how to get paid from your craft business

We have the honor of working with almost 4,000 artists and crafters in the Make-Sell-Grow Facebook Group. Many of them use the patterns from Pixie Faire to sew-and-sell doll clothes. Recently a topic that got a lot of engagement came from Ruth Patterson who wrote this:

Screen Shot 2016-05-15 at 6.34.22 PM

It’s a great question and underscores the challenges of a craft business. So in this post I thought I’d reflect back on our journey a bit, explain our experience and lessons learned, and offer a couple suggestions for people struggling to make a craft business into a profitable business.

$1,000 A Month: We started Liberty Jane in February 2008 because we needed an extra $1,000 a month to pay our mortgage. For those of you who have read Craft Business Power or The Couples Guide To Income Power, you know all the details about that sad period of our life. Bottomline we were very focused on the income from the business from day one, so it shaped how we did things. Over the first eight years our annual sales (in round numbers) were as follows:

2008: $12,000

2009: $12,000

2010: $36,000

2011: $102,000

2012: $200,000

2013: $306,000

2014: $468,000

2015: $646,000

So we have a small business, successful by some people’s standard, but tiny by other people’s standards. Our results are obviously unique and only happened because of the specific business strategies we implemented. So I don’t want to imply that you can achieve these types of results, but I do want to explain a few of the lessons we’ve learned along the way.

Building A Business Means Solving Problems

Starting a business is like opening a 10,000 piece puzzle and looking at all the pieces. Some people look at it with enthusiasm, some people look at it with dread. Then you go to work. You never have all the answers, you never have all the problems solved, you never have everything working perfectly.

At $12,000 a year we had specific problems that needed to be solved, and as we get closer to a million dollar a year business we have specific problems to solve. The best entrepreneurs, from what we can tell, love solving problems and feel a sense of excitement for the challenge. They tackle one problem one year and then move on to the next problem over and over again. So the mental game is important from day #1 and only the determined survive.

Building A Business Means Finding A Successful Product Strategy

Everyone starts a business with a set of skills, ideas, or hopes that they think will result in success. How you turn those skills and ideas into reality (your execution of the idea) impacts the outcome tremendously. As Mike Tyson (not our hero, but this is a good quote) famously said,

 

“everyone has a plan until they get punched in the face.”

 

There are many products that you can make, or try to buy-and-resell, that simply aren’t going to sell. The customers just don’t like it. There are still more that you can actually sell that won’t result in you making any money after expenses. Your job is to continuously refine your product strategy until you find a formula that will work.

As a crafter, this is compounded by the fact that your craft product needs to be made affordably and (most likely) in large quantities. So if you’re the maker, you have to decide how to solve the problem of scaling up production.

A Fun Example: In 1970 David and Barbara Green started making small picture frames in their garage. A few years later they opened their first retail store, a 300 Square Foot space, they called it Hobby Lobby. David had been the department supervisor at a local craft store, so he knew the business. Today they have no debt, over 600 stores, employ 23,000 people, have over 3 billion dollars in annual sales, and (it is rumored) give away over 100 million dollars a year to charities from their considerable profits. They still have a team of people that makes various products they sell exclusively in their stores.

Hobby Lobby Store

Building A Business Means Marketing & Sales 

An incredible product will almost sell itself. But that is incredibly rare. Much more commonly a business owner is starting with a good product that has to be presented to customers effectively and sold creatively. Your business will not grow until you learn how to become (or work with) an effective marketer who can focus on Branding, Photography, Copywriting, and distribution methods.

As you know if you’ve followed our work, Cinnamon and I got lucky in a way because she was focused from the beginning on the product, (see that here), and I was focused from the beginning on sales and marketing. Our best advice is to either commit to doing both parts yourself or finding a partner. But if you neglect the marketing you will most likely fail to get good results. We have both tried to share what we know about our various activities. Cinnamon has done that by creating the Design Academy and Pattern Academy and The Idiot’s Guide To Sewing. I’ve done that by writing various books on the topics including Craft Business Power, Instagram Power, and teaching the Craft Business Academy and Craft Selling Academy.

I know it might sound like I’m trying to sell you something, so take it with a grain of salt if you’d like, but if you’re trying to sell doll clothes on Etsy made from Liberty Jane or Pixie Faire patterns, and you haven’t gone through the Pattern Academy, you really are missing out on our primary training program. It shows you how to tweak patterns to make custom outfits – thereby increasing your chances of selling things successfully.

If you simply try to sell a commodity (something sold by a lot of people) without a unique approach, you’ll most likely be competing on price against other people, and that is rarely going to work well. A simple search on Etsy shows over 2,000 items listed that include the phrase “Liberty Jane” and another 2,000 that use the phrase “Pixie Faire”. The vast majority of those items are simply direct copies of patterns we’ve published, which we approve of, support, and encourage, but that doesn’t mean competing on price in a commodity business is a good idea.

Or maybe you’ve gone through those courses and you are still struggling. Then I’d recommend you take a look at the marketing opportunities you have and begin implementing them. Probably our best kept secret is our Pixie Faire Advertising Program. Lots of people like it, learn more here.

A Fun Example: As a student Dale Chihuly studied Interior Design, but he also became exposed to glass melting and sculpting. He began studying the art form and traveling the world to learn and study. At the age of 30 he cofounded the Pilchuck Glass School in a small town north of Seattle, but in 1976 he was in a severe car accident and lost an eye, then later he dislocated his shoulder in a bad bodysurfing accident. He was no longer able to hold the blowpipe to make the glass, so he hired others to do the work. Chihuly has found worldwide fame and is reportedly worth over 10 million dollars.

