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Starting a craft business is an exciting step—whether you’re looking to make a bit of extra cash on the side, launch a home-based venture, or eventually turn your passion into a full-time gig. If you love creating—whether its knitting, jewellery making, woodworking, ceramics, or anything in between—there’s real potential to turn that hobby into a rewarding business.
And you’re not alone. As of early 2025, the UK is home to over 19.5 million crafters and more than 11,000 craft-based businesses. With around 13.3% of adults buying a handmade item in the past year, there’s clearly a growing appreciation for quality, unique, and handmade goods.
But turning your passion into profit takes more than creativity. It’s important to understand the startup costs, legal requirements, and practical steps needed to build something sustainable. The good news? You don’t need a huge budget to get started. Many makers begin small testing the waters through online platforms or local craft fairs before scaling up.
This guide will walk you through the essentials—from how much it might cost to launch your craft business, to what licences or registrations you may need, how others are successfully making money from their crafts, and most importantly, how you can start small and grow with confidence.
What are essential craft business startup costs?
Craft business start-up costs can vary based on the scale and nature of your company. However, here’s a general breakdown of key costs to be aware of plus a sensible percentage of how much to allocate from your start up budget.
Essential Startup Costs (Approx. 70–80% of your budget)
These are the non-negotiables—the things you’ll absolutely need to get your craft business off the ground.
Materials and Supplies (25–35%)
This is where most of your budget will likely go. The materials you need will depend on your craft, whether that’s fabric and thread, beads and wire, or wood and paint. Try to buy in bulk or find trade discounts if you can.
Equipment and Tools (15–20%)
You don’t need the fanciest tools, but you do need the right ones for the job. Think sewing machines, power tools, or moulds—whatever helps you create your products efficiently and to a high standard.
Workspace Setup (5–10%)
Whether it’s a spare room, garage, or corner of the kitchen, you’ll need a functional and organised workspace. This might mean a few basic furnishings, lighting, and possibly small upgrades to your space.
Packaging and Shipping (5–10%)
If you plan to sell online or post out orders, you’ll need boxes, bubble wrap, labels, and postage costs. Start small and scale up as orders come in.
Business Registration and Insurance (5–7%)
Get registered properly and consider essential insurance like public and product liability. These costs protect you legally and help you run your business with confidence.
Accounting or Bookkeeping Tools (2–3%)
Even a simple spreadsheet can do at first, but investing in accounting software or light help from a bookkeeper will save you time and stress when tax season rolls around.
Nice-to-Have Startup Costs (Approx. 20–30% of your budget)
Once your essentials are covered, these are great extras to build your brand and grow your customer base.
Marketing and Promotion (5–10%)
Social media is free—but things like a website, business cards, or paid ads can help you look more professional and reach new customers. Don’t overspend early on; start small and test what works.
Photography and Branding (5–7%)
Great photos can make your products stand out. If you can afford it, invest in a basic camera or hire a pro for a quick product shoot. A consistent brand look and logo can also help people remember you.
Storage and Inventory Management (3–5%)
As your stock grows, you might need better storage at home or even rent space. At the beginning, though, clear plastic bins and shelves might do the trick.
Travel and Craft Fair Costs (3–5%)
Attending local markets or fairs can be a great way to get noticed. But booths, travel, and accommodation can add up. Start locally or test just a few events to see if they’re worth the investment.
Contingency Fund (Always aim for 5%)
Things will go wrong—orders might be delayed, prices may rise, or a machine might break. Having a small buffer gives you peace of mind and flexibility when unexpected costs pop up.
Much of these ‘nice-to-have’ options are things you can do for free so here’s an example of budget allocation for a £2000 startup budget.
| Essential Category | % of Budget | £ Allocation | Notes / Examples |
| Materials & Supplies | 40% | £800 | Stock up on raw materials specific to your craft (e.g. fabric, wood, beads) |
| Equipment & Tools | 25% | £500 | Purchase or upgrade key tools or machinery needed to create your products |
| Workspace Setup | 10% | £200 | Set up a functional home workspace (e.g. table, lighting, storage bins) |
| Packaging & Shipping | 10% | £200 | Buy packaging materials and cover initial shipping costs |
| Registration & Insurance | 10% | £200 | Cover legal registration fees and basic insurance (e.g. public liability) |
| Accounting / Bookkeeping | 5% | £100 | Invest in simple accounting software or a consultation with a bookkeeper |
Do I need a licence to sell crafts in the UK?
