Running A Crochet Small Business
Hello readers! Oh boy, this is the ultimate blog post discussing about the logistics behind my small business, sustainability, and giving you some small business advice. If you're considering about starting a business especially through Etsy, read along for some insight.
My Shop History
I run my crochet Etsy shop full-time since it's launch on December 20, 2018. I actually started practicing crocheting around the summer of 2018 after graduating college to fill in my post-graduate free time. Through this initial interest, I made some awesome discoveries about the craft business and crochet clothing. I mainly learned off of Youtube, which you can check out my other blog post "How I Study Crochet" for details on how I learned to crochet. I created an Instagram to document my work hence why I call it a "studio".
What I Signed Up For
What I didn't expect getting into all of this was how time-consuming it was. It went from a cute hobby to me working 12 hours a day. I chose to run a small business because after reading so many financial statements on different corporations in college and seeing most of my peers get ready to work for accounting firms, I decided that I want to run a small business instead. It was always what I desired since the start. When it comes to running your own business, a lot of effort goes into it rather than just clocking in and clocking out. So here's an inside look at how I run my shop.
My Business Model
The first year was a learn as I go experience. I thought I was pretty prepared with how I set up my business but the truth is, business models fluctuate and change over time. It was only a matter of how well I can adapt to it. I started off my business model where people can place orders through my Etsy shop with their size measurements and their color choices on the items that they want. I expanded the options for color and designs as I started to make more income. The items are then handmade and sent to them in eco-friendly packaging. Etsy provides me an invoice, shipping labels, and transaction details while also charging a small fee percentage for this systematic organization. Pretty simple right?
The Etsy dashboard for shop owners look like this. There's two Etsy apps, one being the Etsy app for shopping and the other being Sell on Etsy for shop managers.
As orders start to come in, I start making profit and my audience start to grow through the Etsy SEO and Instagram algorithm pushing my work out there. The thing about Etsy is, it does the marketing and search engine algorithm for you. It provides all the statistics I need to view on how my shop is performing. If you want to use different selling platforms like Wix.com, Shopify.com, Wordpress.com, Squarespace.com, Facebook business, Instagram shopping, etc. (to name a few), there are some fees that goes into purchasing a business model plan for it.
Fees
For Etsy, there are fees and payments described in their fees & payments policy. Listing fees cost $0.20 per listing, transaction fee is 5% of the price you list plus the amount you charge for shipping and handling, and there are advertising fees that are optional. Additional fees include shipping label cost deducted from the item sale, payment processing fees, and pattern fees (if you're selling patterns). Etsy will also convert currency from other countries that order outside the U.S. For U.S. sellers there's an auto-billing for these fees to be paid if your sales can't cover it.
If you want to do the "DM to order" on Instagram to avoid certain fees, you have to set up a Paypal account or use a form of transaction application to have it be processed. Keep in mind, the accounting work that goes into it like bookkeeping, invoice, keeping track of transactions, and calculating taxes is your responsibility (or you have to hire an accountant for that). The question to ask yourself is: is it within my budget? Setting up a shop requires investments.
If you want your shop to be taken seriously as a professional business, I suggest using the platforms as mentioned above and paying the small fees. Before jumping the gun on creating an account, I suggest to Youtube videos on people talking about their experiences with these platforms. Keep in mind, you don't have to stay with a certain platform forever. Outgrowing a platform and upgrading your business comes with time.
Creating Your Budget Sheet
As a former accounting student, this is a must. I like to organize everything on a budget sheet. My Macbook has a program called "Numbers" where I can create from different budget templates. You can create your own or try to find a template online. I keep track of my income, expenses, inventory, and overall financial forecast of the shop. It gives me an idea of what yarn color I need to restock or what design I should focus more on that sells. Also, a budget sheet helps guide you to spend or save within your means. Etsy has the Quickbooks and TurboTax for small business owners to do their own accounting work for their shop taxes.
This is the business template on Numbers from invoice to employee schedule if you have employees for your business.
I like to use these personal templates as I am the only person running my shop.
