Step-by-step guide to starting a crafting business in the UK

So, if you have a passion for getting creative with your hands, setting up a crafting business can be a great way to make your hobby pay – whether as a side hustle or a potential full-time business.

What to know about starting your own craft business

You might be starting your own craft business because you’ve got an existing hobby or skill you’d like to make money from. And while the creative side is important, running your business will involve a wide range of different tasks, like:

• making your products
• negotiating with suppliers and buying materials
• developing new products
• marketing your business and selling your products
• keeping business records
• filing documents like tax returns or confirmation statements with Companies House

How much does it cost to start a crafts business?

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

First 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 without spending much at all. Take a look at our complete small business marketing guide for more information.

Starting a craft business – step by step

Are you ready to get going? Read our step-by-step guide to starting a craft business in the UK.

1. Find your niche

If you’re starting a craft business, it’s likely you already have a hobby – it could be anything from needlework to pottery or dressmaking.

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 products 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.

Small craft business ideas

If you still need some inspiration, here are a few products you can try making before settling on your niche:

• upcycling – this one’s brilliant for sustainability. If you’re reluctant to throw something away, can you turn it into something else? It’s one way of creating really unique products – think cushions made of old shirts, or making a table from drawers. You can also collect old stuff that people are throwing away in your area
• soap making – soaps can come in many different fragrances, shapes, and colours, so this is a fun one to experiment with. You can package them up nicely and send them to your customers
• gift baskets – what occasions can you think of where people buy and receive gift baskets? University graduations, birthdays, anniversaries – a personalised gift basket can make a great present
• candle making – whether you’re selling online, at a market, or have your own shop, candle making is one of the most popular artisan crafts. From eco-friendly candles to scented ones, there are lots of opportunities to find your own niche. Read our guide to starting your own candle making business for an overview.

If you want more ideas, social media is the place to look. Lots of creative types share craft ideas on Pinterest and Instagram – and these are great places for you to promote your business, too.

Most profitable crafts to sell in the UK

When deciding on the type of crafts you want to sell, it’s important to consider their profitability. Products that are low-cost and easy to make with a high profit margin and wide target audience are likely to be more profitable.

Here are some of the most profitable types of craft product, according to Made Urban:

• jewellery
• homemade soap and candles
• art and photography
• sewing

Instead of choosing the product first, you could focus on a popular industry such as:

• weddings
• beauty and health
• pregnancy/baby
• events like Christmas or Easter

Some of the most popular trends for craft products are gender neutral, eco-friendly, home decor, outdoors, pet, and wellness items, according to Pinterest.

2. Craft a business plan

Your business plan is one of the most important documents 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.

Your business plan should be as unique as your craft business, clearly laying out your niche, audience, and how you’re going to sell your products.

But most business plans do generally follow the same format and there are tried and tested ways of structuring it. For more, read our guide to writing a business plan for a new company.

3. Work out what legal structure to choose

When starting any business, you should get the legal side sorted straight away. One of the first questions to answer is around legal structure.

Many craft businesses in the UK are run by sole traders, but other craft entrepreneurs choose to set up limited companies. Learn about the differences of a sole trader vs limited company.

Both have advantages and disadvantages, and you should think about speaking to an accountant or company registrar before making a decision.

As a new business owner, you’ll also need to deal with HMRC. It's important that you register as self-employed so you can pay your taxes.

Then you’ll need to keep up with tax deadlines for your business, filing your tax return and paying your bill on time (including corporation tax if you establish a limited company).

Think about insurance for your craft business

Craft business owners should consider a range of different covers.

• public liability insurance protects you if a member of the public gets injured or loses money and blames your business. This is particularly important if you’re setting up a craft stall
• product liability insurance covers you if a product of yours causes injury or a financial 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 could 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 quotes for crafters.

4. Find your suppliers

Crafters rely on great suppliers. The quality of your materials could be one of your major selling points, plus you need to make sure you’re getting 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 with your suppliers regularly to make sure you’re getting the best deal. You might be able to reduce your costs just by asking.

5. Think about where to sell handmade items

Your craft items might be beautiful, but marketing and selling your products creatively is perhaps the most important part of running your business.

There are a few different channels that craft makers can explore.

Selling crafts online

There are lots of craft selling sites that you can use to promote your items. Etsy is the best-known craft ‘marketplace’, and lets you put yourself in front of customers who are already interested in crafts. But you can also set up your own online shop, which can be done very cheaply – or even for free.

We’ve got a guide to starting 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

Bricks-and-mortar retailers are another potential sales route. Try starting local. Approach 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.

Set up a craft stall

Craft stalls are becoming a fixture of many high streets and craft fairs are popular in the UK. A 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.

Read more about setting up a market stall.

6. Check laws on selling homemade crafts in the UK

Before you get your business up and running, you’ll need to make sure that you’re meeting the regulations for selling handmade goods in the UK.

It’s unlikely you’ll need a licence if you’re selling crafts from home. If you’re selling handmade items at a market, it’s worth checking whether you need a business licence using the government’s licence finder.

As a business that sells products to customers, you’ll need to make sure you’re up to speed with the government’s product safety guidance.

Meanwhile, if your products include a hazardous substance such as an essential oil, it’s likely you’ll need to comply with the Classification, Labelling and Packaging (CLP) Regulation. Get in touch with your local trading standards office if you need further guidance.

As a craft business owner, some other laws and regulations you may need to consider include:

• hallmarking
• fire safety regulations
• gas safety regulations
• UKCA marking (which has replaced CE marking)
• toy safety regulations

7. Keep one eye on the future

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

If you’re pleased with how your business is progressing, think about growth opportunities. Here you can revisit your business plan to see what goals you set for yourself, as well as further opportunities you originally identified.

You might need funding. For expert tips, read our guides on:

• crowdfunding
• venture capital
• angel investment
• small business grants

More small business guides and resources

• A guide to going self-employed in the UK
• The self-employed guide to Self Assessment tax returns
• How to start a business
• What does business insurance cover?

What are your tips for running a successful craft business? Let us know in the comments below.