Question of the Week: Do I Need a Business License?

As far as Business Licenses go, every state and usually every major city within that state each have different rules, limits, restrictions and regulations when it comes to what constitutes a “hobby” and what qualifies as a “business”. In general, many states have minimum income requirements that must be met before a license is required. Please visit your state’s licensing department website to research the details of acquiring a business license in your area.

The question of the week is:

My business is super-micro-tiny and not bringing in a whole lot of income.
Do I need a business license to operate my business?

first lemonade stand by InspirationDC via flickr

For the sake of brevity, let’s assume that you’ve already researched your local laws on running a business in your area and found that there is a minimum earning limit of $600 per calendar year before a business license is required. We’ll also assume that your business has not earned more than $600 in one year thus far, so the real question becomes:

If I don’t earn enough to require a license, why should I consider getting one now?

There are quite a few good reasons why getting  a business license now would be good for growing your business. Here are just a few…see how important they will be to your business in the near future:

  • • You are putting together a business plan for this year that will grow your business
  • • You plan on buying a large bulk of supplies for the inventory to implement those plans
  • • You plan on spending a good amount of your marketing budget on business cards, website development, etc.
  • • Your business was brand new last year and you plan on continuing  to grow it even further it this year

If you are planning on growing your business this year, then you will need the benefits that having a business (and resale) license affords for your business. Some of the benefits include:

  • • Buying your supplies at wholesale prices – usually 50% or more off the regular list price
  • • Opening accounts with your usual suppliers that would allow you to pay for your purchases up to 30 days later
  • • Discounts at local retail suppliers – anything from wholesale pricing to non-tax on cost of goods / supplies

Oh the other hand, if you are not planning to grow your business at all this year, then it might be a good idea to wait on that license until you are certain that you are going to stick with this “making money by making stuff” idea and are ready to move forward.

What do you think? Are you ready?

Business license owners, please tell us: When did you know you were ready to get your business license?

Quick Tip – To Sale or Not to Sale?

When sales are slow, more often than not, the first thing we think is:

“Maybe I should offer a discount. That will make people buy stuff, right?!”

salesale by xrrr via flickr

Well, hold on for a minute. Consider this first: There are lots of reasons why things don’t sell. Many of those reasons have nothing to do with you, your business or even your prices:

• They don’t have the money to buy right now even if it were on sale
• They do have the money but won’t buy right now no matter what the price
• Their cat is sick and they need to go to the vet
• (Insert reason that has nothing to do with you or your business here)

Unless you already have an established customer base that you are rewarding for shopping regularly, having a site-wide sale* should really only be used to clear out old / discontinued inventory and/or to make room for new inventory – and it should be clearly stated as such.

(*having a sale is different from running a coupon promotion that drives traffic to your site – we’ll talk about that in a future post)


Having too many sales or discounting your products might get you a few sales in the short term, but in the long run, it can drain your profit margin, damage your shop’s credibility and sometimes create customers who will always expect to get your work for less all of the time – instead of VALUING it for exactly the great quality work it is!

You work hard and your designs should be something you are very proud of and if you want to take your business to the next level, you’ll be better off NOT setting the precedent that you are the shop that never sells anything for full price.

Better customer service costs little to nothing, so instead, strive to be the shop that represents the best quality products, offers quick shipping and has really great communication with buyers at all times.

I mean, really…that’s the kind of shop you’d want to buy from, isn’t it?

Now tell us: What is the most successful promotion you’ve run in your shop or have seen in other shops?

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Question of the Week – How Do I Know if I’m Ready?

Filed under: Business,SellingComments (1)

As a consultant to creative small business owners, one thing I’ve learned is that we ALL struggle with very similar issues and roadblocks when it comes to improving, growing or changing our businesses. I’ll address one topic each week and hope that you’ll join in with your comments and questions in the comment section below!

This week’s question:

“I love making things, but how do I know if I’m ready to sell my work?”

Urban Craft Uprising by Beckathwia via Flickr

You get a lot of pleasure from making and giving things away, so it makes sense that you are thinking of getting into the making and *selling* business. After all, there are so many online venues that make it really easy to set up shop these days.

But how do you know when you’re ready to take the next step and make your hobby a real business?

Before you move forward, you need to know the road ahead. Taking the time to evaluate where you are in your readiness to sell your work will make the difference between trying and flailing. Yes, I said FLailing…which is what it feels like when you’re in over your head!

To test your resolve, try these statements on and see how they feel (true or false):

  • • My friends and/or family always tell me that I should sell my work
  • • If necessary, I can spend all hours of the day happily making things
  • • I willing to make the same (or similar) items more than once to sell them
  • • I am not afraid to show my work to a stranger and hear their feedback
  • • When I receive feedback, I can take the things that are constructive and leave the things that are not
  • • I know that not everyone is going to like what I make…and I’m okay with that
  • • The thought of hard work does not scare me away from considering starting a business

If you answered “true” to all of the above, then you just might be ready to take the next step toward selling your work to others!

If you answered “false” to a few of these questions, don’t worry — look them over again and try to figure out what would help you say “true”.

If you ultimately decide that you don’t want to sell your work, then take heart: There truly is great value and satisfaction that comes from making something and giving it away. So, if you don’t want to start a business, don’t give in to the pressure. Just keep doing what you do best – making great stuff!

Current business owners:
What questions did YOU ask yourself before taking the leap? Please comment and share your insight with us!

