Table of contents
Table of contents
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My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns wi...
My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns with the brand’s voice and strategy.
For the small businesses we support, insurance and financial protection can sometimes seem complicated, especially when getting started. That’s why our content is designed to be clear and practical—providing helpful guidance and ensuring our customers not only find the specialist cover they require but are confident it will do the job they need.
Starting a craft business is an exciting venture, allowing you to turn your creative passion into a source of income. Whether you’re skilled in knitting, jewellery making, woodworking, or any other craft, making a business of your hobby can be rewarding.
However, to ensure the success of your business, it’s crucial to understand the start-up costs for a craft business and the legal requirements. In this comprehensive guide, we’ll explore the expenses involved, answer questions about licensing and business registration, and provide tips on how to get started.
What are the essential costs for a craft business?
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.
Materials and supplies
The cost of materials and supplies is a significant expense for any craft business. The amount you spend will depend on the type of crafts you create. For example, if you’re into woodworking, you’ll need tools, lumber, and finishing materials. If you make jewellery, you’ll require beads, wires, and other components. It’s essential to budget for these materials, and it’s a good idea to buy in bulk to potentially reduce costs.
Equipment and tools
Crafting often requires specialised tools and equipment. This could include sewing machines, kilns, engraving machines, or 3D printers, among others. The cost of these tools can vary widely, so it’s important to research and invest in quality equipment that suits your craft.
Workspace
You may need to set up a dedicated workspace for your craft business. This could be a home studio or a rental workshop, depending on the scale of your operations. Factor in rent, furniture, utilities, and any renovations or improvements, to create an efficient working environment.
Marketing and promotion
To get your craft business off the ground, you’ll need to invest in marketing your brand. This could include creating a professional website, business cards, email marketing, offline promotional materials like brochures and posters, and attendance at craft fairs or markets. Social media promotion is also essential for reaching a broader audience, with options to put advertising spend behind your posts.
Business registration
There may be registration fees involved with starting your business. Additionally, licensing can carry costs, such as street trading or market stall licences. Read more about business registration later in the article.
Insurance
Craft businesses should consider business insurance, which may include public liability insurance, product liability insurance, and contents insurance for your workspace. These insurance policies are crucial for protecting your business in case of accidents, damage, or legal issues.
Packaging and shipping
If you plan to sell your crafts online or through mail orders, budget for packaging materials, shipping costs, and postage. Shipping can be a significant cost, so explore cost-effective options and consider passing on some of these costs to customers.
Photography and branding
High-quality product photography is crucial for showcasing your crafts online and in any printed materials. You may need to invest in a good camera and potentially hire a professional photographer. Developing a distinct brand identity also involves design and branding costs, which you could enlist a professional creative to help with.
Accounting and tax
Consider the cost of hiring an accountant or purchasing accounting software to manage your business finances. This is essential for keeping track of expenses and income and fulfilling tax obligations.
Storage and inventory
If you have a significant inventory of crafts, you’ll need storage space. Renting storage facilities or managing storage costs at home is an expense to factor in.
Travel and transport
If you plan to attend craft fairs, markets, or trade shows, you’ll incur travel and transport costs. This could include fuel, accommodation, and booth rental fees.
Contingency fund
It’s always wise to set aside a contingency fund for unexpected expenses or fluctuations in business income. This acts as a safety net to ensure your craft business can weather unforeseen challenges.
Do I need a licence to sell crafts in the UK?
One of the first questions that often arise when starting a craft business is whether you need a licence to sell your crafts. There isn’t a specific craft-selling licence in the UK, but you might require other licences, depending on your business and area.
Street trading licence
If you plan to sell your crafts on the streets or in public spaces, you may need a Street Trading Licence from your local council. The requirements and costs can vary between councils, so it’s essential to check with your local authority for details.
Market stall licence
If you intend to sell your crafts at markets, you might need a Market Stall Licence, which is usually issued by the event organisers or local authorities. This licence might come with a fee, which you can inquire about when applying to participate in a market.
Food and trading standards
If your crafts are considered food, or if you’re selling items that fall under specific trading standards, you might need to meet certain regulatory requirements and obtain relevant licences or permits. This is particularly relevant for crafts like handmade candles, cosmetics, or edible items.