When you’re just starting out, one of the first things that might cross your mind is: “Do I need a licence to sell my handmade goodies?” The good news is – in most cases, there’s no specific “craft licence” needed in the UK. But depending on where and what you’re selling, there are a few legal bits to consider.
Selling in Public? You Might Need a Licence
Street Trading Licence
Planning to set up a stall on the high street or sell in public spaces? You’ll likely need a
Street Trading Licence from your local council. Rules (and fees) vary, so it’s best to check with them directly before setting up shop.
Market Stall Licence
Fancy selling at a local craft fair or farmers’ market? You might need a Market Stall Licence—this is usually organised through the event team or local authority. It’s often included in your stallholder fee, but always worth confirming upfront.
Special Products = Special Rules
Candles, Cosmetics & Edibles
If your crafts involve things like candles, skincare, bath bombs, or edible treats, you’ll need to meet specific safety and labelling regulations. These might require testing or registration, especially for anything going on the skin or in the mouth. Better safe than sorry—check trading standards or gov.uk for guidance.
Alcohol-Based Crafts
Selling anything with alcohol (like homemade infusions or cocktail kits)? You’ll need to explore alcohol licensing laws, which can get quite strict—even for gifts or small batches.
What If I’m Selling Online or From Home?
If you’re working from home or running things online (Etsy, Folksy, your own website), you’re unlikely to need any specific local trading licences. However, you still need to make sure your products are safe, properly described, and meet all consumer protection standards.
Do I need to register to sell crafts in the UK?
Yes, if you’re making money from your crafts (even as a side hustle), you’ll probably need to register your business with HMRC. It doesn’t have to be complicated—but it does need to be done right.
Here are your main options:
Sole Trader (Most Common)
This is the simplest route and ideal for most small craft businesses. If you’re earning money (over £1,000 per tax year) from your crafts, you’ll need to register as self-employed with HMRC. You’ll need to:
- Keep track of income and expenses
- File a Self-Assessment tax returns each year
- Pay tax and National Insurance (if applicable)
Tip: Many crafters use bookkeeping apps or hire a part-time accountant to help keep things in order.
Limited Company
Looking to scale up or offer extra legal protection? You can register your business as a limited company through Companies House. This comes with more admin and formal reporting—but can be a good fit if you’re planning to grow big or take on contracts.
VAT Registration
VAT only kicks in if your turnover exceeds the current threshold (around £85,000 a year). If that happens—first of all, congratulations! —but also, you’ll need to register for VAT and charge it on your sales. It also means you’ll submit quarterly VAT returns to HMRC.
Can you make money from selling crafts in the UK?
Yes – absolutely! People all over the UK are turning their creative talents into real income. From weekend crafters on Etsy to full-time handmade businesses with their own websites, there’s plenty of potential to earn from your craft—if you approach it with care, strategy, and consistency.
Here’s how to give yourself the best shot at turning your passion into profit:
Focus on Quality That Stands Out
- Well-made, unique items often sell for more
- Take care with your finishes, details and presentation
- Think about what makes your product different or memorable
Do Some Market Research
- Look at what’s already selling well in your niche
- Explore platforms like Etsy, Not On The High Street, and craft fairs
- Think about what your audience wants—and how you can offer it differently
Get Your Pricing Right
- Know your costs (materials, time, packaging, etc.)
- Build in a fair profit margin to keep your business sustainable
- Compare your pricing with competitors, but don’t undersell yourself
Important note: If you make more than £1,000 profit per year, you must register as self-employed and declare your income to HMRC. Track everything from the start to avoid penalties later on.
