Customer Acquisition CostStarting up a craft store business with one’s own craft business: Turning your hobby into a fulfilled and, above all, a self-determined profession is a dream come true for many employees or unemployed people. Anyone who wants to become self-employed with a craft store and owns a creative-creative vein of his own can turn his hobby into a sustainable livelihood, as long as the business plan is holistically planned right from the start. In this regard, the following article would like to draw attention to essential fields of action and requirements that interested founders should have in mind.

Craft Store BusinessSelf-employment with a craft store: What business founders learn here

  • Location, assortment and target group: the basis for business success
  • The role of finance and its careful planning
  • Information on possible sales channels/distribution channels
  • Ideas for a creative marketing strategy
  • Formalities in the run-up to the opening of the business

Have you been dreaming of having your own business for some time, helping you turn your hobby into a career? Maybe you are a passionate hobbyist and love to let your creativity run free in do-it-yourself projects. In this case, you should definitely think about opening your own craft store business. As a local retailer, it’s definitely not easy these days – but if you’re serious about being self-employed right from the start and are looking for some important “rules of the game,” then your business has prospects for success.

What should make the craft store unique from the customer’s point of view?

Founders should ask this central question right at the beginning of the planning because it is essential for the desired business success. The background is that the competition in the form of large chains and above all by numerous shops on the Internet is great. In this respect, the own craft store should stand out and offer customers a special offer. Incidentally, the question raised here should be answered as numerically as possible in the business plan. This document provides the groundbreaking formal framework for holistically and purposefully coordinating all business areas (products, prices, marketing, and finance).

Craft Store BusinessThe work pays off in two ways: Firstly, founders are forced to think through all the decisions to be made from the outset with a view to the financial consequences. On the other hand, a convincing business plan is an effective business card to present your own business project in a compact form. Potential financiers want to know quickly what they are investing in their money or whether the business is viable. In this respect, every detail in the business plan should be consistent.

The business success stands and falls with the money

Sound finances and their careful planning play a key role in any business start-up. Depending on the size of the craft store business in the start-up phase, a high capital requirement for the facility and any reconstruction measures. As equity capital will generally not be sufficient, external donors (banks or even private investors) have to be acquired in addition to possible promotional instruments. A look at the practice shows that finances are the main cause of failure within the first two fiscal years. Therefore, conscientiously one of a cost and profit-oriented management must be ‘tinkered’ from the beginning.

Craft Store Business-How to SuccessBy means of controlling, all costs should be consistently monitored, with the basis for attractive profit margins being set in cost accounting or pricing. Planning the finances makes it clear that the hobby can only become a successful profession if, in addition to relevant specialist knowledge, the necessary commercial or business know-how is available. With all the creativity in this area, the management should be sober and above all pay-based.

What formalities have to be done before the actual opening of the business?

Craft Store Business-formalitiesAs already briefly indicated above in relation to the trade tax, a craft store business is a commercial business. It does not matter if this is operated stationary and/or online. There is no way around a business registration as a formal prerequisite for the business opening. As far as the premises must follow the sanitary facilities and safety aspects. Also strictly observe the legal regulations as well as the price marking guidelines according to the federal state. Inventory insurance can be useful to protect against potential financial damage. However, inventory should never be too large, so as not to unnecessarily tie up too much liquidity. In this way, entrepreneurial freedom of action is restricted.

Which legal form for a craft store business?

Of course, anyone who wants to open a craft store business must register for a trade. Otherwise, it would not be an official business and on top of that, it would be punishable.

If you want to become self-employed, you should lead one of your first ways directly to the trade office. Here you can register your trade by completing the so-called business license. Incidentally, the document is also available online and can be submitted digitally to the responsible office.

Craft Store Business-Legal FormsNo matter if analog or digital – when you fill out the trade license, you have to indicate in any case which legal form you choose.

As a business owner of a craft supplies store, you have several options that are briefly outlined here:

  • Sole proprietorship: As a sole trader, you only have to face a few bureaucratic hurdles. The start-up process is quite simple and even later, there is relatively little to pay attention to. No need to share capital. However, you must also know that you are liable in the event of business failure with your private property.
  • GbR: GbR is always accompanied by full liability. The advantage over the individual company, however, is that you usually take the adventure of self-employment in a team and the liability can be shared among several shareholders.
  • GmbH: If you want to secure the best possible, then you should think about the founding of a GmbH. This legal form enjoys a very good reputation in Germany and will help you to establish yourself quickly as a business. If you fail with this, you just have to stick with your business ownership. In order to found a GmbH, you must present 25,000 euros in registered capital. In addition, the bureaucratic process is much more complicated than when founding a sole proprietorship or a GbR.
  • UG (limited liability): The limited liability company is often called the “little sister” of the GmbH. It comes with similar benefits but requires only a symbolic capital of one euro. The business form UG (limited liability) is very popular, especially in the startup scene. But also some traditional retailers decide for it.

Info: If you have decided on a legal form and want to change it at some point, then that is quite possible. For example, many sole proprietors decide at some point to rename the GmbH. Such a process is not excluded but requires a lot of time.

The right location for a craft store

If you want to start a craft store business, you need a suitable shop. Suitable means in this context that the size of the premises corresponds to the range and that the location of the store every day attracts many customers in the business. Ideally, there is a shop, in which only a few conversion measures are required. In this way, costs and financial risks can be minimized. Of course, a good location should also have a few direct competitors as possible in the immediate vicinity. Incidentally, the location can also have a financial impact, as each city/municipality has its own rate of levy, which is relevant for the amount of the trade tax payable. However, a good location with excellent infrastructure can well justify higher rents in the long term and higher business tax rates.

