Monday, 23 January 2012

Crafting as a business part 2: the Business Model


Good morning and happy Monday everyone!

Today I'm going to continue my discussion of Crafting as a Business. Today's topic: different business models.

 Some Background

When Sherri and I started Beads, Indeed! it was because she had made a pile of jewelry, sold it at her school and the sale went well. Like, really well.  So well we invested a few hundred dollars in materials, confident we were going to strike it rich!

Rich enough to afford $2 breakfast...(this place is great btw)

We made more handmade jewelry, one of a kind pieces, and tried again, and didn't sell a thing. Again and again we tried, changing our display, our prices, our sales approach, and we did see improvements with each try, but we never struck it rich like we hoped. Looking back, there were some pretty serious weaknesses in our approach from the get-go:
  • When you have something unique, it stands out. If you have a hundred things that are unique, nothing stands out.
  • Also, when every piece is unique, if a piece is popular, you can only sell it once.
  • Selling at a craft fair requires inventory. If some pieces are not popular, you are stuck with excess inventory.
The main way that we addressed weaknesses was through our choice of selling venue and our display. This did have an effect, but didn't tackle the root of the problem - the business model. That's why if you're going into crafting as a business, I recommend you think about the business model you want to use so you don't have the same trouble we did!

Business model alternatives



When people think of crafting often the first idea is to follow the business model that Beads, Indeed! followed. The truth is, however, that there are a number of other options, some are a bit out-of-the-box, but some could really be effective, depending on what you want to do.



The Standard Crafter: What most people think of when they think of crafting.  You make a bunch of items in your free time, realize you have too many, then sell them at a craft fair.  This is what we did. This model works best for crafts that really stand out in some way.
  • Pros: Cheap to start. Fun project. 
  • Cons: If people aren't buying an item you're stuck with it. Lots of competition. If your table is next to one that looks like a yard sale, people will think your craft is too expensive.


The Alternate Venue Crafter: How do you deal with a craft like jewelry that has waaaaay too much competition?  You remove the competition by selling in alternate venues. People's homes, online at Etsy or Zibbet, your own home, door to door, etc.
  • Pros: With no competition, it's a lot easier for people to find things they like. If they visit your sale, they come expecting to purchase.
  • Cons: Once you've hit up friends and family you have to be good at promotion to get new clients.


Samples and Orders: This is the way to go pro, and is what I would recommend for most crafters. Instead of making lots of inventory, make a few samples of the craft that you can replicate fairly easily.  Not 100 samples, more like 10. Then you display them on a website or at trade shows or whatnot, and take orders. Give them small design elements that signify them as made by you.
  • Pros: Not a lot of inventory to keep track of. Easy to discontinue old stock
  • Cons: May not be the best option for labour-intensive crafts that take a long time. Often unsuitable for craft fairs because people like to buy what they can touch.

Wholesale it: Design pieces, hire other people to make them, and sell them wholesale.
  • Pros: More of a business than a craft, larger orders all at once
  • Cons: You're not a crafter anymore, you're a manager.

The Artist: Make your craft out of higher quality materials and try to attach deeper meaning to them. Go to art shows and hobnob with art folk. Charge higher prices and sell at auctions. Make sure your events are swanky and prestigious. It's all about image!
  • Pros: You still get to create, and you'll probably get more per piece.
  • Cons: You need good marketing, and it helps to know a few wealthy people who are connected in the art world. This will likely involve a lifestyle change.


The Teacher: Start making things. Teach classes, charge tuition.
  • Pros: Actually can be a very good option for a craft that is oversaturated (like jewelry) and easy to teach. There's probably more money in it than in selling directly, at least when starting out.
  • Cons: You're not a crafter, you're a teacher. A teacher who does crafts.


The Teaching Video: Similar to the last one, make video teaching how to make things, sell video. Success probably depends both on how interesting the piece is and how interesting a presenter you are.
  • Pros: Can do in conjunction with any of the above. Not as scary for introverts. Might also be good just as a general "increasing your profile" tool.
  • Cons: It might be hard to get people to pay for this, especially given the plethora of free information on the web. 


The Supplier: Become a supplier for other crafters who want to save time. For example if you wanted to work with wood you could make pen blanks, table legs that are lathe-ready and so on, essentially doing the grunt work so others can focus on the creative fun part - carving and designing.
  • Pros: It's a way to be crafty if you're not talented?  Seriously this is probably not what you want to do.
  • Cons: probably need large shop to turn profit, you'd be in competition with low-cost overseas producers, not as creative as doing finished products. Probably not really viable unless your craft involves long and unappealing prep-work before the fun part starts.

And I'm sure there are more but you get the idea.

 Epilogue


Looking back, I wonder why was it that at the first sale we raked in the money, even though we were using a business model with serious weaknesses? Probably a few reasons:
  • It was in her school. Everyone knew her and wanted to support her
  • It was near Christmas time, so people who wanted to support her could do so by doing Christmas shopping
  • The display was a bit amateurish, but approachable so people picked things up and handled them.
  • It was in a high-foot traffic area with no competition around. Very visible.

1 comments:

Stephen said...

Saw this posted on reddit. I've seen people talk about crafting a business, but I've never seen anyoen go into so much detail about the different business models. This is excellent information for any budding crafting entrepreneurs.

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