If accounting and taxes causes you a headache, then I personally recommend going to a licensed accountant to do your business taxes. Fortunately, I have family connections and having a bachelors in Accountancy has it's perks. If you want to get a tax estimate of your tax refund or how much you owe, download the app "TaxCaster" for iOS and Google Play.
This app is available for iOS and Google Play. There's also a desktop version here.
Creating Inventory and Finding Your Style
When it comes to art and designing, it's all about perspective. When I first started off crocheting, it was like I was diving into an ocean full of beautiful designs and endless ideas. I love the feeling of newness when starting off. There's just so much excitement and wonder to explore. I started off with Youtube and Pinterest. I made several playlist of free tutorials as well as beginning tutorials to teach me the foundation of crochet. Free patterns are everywhere. There's endless available patterns on blogs, Youtube, Pinterest, and Ravelry. Besides free patterns are an influx of patterns for sale by crocheters. You can find these on Etsy and Ravelry.
When exploring the many different styles, I use the bookmark tag on Instagram for the ones that I would want to wear. This feature also help a lot of creators boost their content to their audience. So bookmark away! This post explains the Instagram algorithm and how you can get more reach for your posts.
Other than that, I do look at fashion runways or browse Vogue knitting and I get inspiration from browsing on Instagram. There's a lot of crocheters now that share and promote other people's work. Every artist have their own style. It's okay to be inspired and recreate it as long as you cite credit (if that's what the creator of the design wants). I'm pretty chill about people recreating my work. Sometimes crocheters have specific rules with how they want you to use their pattern. But what I find now a days is that the more we're open with citing other crocheters and sharing love to each other's work, it creates a bigger community as oppose to a toxic competitive environment.
Once you got a style, it's only a matter of showcasing it on social media through photos and videos. There are so many ways to present a crochet piece. This is where the creativity comes in and you have the freedom to express yourself. The only advice I have is mainly for fulfilling orders by making sure the packaging is durable, include how to take care of the items tags, and a business flier/card.
When selling your products, make sure to stock up on yarn colors that you offer for your item listings. Keeping track of inventory and having a space to store your items is a must. Every year, I calculate how much I spend on supplies and yarn stock. This organization lets me know the budget space I have for these expenses. In the very beginning, expenses may exceed income. However, overtime you will start to make profit when income exceeds expenses. You want to eventually surpass breaking even. Breaking even: a financial result at which cost and income are equal and there is neither profit nor loss.
Pricing
This topic has always been a debate. Even Etsy has a formula with how you should price your items. The suggest pricing formula is: materials + labor + expenses + profit = item price. There's a blog post that explains the formula in detail giving suggestions on how to price your items. I'm slowly learning overtime to get the pricing that I deserve for the labor that I put into each item. I also try to be as affordable as possible. The idea is to create a tier of prices. There is the "Premium Lux" section of the shop reserved for high-quality, time-consuming pieces at the couture level and then there are other pieces within the average consuming price range. I try to be as flexible as possible. :)
I don't like to make selling as my whole personality, so I tend to go with the flow with how I price my work and sell it. I used to start off selling quite low to build my sale and review numbers. Once I hit a huge following and lots of sale milestone on Etsy, I had to increase prices because of high demand. I couldn’t keep up with the orders if pricing is low where everyone can afford it. The results end up with too many order placements that I can't fulfill on a timely fashion. I found myself working 12 hours until 4am every night for a month straight just to catch up on orders. Overworking myself like this goes against the sustainability principle I believe in. I can’t pay myself little and overwork myself.
Because of these results, I had to adjust to the changes by increasing my prices and lessening my workload. The thing is, I'm not increasing it by too much either and I offer sales. I'm also putting out newer designs that feature quality work to justify this change. It's a fair upgrade. You don't have to try too hard with trying to justify your prices if you know your items are worth it. People buy skills, not just a name. For this year, I will try to create a work life balance where I crochet for fun as oppose to being about fulfilling orders all the time.
