critical because the Internal Revenue Service (IRS) cares about the difference. It says a hobby is typically not something you do to make a profit. Overall there are nine factors the IRS considers to determine whether your activity is a business engaged in making a profit:
- Are the tasks or transactions handled in a businesslike manner? Do you maintain complete, accurate books and records?
- Are there personal motives in working on a hobby? This aspect is very subjective, as many people engage in tasks they derive personal pleasure in whether or not they make a profit.
- Does the time and effort you put into your hobby indicate you intend to make it profitable?
- Do you depend on income from this hobby for your livelihood?
- Are there losses incurred while working on your craft due to circumstances beyond your control? Or are the losses typical in the startup phase of your type of business?
- Do you have the knowledge needed to develop this hobby as a successful business?
- Were you successful in making a profit in similar activities in the past?
- Has the activity made a profit in recent years? How much profit does it make today?
- Do you expect to make a future profit from the appreciation of the assets used for your craft?
With help, be sure you choose a proper business structure for your firm to protect your personal assets by incorporating your company.