ETSY SUCCESS: Selling Your Crafts for Fun and Profit
Table of Contents
Chapter 1: What is Etsy? Chapter 2: Deciding What to Make Chapter 3: Who Are You? Chapter 4: Workspace Chapter 5: Photography Chapter 6: Pricing Chapter 7: Packaging and Shipping Chapter 8: Creating a Listing Chapter 9: Marketing Chapter 10: Bookkeeping, Taxes and other Legal Things Chapter 11: Time Management
What is Etsy? “Etsy is the world's most vibrant marketplace. Etsy celebrates individual creativity in design and craftsmanship by connecting unique people, stories, and items in a playful and meaningful way. Etsy provides a marketplace for crafters, artists, and collectors to sell their handmade creations, vintage goods and crafting supplies.” ~ Etsy.com
Currently there are over 30 million members shopping at over 1,000,000 active shops on Etsy.com. Over 22 million items can be viewed by the over 60 million monthly unique visitors. Membership is growing by over 1,000,000 new people each month. In the third quarter of 2013 alone, over 16 million items sold, generating over $319,000,000 … money which went directly to the artists, crafters and suppliers, not to big corporations or middlemen. Sales numbers are increasing at phenomenal rates, each and every month. The over $895 million in total sales in 2012 will become well over $1 billion in 2013. Etsy gives artists a chance to sell directly to the consumer, and buyers a chance to know something about who created what they purchase. And gives you a place to sell your creations online, for fun and profit!
Deciding what to Make
Perhaps you are saying, “What should I make?” or “Will what I make sell?” Whether you already have something you make well, love to do, and want to do forever (or at least the foreseeable future), or you love to create but have no idea what you want to sell … the first step is to spend some time shopping on Etsy. If you know what you want to make, look to see how other people are doing with that same or related type item. What materials are they using? What kind of prices are others charging? Do you have a unique approach that no one else is doing? If you find a lot of people selling the same thing you make, you will need to somehow stand out. When too many people offer the same thing, everyone loses. And no matter how you price your offerings, there will always be someone who is willing to sell for less. So make sure that what you are making is unique, special, or has a different twist to it, and then customers will purchase your creations, rather than the competitors. If your interests lie in many areas and you are unsure what you could make that would sell, rather than looking at specific things, look at a wide variety, and see what catches your interest. On the Etsy home page, there is always a featured treasury. A treasury is a collection of 12-16 items that have been gathered together to create a focus of some sort, for instance a focus on color, theme, idea or whatever was in the curator’s mind. The items featured each come from a different shop, so you’ll see a wide variety of items. Most treasuries will include handcrafted, vintage and supplies all together, or whatever was found to fit the treasury best. On the left hand side of the home page, you’ll find a heading that says “More Ways to Shop.” One of these ways is by treasury. If you click there, you will go to a list of treasuries showing the first 4 pictures … just enough to whet your appetite. When you see one that interests you, you can bring up the full collection by clicking either on the pictures or the name of the treasury. From there, you can click on any picture to see more about that particular item, and more items by that crafter. At the bottom of the home page you’ll see a group of “Recently Listed Items” … click on “See More” and it will take you to a page that essentially will show every item listed on Etsy. It will automatically come up in “Most Recent” order. If you look at the top left, you will see that you can select Handmade (or All, Vintage or Supplies) which will at least get you looking at things you could possibly make. Below that, you can then select a category, like Jewelry, Art, Crochet,
Quilts, Pets, and many, many more categories to further narrow your search, all within Handmade (if you selected that above). For instance, as I write this, there are 22,763,222 total items listed, of which 16,644,533 are handmade, 4,271,934 of which are in the category Jewelry … which can be further broken down to Necklace, Earrings, Bracelet, etc. Taking it further, there are 1,314,534 items in Necklace, which has 20 subcategories, including stone, which has 110,624 items. So if your specialty is stone necklaces, you can now look relatively quickly thru the pictures (for the first several pages, at least … which will be the most recent items) to see if anyone is doing anything like what you make, and if so, what they are charging. As you see individual items that appeal to you and click on them, it will take you to that person’s shop, where you can see all the things that person makes. If you really like what you see, it could be a good idea to mark it as a favorite, then you will see things they post regularly on your feed. However, going back to the main page periodically will give you a broader understanding of just what is selling … and perhaps lead you to making something differently that you already do, or something of a totally different nature. One thing I want to mention here that is of utmost importance: While it is a good idea to go thru the listings for inspiration, it is NOT okay to copy what someone else is doing. Copyright laws apply to individual’s designs, but even if it would be difficult, if not impossible, to prove copyright infringement, it is still morally and ethically wrong. How would you feel if you spent your time and energy to create something new and different, and a week later someone has made something just like it … and might even be selling it for less?