Choose the Right Sales Channels
- Sell through platforms like Etsy, eBay, Folksy, or your own website
- Explore local craft fairs and markets to meet customers face to face
- Use social media to sell directly and grow your visibility
Build a Brand That Feels Like You
- Develop a consistent visual identity—logo, colours, fonts
- Keep your tone of voice and customer experience authentic and friendly
- Share your story and the creative process to build connection and trust
Manage Your Time and Workflow
- Plan your week and batch similar tasks to save time
- Stay organised with orders, supplies and packaging
- Set up systems that keep you focused (especially if you’re juggling a day job too)
Keep an Eye on Your Finances
- Track your income and expenses from day one
- Create a simple monthly budget to stay on top of cash flow
- Avoid overbuying stock or materials until you’re confident in demand
Look After Your Customers
- Be responsive, polite and professional—especially with queries and complaints
- Add personal touches where possible (a handwritten note, nice packaging)
- Encourage reviews and repeat business by offering great service
Stay Compliant
- Make sure your products meet legal and safety requirements
- Register your business with HMRC once you’re earning regularly
- If you’re making candles, cosmetics, food or products for children—check extra regulations
Learn, Adapt and Keep Going
- Not everything will work straight away—and that’s normal
- Ask for feedback, test different approaches, and don’t be afraid to change tack
- Celebrate small wins and keep improving
How do I start a small craft business in the UK?
Starting a craft business might sound overwhelming but breaking it down into clear steps makes it much more manageable.
Here’s a practical, no-nonsense checklist to help you get going—from turning your ideas into real products to making those first sales.
Nail Your Craft Niche
☐ What exactly are you making—and why will people want it?
☐ Have you done a bit of market research? (Look at trends, customer needs, competitors.)
☐ Can you describe your ideal customer in a sentence or two?
Draft a Simple Business Plan
☐ Set some goals—monthly sales targets, number of markets, etc.
☐ Outline who you’re selling to and how you’ll reach them
☐ List what you’ll need to spend upfront (materials, tools, website, etc.)
☐ Estimate your monthly running costs and potential profits
It doesn’t need to be fancy—just useful enough to keep you focused.
Register Your Business
☐ Choose your structure (most small crafters start as sole traders)
☐ Register with HMRC as self-employed
☐ Check if you need any licences (e.g. for markets or selling food/cosmetics)
Pick a Business Name & Build Your Brand
☐ Choose a name that fits your vibe—and check it’s not taken
☐ Secure a matching domain name and social handles if possible
☐ Start developing a consistent brand style (logo, colours, tone of voice)
Develop & Test Your Product
☐ Finalise your first batch of products
☐ Make sure your crafts meet all relevant safety and labelling regulations
☐ Try a soft launch—sell to friends, at a small market, or via social media
Set Smart Prices
☐ Know your costs (materials, time, packaging, etc.)
☐ Add a fair profit margin—your time has value!
☐ Check competitor pricing to stay realistic and competitive
Set Up Your Sales Channels
☐ Decide where you’ll sell: Etsy, Folksy, markets, website, Instagram shop
☐ Set up basic online listings with clear photos and descriptions
☐ Think about how you’ll take payments (PayPal, Stripe, card reader, etc.)
Start Spreading the Word
☐ Launch your social media (Instagram, Facebook, TikTok—wherever your people are)
☐ Tell your story—why you craft, what makes your work special
☐ Join local craft groups, forums, or events to network and grow your reach
Get Organised with Admin
☐ Keep receipts and track your income and expenses from day one
☐ Set calendar reminders for tax return deadlines and stock updates
☐ Create basic systems for orders, packaging, and stock control
Learn, Adjust, Repeat
☐ Test what works (and what doesn’t)
☐ Ask for feedback from customers and fellow crafters
☐ Be ready to tweak your products, prices, or marketing as you grow
Get Crafters Insurance with Protectivity
There are things you can do to minimise the start-up costs for any craft business. This includes having the right craft insurance to cover you in the event that incidents may occur. This way, you can lessen the potential financial impact that could threaten your operation.
Protectivity’s Craft Insurance offers Public Liability cover, designed for accidental damage to customers or third parties, and Employers’ Liability, for any staff you may employ. Our Products Liability extension has been created for claims around third-party products, or opt for Equipment and Stock Cover for loss, damage or theft. We also offer Craft Fair Insurance, if you need cover for your equipment and supplies at one-off or short-term events.
Read more and get a personalised quote today. If you need help with anything, our friendly team can answer any queries you may have.
Get Crafters Insurance from Protectivity
*Disclaimer – This blog has been created as general information and should not be taken as advice. Make sure you have the correct level of insurance for your requirements and always review policy documentation. Information is factually accurate at the time of publishing but may have become out of date.
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