By: Emily Coltman ACA

Stich Craft Create: Business

“As a craft business you’ll almost certainly be buying and selling stock. This might be raw materials; for example, if you’re making curtains, then your raw materials would be the lining fabric, curtain fabric, thread and trimmings. Or you might buy in stock to sell on as is, for example if you’re importing silk kaftans from Thailand.”

1. Choose your accounting system wisely

It’s important for any business to keep their books in order from day one, but for owners of a craft business this is even more important than usual as you’ll be dealing with stock and you’ll need to keep track of how much you have at any one time. Choose a good accounting system with the right level of stock control for your business. If you’re buying in stock to sell straight on, you’ll need a system with light stock control. In which case, try FreeAgent. If you’re making products from raw materials, particularly if your business is growing, look for a system with in-depth stock control. I like Brightpearl for this.

2. Be careful with commission sales

You may sell your products to larger organizations such as countywide craft bodies, who will then sell on the items to the public. If you’re going to do this, make sure the rate of commission they keep on the sales is fair, and that the interim buyer pays you on time. Don’t be caught out by big companies who may pay “low and slow”.

3. Beware of VAT registration if you sell to the public

If you’re selling your goods directly to the public, for example via your own website, don’t register for VAT unless and until you have to because to the public VAT just represents an increase on the cost of your product.

4. Save money where you can

If your craft business won’t take up much space, start from home and find out whether you can save money by buying large items for your business second-hand. For example, if you want to make pottery, could you find a potter’s wheel for sale on eBay or Gumtree, or even pay to use the wheel at your local art college, rather than buy a new one? But choose your cost savings wisely – see point 5.

5. Choose your suppliers carefully

When you’re thinking of how much you should pay for stock, don’t just look for the cheapest option. Think also of quality and ease of acquisition. For example, it may be cheaper to buy your buttons for your homemade childrenswear from abroad, but if they break when tugged by a child, that’s bad news for your brand and you could lose business. And there could be myriad reasons (stray ash clouds, political upheavals) why your imported stock can’t reach you. There may be import tax, too, which would push up the total price paid, so choose your suppliers carefully.

6. Think about how much stock you should buy in at a time

Suppliers may well give a discount if you buy a larger quantity, and you’ll save on postage too, but make sure you don’t end up with a pile of unsellable stock which will put a dent in your profit and tie up cash. Your stock might not be perishable, but if you’re making fabric bags and you buy a large quantity of bright orange material, will bright orange stay in fashion long enough for you to make the bags and sell them?

7. Work out your profitable lines

If you sell more than one kind of product, for example hand-knitted mittens and scarves, it’s a good idea to know which lines bring in the most profit, as that’s where you should look to focus your time. To work out how profitable each line is, take your sale price per unit (for example, £10 per scarf), then subtract how much each unit costs to make. Make sure you include all your costs. For example, if you’re making patchwork cushions, think of not only the fabric and thread but also the cushion pad and zip, and don’t forget to include your time for cutting out and sewing up. The more intricate the design, the longer this will take. Use a spreadsheet to help you and ideally do this before you set your prices to customers, because it can be very hard to put prices up right away.

8. Set your prices carefully for handmade goods

How much premium can you charge for handmade goods? For example, if you are making bespoke cross-stitch wedding samplers then your customers will expect these to be sewn by hand, and will expect to pay a premium because this will take you a long time. But if you’re making clothes then these would usually be machine-stitched, which would not take as long to make as handsewn garments.

9. Your website or mine?

Should you sell through your own website or through sites such as Etsy or Alibaba? In terms of costs, weigh up the price of building your own site (possibly by using a dedicated e-commerce platform) or having it built by a professional, against the greater pool of customers you’ll find through Etsy but will pay fees for. And don’t forget that if you go through your own website you’ll also have to invest time marketing the site and maintaining it, or paying someone to do that for you.

10. Plan for the future of your craft business

No matter how small your business is, it’s very important to plan and forecast your sales, costs, profit, and cash coming in and out. This isn’t just for large businesses. You won’t be able to keep everything in your head no matter how small your business is so write it down and record it!


This article has been excerpted from The Craft & Creative Start-Up Kit by Enterprise Nation founder Emma Jones. To download the rest of this fascinating ebook, Become a Member of Stitch Craft Create Business today!

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