Indie Business

8 Steps to Take Before Launching an Etsy Shop {Handmade Business 101}

Today I’m thrilled to introduce a new blog series here at The Borrowed Abode, Handmade Business 101.  Although I launched this site 3.5 years ago as a rental decorating blog, it’s come to represent a blend of decor, DIY, and small business, as 2 years ago I launched a part-time handmade business from my rented home.

In the time since my shop first launched (when it had a totally different name and mostly different product lineup) I’ve learned so much – and realized how many things I wish I’d known before I started!  Now, two years later, I feel as though I’ve finally found my rhythm  between Janery (my shop), this blog, my day job, and my social life.

Handmade Business 101 | The Borrowed Abode

 

8 Steps to Take Before Launching an Etsy Shop

These are the top things I figured out over time, the hard way – via trial and error.  Lots of error. 😉   While that’s one way to grow as an entrepreneur, it would have been more efficient if I’d done, or at least considered, all of these items first!

1.  Test Your Product

I’d hope this goes without saying, but my OCD tendencies forced me to include it on the list.

You do not want to sell new customers a product that is poorly designed, hard to use, or falls apart after one washing.  This is the one thing I did well before launching my handmade business.  Research and development is key to creating quality, dependable products.  Its handmade nature doesn’t give you an excuse to skimp on quality!

Consider This: If you’ve got some products in mind, try giving them to friends and family to test out and provide feedback on.  Ask them to be kind but honest.  Oh, and if you do that?  Make sure you’re gracious in receiving the positive or negative feedback!

2.  Figure Out a Schedule

There’s more to running your business than just making that special product you feel so passionate about.  Some, if not all, of the following activities will take more time than you ever imagined:  Photographing your products, editing your photos, packaging & shipping, answering customer questions , and writing your product listings.

When Janery made its debut online, I thought I could get all my products photographed, edited, and listed in the shop in one day.  Well, after spending a whole Sunday (‘til way past midnight, actually), I realized that I should have allowed at least an entire weekend, if not a week, for setting up the shop and listing everything.

Consider This:  Try setting a schedule that balances the actual product creation time with the other activities mentioned above.  If you work days, how about doing production one night, photo editing another, shipping another, and so on?

3.  Create a Shipping System

When I first launched,  shipping was my biggest weakness.  I tried to use recycled and secondhand boxes that I had on hand, but quickly found that made weights and dimensions vary, which meant that I never knew how much it would cost to ship an item.

Set up a small shipping station in your home, even if it’s a box you slide under your bed when not in use.  If your product weights will vary, purchase a small postal scale so you don’t have to run to the post office every time you need to estimate shipping for a product.  If you have a set group of products whose weights don’t vary, package one of each and get a shipping cost estimate at the post office.  This way you’ll know exactly what you need to charge your customers.

I have a spreadsheet that lists the weights and worst-case US shipping costs.  That allowed me to set up accurate shipping profiles in Etsy. As for international shipping, you need to decide if you want to offer it.  I only ship to Canada.

Consider This:  If you aren’t armed with accurate shipping cost information for your products, you run the risk of undercharging and you can quickly lose a lot of profit!

Janery Etsy Shop Packaging Handmade Biz 101 | The Borrowed Abode

4.  Set Fair Prices

Speaking of shipping costs, you also need to calculate and set fair prices.  Fair to you, I mean!  Price your items high enough that you actually are able to make a profit.  Don’t forget to take hidden costs into account, such as Etsy fees, PayPal fees, packaging costs, etc.

There are a lot of Etsy sellers who are underpricing their items in order to make more sales more quickly and – I guess – to try and be more competitive.  I see this because they use some of the same fabrics I’ve bought through my wholesale account, so I know what the materials actually cost.

This is a topic that I’m going to discuss in depth in a future Handmade Business 101 post.

Consider This:  When you set unreasonably low prices, you both devalue handmade products and your time!  If you want to make minimum wage, you might as well do so while working for a corporation that offers health insurance and a 401-k!

5.  Brand Yourself

Before you launch, take the time to make a high-resolution banner and avatar for your shop.   A customer’s first impression goes a long way!  Make sure it’s a good one.