Who Are You? Choosing a Name Now that you’ve decided what you want to sell on Etsy, you need to figure out your shop name. If you’re already an established business, chances are good that your business name will work just fine, although there are times that someone already has the name on Etsy (we found that out when we tried to open a shop with the name of our gift store). There are a few obvious approaches: •
• • • •
If you are a traditional artist, using your personal name works well, and helps establish name recognition (e.g., Rachel’s Studio, Alisa Paints, Melissa Dawn Arts, Art by Glorianna …) If you make a particular type product, you could mention that in your name (e.g., Knits4Noggins, JewelryToteDesigns, WireAnimals, NW Fudge … ) You can choose a name that promotes the feeling you want to create with your shop (e.g., Smile Mercantile, Sweet Sanity, Party With Me …) You can build on your location (e.g., Pacific Coast Seaglass, Connecticut Shores, Atlanta Bows, California Sweet Peas …) Sometimes, something seemingly totally unrelated will make its mark (Purple Cactus Studios, Yellow Bug Boutique, Squirrel on a Ledgetop …) (all of these are actual Etsy shop names)
What you really want is something that will stay in people’s minds so that they can find you again. When you have a few name choices, run it by some friends, co-workers, family … people you think might have valuable input. Once you have it narrowed down (or have an existing name) you should check it out in several places: • • •
Check to make sure it is available on Etsy Go to www.GoDaddy.com and check to see if the name is available for a website Check your state’s Department of Revenue database to be sure the name is available in your state
You want to find something that you can make yours in all three locations. Otherwise, what someone else is doing can reflect on you and your business (and that is not necessarily good).
Once you have decided on a name, it is time to set up your shop. First you will set up your account as a buyer,
Creating a Logo, Banner and Branding Now that you have your name, you need a logo and a banner to put on your Etsy shop and other business paraphernalia. This can be as simple as a great photo of one of your items to which you add your name. It can be artwork you have done (or have someone do for you); it can be simple graphic design. The important thing is that this is the FIRST thing people see when they come to your shop, so you want it to be a true representation of you and what you sell. In other words, a fancy scriptstyle typeface surrounded with scrolls would not be appropriate if you make denim coveralls for little boys, nor would bold block letters in primary colors if you make delicate pearl jewelry. If you are familiar with Photoshop, then the banner-making process should be fairly simple. If you don’t have Photoshop but wish to create your own banner and logo, you can go to www.pixlr.com, which is a free program online that you can use to create your banner. Your banner needs to be 760 pixels wide by 100 pixels high. There are several tutorials on YouTube that will show you how to use this free program. (One I saw that seemed pretty decent, especially for a novice, is http://www.youtube.com/watch?v=OzmaxrdCHnU … just replace his measurements.) If you don’t have those kinds of design skills, perhaps you have a friend or family member that can make one for you. Or, you can always outsource the work. There are many people on Etsy who sell pre-designed kits, or who will design a custom piece for you. Or you can give someone on www.fiverr.com a try (this is a website where people offer services starting at $5). When you are planning your designs, pay attention to colors, as you will want to use these throughout as a theme and for branding yourself. The American Marketing Association Dictionary defines branding as the "name, term, design, symbol, or any other feature that identifies one seller's product distinct from those of other sellers.” It is the image you present, not only with what products you are making, but in how you photograph and present them, how you describe them, the colors you use, etc. It is also about how you present yourself, not only on Etsy, but on Facebook, Twitter, your website if you have one, as well as in person via business cards and craft shows. Creating your Identity with your profile pages
On Etsy you have two places to tell your customers more about you: the profile page and the about page. The profile page is where you tell more of your personal story, while the about page is to tell the story of your shop.
