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Step-by-step guide on how to start a craft business

5-minute read

Step-by-step guide on how to start a craft business
Josh Hall

Josh Hall

16 July 2018

Interest in craft products and the people who make them is exploding in the UK.

Many people across the country want to support local makers, and to own unique, individual items that can’t be found anywhere else. If you have a passion for crafting, starting a craft business in the UK can be a great way to make your hobby pay – whether you’re thinking of it as a side project or as a potential full-time career.

What does running a craft business involve?

Running a craft business can involve a number of different tasks, and your work can vary day to day. Some of your key activities are likely to include:

  • Negotiating with suppliers and purchasing materials
  • Developing new products
  • Making the items (the fun bit!)
  • Marketing your business and selling your products, for example through craft stalls or online
  • Keeping business records
  • Filing documents like tax returns or confirmation statements with Companies House

How much does it cost to start a craft business?

Starting a craft business doesn’t need to be cripplingly expensive, especially if you’re starting with a small number of products. However, there are some startup costs involved.

First up is the cost of your materials. Finding the right suppliers and negotiating the right prices are crucial for a small business. You might also need to pay fees to run a craft stall – but you should be hoping to recoup these through sales.

You may want to set aside some cash for marketing, but remember that some of it can be done on a shoestring. Take a look at our guide to the most important concepts in online marketing for more.

Starting a craft business – step by step

So now you’ve got the basics down, it’s time to get started. Read on for our step-by-step guide to starting a craft business in the UK.

1. Find your niche

If you’re thinking about starting a craft business, it’s likely you already have a crafty passion – whether it’s needlework, pottery, dressmaking, or anything else you can imagine.

Craft and ‘artisanal’ goods are popular in the UK and abroad, but competition in the market is high. Think about how you can make sure your offerings stand out. What is it that you can bring to the craft market that’s truly unique? Do you have a special skill, unique style, or materials that nobody else is using? Try to work out your niche before you begin.

2. Craft a business plan

Your business plan is one of the most important documents you’ll write when starting your craft business. It'll act as a guide when starting out, but you should also go back to it regularly to see whether you’re hitting your goals and benchmarks.

Just as every business is unique, so too is every business plan. However, there are some key points to cover in the document, and there are some tried and tested ways of writing and structuring it. For more information, read our guide on how to write a business plan for a new company.

3. Sort the legal side

When starting any business, there are some important legal issues that you need to sort out immediately. One of the first questions is around legal structure. Many craft businesses in the UK are operated by sole traders, but other craft entrepreneurs choose to set up limited companies. Both have advantages and disadvantages, and you should consider speaking to an accountant or company registrar before making a decision. For some starting tips, read more about the differences between a sole trader and a limited company.

As a new business owner, you’ll also need to deal with HMRC. You’ll need to register as self-employed, and file your tax return and pay your tax bill (including Corporation Tax if you establish a limited company) according to the relevant tax deadlines for your business.

 Think about insurance for your craft business

Craft business owners should consider a range of different covers.

  • Public liability insurance can protect you against claims arising from injury or loss suffered by a member of the public as a result of your business. This cover is particularly important if you’re setting up a craft stall
  • You should also consider product liability insurance, which can cover you if a product of yours causes injury or loss. Keep in mind that you may still be liable for compensation claims if you’re selling products that you haven’t made yourself
  • Stock insurance may also be important, helping you protect any stock you’re storing – which may well be your biggest asset

Simply Business offers tailored insurance for craft businesses, letting you combine all the covers you need into a single policy. Compare insurance for crafters quotes.

4. Find your suppliers

As a crafter, you rely heavily on great suppliers. The quality of your materials might well be one of your major selling points, and you need to make sure you’re getting exactly the right supplies at the right price.

Remember that when you're starting out, you're likely to need your suppliers more than they need you. Similarly, many suppliers will be unwilling to offer credit to brand new businesses, so you should be prepared to front the cash for your first orders.

However, as your business grows, check in with your suppliers regularly to make sure you’re getting the best possible deal. You might be able to shave off some of your costs just by asking.

5. Think about where you’ll sell

So you can make beautiful craft items – but where are you going to sell them? There’s a few potentially successful sales channels that UK craft businesses can explore.

 Wondering how to set up a craft stall?

These are becoming a fixture of many High Streets, and craft fairs are immensely popular in the UK. A craft stall can be a great way to establish your business and introduce yourself to the local community. Have a look online and find the craft fairs within a reasonable distance. Each one will have different application processes, so contact them individually to find out how to set up a craft stall at each event.

 Try selling online

There’s a wealth of sales opportunities online for craft businesses. Etsy is the best-known craft ‘marketplace’, and offers the opportunity to put yourself right in front of customers who are already interested in craft products. But you might also consider setting up your own online shop, which can now be done very cheaply – or even for free.

We’ve compiled a guide on how to start an online shop with everything you need to get started. You could also read our rundown of the top free tools for building a business website.

Approach retailers

Brick-and-mortar retailers are another potential sales route. Try starting local. Approach likeminded shops in your area and ask if they'd be interested in stocking your products. Make sure you're fully prepared before making an approach, as sensible retailers will want to make absolutely sure that your items are of the best possible quality and, most importantly, that they'll be popular with their customers.

6. Keep one eye on the future

Many people start craft businesses as a side project, or simply as a way of making their hobby pay. However, there’s great potential for expansion in this field, particularly as interest in craft products and their creators continues to grow.

If you’re pleased with how your business is progressing, think about scoping out potential opportunities to grow. To do this, you might need to seek funding. For expert tips on this process, read our expert guide to getting funding for a business.

Insure your craft business

You can build a tailored craft business policy. Choose from a range of expert cover options, starting with public liability insurance and product liability insurance. Run a quick quote to get started.

Start your quote

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