Craft Shows: How Much Should You Expect to Sell?

So. How much SHOULD you expect to sell at a show?
(I’m talking gross sales here – you know, the amount you add up pretty much every time you make sale? 🙂

To start, here is a quick and dirty general formula to help you start figuring out if a show is worth your time:

Booth Fee x 3 = the MINIMUM amount to sell at the show to make it even remotely worthwhile.

What does that look like?

On the low end of the spectrum: If you paid $20 for a booth, then according to the formula, you should pull in a minimum of $60 in sales to make it worth your time. (Of course, ideally you’ll sell way more than that if it’s the right audience for your work!)

On the higher end: If you paid $300 for a booth, then according to the general formula, you should pull in a minimum of $900 to make it worth your time. (Does the target audience for this show match that amount?)

Now before you get all in a twist about that show you were considering, please remember — this is a VERY GENERAL starting point. Let me emphasize *General*. This is NOT a one-size-fits-all formula. To tell you the truth, there really is no such thing. But, if you clicked on this post because you have absolutely no idea where to start, give this formula a try.

So – how do you know if a show is the right show for you?

To give yourself the best chance at having a successful show, there are three things that should be in place:

  1. The amount you pay for the booth fee is on-par with the quantity (and quality) of customers who will shop the show.
    (In other words, if you pay a lot for your booth space, you should expect a proportionate amount of traffic to come through the show)
  2. Your product is a good fit for those customers.
    (In other words, the stuff you make is generally the stuff those customers are looking to purchase)
  3. You know how to effectively sell your product to customers.
    (In other words, you know how to take full advantage of each opportunity to sell your stuff every time someone walks by to check out your work)

Let’s break that down a bit…

Point 1: The amount you pay for the booth fee is on-par with the quantity (and quality) of customers who will shop the show

You know the saying, “You get what you pay for”? Well, that truism works for craft show booth fees too:

Cheap booth fees generally mean fewer customers.

Why? As I’m sure you can guess, it costs a LOT of time and money to produce and properly advertise a craft show. If the show producers are not allowing for a healthy advertising budget when calculating their booth fees then it is unlikely that there will be a lot of buyers attending the show. No advertising = no customers. That’s just how it works.

Point 2: Your product is a good fit for those customers

Here’s where you need to be really honest with yourself about your real customer. If your product offering is just not right for the buyers who attend the show then no amount of planning will help you to sell more stuff.

Do your research on the show and its customers before committing to it. The best way to do assess this is to shop the show first before applying to be a part of it. If you’re looking at an out of town show, you’ll want to search around for honest reviews of that show and maybe even try contacting one of the vendors who show in your category to see if they’ll give you some feedback on their experience at that show.

Last but not least – Point 3: You know how to effectively sell your product to customers

This last one is by far the most important and quite often the least considered point in making a show a good one.

The truth is, if you aren’t ready to really sell your work, then you are basically throwing money into the wind and hoping some of it is going to blow back into your pocket. You may get lucky some of the time, but without the proper sales skills you will never achieve your full potential profit at any show regardless of how reasonable the booth fee or how extensive the advertising.

Want to know the shortest short-cut on improving sales at a show?

Make it a priority to learn how to sell your work effectively and watch your sales improve at every show you do!

Craft Shows: How Much Inventory to Bring?

It’s Holiday craft show season once again and vendors everywhere are struggling with the same question: “How much inventory do I make for my shows?”

Want a quick answer that works? Here’s the most common formula:

Figure out how much you plan to make in sales at the show and bring about 3-4 times that amount in merchandise.

Example: Planning on selling $500 at the show? Bring at least $1500 – $2000 worth of merchandise. (Keep in mind this is a very, very general guideline)

Very Important: The idea here is you have to have stuff to sell stuff. Use the back-stock inventory to add on to sales (suggestive selling) or replace items that have sold throughout the day. This does NOT mean that you have to put out ALL of your inventory on display!

Here’s a perfect example of a great display by booth

Beautiful booth display by Glass Elements

Okay, so the 3x / 4x factor very effective starting point – HOWEVER….
Before you can set your sales goals, you need to know how much you can realistically expect to sell at any one craft show.

Of course, we all would LOVE to go into every craft show with the expectation of selling $1000 every single time. We also know that is just not a realistic way to look at it. (You DO know that, right?)

This is why I suggest figuring out a MINIMUM amount you need to sell in order to make any one particular show worth your time.

But wait a minute. What does “worth your time” mean to you?

What it SHOULD mean is making enough to cover your booth fee, cover any extra supplies you purchased for that particular show, your time away from your studio, the time it takes to set up and break down, meals at the show, etc. etc. PLUS an amount for pure *profit* above and beyond all costs and labor.

What it should NOT mean is just “making your booth fee back”. That is just NOT enough to make a show worth your valuable time. It just isn’t. Nope. It isn’t. I’m going to tell you why. Stop arguing with me and listen for a second, please! 😉

In order to sustain your business and yourself, you have to value every moment you spend on your business. Otherwise, you won’t make enough to reinvest into your business. If you don’t reinvest, your business doesn’t grow – and if it isn’t growing, you will find yourself struggling needlessly every day wondering why it’s so difficult to make a living selling what you love to make.

You love yourself more than that, don’t you?

Next post: “Craft Shows: How Much Should You Expect to Sell?”


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