These pages can be two of your most important pages. This is where potential customers get to find out more about you, and decide if you are someone they want to support and do business with. They will want answers to a variety of questions, such as: Who are you? Why do you do what you do? How did you get here? They’ll want to know about things you’ve accomplished, awards you’ve received, things you’re proud of. Even if these are things unrelated to the items you’re now making and selling, it is part of you, and therefore part of each thing you make. When talking about your shop and your items, things to consider are: Where is your shop? What inspires you? How is what you make unique? What can your customers get from you that they can’t get elsewhere? Tell your story. Be proud of who you are. This is your chance to shine, to give your guests reason to come back again and again. It’s okay to brag a bit, to be quirky, to be “out there.” But be real.
Whether you have a full studio or a corner in a room, it is important to have a place that is set aside for your creative projects, where you can work uninterrupted for at least some period of time. Even if that means having everything on a tray or in a box that you bring out to use on the kitchen table, make it YOUR time and YOUR space. Organization is key to being able to create freely. If you have to take all your time looking for something you know you have, you not only waste time, but you lose momentum. And when you do that, you get frustrated, maybe angry … maybe to the point of giving up. Investing in some proper storage containers for your supplies can be a huge help. That way, even for those who must keep their supplies stored between uses, it takes only a matter of minutes before you are ready to start crafting. If you are lucky and have a separate space (an extra bedroom, a closet workspace in a room, an area in the garage, whatever … try to have it be attractive and inspirational. Most people find themselves to be more relaxed and more creative when surrounded by things that inspire them, whether that is things they find beautiful, prints with quotes on them, or a photograph of someone you admire. It is really helpful if you can have an area set aside for taking pictures of your items, so if your workspace is large enough, plan for that. Obviously, small items need only a small space, which is easier to have set up on a semi-permanent basis.
Ok, so you’ve made some items. Now you need to photograph them. There are tons of YouTube videos and how to articles on the internet, as well as many articles to be found on Etsy. So I’m just going to cover the basics here, to help you get started. • • • • •
Take pictures in indirect lighting, never with flash Take at least 10-15 pictures of each item (you’ll need your 5 best) A plain white background is usually best Take pictures of the back, too It’s not the camera
Indirect Lighting – this is the lighting you get outside in the early morning and late afternoon, when the sun is hitting at more of an angle and not shining directly on things. If you can be outside to take pictures then, that is great. But it’s not very practical to rely on that, so the next best thing is to make a photobox (for small items) or create a photo backdrop staging area. You’ll need to be able to have diffused lighting to eliminate shadows, no fluorescent lights (changes the colors the camera picks up), and a light on each side of the object for good balance. Take lots of pictures … that’s one of the benefits of digital photography. Until you know how many of your pictures are likely to turn out, taking at least 2-3 times as many as you want to end up with gives you plenty to work from. Take from above, beside, the other side, angled, straight on, try different lighting, different positions of the item. Take close ups. Take extreme close ups. Try using props, and try different backgrounds as well as taking the pictures on a plain white background that can just disappear. Remember, your customers can’t hold the item in their hand, can’t turn it around and look at the back … so you need to do that for them. Think of what they would want to see to help inform their decision to make a purchase, and give then that information in your pictures. Many people are taking excellent pictures with their cell phone cameras. Many others use simple point and shoot cameras. Use what you have, and when you can afford to, move up. The important thing is to learn to use and understand the camera you have. Read the manual, look on the internet for more information on your camera. Experiment. Take lots of pictures and see what works. After you’ve taken your pictures, you will want to take them into Photoshop or another editing app to sharpen, tweak color, crop, rotate, or whatever is necessary to make the photos pop.
Again, there are many tutorials for this online, and since everyone has different available tools, I will leave that up to you to find out what works for you and what you have to work with.
