Two Mistakes New Handmade Businesses Make

Posted by KreyolGirl on 9/1/2013 to Business Tips & Things

Two Mistakes New Handmade Businesses MakeThe most frequent complaint voiced among any business starting out is the lack of working capital. The initial, often lean years require a business to operate more frugally than at any other time. Every expenditure has to be closely monitored. In the sense of expenditures, small businesses come to learn one thing rather quickly: time is as valuable to the success of a business as is money.

Ask any small business owner what they could use more of and they’ll quickly state time and money. Where most miscalculate early on is how much time is required to dedicate to the business. Not simply creating goods, but the time needed to setup and maintain websites, create and disseminate marketing literature, remain relevant, reconcile product and marketing costs against customer purchases, and other necessities of doing business.

Below are two common mistakes made by new handmade business owners:

1) Spreading themselves too thin. Most small businesses consist of one jack-of-all-trades: you. As that person, you are responsible for scouting for and obtaining the best deals on quality raw materials, the production of goods, distribution of goods, customer acquisition, customer retention, legal paperwork, marketing, etc. The mistake made most often by new businesses is offering too much too soon without giving consideration to the time requirements and therefore the economic sense. It’s easy to get caught up in a moment or have a few customers request something you do not ordinarily make and think that if you add that product to your business other customers will also see the value in it and before you know it, you’ll be rolling in dough with more business than you can handle. Sometimes that is exactly what happens, but more often than not, this is not the case. The likely occurrence is that you end up with a product that isn’t moving as rapidly as you’d like or requires such a different approach that it eats into valuable time whenever the rare order for it comes through.

Nowhere is this more evident than in body care product making. In my first years of business, I often received inquiries as to if and when I might start offering soap. My first thought was that I should do so immediately because of the constant inquiries, but when I looked at my current workload, I had to admit that I had little time for soapmaking and even less time to devote to ensuring consistent quality and availability. That left me two choices: I could try my hand at it anyway and maybe reduce or eliminate some of my other products, or I could point them in the direction of soapmakers and continue to focus on what I enjoyed most and proved most profitable for me, which was creating natural deodorants and moisturizers. After considerable research and thought, I decided the latter was the best option for my business. My reasoning is what leads me to the number two mistake.

2) No determined core focus. I once asked a business owner to define her core business. She read off a litany of products she created. I questioned further as to her niche, and she looked at me with a perplexed expression and admitted, “I offer so much, I never really gave it any thought.”

I then asked if she considered her business model profitable, to which she stated that she could be doing better, if she had the time to dedicate fully to the business and getting out the word about her products. I asked if, perhaps, she might be able to recoup some of this time by limiting her product offerings. She acknowledged that most of what she offered didn’t have a large customer following, yet she always had to take those into account just in case. This also required her to keep additional raw ingredients on-hand.

The majority of her customers purchased her soaps, body oils and scrubs. Those items she’d originally built her business on. Less than a year into business, she’d added natural deodorants, body butters and a host of other items, but she rarely sold them and had to go out of her way to designate time to them when she received an order. She was a bit dismayed that she sometimes took a loss on a product that a customer purchased in her smallest-offered quantity, because there was no guarantee she’d sell the extra. She was also beginning to resent having to devote time to making a small batch of less frequently sold products when she could have used that time to make or promote her more frequent sellers.

I asked why she continued to offer those items, and she said because she wanted to be a one-stop shop for her customers. While there’s nothing wrong with that on the surface and larger corporations do it all the time, we don’t have the human or financial capital of large corporations, making it an unrealistic approach for the small handcrafter. The reality is that the more we do, the more likely it is as the business grows that we will become inundated to the point that quality suffers, if we’ve not developed a central focus and a routine that gets a product completed and out the door in the fastest time possible, while maintaining the level of quality our customer has come to appreciate. Nothing sounds the death knoll of a business quicker than poor quality and bad customer service.

Word to the Wise. Use the early years to improve upon your initial offerings and build a loyal customer base. There is never a more important time to nail down your niche than in the beginning. This is a required part of the branding process, and is as important to the success of your business as oxygen is to our lungs. Find your niche. Work it and work it well. Introduce new products gradually—in other words, don’t bombard customers with new products every week or even every month. You’ll only confuse or overwhelm them, especially if you’re a new player on the scene. Be sure the new product complements the current products. Leave the nonprofitable time-eaters to others who have the time to dedicate, making it their niche. You can’t be everything to everybody, and you shouldn’t try. For one, it says to customers that you are not sure who you are and might be a little desperate and inexperienced in your business pursuit. First impressions are usually lasting impressions. Think long and hard on the impression your business will leave.

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