Your shop banner and avatar don’t have to be fancy – but they must be clean and clear.  Frankly, Etsy offers some free banner options and I think they’re perfectly fine.  Much better, in fact, than having a grainy, poorly laid out homemade banner.

Consider this:  You can make a banner using a colored background and two fonts:  one for your shop name, and one for your tagline. That’s pretty much what I did for my first banner.  If DIYing it is too daunting and you want to be unique, there are plenty of Etsy shops offering affordable graphics.

Janery Etsy Shop Handmade Biz 101 | The Borrowed Abode

6.  Register Your Business & Know the Tax Laws

Please, before you launch, arm yourself with information and register your small business.  Not only is it advantageous for you – getting a tax ID number, or EIN, will help you set up wholesale accounts with suppliers – but also, it’s the legal way to go.  It’s a heck of a lot easier to start your business legally than to try and fix it later on when the IRS hunts you down.

This is another topic where I could go on and on, but I’m going to keep it short and sweet.

Not sure where to start?  Visit the Small Business Administration (SBA) website and you’ll find all sorts of beginner’s resources at your fingertips.  They also have local resources in each state (District Offices) if you need more location-specific help.

7.  Set Up a Bookkeeping System

Ah, finances and bookkeeping.  It’s only slightly more interesting than small business tax law, I know.  I recommend setting up a business checking account – it doesn’t take much to open one – so that you can keep your business finances separate from your personal finances.  Trust me, it will make tax time so much easier!

Save all your receipts from purchases of supplies, purchases of furniture, computers, or storage equipment for your business.  Blog conference fees. Web hosting fees.  Save receipts for Everything!  Preferably in an organized manner.  And did you know? The mileage you drive to and from any business function is tax-deductible.  This includes emergency trips to the local craft store.  So keep a log book in your car to record mileage.

Consider this:  You have to have a tax ID number / EIN in order to open a business checking account, so see above.

8.  Consider Custom Orders

Finally, think long and hard about whether or not you want to offer custom orders.  If you do decide to accept them, figure out what your limitations and fees are.   It’s totally fair to charge an additional fee for “custom”, because it takes more time away from your production schedule – primarily because of the increased amount of customer communication required.

In the beginning it’s easy to jump at the chance to do custom, because you need to “make money.”  However, that time may be better spent on marketing or product creation.

Consider this:  Which are you more excited about – creating products that you’ve designed, or working one-on-one with customers to create a unique, specific item for them?  Neither answer is right or wrong – just different.

– – – –

Thanks so much for taking the time to read this!  If you have any questions, or think I’ve left anything off the list, please comment and share your thoughts. I love hearing from you!!

Oh, and if you’re new here, you can read all about my latest art festival or check out more posts I’ve written about starting a small business.

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29 Comments

  • Reply Stephanie at 7:33 pm

    Awesome post! I immediately bookmarked this one. So many people jump in without looking at all the factors and making a plan, it really helps to have tips from someone who has been there 🙂

    • Reply Jane @ The Borrowed Abode at 9:38 am

      Thanks! I thought I was prepared and had done my research, but there was still so much I had to learn by trial and error.

  • Reply Jenn@ahomeinthemaking at 7:35 pm

    Jane, this was such an interesting post. For awhile I’ve thought about potentially, maybe opening an etsy store, and it’s so great to hear your inside take on the whole venture. Really looking forward to upcoming posts about the subject!

    • Reply Jane @ The Borrowed Abode at 9:39 am

      Jenn, that would rock! I’d love to hear more. It never hurts to try, because Etsy makes it so easy, but at the same time I definitely recommend doing a lot of planning & prep work.

  • Reply Katie makingthishome at 8:49 pm

    well said!

  • Reply Steffanie at 9:25 am

    This is a great post Jane!! I would also add, depending upon your product, get insurance and file as a LLC. It takes any liability off of you, personally, and puts it on the company. Yeah, it is a huge upfront cost but it is worth it for the peace of mind.

    • Reply Jane @ The Borrowed Abode at 9:40 am

      Steffanie, that’s a great point. Insurance is not something I’ve done but it’s a really smart idea. Also, LLC is great – I went with Sole Proprietorship, but LLC is definitely more protection. I should upgrade…

  • Reply Skooks at 10:38 am

    Thank you for tackling this subject, Jane. Jury is still out on whether I will actually ever pursue this course of action, but the more info, the better my ability to make such a decision.

