Craft Business Management

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Effective craft business management is not always the first thing on your mind when you’re planning to start your own home based craft business. The details of bookkeeping, inventory management, business registrations and sales forecasting are typically not as appealing to artists and crafters as the more creative aspects of the business.

However, effective craft business management will prove to be important to the growth of your art or craft based business. No mater what type of media you work in, effective craft business management will help you to save time and money, realize where you need outside assistance and understand and make strategic choices about how your creative decisions and business decisions impact each other.

Please keep in mind that although these articles are carefully written, I am not an accountant, or a bookkeeper or a lawyer, so any information on this site is not intended to be legal advice or to replace the advice of professionals. Please use your best judgment to determine for yourself when you need to consult a lawyer or other professional.

The following tips and articles are here to help you consider craft business management issues that you may not have thought about, and make the business management process a little easier.

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Get craft business management tips:

Creative Decisions vs. Business Decisions
This can be a huge issue for people who are thinking about making money with crafts or art. It’s amazing how closely creative and business decisions are connected, and being aware of how they are related is part of good craft business management.


Business Names: Ideas for Brainstorming Business Names
Choosing a business name can be one of the first big decisions you'll make when you decide to start your own craft business. In this article, you'll find many tips for brainstorming business name ideas for your art based business.

Business Names Part Two: Choose Your Best Business Name
In part two of the Business Names article, you'll find 14 tips for choosing your best business name from all of the possible names that you brainstormed with part one of the article.

Art Business Plan
Developing an art business plan is usually not the first priority for most creative people. Find out how your business will benefit from good planning.

Accounting
Putting an effective accounting and bookkeeping system in place for your home craft business is a central factor in good craft business management. It's absolutely crucial if you want to know how much you’re making, how much you’re spending and avoid pulling out your hair at tax time.

A good accountant can give you financial advice specific to your local business laws. Financial management software can help you to see where you’re spending money and where you’re making money. Your local business development center can be a great resource for getting started on finding local resources for putting together organized books for your small business.

Get rid of that old shoe box full of receipts, get organized and you'll be happier and your business will be healthier for it.

Registering Your Business
The process for registering your business will vary depending on where you live. In my own experience, registering my business was a lot easier than I expected, and it opened up a lot of doors that would not have been available otherwise.

Registering your business gives you the ability to buy supplies from wholesale suppliers in your industry. Wholesalers typically sell for about half the price of retailers and have better selections than retailers, so it’s pretty important to most craft business to have established wholesale accounts with wholesale suppliers.

Laws regarding business registration requirements vary from place to place. Contact your local business development office, chamber of commerce or town or city clerk’s office to determine the registration requirements in your own location.

Inventory Management
Your ability to effectively manage your inventory can have a big impact on the success of your business. On one hand, you'll likely want to be frugal and won’t want more raw materials and finished products on hand than necessary. On the other hand, you have to have supplies and finished products on hand when you need them and when customers want to buy them.

Handmade work is unique in that you will have to factor in a significant amount of time to produce your art or craft if you need several pieces to sell at a specific venue. That can really complicate inventory management. Good craft business management includes taking time to estimate when you’ll need raw materials and finished products and how much you'll need.

Forecasting Tools
Using some kind of tool to help you determine when you will need inventory and raw materials can be a big help in your craft business management process. If you're comfortable with Excel, it's a great tool for setting up a forecasting tool.

A forecasting tool can be particularly useful if you start selling wholesale or at larger art and craft show which require you to produce larger volumes of inventory. Whatever system you use, a forecasting tool can help you to quickly determine:

how much raw material and finished product you need at a given time

how much lead time you need to produce your finished product

how much lead time you need to order your finished product

and how much it will all cost

It can also help you to manage inventory, plan production times and make effective craft business management related decisions.

Establishing a Merchant Account
As far as craft business management decisions go, establishing a merchant account so you can accept credit cards is one decision you will be happy you made. It is not difficult to establish a merchant account. It does take a bit of research to determine which company and type of account will be best for you.

Some plans make more sense if you're starting out and have few transactions, others are more cost effective if your home craft business is growing and you’re making plenty of sales and have plenty of credit card transactions. It can take some time to get your account established, so don't leave it to the last minute before a big craft show. Being able to accept credit cards will go a long way to helping you increase sales in your art based business.

Designing Efficient Work Processes
There are certain tasks that are required when running a home craft business that, depending on your work preferences, can become tiresome and time consuming. Often they are necessary but don't feel very productive. For me, it’s the administrative type tasks that get to me. Photographing my jewelry and making handmade tags to describe each piece always feels like a big, but necessary drain on my time. The more you can make decisions that streamline the time consuming, but necessary processes (like photographing a lot of your work at once), the more time you'll have for all other aspects of your business.

Setting Realistic Goals
It’s easy to get ahead of yourself when building your home craft business. You read small business success stories or look at other artists you admire and want to be where they are immediately. Keep in mind that good craft business management includes realizing that it takes time to build a business from the ground up. If you dive into too many projects at once, you won't have time to commit to making them all successful. Carefully choose the direction of growth you want for your business and focus on that until you have it up and running before you jump into something else.

Multiple Streams of Income
I'm a huge fan of developing multiple streams of income. If your business relies on one primary source of income, in my opinion, it's in a risky position, and that's not good craft business management. So, while it's important to stay focused and develop one aspect of your business at a time, as you grow your home craft business, keep in mind that if you can establish several sources of income, your small business will be more resilient to market changes that are outside of your control.

Taking the time needed to develop good craft business management processes will be beneficial to the health of your small business and help you to continue doing the creative work that you love.

 
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