Customer Service
I adore my customers. I tend to have some really kind and understanding ones. Let me give you my secret to how I make sales: I don't force or pressure anyone to do anything. People should be able to freely window shop around without being harassed to buy anything. It requires a lot of patience but eventually people will see your value and unexpectedly stand for you. You'll be surprised at how many people got your back when they can attest to your character and integrity. The reviews I receive on my shop is so unexpected and I just leap with joy every time I read a lovely review.
With that being said, I've had some difficult experiences here and there especially during the most busy time of the season. Everyone that has dealt with customer service knows how much you mature quickly in human interaction. There are several posts on Instagram telling customers how they should approach small business owners so I hope that people get an idea to be decent human beings. People who work in retail, customer service, waitress job, or in an industry serving others can empathize with treating those working with respect.
Dealing With "Competition"
Things start to get competitive when a lot of people are trying to do the same hobby/interests as you. I didn't really think of it like that until I got a lot of crochet followers and I see the same stuff being made. I was fortunate enough to meet such lovely people. Ever heard the quote, "community over competition"? The energy you put out is the energy you attract. If you make everything a competition and the need to one up somebody, then it reflects more about your character than it does about what you create. Social media plays a big role in how we interact with others. It's okay to take a break sometimes to recharge those social batteries. Being an INFJ, I really do need a lot of alone time to recharge.
Personally, I'm not bothered or feel pressured to "keep up" with what others are creating. There shouldn't be a pressure to compete. Create at your own pace but most importantly, create because you love it. This is something I have to constantly remind myself as I tend to always put pressure on myself to perform perfectly when fulfilling orders. There are endless possibilities and designs you can put out for the concept you want to express. Everyone has room to show what type of creator they are. Confidence is learned. Creating should come from a secure place. With that being said, I hope this encourages you to explore the many ideas and possibilities there is within crochet. :)
Why I Choose Sustainability
On the post "Know Your Worth", I discuss about garment workers and the unfair advantage they face being used for their labor for little to nothing pay. Here's a post explaining the 5 Reasons Not To Buy Fast Fashion. A documentary that explains this topic very well is called The True Cost. It gives insight into third world countries where workers are taken advantage of performing labor for fast fashion companies.
Getting into sustainability is a lot to take in at first. It is a topic that takes time and research. I only began to learn about this when I started to crochet and I hope to do more learning over time. My shop is ethically made being that I am the only person producing the crochet pieces. It takes time to gather and collect sustainable clothing pieces/yarn. I use every single scrap yarn fyi. That is something I am continuously working on before anybody wants to scream "green-washing" at creators while they lowkey wear or use an item that is plastic. Big fast fashion companies are green-washing. Everyday I see endless posts of people nitpicking at smaller creators for making one small item that isn't considered "sustainable". That type of criticism is counterproductive. We can't completely be plastic-free but we can aspire to reduce our use and consumption of it.
I am still doing more research into this topic, so I will continuously share more content in the future. :)
Lastly, Being An Artist Needs More Respect
Nothing is more valuable than being your authentic self. It's okay to be inspired and learn more from creators on how they've build a sustainable business from scratch. Like crocheting from scratch, building a small business requires technique, focus, skill, and a dash of creativity. I really love what I do. I learn so many lessons being a small business owner and it only inspires me to get better at what I do. There's a lot of flaws within our American economy and government that gives people a disadvantage from the start. It's small business owners that are trying our best out here. After this year, if it doesn't radicalize you then you need to really pay attention to what's going on.
With that being said, being an artist has ups and downs. Here's a post explaining the value of buying artwork. The creator makes a valid point that if it's not a priority or within your budget, you don't have to buy it. It's okay. If you still want to support in some way, social media is free. The attitude towards creatives are changing now that social media is exposing the respect that they deserve. Art actually is becoming a profitable career choice with the shift towards everything becoming digital/virtual. I'm excited to be part of this online community.
And that's a wrap for this post. Thank you for reading! I hope it gives you insight or help in some way when considering about being a small business owner. There are so many fields to get into if it's not just art you that want to try out. There's beauty, fashion, jewelry, etc. I suggest start exploring through social media to get an idea of what's out there. I'll try to continue to put out more content for everyone to be informed. Until then, have a lovely day!
