Startup capital is important
Going into business without startup capital is like a contractor building a house without a foundation. It’s a setup for failure. You can’t expect paying customers if you’re not willing to invest in your own endeavor. Starting a business is a huge step. Stressing over lack of finances is not a good thing.
Here’s the good news!
A lot of money isn’t needed to start a home-based craft business. Therefore, loans or investors aren’t necessary. When you take out a loan, you’re responsible for repayment whether or not the business succeeds. The goal is to start your craft business the right way.
How much startup capital is required?
Depending on where you reside and what your business needs, required startup capital can be anywhere between $500–$2,000. This differs from monthly expenses. Startup capital is seed money that covers expenses related to your business launch.
If you’re excited about your new business venture, you will benefit from knowing ways you can fund your business without going into debt.
Here are five ways to get money:
- Personal Investments: Make a list of expenses related to the opening of your business (website, selling platforms, etc.). Then, define the actual dollar amount for each expense. If you aren’t sure of the exact amount, get a price quote. Once you have the total startup cost, add an extra $200–$300 in case something unexpected occurs. Last, figure out the length of time it will take to save the required amount.
- Private Sale: Notify people that you’re going into business, especially those who have bought from you in the past. Invite them to a private sale, in-person or virtually. A private invitation not only makes them feel special but also build suspense. Once the invites are confirmed, create products to sell and work out all the details. Send your guests emails showing glimpses of the private sale leading up to the event.
- Virtual Events: Even though we aren’t in the thick of the pandemic, virtual events are becoming the new normal. Check sites such as Eventbrite and see where you can vendor. Before paying a vendor fee, consider the audience, length of event, the type of event, and the list of confirmed vendors to see if anyone is selling the same products as you.
- Pre-Orders: Not ready to launch a full website? Want to test the waters before you swim? How about creating a landing page to take pre-orders? Web pages should address a problem, provide a solution, display an image, include the price, create a catchy title, and offer a call to action. To imply a sense of urgency, have an order period. The landing page is only part of the conversion strategy.
- Crowdfunding: Kickstarter, GoFundMe, and Indiegogo aren’t just for five- and six-figure projects. When starting a campaign, you should keep in mind that you must give something of value in exchange for money. Brainstorm tier levels and what patrons will receive. Crowdfunding proceeds are taxable income. If you choose to go this route, decide which platform to use and if you’ll receive payout if the goal isn’t met.
This is a last resort. If you borrow from family and friends, make sure you show serious intention. People are leery about lending money. Show them that you’re serious about repaying them. Be willing to draw up an agreement with payback arrangements if you must. The last thing you want is to be at a family reunion and discover relatives are avoiding you because you owe them.
You don’t have to go into debt or break the bank to come up with startup capital. Ideally, you’d want to save the capital amount to put into your business. In case you’re unable to do so, other options are available. One advantage of starting a craft business is that you can diversify your skills (classes, guides) as a starting point.
Did today’s blog post give you a different way to think about startup funding for your business? Please share your thoughts in the comments.
Crafty Hands Club encourages crafters to transform their hobbies into a profitable side business by helping them know their numbers, understand them, and make them work. To receive weekly content to your inbox, sign up here.