Often people think that starting a new business requires a lot of upfront investment, capital and ongoing financial commitment. On top of that, the small business statistics are not particularly encouraging when you find out that most businesses don’t make it through the first three years. Whilst this looks like a bleak prospect, it doesn’t have to be!
The good news is that most craft businesses can be started with little or no money. In this way, you can invest in your business gradually as your handmade business starts making money.
In this blog post, I’m going to share with you how to start a craft business with no (or very little) money to help you build your dream business.
Start with a craft business that you know!
The chances are that if you want to start a jewellery business, you already have a jewellery making as your hobby. And I’m sure, over the years, you have collected and bought the right equipment, material and set up your little craft room or a corner. You already have the knowledge of your craft, the right equipment, set up and material. You already know your suppliers, trends in jewellery and who you admire in your field. Sure, you will need to perhaps improve your techniques, learn how to use new tools, but you don’t need to spend money on learning something entirely new!
All this would be a huge financial and time investment if you were starting from nothing!
Do your research well
If we stay with the example of a jewellery maker, you need first to research what trends are current in your craft niche – in our case – the jewellery market. You need to start thinking with your business head-on when you do this.
For example, if you love making intricate beads bracelets, which take a lot of time to make and the material cost is fairly high, can you really sell them at a price that people can afford, and you can live on?
Or if you make a particular style of jewellery, is there a demand for such products? Is there something that you can make, that’s also on-trend and in fashion now?
The clever bit about this is to come up with a product that you can easily make (e.g. you have the expertise), it’s affordable for you to buy the material and you can then make a decent profit on each product purchased.
Please don’t feel that a ‘profit’ is a rude word here! You absolutely have to make a profit on each product to make sure that you can re-invest it back to your business and of course to be able to pay yourself a decent wage from the start.
Reframe what you really need to set up your business
If you are strapped for cash, you have no option, but to start thinking outside the box and be very creative about what you really need to run your business versus what you might like to have.
Don’t worry about the mainstream business advice or even about what your established competitors are doing.
So, what if the jewellery business in the next town that you admire so much, has a custom-made website, brick and mortar shop with staff and supplies wholesale jewellery to a chain of shops. The chances are that as glamorous and amazingly successful this sounds; it can also bring more problems. The custom website needs to be updated by somebody who understands it, which means you need to pay more for every change you want to make. The jewellery shop rent can go up with no warning and the staff might become ill, leaving you without a shop cover. The wholesale order probably works on very small margins, which means you need to sell a lot to make the same money as if you sell directly to the customers. It doesn’t mean that that jewellery business has a bad business model, but one that works for them. And equally, it doesn’t mean that the same model will work for you. Nor it means that you should apply the same business model for your business, just because it works for somebody else. Create your own path!
So, let’s think about how to set up your craft business with no or very little money.
Studio or craft workshop
Designate a room or a corner in a room to your new craft business. Utilise furniture that you already have. As your business grows, you’ll be able to re-invest money into upgrading your workspace to perhaps a house extension, garden studio, loft or garage conversion to a craft studio.
Utilise all available free marketing, that you feel comfortable with. This very much depends on what craft niche you have, but Instagram and Pinterest work particularly well for creative businesses.
Tell everyone you know about your new business. Don’t try to annoy your friends with lots of self-promotion, but simply letting people know what you currently do. Next time when they or their friends need a jewellery gift, they will think of you! None of this cost any money and word of mouth is the best marketing anyway!
Maximise all free business tools and services
There are lot of free and low-cost services you can use when you are just starting your business. You can always upgrade to the more expensive better services and products later at any time. Check out your local council business hub for free courses and mentoring support. Online tools, such as photo editing, website tools or e-mail marketing, usually have a free version, which has a fewer features, but it’s usually perfectly adequate to work with.
Equipment & material
After you’ve decided what type of product you want to focus your business on, you need to be brutally honest with yourself and cull your craft suppliers stash!
What could you make with things from your stash to help you raise start-up funds if you need to? Alternatively, are there any items in your stash you could sell to raise some funds? You will need the space anyway, so why not make some money to re-invest them back to your new business?
Having an online presence is practically a must for any business. But it doesn’t mean that you have to have all singing and dancing website that will cost you several thousand pounds or dollars.