  • Reply Funnelcloud Rachel at 11:23 am

    Shoot! I’m doing it alllllll wrrrrrrrong! 😉

  • Reply Tonya Renee at 3:19 pm

    Thank you, thank you, thank you. I have thought about opening an etsy store for some time and so grateful someone has taken the time to share based on personal experience.

  • Reply Jamillah at 2:23 pm

    this is flippin’ brilliant.

  • Reply Wendy & Alex at 8:17 pm

    Great advice, Jane! Really helpful, yet simple enough anyone can follow it. Thanks!

  • Reply Weekend Roundup: Fighting Fires and Janery Product Photography | The Borrowed Abode: Adventures in decorating a rental home. at 1:12 pm

    […] After that I spent hours editing the photos.  Sorting the good from the bad, color-correcting the ones I wanted to use, because I still don’t have good enough lighting when I photograph.  Then I tackled creating or updating my Etsy listings.  I’m still working on photo editing and listing the items.  This is the time-consuming behind-the-scenes work I was referencing in my Handmade Business 101 / Before You Open an Etsy Shop post.  […]

  • Reply Skittle at 2:05 pm

    This post couldn’t be more perfectly timed! I have been seriously considering opening an Etsy shop & this helps answer a lot of the questions I had about where to start. Thanks so much!

    • Reply Jane at 4:59 am

      So happy you found it helpful! It’s a lot more work than I ever realized it would be, but it’s also super rewarding. Good luck with your adventure!

  • Reply Ginny at 7:34 pm

    What great advice! My daughter and I used to sell on Ebay and she figured out all the technical stuff like you’re talking about. I’m sure you know this by now, but you need to have posted rules about returns and such.
    Also, the USPS (Post Office) will deliver priority mail and flat rate boxes to your home. You can print your labels, either through the post office or PayPal, and schedule the post office to pick the boxes up. That was my favorite part of all of it! I did most of the packing and shipping and it made it so easy to ship. Also, as long as you have at least one priority mail box, they will pick up regular mail too. It’s cheaper than other carriers too. Now I’m gonna look at your shop! <3

  • Reply Ali Henrie at 3:17 pm

    Great article! thanks for the tips. Can I ask where you got the clear bags you put your product in? I’m starting my shop soon and am looking for something like this for my products. Thanks so much.

    • Reply Jane at 11:35 am

      Hi Ali! No problem – Nashville Wraps. They’re awesome, they ship quickly, and they have lots of biodegradable bags as well as Made in the USA products!

  • Reply Liv at 8:21 am

    Thanks! Do you have any tips on how to get found in search/browse? I have had my Etsy shop open since January and have not had any sales. My shop is linked above ^

    • Reply Jane at 10:06 am

      I wish I had a magic secret to share, but I don’t! It’s important to do your own self promotion and advertising to drive traffic.

      The bigger Etsy has grown, the more competition there is and it’s hard to get found. Extremely sharp product images are one important thing, and I’m a huge believer in a solid white background with just your product on it for the main listing photo.

      Another key is a long title because that plays a big role in search results. Your Country Patches Apron, for example, could be Floral Country Patches Kitchen Apron With Pockets in Pink Green Yellow Floral Woman’s Kids Ladies Colorful Flower Accessory.

      Yes, it seems absurd, but that does affect how easily people find your items when they’re looking for them.

      Etsy has some really good articles on their blog or in their manual to help with tips on being found. The forums there are also useful, I have found. Good luck!

  • Reply JBH at 12:41 am

    What great information. Some of this I knew because I had a small business in the States. Now I live in Carriacou, Grenada and had not thought of some of these things. I tried researching on line how to file for a business license here, with no luck. I will be shipping my handmade macrame jewelry to the states, etc. Now I am worried. I have been selling my product here at local carnivals with no problems and great success. They don’t require you have a license to sell here. Anyone have any ideas on how I go about selling on Esty or Storenvy without creating legal issues? Help. My email is jbakerhaynes@gmail.com. Thanks for any help anyone can provide.

    • Reply Jane at 10:16 am

      I would suggest contacting the Etsy help team to see what they recommend! Good luck!

  • Reply Arvilla at 9:12 pm

    This was super helpful. I book marked it as well.

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