Craft Store Business-LocationOf course, before you open a craft store business, you need to find a suitable store. First of all, this task might sound simple, but it drives some retailers to the brink of madness in the start-up phase.

In general, it is advisable to keep your eyes open from the moment your idea is born. Even if you have not officially registered your trade, it can not hurt to look for opportunities. Furthermore, it makes sense to involve your friends and acquaintances and to report on your plans. Especially in smaller cities, the chances are good that anyone snaps anything and can give you a good tip. Apart from that, the following always applies: Research on the Internet and contact a real estate agent.

There are basically two aspects to choosing your location: the hard facts and your gut feeling. The hard facts include:

  • (central) location
  • easy accessibility by car and public transport
  • Parking in the immediate vicinity
  • enough space
  • good lighting conditions
  • Rent and utilities
  • Distribution of the rooms
  • Distance to competitor shops

If everything speaks rationally for this store, you should always listen to it for a moment. What does your gut feel about the business? Is it exactly as you imagined? Or have you made a few subconscious compromises? Can you imagine working here for the next few years? Of course, facts are something to cling to, but many entrepreneurs will be able to confirm that not only the rational aspects should be considered in a decision.

Target audience and assortment: the foundation for sustainable business success

It is obvious to focus on crafting needs, to which one has a close connection. But beware, because what appeals to you, does not have to be interesting for the mass of potential customers. In this respect, the founders should ask what is in the ‘craft scene’ in general or currently there is a great demand. In principle, the strategic decision is to make whether the range will be rather broad (everything the craft heart desires) or occupy a niche (it would be possible to focus on various types of paper or a major type of material).

Craft Store Business-Target AudienceUltimately, the assortment can only be determined in a goal-oriented manner if there is clarity about the targeted target group: should hobbyists or artists be addressed more or both? Or the craft shop should fulfill the needs of kindergartens and/or (elementary) schools? Anyone who knows their target group can, therefore, satisfy their needs with a perfectly tailored assortment. Customer satisfaction proves to be a decisive factor in binding in the face of fierce competition. In addition, satisfied customers tend to be in a greater buying mood.

Tip: a seasonally changing range can contribute to customer loyalty

A certain standard range should be available so that customers can cover their basic need for crafting utensils with every purchase. The trend is also seasonal articles in terms of craft supplies. In the Christmas period, for example, a special subject area should not be missing apart from the standard range. Actions are also conceivable for the seasons or special occasions like Valentine’s Day. There are hardly any limits to creativity here. And which customer does not like to be surprised with new creativity?

The assortment: What should customers find in your shop?

In order to be able to start a craft store business, you should, of course, carefully consider in advance what you want to include in your assortment. Because as you surely know, the colorful world of craftsmanship is extremely diverse. All facets and possibilities in a store to bundle are almost impossible.

It is all the more important that you think about what you want to offer in your store. By selecting products, you automatically sharpen your profile and develop a concept that at best runs through your entire business.

Tip: Define your audience. Knowing them will automatically make it easier for you to choose your assortment.

Is next to the stationary trade another sales channel makes sense?

Many start-ups want to be as broad as possible in order to secure a sustainable revenue base. In this regard, it may be worth considering strategically designing an online shop as an additional distribution channel in addition to the stationary craft shop. If you want to keep the initial costs low overall and/or find no suitable shop, you can also just call an online shop for craft supplies. Anyone planning to do so should take their time and carefully analyze the competition on the Internet in order to make their own offer as effective as possible.

Creative Marketing: How to put the craft store business in the right light

Show the creativity by pointing out striking means on the craft store. Inside too, it should be creative, to make customers want more. However, the order and overview should not be affected, because which customer has been looking for a long time? Apart from the professional staging of the sales rooms, go for online advertisements too. In this way, customers can learn about the existence of the craft store and understand the range and actions. Flyers, advertisements in newspapers and brochures are still an effective means of advertising to attract customers and lure them into the craft shop for a clearly defined range of action.

Craft Store Business-Creative MarketingIn this creative area, it also makes sense to consistently integrate social media and to keep customers in action with (buying) humor. It would be conceivable, for example, to upload photos or videos of crafting activities on Facebook and reward the best entries with prizes.

Sell products online too?

If you want to start a craft store business, you are very likely to encounter headwinds quickly. The most common objection: With an analog shop, you can not earn anything nowadays because everyone only orders online.

Craft Store Business-Sell OnlineYes, it has definitely become more difficult – but it is still not impossible. If you manage to establish yourself on the market and offer your customers as many different products as possible, then you have a very good chance of living from your craft shop.

If you do not want to leave anything to chance, you can also think about building an online trade for craft supplies in parallel with the offline business. Alternatively, there is also the (slightly less expensive) opportunity to place your products on online marketplaces like Amazon, eBay, and Dawanda.

What you have to pay attention to activities in e-commerce (in any form) will take a lot of time. A time you may be better off using to get your analog business moving forward. Whether it is good or less good to offer the products online, you have to decide for yourself.

Self-employment with craft store business: practical summary in a compact overview

  1. To a certain extent, the business plan is the goal-oriented ‘craft instruction’ in order to set the course for success right from the start
  2. External financiers want to compactly learn in the business plan why the business idea is profitable
  3. Having a good location will ensure a high frequency of customers
  4. Who knows his target group and their needs, can tailor the assortment exactly (basic decision: rather broad or special assortment (= niche strategy)?)
  5. Depending on the season/occasion, the assortment should always contain new products in order to keep customers (buy) happy and to bind them permanently
  6. In addition to a shop, choose the internet as another option, specific country or possible even worldwide distribution channel. It is also possible to set up only online trade if not found any suitable location or costs.
  7. Before the opening of the business, a trade must be registered. For business operations, must observe the relevant laws and directives of the trade like opening hours and price marking as concrete examples.

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