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Rules to turn a Creative hobby into Serious Business

Hobbyists have a really hard time making products for the actual marketplace instead of for themselves," says crafting veteran Barbara Brabec, author of Handmade for Profit and several other craft business guides. But ultimately, launching a viable business requires compromises between what sellers want to make and what customers want to buy. Click through this slide show for advice on how to handle four common business pitfalls when making the leap from hobbyist to entrepreneur.

REFINE THE PRODUCT LINE:
The Hobbyist: Makes whatever suits her fancy
The Pro: Pays attention to brand-building

Like many crafters, Maryellen Kim started off making a little bit of everything: crocheted scarves, purses, baby bags, belts, and jewelry. But when she decided to turn her hobby into a business from her Richmond (Va.) home, Kim started phasing out the less popular and less profitable items until she switched to making jewelry full-time. A newly streamlined logo and Web site completed her branding efforts: Kim's business, Twist Style, saw a boost in sales when she divided her “mish-mash” of jewelry listings into cohesive collections with names like “beachside glamour” and “vintage grace.”

New York City gallery owner Jen Bekman says this strategy also holds true for visual artists trying to impress curators and gallerists like her. “There are some artists who can work in a variety of media and have a range of distinctive work, but I think if you're just beginning to put yourself out there, you want to have a well-edited, coherent selection of work.”

POST A PROFIT
The Hobbyist: Sells for the fun of it
The Pro: Needs to make a profit, too

Pricing is a particular point of contention between hobbyists and full-time crafters, and often a huge stumbling block for many beginners. “They price their stuff too low, because they're just so excited that somebody wants to buy it,” says San Francisco jewelry designer Raven Hanna. “But if you're going to actually do it as a business, you have to be very practical about it. How much time can you dedicate to making things? And how much do you need to charge for those things to make enough money to live?”

Standard retail pricing formulas usually advise doubling the cost of materials and labor to come up with an item's wholesale price, then doubling again for the retail price. With handmade goods, the tricky part is coming up with a competitive price that also includes a fair wage for the maker. Part of that, Hanna says, is being able to able to articulate what's unique and special about your product, to show buyers what they're getting for their money. But sometimes it means discontinuing items—even popular ones—that are just too time-consuming or inexpensive to provide a reasonable profit margin.

COUNT YOUR PENNIES
The Hobbyist: Doesn't bother with accounting
The Pro: Always keeps an eye on the bottom line

Because handmade items don't allow for the same economies of scale as manufactured goods, keeping close tabs on material costs is especially important. After the holiday crush is over, Twist Style's Kim sets aside time in January for sourcing new suppliers. (Many of her leads come from other crafters posting on the forum at theswitchboards.com, an online hub for creative entrepreneurs.) Although she prefers to buy from other locally owned independent businesses, Kim says sometimes she has to pass up her local bead store for wholesalers that can offer a bulk discount. “The larger outlay of capital can be a little scary,” Kim says. “But it's absolutely vital if you want your business to be viable.”

KNOW YOUR MARKET
The Hobbyist: Follows his creative instincts
The Pro: Also pays attention to what people want to buy

At Beehive Coop in Atlanta, founder Petra Geiger encourages designers who sell high-end items to think about how they can translate their vision into lower-priced works without compromising their so-called brand value. “Someone who can't afford a $350 bracelet can maybe afford a cool pin for $75,” she says, and a customer who buys a hat or a scarf on impulse may return later for a higher-priced poncho.

New York gallery owner Jen Bekman's "20x200" project, which offers small prints in limited editions of 200 for $20 each, operates on a similar principle. “I knew that more people would buy art if they had the experience of buying art, but I understood that I had to lower the barrier to entry as much as possible.” So far, the online-only project has worked as planned: Bekman says many customers who buy $20 prints have returned for larger $200 prints, and a few have bought higher-priced pieces from her as well. back