Craft stores supply the resources needed to create one-of-a-kind handcrafted things for customers who choose individuality over bulk manufacture. A craft shop might operate online, in a physical location, or both. Some craft stores provide a broad variety of arts and crafts items, while others focus on specific niche markets.
Table of Contents
Follow these ten steps to open a craft store:
Prepare your Craft Store
Create a legal entity for your craft store.
Fill out a tax registration form for your craft store.
Create a Business Bank Account and a Credit Card
Create Accounting for Your Craft Shop
Get the Permits and Licenses You Need for Your Craft Store
Purchase Craft Store Insurance
Create a brand for your craft store.
Make a website for your craft store.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. We’ve put up an easy-to-follow guide on launching your own craft shop. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a craft store?
For tax reasons, your small company will want a tax ID number. The cost of starting a craft shop varies greatly depending on whether it is an online or physical location. Other than materials, online enterprises may be launched for very little money. The expense of renting and furnishing a facility, as well as a larger initial inventory of craft materials and things for sale, would be included in the costs of starting a physical store.
What are the continuing costs of running a craft store?
Ongoing business expenditures for a craft shop might include:
Rental of real estate
Utilities
Office equipment maintenance
Service for POS/Inventory Software
Wholesale supply prices
Shipping fees
Who is the intended audience?
Clients who like engaging in arts and crafts projects for gift-giving and house décor are preferred, as are items that showcase the artistic and creative abilities of others.
What is the business model of a craft store?
Buying craft goods in bulk at wholesale pricing and reselling them at a profit is one method a craft shop company might generate money. Another, less popular, approach for this sort of company to create money is via the design and creation of unique arts and crafts goods. Some craft businesses sell directly to other craft stores, while others demand a royalty fee for using their unique designs.
How much money may you charge your customers?
Craft supply prices fluctuate based on demand and manufacturing costs. When you buy popular things in quantity at wholesale costs, you may enhance your profit margin. Pricing handcrafted products might be tricky. This article provides some suggestions for determining the best pricing for your items.
Because one-of-a-kind objects are regarded and priced differently, pricing completed products is more complex than pricing the resources used to manufacture them. Pricing based on comparable products might result in undervaluation and lost earnings.
How much money can a craft shop make?
Profits from online craft shop operations vary greatly based on material costs and price.
Jo-Ann Stores, a large craft retailer in the United States, earned $2.4 billion in earnings in 2015. Because this is a vast chain, anticipate to earn much less than this. However, this figure indicates that there is a sizable demand for craft materials.
How can you increase the profitability of your company?
Creating a lot of completed items and giving your customers the option of purchasing a kit with all of the ingredients needed to build those things themselves may be a very successful sales technique. To compete effectively with bigger, more established firms like Jo-Ann Fabrics, you must offer something distinctive. Some craft stores provide lessons in specialised skills such as felting, quilting, and jewellery making. Nothing beats a particular group of individuals gathering in the same area at the same time to engage in a creative endeavour. Craft fairs are another approach for craft shop owners to boost public knowledge of their items as well as their revenues. Many craft shop enterprises grow to offer completed craft objects on sales platforms like Etsy, which charge a percentage of sales.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
If your craft shop is sued, becoming a formal business organisation, such as an LLC or corporation, prevents you from being held personally accountable.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
To run a craft supply company, certain state permissions and licences may be required. Visit the SBA’s reference to state licences and permits to learn more about licencing requirements in your state.
Most states, in particular, require retail companies to get a seller’s permit. A seller’s permit enables governments to record and collect taxes on sales of products (and occasionally services).
Craft supply companies may also want to consider registering for resale certificates, which enable merchants to buy products for resale without paying sales tax.
Furthermore, local licencing or regulatory restrictions may apply. For additional information on local licences and permissions, please visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Occupancy Certificate
A craft supply company is usually conducted from a physical location. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can get a valid CO for a craft business.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or create a location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building regulations and zoning restrictions for your business’s area to guarantee that your craft shop is in compliance and may receive a CO.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Market and Promote a Craft Store
Making business cards with your website URL and contact information is just as vital as creating a brochure or catalogue of all the creative products your company will sell. Good product photographs and descriptions assist your clients in finding precisely what they are searching for while also exposing them to new goods. Offering workshops in certain sorts of arts and crafts that use your products is another effective approach to advertise your brand.
How to Keep Customers Returning
Attending craft fairs and community events is a great method to present your company to people who are already interested in your items. Another thing is to create a website and keep it updated with new goods on a regular basis. Popular are loyalty programmes that provide money-saving coupons after a specific number of transactions. Offering discounts on lessons to people who bring a friend is a terrific approach to broaden your consumer base as well as the local creative community.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.