Alcohol licensing
If your craft business involves selling products with alcohol content, such as hom
It’s important to note that if you’re operating from your home or an online platform, you may not need any specific licence related to crafts. However, you must ensure your crafts comply with safety standards and consumer protection regulations.
Do I need to register to sell crafts in the UK?
Whether or not you need to register your craft business with HMRC (Her Majesty’s Revenue and Customs) depends on the scale and nature of your business.
It’s essential to consult with an accountant or a business advisor to determine the most suitable structure and tax implications for your business. Proper registration and tax compliance are crucial to avoid legal issues and financial penalties.
Sole trader registration
If you plan to run your craft business as a sole trader, which is the simplest and most common structure for small businesses, you’ll need to register as self-employed with HMRC. This registration is necessary if your craft business is your primary source of income. You’ll need to keep records of your income and expenses, and you may need to pay income tax and National Insurance.
Limited company registration
If you intend to operate your craft business as a limited liability company (LLC), you must register it with Companies House and inform HMRC. This structure offers more legal protection for your personal assets but comes with additional reporting and tax obligations.
VAT registration
If your craft business generates a significant income, you might also need to register for Value Added Tax (VAT) if your annual turnover exceeds the VAT threshold. This is subject to change but is typically over £85,000. VAT registration involves charging VAT on your products and submitting periodic VAT returns.
Can you make money from selling crafts in the UK?
Firstly, there is plenty of potential to make money from selling crafts. However, there are various factors to consider, such as the quality of your offering, your marketing efforts, and your business strategy. Find out in more detail how you’ll be able to earn more and cover your craft business start-up costs.
Craft quality
The quality and uniqueness of your crafts play a significant role in your success. Customers will pay more for well-made, unique, and attractive items, so make your products stand out in terms of design and craftsmanship.
Market research
Conduct thorough market research to identify your target audience and competitors. Understand what sells well in the craft market and how you can differentiate your products.
Pricing strategy
Determine a competitive pricing strategy. Ensure that your prices cover your costs and provide a reasonable profit margin. Don’t undervalue your work, but be mindful of pricing yourself out of the market.
Sales channels
Consider where and how you want to sell your crafts. Options include craft fairs, markets, online marketplaces, your own website, and social media. Diversifying your sales channels can help reach a broader audience.
Marketing and branding
Invest time and effort in marketing and branding. Effective promotion on social media, craft forums, and local events can help you build a customer base. Creating a distinct brand identity will set you apart from competitors.
Financial planning
Develop a comprehensive business plan that includes a budget and financial projections. This will help you keep track of your expenses, income, and overall profitability.
Customer service
Providing excellent customer service and responding to customer feedback can help you build a loyal customer base and positive reviews, which can be crucial for your business’s success.
Legal considerations
Ensure that you are in compliance with all legal requirements, such as safety standards, licensing, and tax obligations. Non-compliance can lead to costly penalties and damage your business reputation.
Persistence
Building a successful craft business takes time. Be patient and willing to adapt your strategies as needed. Don’t be discouraged by initial challenges.
Networking
Connect with other crafters, attend craft-related events, and consider joining craft associations or online communities. Networking can provide valuable insights and support.
While it’s possible to make money from selling crafts in the UK, it’s important to have realistic expectations and be prepared for the challenges that come with running a business. Success often requires dedication, innovation, and the ability to adapt to changing market conditions.
How do I start a small craft business in the UK?
Starting a small craft business in the UK involves several important steps. Here’s an overview of how to get started:
Clarify your business idea: Identify your craft niche and products. Conduct market research to understand your target audience and competition.
Create a business plan: Create a detailed business plan, containing your goals, target market, marketing strategy, financial projections, budget and investment needs.
Register your business: Decide on the legal structure of your business (sole trader, limited company, etc.). Register it with the appropriate authorities.
Come up with a business name and branding: Choose a business name and check it’s not already in use. Develop a brand identity, including a logo and visual elements that represent your crafts.
Develop your product: Create or source the crafts you plan to sell. Ensure that your products meet safety standards and regulations.
Set your pricing: Determine your pricing strategy to cover costs and make a profit.
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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My main focus is managing the blog and product content for the Protectivity website ensuring everything aligns with the brand’s voice and strategy.
For the small businesses we support, insurance and financial protection can sometimes seem complicated, especially when getting started. That’s why our content is designed to be clear and practical—providing helpful guidance and ensuring our customers not only find the specialist cover they require but are confident it will do the job they need.
