Business Operations

The Handmade Business Dilemma

There’s a reason that you struggle with running a business as a handmade seller : you are both the manufacturer and the retailer. You are basically running two different businesses at the same time: a small factory and a small online store.

As a result, you need to worry about things like raw material costs, material storage assembly costs, planning for demand,  waste material, and mistakes at the same time you are worrying about things like marketing and advertising, storing finished products, customer service, packaging, and shipping. Of course, both businesses need to worry about accounting tasks. It’s a huge workload for one person.

When you are performing two very difficult (not to mention, different) roles at the same time, time management becomes critical. You need to record all the tasks you need to do and make sure the most important ones are done first… which sometimes means getting things done today that prevent a crisis tomorrow or next week (for example, skipping marketing because you are too busy).

That’s part of what led to my post on what to stop doing in your business. When you get wrapped up in the smaller details, your business can suffer. Instead, focus on what needs to be done for the long-term success of the business, not just what solves a problem today. You might find that by focusing on tasks that are important in the long term, you have fewer problems that pop up in your day-to-day tasks.

This dual role also causes issues with pricing.

When a retailer sets a price for something, they know how much they paid for it and they usually just set the price at double what they paid (called “keystoning”). But in this case, unless you track your costs very closely, it’s easy to lose track of how much you spend making your products. It’s especially and issue for labor, which handmade sellers price far too low and rarely keep close track of. It’s also a problem with overhead costs, most sellers I talk to aren’t tracking at all. It’s only when a tool breaks or they run out of something they realize it was an issue.

I talk about how all of these costs relate, how to record them, and how to set your prices accordingly in my Pricing Workshop course.

This “handmade dilemma” is one of those problems where awareness and admission are the first steps. Once you recognize that you need to fulfill both roles, you can start tracking your time and expenses accordingly, making it a lot easier to prioritize your tasks and set your pricing.

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