Should you start your own business? Only you can answer this, and certain indicators can lead you in the right direction. Here are ten questions to answer in as much detail as possible before starting a business. Answer as many of them as you can; those left unanswered will guide you toward any possible weaknesses you may have.
1 Why do you want to start a home-based craft business? Provide as many reasons as you can, such as being your own boss, having an opportunity to spend more time with your family, gaining control of your career, getting out of a dead-end job or avoiding the hassles of commuting.
2 What craft experience and management skills can you bring to your new business? List craft-related jobs and management positions you’ve held, courses you’ve taken, books you’ve read, and how they have helped to prepare you. If you identify weaknesses in either area, explain how you plan to overcome them. If you’ve never held a management position, perhaps you can gain the necessary skills by launching a research effort at your local library, taking business courses, signing up for seminars or a combination of these.
3 How much space will you need for your new business? First determine what kind of spaces you need: office, workshop, studio, warehouse, sales area, display room. Every home business must have an office. You’ll also need a workshop or studio. Nobody ever has enough storage space. Although some might get by with a large closet, most craft businesses require more space, some far more. After determining your requirements, estimate the necessary size in square feet. Sit down and lay out your work area (there are computer programs to help with this.) Allow for furniture and equipment to get an idea of how much space you’ll need.
4 How do you plan to accommodate the space demands of your new business? Will you set up an office in your dining room or put a desk in your bedroom? There is nothing wrong with that; many entrepreneurs start out this way. Can your office double as a studio or do you need separate areas? Do you have a garage or basement you can convert? Everyone will have different answers; renters are more restricted than owners. If you plan to move within the next five years, list short-term and long-term considerations.
5 What are your immediate and future equipment needs and how will you meet them? List all arts-and-crafts equipment you will need over one year. Depending on your craft(s), these could include hand tools, power tools or specialized instruments. List all office and other equipment as well: computer, telephones, calculator, office furniture, vehicle. Similarly, list your projected equipment needs for the next five years. In each category, indicate what you already own and how you expect to acquire what you don’t. Keep in mind that you’ll probably need to update and upgrade some during your first five years.
6 What licenses, permits and laws do you need to know about to operate a business from your home? Laws vary from state to state, county to county and city to city. Your state may require you to file your business with a state agency or to apply for a business license. You might have to obtain a permit from your county government. There could be city ordinances regulating home businesses from one neighborhood to the next. You need to know about all obstacles and how you’ll overcome them.
7 How much cash will you need to run your business for one year and where will it come from? This is no place to fudge the figures. Be as honest as possible, even though you’re making a rough estimate. Remember, it’s best to err on the side of fiscal conservatism: Overestimate the payables and underestimate the receivables—any outcome to the contrary will be a pleasant surprise. Estimate what your business will cost for a year (remember to include your own salary). Now determine where the operating capital will come from—savings, a spouse’s income or the business itself.
8 Who are your competitors, how are they doing and how do you expect to overtake them in the marketplace? Your answer to this question depends on your kind of craftwork and how many other local artisans are in the area. If certain crafts are popular in your community and you plan to work with those same crafts, you’ll be in competition with many others. If they’re all driving fancy vehicles and living in expensive houses, there’s plenty of room for competition. If they’re barely scratching out an existence, however, that could mean the supply is outstripping the demand. Chances are, reality lies somewhere between. If you have a particular area of expertise, in a small community you could be the only one so skilled and may well fill a need. Answer this one carefully—it is your first step into market analysis.
9 What are your short-term financial and personal goals for your new business? What do you expect to earn and accomplish during your first year? This question relates to question 1 and goes beyond question 7. Focus here and get more specific. Lay out objectives that go beyond “just getting by.” What are your goals? What do you expect your income to be? Will you have others working for you? What sort of rates or fees will you be demanding? How will you have improved or branched out? What will you have learned?
10 What are your long-term financial and personal goals? Now discuss everything you covered in question 9 in terms of a five-year plan. How big do you expect your business to be? How skilled an artisan do you hope to become? What sort of customers do you expect to have? Will your business continue to grow, or will you want it to level off? Do you plan to hire help? Will you branch out? Will you get rich?
The information in this article was adapted from chapter one of How to Start a Home-Based Craft Business by Kenn Oberrecht, copyright 2007, Morris Book Publishing, LLC, and was used by permission of The Globe Pequot Press.