Starting a Handicraft Business

INDUSTRY NOTES

The handicraft industry is showing signs of growth due to increases in:

• The number of people who want to personalize their surroundings with original handmade items which are often functional as well as eye-catching and more affordable than other types of artwork such as paintings.
• The number and variety of handicraft courses which grant an appreciation for the skill, time and money needed to produce high quality craftwork.
• Tourists who are now purchasing unique cultural items for their own personal use, rather than small souvenirs for family and friends.

BEFORE STARTING

Whether part-time or full-time, starting a craft business offers two possibilities:   (1) the production of handicrafts, (2) the selling of handicrafts. This factsheet focuses on producing handicrafts. However, before starting either type of operation:

• Know with some certainty that people will want and will buy your handicrafts.
• Understand all the requirements and have reserve capital to meet expenses before you are able to produce sales and earn a profit.
• Understand the basics of managing, bookkeeping, purchasing and advertising.

STUDIO DESIGN AND LOCATION

Your studio must fit your needs in terms of size, services, security and safety. Aim for efficiency, while creating a pleasing space to work in and visit. Consider a home studio. Register a business name and mailing address and get a separate business phone line. This allows you to:

1. Operate with lower overhead and start with a smaller amount of capital.
2. Work flexible hours and begin on a part-time basis.
3. Claim a portion of home expenses as tax deductions.
4. Eliminate travel time and hassle.
5. If operating at home is not an option, consider leasing a separate location. Consult with a lawyer before signing any lease agreement. Locate in an area with lots of traffic and convenient parking.  Make sure that any noises, fumes and traffic you generate in your work do not affect your neighbours.  Also ensure that the building:
   1. Offers room to expand, shelving and storage space, an office and visitors area, wide doors to accommodate materials and suitable pick-up/delivery areas.
   2. Has an efficient electrical service and ventilation system, especially if you use kilns or toxic solvents, plastics or chemical dyes.

SELLING YOUR CRAFTS

You can sell your crafts directly from your studio, or through:

Retail stores
Specialty craft, gift, or department stores are the most popular ways of selling crafts, especially if you produce in limited quantities. Stores usually sell your work at double your price. Craft stores have traditionally sold mostly on consignment they pay you only after they sell your work, keeping 30-40%. This is changing though as artisans gain more business experience. Be careful with terms and conditions of consignment sales.

Galleries
Choose respected, well-known galleries. Put all agreements in writing before delivering your work.  Ask for an individual showing. These are usually done on a consignment basis, with the gallery keeping up to 50%. You may be asked to pay for invitations or refreshments.

Craft markets
Check with professional craft associations and the Manitoba Department of Culture, Heritage and Citizenship for information about craft shows and markets, such as the annual Manitoba Christmas Craft Show and the Old Market Place in Winnipeg.

Agents
Agents are not commonly used for handicrafts but in certain cases, they can help to promote and expose your work.  Commissions usually range between 20 and 50%.

PRICES

When pricing your handicrafts:

1. Cost approach:  add up all your expenses, including raw materials, labour and overhead costs such as rent, heating, advertising, as well as a factor for profit.
2. Comparative approach:  talk to other artisans and retailers; compare the prices of similar items in stores and galleries.
3. Select a price from within the price range formed by the approaches in steps 1 and 2.

PURCHASING MATERIALS

1. Find suppliers of materials by checking the Yellow Pages, Frasers Directory (for Canadian manufacturers), Thomas Registry (for American manufacturers), trade magazines such as the Canada Crafts Magazine, and local craft councils.
2. Compare prices, shipping costs and volume purchase discounts.
3. Plan in advance, combine orders and 'group-purchase' with other artisans.
4. Take advantage of possible sales tax exemptions if buying in large quantities.

ADVERTISING

A reputation for fine work is the best form of advertising. When getting started however, consider these methods:

• Rent display space at a shopping mall for a weekend.
• Hold open houses which can also be helpful for developing mailing lists.
• Design business cards and pamphlets which describe and illustrate your work.
• Send press releases to the feature editors of newspapers and magazines.
• Build a portfolio of photographed pieces, which can be particularly effective when meeting with gallery owners, retailers, architects or interior designers.
• Enter competitions which offer exposure and often some compensation.

Copyright, Trademarks, Industrial Design and Safety Standards

Contact the Canada/Manitoba Business Service Centre for more detailed information.

Copyright - If you produce an original craft piece, you must reproduce its design at least 50 times in order to register it under the Industrial Designs Act.  If you produce an original artistic work, it is automatically protected under the Copyright Act for the life of the artist and 50 years after the artist's death. It is still recommended that you register for copyright in order to prove the work symbol and the owner's name and year of registration.

Trademarks -  A trademark is a word, mark, distinctive colouring or finishing method that distinctly identifies the origin or ownership of an item and is legally reserved for the exclusive use of the owner.

Safety Standards - Safety standards apply to all products sold and made in Canada.

Labelling - Federal and provincial laws apply to:

• Glazed ceramics used for food or drink. To control the use of lead glazes, the manufacturer's name and address or a registered trademark must appear on a sticker, label or tag on each piece or boxed set.
• Textile products. The Federal Textile Act requires you to attach a fibre content label to upholstered furniture, mattresses and stuffed toys. In Manitoba, you must also register as a hobby craft operator if you produce furniture, clothing, bedding, toys, sports equipment, pillows or cushions.

HUMAN RESOURCES

If your handicraft business expands, you must be able to hire and keep excellent employees. Educate yourself in all areas of human resources -- how to recruit, interview, motivate, train and develop personnel policies (wages, benefits). Promote continuous training and upgrading through related courses and programs. Refer to the Human Resources factsheet for more information.

ASSOCIATION

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

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