Advice from a Seasoned Business Owner

Post by Jamie Dobiesz

Changing from a hobby to a business.  It is overwhelming, terrifying, exhausting but rewarding.  Preparation is the key to enjoying the experience.

Determine the reason you are doing this.  It is always great to make money doing what you love but this might not always be the case.  Depending on your cost of materials or your time spent it may never be feasible to sell your product and make a living at it.  

You hear people say that they had to give up their favorite hobby because they could not afford it any longer.  Creating can be very therapeutic and in very artistic people it may be a necessity.  Quitting may not be the only way to solve the money problem.  You may find that selling the result of your hobby only pays for you to continue that hobby.  This is O.K.  Trust me, it helps you to unwind and is cheaper than therapy.

Let’s talk about costs and profits.  First you have to consider the actual materials that you use.  It may be paper, glue, metal, or wood.  It does not matter.  You need to look hard at all components that go into your particular craft.  Take a little time to think of the money it takes to purchase supplies and jot it down.  How many items can you make with these supplies?  Let’s say you spend $22.00 and you can make 48 items.  $22.00 divided by 48 = roughly .46 cents.   Write down that number.  You should always mark up your supplies to cover your time spent shopping, gas to the store, show fees, displays, taxes, and other miscellaneous costs.  So let’s take .46 cents and multiply it by three.  .46 X 3 = $1.38.  Write that down. ( Some people recommend multiplying by 10 because their indirect costs are higher.)  It is just a number to start with.

Now what about time spent?  A good way to do this is when you feel a good creative burst coming on, note the time you start and end.  Now count up the items that you completed.  This will show you how much time you are putting into each item.  Let’s say it is 27 minutes for each item.  (Let’s use $10 an hour as a simple rate of pay. (You personally may not want to work for less than $20 per hour.)  There are 60 minutes in each hour so $10 divided by 60 = .16 cents per minute.  27 minutes times .16 cents is $4.32.  That is your time cost.

So now let us add $1.38 to $4.32 time cost you will get $5.70.  There.  See? That wasn’t so hard.  Your cost is $5.70 to make your item!  This is very simplified and does not serve as an actual business plan but it gives you a place to start.

Next look into how much similar items are selling for.  If they are selling for $20 It means you have a decent business possibility, assuming that you will be able to reach the type of people that buy this type of item.  

Now you have a little more information about what you are putting into a product. Only you can decide if it is worth it.

Start looking for a place to sell.