If you’ve been dreaming of turning your part time handmade business into a full time income, you might have been wondering whether it’s really possible to make a living from a handmade business.
And the answer is YES. Of course.
But it’s not surprising that you might think otherwise.
Everybody and their uncle loves to tell us that we’ll never make money from the creative arts and that creative people are bad at business.
Neither of those things are true.
Every single consumer product is sold with visual artwork AND creative people have specific skills that actually make them very good at business.
But it’s definitely true that artists and makers don’t get a lot of guidance on what we need to do to develop our passion into a profitable income.
You might even have tried to make money yourself from your art or from handmade products and found that it’s not as easy as you think.
So understandably you might be feeling a bit skeptical. After all it seems like everyone is saying that it’s not possible, even people who are trying to do it. And you’ve tried it yourself and it has been hard.
So why should you listen to me when I say that it’s not only possible, but it’s possible for you?
Because I work with hundreds of artists, makers and handmade business owners. And sadly, I see the same mistakes being made over and over again.
I’ve made most of them myself too, when I was a fine art photographer.
These are critical mistakes that prevent makers from generating profit in their businesses and keep them struggling to pay themselves a decent wage.
They’re easy to make but the good news is that they’re not difficult to fix – once you commit to doing it.
So let me tell you about the four things you absolutely need to get right in order to make your handmade business profitable enough to pay you a full time income.
If you’re struggling right now, and you’re honest with yourself, you will probably see that you’ve got a problem with one of these four areas.
1. Your pricing has to be spot on
Undercharging is the top reason maker businesses are unviable. Many artists and makers are chronically undercharging for their work.
This means that either they’re running at a loss and they run out of money, or they are earning so little that they lose all enthusiasm for doing the work, which is a really awful place to be.
Missing out expenses, not calculating expenses, using an hourly rate that would be illegal if you tried to pay it to anyone else. Not setting your prices where they need to be because “it feels too much” or “the market won’t bear it”.
These are all signs that you are undercharging.
Undercharging means fuelling a limiting belief that “it’s not possible to make a living from a handmade business” not because it’s true, but because you’ve made a choice to make it unprofitable and not even try to get paid a fair wage.
More sales will only make things worse, rather than better because you’ll be working really hard and getting paid almost nothing for it. Plus you’re building an audience of people who want to buy your products – but only at an unsustainable price for you.
I know it’s painful and scary, but you must charge profitable prices from day one. And that also means including the cost of marketing and selling your products, so your prices must include enough room to pay a wholesale mark up.
2. You have to make sure that you don’t overspend in the wrong areas
If you are hoarding materials, speculatively making large amounts of stock, or not paying yourself because you are “reinvesting in the business” you are creating a cashflow problem that can stop your business’ progress in its tracks.
Cash is the oxygen that keeps your business running. And if you have all of your cash tied up in something that is just sitting on a shelf, you don’t have that cash available to purchase things you need right now, or to make and develop new products.
All of the cash that comes into your business needs to be given a job to do – whether that’s paying your salary, paying your taxes, paying for materials or paying your stand fees.
That means you need to have a budget (ugh, I know!) and stick to it.
For the vast majority of the makers I work with, a budget reveals persistent overspending in their business.
Instead of paying themselves a wage, they are overspending on things that they don’t need right now and tying up cash buying supplies in bulk.
The good news is that it’s not hard to take control of your spending. For a fantastic budgeting and cashflow management system that works great for businesses of all sizes, check out Mike Michalowicz’s book, Profit First.
3. You have to start building your audience RIGHT NOW
Most people underestimate how many people you need to have in your audience, and how long it will take to build it.
To keep your business resilient and your sales consistent, you may need several hundreds, or even thousands of people in your audience. Most of us need a few years to achieve that.
Plus it’s hard work to get in front of people in the first place, so you don’t want to be building your audience on a social media platform that could revoke your access to those customers tomorrow and make you start over.
The best way to avoid that is with an email list. And for a lot of makers building an email list is something that’s on their to-do list, but it keeps falling to the bottom.
But the bottom line is that if you want to make a living from your business, you need to get started on this as soon as possible.
4. You have to have products that people actually want to buy and that you want to make – it has to be both
The process of figuring this out can take quite a while as well.
Sometimes we find out that people either don’t really want what we really want to make, or don’t want it at the price we need to charge.
Or we find something that people really want to buy, but we just don’t enjoy making it.
In either case, it can be tough to let go but when you find that thing where there is overlap between what you love to make and what you can sell, you’ll be shocked at how easily your business comes together and how much better it feels.
And when it feels better, you want to talk about it and share it more, marketing and sales becomes easy, and it naturally gathers more momentum.
Why aren’t you making money at the moment?
If any one of these four things aren’t working properly, your business will struggle to become profitable.
These are fundamental pillars of your business that determine how you will make money from the products and services you sell, so when even one of them isn’t solid it makes it very hard to make a living from your work.
That’s the reason why so many people are saying it’s not possible to make a living from a creative business.
Because they’re making one of these mistakes. Usually pricing.
It’s not a permanent situation. It’s not that they could never make money. They just can’t do it with the way they’re approaching it right now.
If they changed what they were doing, they could turn things around. Many of them will, given enough time and enough pain. It’s what I did.
So what do you need to change to make your business more profitable? Which of these pillars is weak for you? Where do you already know that you need to make changes?
The time to start is right now. The clock is ticking because it’s only a matter of time before you run out of money or enthusiasm or both.
If you want to learn more about how to get each of these foundational pieces in place and make sure that you’re building your audience from day one, join us in Makers’ Momentum Club where we work on this together every week.