There is nothing wrong with starting with the basic free version of widely available website platforms, like Wix, Weebly, WordPress or other platforms.
If you are not keen on learning how to design or manage your own website, you can just open an online shop on a craft marketplace, where you pay a small commission only when you sell something. This is completely risk free, saving you time and money too.
Another way of selling your products without a website is to sell directly via social media. There are many successful craft businesses that sell directly through a closed Facebook Group, that they created for their customers or through Instagram. Just post an engaging product description, great photo, price (including any P&P) and how people can contact you about the product and pay you.
Exchange services or products
I wouldn’t recommend approaching established businesses, but if you know somebody who is just starting out like you are, you might be able to help each other. Be realistic about pricing your services or products when you are exchanging, making sure that both products and services are of a similar value. This is also a great way to network with new business owners and support each other on your new journey.
What if you really need to raise money?
No matter how super creative you are with setting up your business on zero budget, you might come across a cost that’s just unavoidable. Perhaps it’s an important piece of equipment, that you need to have, necessary business insurance or other things that you just can’t start your business without.
Here are few ideas how to raise money to help you to set up your craft business
Sell unwanted stuff
We’ve already talked about spare craft material or equipment, which you can sell to fundraise your new business. Now, it’s time to have a look around the rest of the house.
Rent a room
I know you are just about to designate a room for your new business, but if you had a spare room or could work out how to temporarily work from a smaller space, you can rent your spare room. This can be done either mid to long term depending on what suits you. Advertise in the local corner shop or create a listing on Airbnb to get started.
Rent a parking space
If you have a driveway or even a garage that you don’t use, you can rent it on short to long term through various car parking marketplaces. This is less intrusive than renting a room.
Crowdfunding platforms such as Kickstarter have changed the way small business owners raising money to fund their new businesses. Whether you want to set up a craft shop, need a new website or equipment, you can get people to invest in your new craft business.
Review your current spending
Even if you are sensible about your spending, it doesn’t hurt to review what currently goes out of your bank account and what you save and re-allocated the money towards your new handmade business.
If you are not already doing this, start tracking your daily spending and see where you can spend less.
Here are few areas you might like to review:
Swap take away coffee at the local shop and make your own.
Make your own lunch to take to work
Eat out less
Look at any subscriptions, you have. This includes any magazine subscriptions, cable television, expensive mobile tariffs, gym memberships etc. Do you still need them? Could you pause or cancel them?
Consider freelancing or doing a few temporary jobs to earn more money.
The first 6 months of your craft business are going to be the most important. You’ll probably see very little sales and you’ll be spending a lot of time learning everything. Everything will be new, and it will take twice as long as when you are experienced.
If you can start building up your new craft business alongside your day job, to give yourself the time to learn and to set your business right. Save as much money as you possibly can during this time, so that you can eventually go part-time or leave your job completely. You will be glad of a safety net of your saving when you go full time in your new business.
Get a loan
To raise some needed money at the beginning of your new business, you can also look into getting a personal loan. You can also look on local and national level for a small business loan or funding. Check with your bank, what are the requirements, but it’s likely that a personal loan might be easier to obtain, than a business loan. For a business loan, you’ll need to do a bit of preparation, as banks usually want a written business plan, including financial budget and projections with your business loan application.
Learn to do what you can
Apart from your main job in your new craft business – e.g. being the jewellery maker, you will also need to learn other job roles that are necessary to run your business. As you grow, you can outsource some of these to free up your time to focus on the main areas of your business.
No matter how much you pair down your business, you’ll also need to take on roles of
Social Media Manager
Accountant & Bookkeeper
At the beginning, you will be all those people (and more) and if you want to start your craft business without no money, you will need to learn all these skills. There are numerous free resources, both written and as videos to guide you through this – a search bar is your friend!
Embracing the DIY approach to your business is a smart way to start your business without no money. Whilst, it can take a lot of time to perfect the skill and it might not be as perfect as if a professional person did it, it shouldn’t prevent you from starting your business.
And now, over to you! I’d love to hear your ideas on how to start a business with no money. Your thoughts, questions, and comments are always welcome below!
Until the next time, happy crafting!
This blog post was originally written for WowThankYou by Magdalena Marsden