Creating a business plan for craft sales

Why a craft business needs a plan (even a short one)

Plenty of makers fall into selling by accident. You post a photo of a bowl you turned at the weekend, someone asks "how much?", and before you know it you're taking orders. That's a lovely way to start, but it's a difficult way to grow. A business plan is simply the act of writing down what you're trying to build, who you're building it for, and whether the numbers actually work.

Forget the thirty-page document you might have seen in a textbook. For a craft business, one or two pages is plenty. The point isn't to impress a bank manager — it's to stop you making expensive decisions on instinct alone. Keep it somewhere you'll actually look at it, and revisit it every few months.

Set goals you can measure

Vague ambitions like "sell more" don't help you decide anything. Give yourself targets with a number and a date attached. It's the difference between hoping and planning.

• Short term (next three months): photograph and list twenty new pieces, or book two local craft fairs.
• Medium term (this year): reach a set monthly turnover, or cover the cost of a new bandsaw from sales alone.
• Long term (two to three years): move from market stalls to wholesale orders, or replace a day's employed income each week.

Be honest about your capacity. If you work full time and make in the evenings, twenty hours a week in the workshop is probably a fantasy. A plan built on imaginary hours will collapse the first busy month.

Know who is actually buying

"People who like handmade things" is not a target market. Your customers are specific: a person with a particular budget, taste, and reason to buy. Spend an hour thinking about two or three real buyers you've already had. What did they buy? Was it a gift, or a treat for themselves? Did they care more about price or about the story behind the piece?

That thinking shapes everything practical:

• Where you sell: a farmers' market suits affordable, high-volume items; a specialist fair or gallery suits higher-priced work.
• How you photograph and describe pieces: gift buyers want wrapping and a card; collectors want provenance and detail.
• What you make next: if one design accounts for most of your sales, that's a signal, not a coincidence.

Pricing that actually pays you

Undercharging is the single most common problem in craft businesses, and it usually comes from forgetting to count everything. Work through your costs honestly for each product.

• Materials: timber, finishes, hardware, thread, clay — including the bits you waste on failed attempts.
• Your time: track how long a piece really takes, then apply an hourly rate you'd accept from an employer. If the maths leaves no room for profit, the design or the price has to change.
• Overheads: workshop rent, electricity, tool replacement, insurance, software subscriptions, travel to fairs.
• Selling costs: online marketplace commission, card processing fees, stall fees, packaging and postage.

A rough rule for wholesale is to double your cost of materials and labour, then add a margin — though you should test the figure against what your market will bear. If you sell at retail and wholesale, keep the two price lists separate and never let a retail customer pay more than a trade buyer's customer would.

Financial projections without the dread

You don't need a spreadsheet qualification. You need three numbers: what you expect to sell, what it costs to make and sell it, and what's left over. Start with a monthly sales forecast — say fifteen items at an average of £40 gives £600. Then list your fixed costs (rent, insurance, subscriptions) and variable costs (materials, commission, postage). Subtract both from your sales figure. That's your rough profit, and it's often a sobering exercise the first time.

Work out your break-even point: how many items must you sell each month before you've covered your fixed costs? If a fair costs £80 in stall fees plus £40 in travel, how many pieces do you need to sell just to get back to zero?

Finally, plan for cash flow, not just profit. Stall fees are often due weeks in advance, while online payouts may arrive days after dispatch. Tax on self-employed income needs putting aside as you earn it — a separate bank account for the business makes this far easier. Aim to build a buffer of three months' running costs before you take a larger wage.

Review, adjust, carry on

A plan is a working document, not a contract. Set a reminder to look at it every quarter. Did you hit your sales target? Which products sold and which sat in the cupboard? Did your hourly rate turn out to be realistic once you timed yourself properly?

Adjust the figures, note what you learned, and set the next three months' targets. Do that four times a year and you'll have something far more valuable than a perfect plan written once and forgotten — you'll have a clear picture of a business that's genuinely moving forward.