Tuesday, April 1, 2008

Who Do You Want To Be Today?

Hobby Vs. Business

Nothing causes quite as much confusion for a crafter, artisan or artist than the concept of business. I imagine this is partly because creative types, by nature, are a little uncomfortable with the mundane details involved with having a business. I see folks questioning daily, whether they should be a business, or are one already. The debate also spurs on controversies regarding pricing, advertising, quality, taxes and countless others. Using what I've learned I'd like to break down for the newbie the basic, honest questions you should ask yourselves in order to get the answer right for you.

There are, in my opinion, four basic things you should question to understand whether you are starting a viable business or what I like to call a self sustaining hobby. First, do you have a real talent or skill at your chosen craft. Second, how much time do you actually have to spend on your craft? Third, what is your turnaround time for your craft. And lastly, what is the cost versus profit of your craft.

Do you have a real talent or skill?

I want to tackle this one first, because it is the hardest one to answer for most people. I see people everyday asking for critiques and sadly getting few real answers. Most people are simply too polite to give you an honest answer, instead they say thing like, "it's cute", "i like the color", "you just need to wait for the right buyer". This is all bull and you should know it. Be honest with yourself. If you think the product you make is just ok, stop trying to sell it and hone your craft first. Pick something else to try that you enjoy or just make things for friends and family. If you want me to give you an honest opinion on your stuff, just ask!
If you feel like you know what you're doing, then good on ya and keep reading.

How much time do you actually have to spend on your craft?

See, I have two small kids, so my day does not revolve around tatting. If it did, perhaps I would have a business. How is your day structured? Do you set aside a block of time for creation and promotion? Do you craft whenever you get a quick moment and then head over to the forums to play? If you can't treat your craft like a real job, then you can't expect it to be a real business. Don't forget that if you want to be a business, you must also factor in the time you need to promote and advertise as well as creating your product.

What is the turnaround time for your craft?

This is really a make or break question. A lot of products lend themselves to reproduction and those are best suited to starting a business. Artists and photographers may spend a great deal of time on their pieces, but at the end of the day they can make nearly limitless prints, buttons, t-shirts, bags, magnets and countless other products with relatively short production times. If you're a knitter, you still have to knit each piece one at a time and while you may get faster, you'll never be that fast. So, you need to look closely at how long it will take to stock your store, then imagine if you sold 2 or 3 things a day, could you keep your store stocked? If you're sure you couldn't, put yourself in the hobby category and stop stressing out. If you can, then you may have a viable business idea.

What is the cost versus profit of your craft?

This closely relates to the previous question. If you can't make hundreds of something quickly, but you can charge and get a large amount for it, then you're gold. First, take into account how much your material costs are to make your craft, don't forget online fees, then make a guess at how much you'd like to pay yourself an hour or a piece. This should allow you to come up with a ballpark price. Now I suggest doing a very thorough search of many different online outlets for the average price of whatever you are choosing to sell. Don't forget to check and see whether sellers are actually making sales at their prices. If you came up with an unrealistic price for your items, then let it go and charge your cost plus a small profit and you have yourself a sustainable hobby. If your price is comparable to others or lower then you have a shot at becoming a business.
Back to the artist and photographer for a moment, if they are talented, they can charged a good amount for their original pieces as well as reasonable prices for ancillary products. This again makes a potentially profitable business. If it takes you 10 hours to knit a scarf that you can only get $40 for, then clearly you're not going to be making a living off of your craft, but you can sustain your hobby.

There is absolutely nothing wrong with a self sustaining hobby, that's what I have. Of course, I dream of a day when I could make good money with my tatting, but I asked myself these questions, and for now, it's not in the cards. Perhaps when the kids are a little older, I'll have the time and resources to make that happen. The real reason to learn these things about yourself, is to reduce stress. If you know it's just a hobby, you don't need spend hours a day promoting yourself, you can just enjoy your craft and put whatever money you do earn back into your craft. If you've done your research and feel a business coming on, then you need to spend time promoting and worrying about making a profit.

More controversies to come...


Sheikasaurus Rex said...

That hit me right where I've been troubled lately. It was a hard lesson for me, but I learned that I have to treat my craft like a real job if I want it to be. I devote a good amount of my day creating and promoting, I've streamlined my process so I can create everything in my store quickly and uniformly; and yet I sell only to family and friends. I'm beginning to think, as you suggested, that it may be my products and skill level that turn off customers.

Crystal Creates said...

Wonderfully put. I really enjoyed reading this and feel many should. It really makes you sit back and take a look at yourself.

Retro Grandma said...

I work at a full time day job and then my evenings are crafting, listing, promoting. It started as a hobby but with the amount of time I spend on it I believe it's turned into a business. I'm hoping to retire in 2 years and turn it into a bigger business when I have more time.
Nice article you wrote!

© Shalom Schultz said...

Great advice - very thought provoking.

Julia said...

Oh my goodness! THANK YOU for this thorough and revealing entry. I think it's good to tell it like it is. I think after reading these things I can calm down a bit and recognize that my hobby is just that, a hobby! I toy around with the endless maybes, but I think I can coast a little while before I put everything on hold for my *business*

Anonymous said...

This is a great, well-thought-out post! I'll definitely come back to this frequently as I review my own work in terms of pricing, time spent promoting, etc. Thanks!

Erika said...

This is a strong post, i admire you.

I've linked your blog into mine ^^

cutedesigns said...

Nice post. :) The business and hobby thing can be an interesting one - for me it's a hobby. I enjoy my crafting. :)

Mary Richmond said...

This is an excellent, well thought out post! I came over from Etsy.

Michele said...

Great post...and right on the money.

monamigreetings said...

Right on! Thanks for the great read!

Cynthia said...

so well put. i love the idea of a sustainable hobby vs. a business. i knew thought of it that way!!

more people should read this blog of yours so they too can stop 'stressing.'

Cynthia said...

I NEVER thought of it that way. Where is my brain?

crimsoncat05 said...

great points... I stress out sometimes over Etsy, but your craft vs hobby information is directly the root of my stress: "will anyone buy this?" or "should I make X because I think it will sell, instead of because I want to make it?" Thinking of it as a "sustainable hobby" is a perfect compromise- thank you so much for the enlightenment!

DJ said...

Well done! Mine is a hobby turned business. profitable soon I hope!:)

R said...

Like it or not, once you have sold your first item you are a business - and subject to all of the laws and regulations for businesses at the local, state, and federal levels.

You can call it a hobby but the IRS and your state tax departments are going to call it a business - and if you have not covered all of the requirements, look out!

Anonymous said...

I really enjoyed this post. I t makes you take an honest look at your hobby vs business. I started out as a hobby making jewelry for myself and family and then co-workers enlisted me to make jewelry for them so ever since then I have been trying to grow into a business. I am going to add you as one of my favorite links.