Wow. You’ve made some wonderful creations, you’ve decided on your shop identity and set up your shop, you’ve taken some photos, and you’re ready to list some things and start selling, right? Not quite. First, you need to establish your prices. If you haven’t already been selling your crafts, there is a lot more to that than you may realize. Even if you have been selling, you may need to rethink your prices. Let’s start with a simple formula: (Out-of-Pocket Cost + Labor) x 2 = wholesale x 2 = SRP (suggested retail price) When figuring your out-of-pocket costs, it’s obvious that you would include the cost of the materials used in making your items. But it’s easy to overlook all those things you have on hand in quantity, but use only a small amount for per project. Things like thread on a sewing project, flavoring on an edible, seed bead spacers used on a beading project, etc. add up! Also include your packaging costs: tissue, ribbon, boxes, bags, padded envelopes, tags, etc. After all, each sale goes out with packaging, so it is a real part of the cost of each item. When figuring labor costs, in addition to the time spent making the item, include the as time spent taking the photographs. If you are making one-of-a-kind items, all of the time spent on photographing each item must be included in the labor of that item. If you are making things that will be relisted over and over, then the time spent taking pictures can be allocated over many pieces. This will need to be a “guesstimate” at this point, since you don’t know how many you’ll sell, but you can make a qualified assumption based on the market and kind of item as to whether you will sell 5, 10, or 50. Then you need to ask yourself, “What is my time worth? How much per hour should I be paid?” Remember, you are an artisan, a crafter, an artist, a designer … and CEO of your business. What do you consider a living wage? If you were to do this full time (40 hours a week), what would it take to make it worthwhile? Would you be happy with $10 an hour? $12? $20? Consider the training needed to be able to make whatever it is you are now selling, and your skill level. Obviously, if it takes you three hours to make something that someone with more experience could make in an hour, your time isn’t worth as much. But if you’re making
something that took 15 years of practice to perfect, your time is worth a lot more than if you’re doing something that you just picked up over the weekend. Since the amount of time will vary with each item, even if you are essentially doing the same thing over and over again, it makes sense to round up. I like to start with $12 an hour, because that breaks down to $1 per 5-minute increment (figuring down to the minute is just extra work). So if something takes me 20 minutes, I can then say $4 for the cost of labor for making it, plus maybe $1 for the time it took for photography (assuming 5 minutes for the group of pictures of that item). Then let’s say the materials cost $6.80, and the packaging cost .76. Going back to our formula, we now have $7.56 + $5 = $12.56 x 2 = $25.12 … this is your wholesale cost. If, down the line, you decide to sell wholesale to stores, this is the price you would charge them, and you would be making the hourly wage you decided you needed. Your retail price, the one you will list, will be double that … $50.24. But that’s a really strange price, so round it down, or up. And this is where your market research will come in. Suppose you found that similar (not the same, remember … NO COPYING!) items are selling for $47, $34, $59. First, see if you can determine the quality of the materials used, and how they compare to what you have used. For instance, if you have used sterling silver on a pair of earrings, but something similar was made of silverplate, your earrings are worth more just by the value of the metal. In our sample case, I would suggest listing the item at $49, which is just under the SRP and is in mid-range of the other listings. If your quality if obviously better, don’t be afraid to charge more than other shops charge. And if your work is totally unique, you can be the one to set the price, because no one else has been there before to do it for you. Now, you may be saying … “But wait, I only spent $7.56 on this item, and it’s only taken 25 minutes total … why should I sell it for $49? Isn’t that ripping off my customer?” Remember, you are not only the crafter here. You are the designer, head of your packaging & shipping department, listing editor, marketing director, advertising executive, bookkeeper … and at the end of the day, you get to clean up your workspace, too … and all those people need to get paid out of the retail markup! Also, just as in a brick and mortar store, you have overhead expenses to cover as well, including your Etsy fees (.20 per listing + 3.5% per sale) and credit card processing fees (either PayPal or Etsy), as well as paying for heat and lights and even your work space. Some other things to consider when pricing are put quite clearly in the Etsy Seller’s Handbook: https://www.etsy.com/blog/en/2009/the-art-of-pricing-three-helpful-pricing-exercises/
Packaging and Shipping
When you get a package delivered to you, what do you like to see? I feel like I have received something of quality when the package is clean and neatly labeled. When I open the box I like to find packing materials appropriate for keeping the item(s) safe. If the item itself is wrapped in tissue, ribboned, in a gift bag or box, so much the better; if you do this in the color theme of your Etsy shop and web page, it helps to reinforce your brand in your customer’s mind … and that can help lead to repeat business. But it really depends on what is being shipped. A nice piece of jewelry should be treated as a gift. In reality, jewelry is ALWAYS a gift … either to be given by the buyer to someone else, or a gift from the buyer to herself. So gift packaging is always a nice touch for jewelry items. Clothing would be nice to wrap in tissue, perhaps with yarn, ribbon or twine around it, or a printed sticker (perhaps with your logo) holding the