21 October 2014

Tips for Turning Your Hobby into a Business

Exciting times, people. Not only are more and more people getting into sewing and making, but more and more small businesses are popping up on the scene to cater to our crafty needs. It’s wonderful to see women following their dreams of starting a company – and bringing us new options and fresh approaches for reviving traditional crafts. Yay for crafty biz!

Every few days I receive an email or DM on Twitter from someone seeking advice for setting up a small business – whether it’s a sewing school, clothing line, e-book business, pattern company or fabric shop. I started earning a bit of money from Tilly and the Buttons in the Summer of 2012, and took the plunge into full time self-employed mode a year later – so I’m very much still learning (every day!) and wouldn’t call myself a veteran business owner with all the answers. But what I can share are my top tips on starting up – some of these are things I’ve done from the very beginning, others are things I learnt the hard way...

1) Test the waters
Before you invest all your savings into putting a deposit down on that shop space or manufacturing your product line – and definitely before you quit your day job – make sure you’ve tested out your idea to see if people will actually buy it.

I highly recommend the book The Lean Startup by Eric Ries which talks about how to apply the principles of lean manufacturing to business. The thrust of it is that, rather than wasting time and money developing something that nobody wants, put out a beta version of it, get customer feedback, and learn from that to improve your product or service.

For example, if you want to design sewing patterns, start by releasing PDF versions and monitor your sales and get feedback on them before you invest in printing. Or if you want to open a sewing school, how about starting by running a time-limited pop-up or monthly events at an existing venue first?

You’ll learn so much from putting your stuff out there into the world, and testing the waters like this will allow you to tweak your idea before you’ve invested too much into it.

2) Be clear who your work is for
Your work isn’t going to appeal to everyone. And that’s okay. In fact, it’s a good thing! If you try to create a product or service that everyone likes, you’ll be spreading your efforts too thin, creating something a bit bland and probably won’t end up making much of an impact with anyone.

So be specific about who you’re trying to appeal to (their age, gender, lifestyle, hobbies, dress sense, favourite magazines, pets…), and pitch everything you do directly at them. You don’t have the marketing resources of Coca Cola. What you want as a small business is to be niche – niche enough so that the clearly defined group of people who you want to love your stuff REALLY love your stuff. And buy it. And tell all their friends about it.

3) Cost everything from the start
Get out your spreadsheets – creating a detailed, honest, realistic budget is reeeeally important. If you want your project to be a real, sustainable business some day and not just stay a hobby on the side of your day job forever (hello impending burnout), then before you set the pricing you really need to work out the cost of producing your product or running your service.

I don’t just mean what it costs you right now, which may be very little if you’re working from home, earning your main salary elsewhere, and using equipment that you already have to hand. I mean what it will cost you when you’re running the business the way you would like it to be in the future – when you’ve outgrown the kitchen table, have created staff positions, are using professional services and producing and selling on the scale you would like.

Research or make an educated guess as to how much it’ll cost in terms of supplies, manufacturing, rent, overheads, insurance, packaging, staff salaries, depreciation of equipment (at some point you’ll need a new laptop or sewing machine), accountants' fees, stationery, software subscriptions… etc etc. And – assuming you’re not independently wealthy – don’t forget to pay yourself!

Once you've got the actual costs, you'll need to add some kind of profit to your price if you want to keep the business going and growing. If you'd like to see your stuff stocked in shops one day, you’ll also need to factor in retailer mark ups, which can range from double to triple your wholesale price. If you’re in the UK, at some point you’ll (hopefully) hit the threshold at which you have to include VAT in your pricing (the VAT threshold for 2014/15 is £81,000 turnover), so even if you’re not yet registered for VAT you’ll need to be prepared to pay this out of your sales to the tax man. (I don't know how sales tax works in other countries, please share in the comments if you do.) Update: From 1st January 2015, anyone selling a digital service (such as a PDF sewing pattern) to a non-business customer in an EU country will have to register for VAT in each country (or apply for VAT MOSS if you're in the UK) and charge VAT at the rate of the customer's country, not the seller's country. Read more on this

Work all these things out now, before you announce your prices to the world – it’ll save you a nasty shock later!

4) Dream big, but start small
If you’ve read this far, I’m guessing you have big ambitions. Maybe those ambitions are to quit your job and to work for yourself full time, to have your own fabric line stocked in your favourite shops, to rent a beautiful office space, to employ a whole team of people, to have a custom-built website, to run a sewing school in the Bahamas…

Having a vision for what you want your business to be is wonderful – but don’t let the pursuit of perfection hold you back. It’s probably not going to be exactly what you want it to be at the beginning. For the first few months (maybe even years), you’ll probably be running your business in your pyjamas from the kitchen table, with very little money, working all hours, doing absolutely everything yourself, and dreaming of the days when you’ll have more to invest into your product or service.

It may not be everything you dreamed of – but the important thing is to stop simply dreaming about it and start doing it. Brixton today, Bahamas tomorrow...

5) Be a do-er
It’s easy to sit around talking about what other people are doing – whether you love it or hate it. Where the challenge lies is putting yourself out there and doing something yourself. It’s hard work. It’s scary. You’ll be making yourself vulnerable to mistakes, criticism and burnout. But all that pales in comparison to the exhilarating sense of fulfilment you will get from taking control of your life and creating work to share with the world.

Cliché alert – at some point we’re all going to die, and while I’m alive I want to make stuff and share stuff and build something positive that I can be proud of. Do your thing while you can.

I love this quote by George Bernard Shaw:

“This is the true joy in life — being used for a purpose recognised by yourself as a mighty one… being a force of nature instead of a feverish selfish clod of ailments and grievances complaining that the world will not devote itself to making you happy. I am of the opinion that my life belongs to the whole community and as long as I live it is my privilege to do for it whatever I can. I want to be thoroughly used up when I die, for the harder I work, the more I live. I rejoice in life for its own sake. Life is no ‘brief candle’ to me. It is sort of a splendid torch which I have a hold of for the moment, and I want to make it burn as brightly as possible before handing it over to future generations.”

Wishing you lots of happiness and fulfilment in your ventures!