According to Business Jargons, an online business encyclopedia, it’s often harder to start a business in rural areas, due to several factors, including a lack of technical know-how and training. But the encyclopedia also points out that several businesses are particularly well-suited for those living in rural America. Some include textiles, weaving, spinning, tie-dye, coloring, fabric bleaching, and handicrafts, including crafts/artistic items made of wood, bamboo, glass, jute, soil, etc.
Many of you may already be creating handicrafts as a hobby, so 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. So if you’ve ever dreamed of turning your crafts hobby into a business, now is a great time to get started.
Before we discuss how to do this, there are a few things you need to consider. First, 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.
Key Dos and Don’ts
Let’s look at some dos and don’ts of turning a hobby into a business.
Do it! I don’t 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.
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. Go bigger by launching an e-commerce website. Or instead, Shopify suggests you explore these online marketplaces. Etsy is the most well-known of these marketplaces and is an excellent place to launch your crafts business.
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.
I only have 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:
- Do you carry on the activity in a businesslike manner; do you maintain complete, accurate books and records?
- Are there personal motives in carrying on the activity? This aspect is very subjective, as many people engage in activities they derive personal pleasure in whether or not they make a profit. For this reason, you must consider the other factors as well.
- Does the time and effort you put into the activity indicate you intend to make it profitable?
- Do you depend on income from the activity for your livelihood?
- Are the losses incurred while performing the activity due to circumstances beyond your control? Or are the losses typical in the startup phase of your type of business?
- Do you or your advisors have the knowledge needed to carry on the activity as a successful business?
- Were you successful in making a profit in similar activities in the past?
- Has the activity made a profit in some years, and how much profit does it make?
- Do you expect to make a future profit from the appreciation of the assets used in the activity?
Another do—make sure you choose the proper business structure for your company. Because you see yourself as just selling the crafts you create doesn’t mean you you shouldn’t protect your personal assets by incorporating your company.
Talk to your SCORE mentor today if you have questions about this or other aspects of turning your hobby into a small business.
Copyright © 2023 SCORE Association, SCORE.org
Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.