tissue shut. But if you are focusing on selling things made from recycled materials, perhaps your packaging should be more austere, even using recycled cardboard boxes for shipping. Breakable items should of course be packed in such a way as to arrive safely unbroken. Often it helps to put breakables in one box, then put that box (or those boxes) in yet another box, with extra packing materials (Styrofoam peanuts, bubble wrap, shredded newspaper, etc.) Every order should include a personal thank you from you to the buyer (unless you are shipping as a gift to someone else on behalf of the buyer). It should always contain something that shows how the recipient can contact you. If something is wrong, this will help your customer … you don’t want them to get angry while searching for how to reach you. And if they are happy, you will want them to have something to keep handy so that they can easily reorder from you. Small things may ship well in bubble or padded envelopes; these are normally very inexpensive to mail. Larger things will require boxing, and shipping rates will vary depending on size, weight, and distance to be shipped … which can make it difficult to determine what to charge for shipping when you list it. One way around this is to use the US Postal Service Flat Rate Shipping. With this service, anything that fits within a certain box ships to anywhere in the country for the same price,
regardless of weight. The boxes are available for free; they will even ship them to you (or you can pick them up at your local post office). You can go online to www.usps.com and pay for and print a label for each item you need to ship (and receive a discount for ordering online). And they include tracking and insurance (up to a certain level, you can add more if needed). You can either schedule a pickup or take them to your post office. Etsy offers a lot of helpful information about packaging and shipping here: https://www.etsy.com/blog/en/2013/4-steps-to-shipping-success/ If you are unfamiliar with shipping internationally, I would suggest getting your shop started and get to know what you are doing, then look into shipping to other countries. (Donâ€™t try to take everything on at once!) Once you have determined how much you will need to charge for shipping an item, you are finally ready to list it for sale.
Creating a Listing
Finally. You’ve made items to sell, you have some fantastic photos to show them to your potential customers, and you know what prices you are going to ask. Time to list your first products! At the top right of the page mouse over where it says “Your Shop” then click on “Add New Item.” This will bring up the listing page, and Etsy asks several questions. Fill in the information for each section and upload your photographs. Your Item Title should be precise, but cover a lot of information, as it will be used in search engines as well as being seen by customers. Titles like “Red and Yellow Flower Earrings in Sterling Silver,” “Crocheted Floral Headband in Blues and Purples,” “Jumbo Acorn Ornament, Silver Shimmer, Rustic Woodland Décor,” “Bridal Earrings, Vintage Style Pearl Swarovski Wedding Earrings” all give a lot of good, detailed information to make it easier for people to find what they are looking for. Be sure to use words that buyers would use to search for something. Your product Description goes deeper. Definitely use some of the words used in the title, then add more information. Using bullet points for specific details (materials used, size, etc.) makes it quick and easy to view the listing. Be sure to include things that will answer all the questions you can think of that a customer would ask in order to make a decision. After you have given the quick and easy list of details, if you want, have fun telling a story about the item … why you made it, what inspired you … anything that might entice a buyer, or give them something to tell their friends about when bragging about their new purchase! Here’s a link to a great article on Etsy about writing descriptions: https://www.etsy.com/blog/en/2012/how-to-write-enticing-item-descriptions/ Next comes three optional question boxes, which can be left blank or filled as suits your item. Then you get to the all-important tags. Tags are the keywords of Etsy. They are one of the things the search engines use to find matches and relevancy. You have the opportunity to use 13 tags: use them all. Think what it is, who it for, what color, what it’s made of, etc. If you run out of ideas of what to use as a tag, add your locale, team tags, or anything else people might use to search that would be appropriate for your item.
A helpful tool from Etsy: go to Your Shop > Shop Stats then scroll down to keywords. This will show you the keywords people are typing in that have led them to your shop. You will want to make sure that the top keywords are used on each of your listings (where appropriate). There are many articles on Etsy about the importance of keywords … here are a couple of good ones: https://www.etsy.com/blog/en/2011/shop-makeover-titles-descriptions-and-tags/ and https://www.etsy.com/blog/en/2007/guidelines-tips-tagging-on-etsy/
When listing materials, you don’t need to list every single thing used. This is another place where what you list can help people know more about your item. For instance, “suede cloth” would be important, “thread” would not be. For edible items it would be good to include the main ingredients as well as major allergens (nuts, soy, dairy, etc.), which can help a buyer make a decision. Price and Quantity are next. If your item is one of a kind, then obviously you can only have one. But if this is something you have made more than one of, or could easily make more of with materials on hand or immediately accessible, it might be wise to list a higher quantity (at least two). This is good for two reasons: • •
A customer may want more than one, and could order more right then. Etsy automatically relists items when they sell when you have listed them as having more than one in stock. This keeps you constantly in the feed as you sell more and more things.