Dale Chihuly

Building A Business Means You Get Paid Last 

The major difference between working for someone else and working for yourself is that as an entrepreneur you are fully accountable for both the income and expenses. That means everyone else gets paid before you make any money. So top-line sales (how much you sold) is never an indicator of how profitable you are as a business. Aeropostale just declared Bankruptcy, yet they had sales of 1.5 billion last year. Businesses at every level can be unprofitable, so if yours is unprofitable, you need to look hard at your business model.

Entrepreneurs have a choice – they can either try to grow fast and keep profits very low, or they can try to focus on profits, which commonly means they will grow more slowly. Why? Because to grow profits you have to spend money on staffing, inventory, technology, marketing, and a whole lot of other expenses. Your ‘owners draw’ can only happen after all of those other expenses are paid.

At Liberty Jane we actually shifted in our 3rd year and began focusing on sales growth instead of personal profit. Scroll back up and look at our annual sales and you can see it in the numbers. The shift occurred for personal reasons (related to where we lived and my day-job salary). I worked a day job until January 1, 2014 and until then, I was simply an evenings and weekends helper. Even today, I don’t technically draw a salary. My hourly wage is zero. Nor are we trying to make a ton of money from this business, but we make enough to live-on and we are continuing to try to scale the business fast, instead of maximize profits.

This also means that you will most likely get paid in ‘lumps’ rather than a steady paycheck. Some months are good, some months are bad, that’s entrepreneurship. You most likely won’t get a steady paycheck until you achieve a fairly high annual sales amount and can ‘bake in’ your salary as a normal expense. Why would an entrepreneur endure this type of treatment and even be excited about it? Because…

Building A Business Means Working To Create An Asset

The most important lesson we can share from our experience is that building a business means focusing on creating an asset that has long-term value, not just making sales. Your job is to work ‘on your business’ not just ‘in’ your business. When you work ‘on’ your business you are thinking about the long-term strategy to create an asset that has long-term value. Everyone will have a different long-term goal and work toward different asset strategies.

A good business creates assets that have long-term value. One of the best assets you create quickly and easily is an email list of fans, followers, and customers who are interested in your product, niche, or topic. Why? Because there is long-term value in having an email list, (which I describe in Email Marketing Power). But other assets include digital assets, (patterns, characters, books, videos, courses, apps, software) etc. These assets are more valuable than simply making a one-off craft item and trying to sell it. A good system sells items – and as they sell – they reinforce and strengthen the asset you’re trying to build.

Of course the bigger and better your sales, the faster you can build assets. But sometimes, many-times, slow-and-steady wins the race.

For example, every time we sell a new Outback Libby garment at auction, we reinforce that character concept, which we consider to be an asset of our business. Every time we sell a pattern from the Outback Libby collection, we reinforce it in another way. Every time we sell one of our Outback Libby books, we reinforce in a third way. One day, when Disney calls us and says, ‘can we make a cartoon out of Outback Libby?’ we will look back and say, ‘our strategy worked.’  

And of course, there are traditional assets you can work to acquire, like real estate that you buy and pay off from the proceeds of your monthly sales. Many traditional small businesses ultimately shut down their selling effort and their real estate ends up being the long-term asset with value that they can sell-off and profit from. You can use this strategy too.

Imagine making an extra $500 a month from Etsy sales and using the money to pay down your mortgage. After a few years you’ll look back and say, ‘wow – our strategy worked.’ 

Everyone has different business goals and strategies, but the main thing is – have one.

As most of you know we started Pixie Faire and have worked to make it the Internet’s Largest Doll Clothes Pattern Marketplace because we wanted to serve doll clothes pattern buyers in a unique way, but we also wanted to create an asset that had long-term value. We have no plan to sell it, but one day we will retire from it, or sell it, and hopefully we’ll look back and say, ‘our strategy worked.’ If you sell doll clothes patterns, and you’re reading this, and you don’t sell on Pixie Faire, we’d love to invite you to. It is the best sales channel for your work.

Building A Business Means Serving Others 

If you aren’t passionate about serving others, then don’t go into business. If people bother you, annoy you, irritate you, and if you generally don’t like them, then you aren’t going to have fun in business. I’m writing this insanely long blog post not to try and make any money (even though I’ve mentioned a lot of our various programs and products). I’m writing it because I honestly enjoy teaching, helping, and sharing.

If you are an awesome critic, but a bad servant, then forget trying to build a business. Business is relational. We do our best to serve our customers via Pixie Faire, Liberty Jane, and Sew Powerful. And of those three, our heart is probably most compelled by the opportunity to serve the women and children of Lusaka Zambia via Sew Powerful. As our for-profit business grows our charitable work will grow too – and that is amazing to us. It motivates us more than any financial goal ever could.

In Conclusion: I really cannot promise any of you that you’ll get paid for your craft business work. All I can offer is our best suggestions, tips, ideas, and the tools we’ve put together that you can use to speed up your learning and achievement. I hope this post helps a little – and that you didn’t get annoyed by my various links to our books, courses, and programs. We are trying our best to serve you – and be of help – and we’re enthusiastic about your opportunities.

We hope your plans and dreams come true.

Jason & Cinnamon

Ps. Thanks for reading this entire post! I’d love to know what you think, feel free to leave a comment and I’ll be sure to anwer. And to make it even more fun, let’s do a comment contest and giveaway a free ticket to the Pattern Academy in June, or a free copy of Youtube Marketing Power!

To enter simply leave a blog comment below or join our newsletter list. Enter via the Rafflecopter entry form below.

Official Rules: No purchase necessary, void where prohibited. Contest begins on May 16, at 11 Am Pacific and ends on May 31, at 11:59 PM Pacific.

a Rafflecopter giveaway