Finally, you will enter Shipping information … processing time, cost, where you ship from and where you will ship to. If you are in the United States, I would suggest starting out just shipping within the states until you get your shop going. I have found that if someone is interested in having you ship to them elsewhere, they will contact you and ask, and you can determine shipping prices for them at that time.
Promoting within Etsy There are many ways to get your shop better known on Etsy. Favoriting and Following items, shops and shop owners that you like helps to create the “mystique” of whom and what you are. When you follow someone, Etsy notifies them that you have done so, and gives them the link to see your information; many people will then start following you as well. And when they do, it lets everyone that follows them know that they are now following you, or that they favorite your shop or one of your items, so you get instantly exposed to a lot more people. Another way is to become a member of a team (or several teams). Teams are groups of Etsy people who have something in common. At the top of the page, go to Community > Teams. This will bring up a list of teams. As you look through them, you can click on a team and it will give you information as to what the team is about, who can join, and what requirements are to be a member. Some teams require active, weekly participation. Others require that you are from a certain area, or create a certain type item. Teams can be a good place to find mentors, develop friendships, and get advice. Another way to be seen on Etsy is with Treasuries. Making a treasury is fun; it forces you to look at what other people are selling, often with a different thought as you look for things to fit in the theme of your treasury. People enjoy looking at treasuries, and will often start following people who make nice treasuries, so that they will be sure to see each new treasury as it is made.
Promoting outside of Etsy Promoting listings online to Facebook, Twitter and Pinterest is easy. Simply go to Your Shop > Info and Appearance. Scroll down and just below your banner it gives you the option to Link to Facebook and Connect with Twitter. For Facebook, click where it says Link to … and it will bring up a list of Facebook pages that you manage. Choose the one page you want your postings to show up on. Same thing with Twitter; click the link and it automatically brings up your account.
Now all of the people who see you on Etsy can like your Facebook page, and Etsy gives you the opportunity to automatically post a new listing to Facebook or Twitter as you publish it, to keep all your fans and followers aware of what you’re doing.
On each of your listings is a link for people to like, tweet or pin the item, just below where they would mark it as a favorite. It wouldn’t hurt to ask your friends and family to pick an item or two to do just that, and help spread the word! When an item is pinned directly from Etsy to someone’s board, it automatically contains a link back to the listing on Etsy. Many businesses have found tremendous success from an item being pinned and repinned, resulting in many unsolicited orders. So be sure to pin your listings to your own Pinterest boards … they may go viral! Besides online promotions, there are other ways to market your Etsy shop. Be sure to have business cards with your shop info. If you have a physical business or are promoting a web business, be sure to include your Etsy direct url. You can use either www.yourshopname.etsy.com or www.etsy.com/shop/yourshopname. In addition to making sure to have printed business information, you may want to participate in craft shows. This can be beneficial in many ways. Not only can you get word out about your Etsy shop, but you can make money selling at the show. And perhaps most importantly, you can get direct feedback from customers about the products you make. You may find out that different sizes or colors would be popular, come up with a way to group things together for more sales, or learn about a different supply that could be used to improve your items. Personal interaction is essential … you won’t accomplish anything by just setting up a table, sitting back, and only talking to people when you take money from them. (Yes, I have seen many people at craft shows do just that … almost like you, the customer, are an annoyance that they have to deal with.) Promote yourself, promote your products … and listen, learn and grow.
Bookkeeping, Taxes and other Legal Things
It’s official. You’re selling things. That means you are in business. Question is … what kind of business do you have? To begin with, most people operate as a sole proprietor, meaning you are the sole owner of your business (or a married couple operating a business together). If you operate under a name other than your legal personal name, you will need to file a DBA (doing business as) form. There will most likely be state, county or city regulations you need to follow, that vary from place to place and type of business. Filing for your resale permit will help you save money, as you will then be able to buy your supplies wholesale and not pay sales tax on them. One of the easiest ways to find out what you need is by going to sba.gov and using their permit app, where you enter your zip code and it tells you what you will need. (http://www.sba.gov/licenses-and-permits) When we first started in retail, our accountant told us that until our sales reached $1million, we were fine operating as a sole proprietorship. Things have changed over the last 25 years though, and it could make sense to set your business up as an LLC (limited liability company). With this format, you get many of the benefits of being a sole proprietor, combined with some legal and/or financial protection. This is the sort of decision best made with the advice of a competent small business attorney. However, you don’t have to make the decision when you start … you can always change the business format from sole proprietor after you get started and the sales start rolling in!
Bookkeeping Bookkeeping is something that should be done at least monthly (but is actually easier if you take a few minutes to log things as they occur). Keep receipts for all purchases of supplies, tools, etc. someplace for easy referral. Using Excel or some other program to make a list of expenses by category, and entering the information from each receipt (either at the time, or as part of your monthly bookkeeping duties) will make life a lot easier when it comes time for tax reporting. Oh, and if you don’t already use your bank for automatic bill paying, look into it. It is such a time saver! When a bill comes in the mail, I just go to my computer, log on to my bank account, and in the bill paying section say to whom, how much, and when the payment needs to go out.
Then I file the paperwork. No more lost invoices, no late payments because you forgot to go back and write a check, etc. (And if for some reason you don’t have the money when it is time for the payment to go out, you can always adjust the date the bank will send it. Your payment will be somewhat late, but you won’t be overdrawn.) When I had four retail stores and 30 employees, every invoice was stapled to a copy of the check, punched and filed in order in binders by month. The one time I was audited, the auditor was in and out of my office in under an hour, because things were so organized. (He told me that the usual audit took 1-3 days, and often more than a week). Now that we have downsized our business and no longer use checks, I keep organized records on the computer, and keep paper receipts in a box. I know they are there if I need them for proof of anything, but the actual bookkeeping takes place on the computer. You just have to be sure to enter every expenditure. At the end of each month (or quarter) print out a report of these expenses and put in a folder or binder. At the end of each month, you can get a report from Etsy listing your sales for the month. I suggest printing out each month, and keeping these reports in with your expenses. That way everything you’ll need is all in one place when it comes time to file taxes.
Taxes Ok, paying taxes is no fun. But really, you WANT to pay taxes … because you only have to pay taxes if you are making money! Taxes fall into two main categories: Sales Tax and Income Tax. Sales tax generally needs to be collected on each sale made to customers who live in any state where you have a physical presence. Your state’s Department of Revenue will walk you through the process of how often you need to submit taxes (most likely quarterly, until your sales get above a certain level). Generally the easiest method is using their online form to report and pay, with a direct withdrawal from your bank account. Paying your sales tax takes just minutes each quarter. Simply use the information provided by Etsy (YourShop>SoldOrders, scroll to bottom, click on “Download a CSV file” then choose “Order” and the months you need to report. Etsy will provide an Excel file listing all your sales for that time period. At the bottom of each column listing a dollar amount (order value, shipping, sales tax, order total, card processing) use the auto sum function of Excel to add the columns. Then add the three months of the quarter together and you have your numbers for filing your taxes.
Income taxes also must be paid quarterly. Obviously, when you first start out, you have no idea how much money you will make, or even if you will be making any profit! So until you know you will be making over $1000 a year profit from your business, you wonâ€™t need to make quarterly income tax deposits. Once you are making money, though, you need to make deposits each quarter based on an estimated tax you will owe. These taxes must be paid by the 15th of April, June, September and January for the months preceding them (not exactly in true 3-month quarters, as the June payment covers only two months, and the January payment cover four). Again, this is easiest done online â€Ś just be sure to do it ontime, or you will incur penalties and interest charges. They make it pretty clear on their website at http://www.irs.gov/Businesses/Small-Businesses-&-SelfEmployed/Self-Employed-Individuals-Tax-Center#QuarterlyPayments.
Time Management You want to sell on Etsy because you love to create, right? But somehow, finding time to create isn’t always easy. The problem generally lies not in the fact that your day is too busy, that you have too many obligations and commitments, etc. The problem is that you have failed to prioritize your day or your week. If you are looking to Etsy as a way to make money, then creating needs to become one of the highest things on your priority list. Even if you’re just setting up shop because you want an outlet for those things you make when you’re having fun … having fun is a priority, too! In other words, regardless of whether selling on Etsy is for fun or profit (or both), in order for it to succeed, you must make a commitment to it. There are several things that need to be scheduled into your Etsy time: • • • • • • • • •
Designing Organizing & Ordering supplies Crafting Photographing Items for listing Listing Items Checking shop stats Packing & shipping orders Bookkeeping Marketing
Some of these things, like checking shop stats, need to be done daily (you obviously will want to handle each order as soon as your item sells). Other things may be done daily, weekly, or on some schedule that works for you. But it will work better if you actually make a schedule, and do your best to stick to it. You won’t get very far if you spend all you time designing new items, but never take the time to actually make them. Or make things, but never get around to listing them because of the time involved to photograph, measure, describe. Sometimes it seems that doing all these other things get in the way of designing and creating, but each of these steps is crucial to the success of your Etsy business.
One good way to start planning a schedule is to print out a chart with a block for each hour, each day of the week. Start out by filling in the knowns: work, travel time, meals (if they are at set times), classes, weekly chores, etc. Then see what you have left. If you notice that you have a 15 minute block of time at the same time each day, that could be a good time to check your shop stats, find out what you have sold, and relist anything that may have expired. Although you may want to check your shop more often, eager for sales, once a day is usually enough; your time can be better spent on other aspects of your business. As you see larger blocks of time, decide which are going to be better for which processes. Are you more creative late at night? Plan your designing time then. If you are photographing in natural light, you will need a time early in the morning or late afternoon, to take advantage of the best indirect light. Maybe you only have a block in the time period once a week. If that is the case, mark that time in pen, and take pictures of all the items you have made since your last photo opportunity. Creating listings can also be done all at the same time. Most people find they get in the flow of whatever they are doing, so writing descriptions of several items at once can make the overall time spent actually take less than if you make an object, then list it. With the “draft” function on Etsy, you can have as many listings prepared as you want without needing to list them all at the same time. What? You mean you shouldn’t list things as quickly as you can? Yes and no. It is better to stagger your postings to keep you constantly in the “feed” rather than listing a whole bunch at once. So once you have your drafts created, that is one more thing you could do in your 15 minute daily shop check (when you check for sales and items to relist, you can also post a draft). You’ll notice I haven’t said anything yet about making anything! Obviously, that should be the biggest portion of time. But until you have determined what time you have and scheduled the other important aspects, you won’t know how much time you have to actually get down to crafting. If it looks like there is no time left, look at your schedule again. Do you really need to take two hours cooking and eating every night? Could you prepare a group of meals in advance, that you could just put into the oven, giving yourself an extra hour in the evening? Whatever it takes, you need to make sure you have at least some time each day to do something creative, to keep the juices flowing. And then on the days you actually have a block of time laid out for crafting, you can do just that. You won’t get sidetracked by checking for sales or posting new items (that time is already scheduled). You can ignore bookkeeping, organizing, ordering supplies … all the things that keep you from being free to craft. Since you have done something creative daily, you are prepped and ready to go mentally.
So dive in!
Credits and additional information: My hope for this book was to get you started, in a way that wasn’t overwhelming. The Etsy website has a world of information. At times, it can be a bit difficult to find just what you are looking for, but if you start at these locations you are sure to find some things that will help you. Be sure to go to http://www.etsy.com/sell and read thru the do’s and don’ts. Sign up for the Etsy Success Newsletter. Skim thru the FAQs. Go to https://www.etsy.com/blog/en/2013/the-seller-handbook-archive for links to a lot of very helpful articles. Watch over 200 helpful videos at https://www.etsy.com/community/online-labs
The “mini treasury” on the front cover contains items that were for sale at real shops at the time this book was being made. While they may not have the particular item any more, be sure to visit these shops who so graciously allowed me to use their pictures: Handbag from SisoiBags - https://www.etsy.com/shop/Sisoibags Cat Art Print from Rachel’s Studio - https://www.etsy.com/shop/rachelsstudio Earrings from Crystal Avenues - https://www.etsy.com/shop/CrystalAvenues Paper Ornament from Smile Mercantile - https://www.etsy.com/shop/smilemercantile
When you are ready to take your shop to the next step, look for my (upcoming) books in the Etsy Success series: ETSY SUCCESS: How to Make a Living Selling Crafts Online ETSY SUCCESS: 15 Success Stories with Advice to Help You Succeed