Starting a Craft Business

This document is a guide prepared by the Canada-Saskatchewan Business Service Centre and is intended to provide you with general information and suggested resources to assist you in researching your project. The extent to which this information will apply to you is dependent upon the circumstances related to your project.

For further information on individual topics identified herein, contact the respective governing body or the Canada-Saskatchewan Business Service Centre. Because this document is only meant as a guide, the Business Service Centre will not accept responsibility for business decisions made based on the information provided.

Before proceeding, reference should be made to the Business Start-up Info-Guide, which covers the basic steps involved in establishing a new business in Saskatchewan; as well as the document titled A Current Index of Business Fact Sheets .These fact sheets cover a wide variety of business topics. Be sure and also request the Sources of Information and Required Licenses for your area or view these on our Business Fact Sheets Web site.

TABLE OF CONTENTS

• Industry Overview
• Licenses and Regulations
• Managing Your Operation
• Associations and Contacts
• Resources
• Recommended Books in Our Library
• Video Collection
• Recommended Internet Web Sites

INDUSTRY OVERVIEW

The handcraft 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 handcraft courses which grant an appreciation for the skill, time and money needed to produce high quality craft work; and
• Tourists who are now purchasing unique cultural items for their own personal use, rather than small souvenirs for family and friends.

SIC codes
Canadian 1980 standard industrial classification codes for various industries.

Sample SIC Codes:

• 6582 Gift, Novelty, and Souvenir Stores

NAICS codes
A few years ago, the statistical bodies of Canada, the U.S. and Mexico got together to come up with a classification that was the same for all three countries, so that data collected in all three countries on a specific industry could be compared accurately across country boundaries. This system is called the "North American Industrial Classification System" or NAICS (pronounced "nakes").

Sample NAICS codes are :

• 453220 Gift, Novelty and Souvenir Stores - This industry comprises establishments primarily engaged in retailing new gifts, novelty merchandise, souvenirs, greeting cards, seasonal and holiday decorations, and curios. These establishments may also retail stationery. Includes: carvings and art craft, retail; ceramics, handcraft, retail; gift shops, retail; gifts, novelties and souvenirs, retail; handcraft, retail.

• 711510 Independent Artists, Writers and Performers - This industry comprises independent individuals (free-lance) primarily engaged in performing in artistic productions, creating artistic and cultural works or productions, or providing technical expertise necessary for these productions. Independent celebrities, such as athletes, engaging in endorsement, speaking and similar services, are included. Includes: artists (except commercial, medical and musical), independent; sculptors, independent.

Before Starting
Whether part-time or full-time, starting a craft business offers two possibilities: the production of handcrafts or the selling of handcrafts. However, before starting either type of operation:

• Know with some certainty that people will want and will buy your handcrafts;
• Understand all the requirements and have reserve capital to meet expenses before you are able to produce sales and earn a profit; and
• Understand the basics of managing, bookkeeping, purchasing and advertising.
• If you buy an existing business, carefully evaluate the opportunity. Study the reasons for selling and assess potential profits, sales, expenses, assets and liabilities. Ask a lawyer to review any agreement.

For further information regarding buying a business, see the document Buying A Business.

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:

• Operate with lower overhead and start with a smaller amount of capital;
• Work flexible hours and begin on a part-time basis;
• Claim a portion of home expenses as tax deductions; and
• Eliminate travel time and hassle.

If you choose to operate a studio from your home, you may want to see the document Starting a Home-Based Business .

If operating at home is not an option, consider leasing a separate location. Consult with a lawyer before signing any lease agreement. For further information regarding leasing, see the document Questions To Ask Before You Sign A Lease . 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:

• Offers room to expand, shelving and storage space, an office and visitors area, wide doors to accommodate materials and suitable pick-up/delivery areas; and
• 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. For further information regarding consignment, see the document Selling Products On Consignment .

• 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  Saskatchewan Craft Council, for information about craft shows and markets, such as the annual Christmas Exhibition and Sale, Saskatchewan Handcraft Festival and others. Tourism Saskatchewan compiles a report each year listing the Saskatchewan Events & Trade Shows (see the Resources section below for more information).

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

Prices
When pricing your handcrafts:

• 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;
• Comparative approach: talk to other artisans and retailers; compare the prices of similar items in stores and galleries; and
• Select a price from within the price range formed by the approaches in steps 1 and 2.

Purchasing Materials

• Find suppliers of materials by checking the business pages of the telephone book, Frasers Canadian Trade Directory (for Canadian manufacturers), Thomas Register (for American manufacturers), trade magazines such as the Canada Crafts Magazine, and local craft councils;
• Compare prices, shipping costs and volume purchase discounts;
• Plan in advance, combine orders and 'group-purchase' with other artisans; and
• Take advantage of possible sales tax exemptions if buying in large quantities.

Canada Saskatchewan Business Service Centre subscribes to a number of licensed databases that are useful in locating suppliers. Contact a Business Information Specialist to request this information.

For more information see the document Finding and Selecting Wholesalers.

Marketing/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; and
• Word-of-mouth advertising and good public relations are often the best ways of promoting your business.

The Online Small Business Workshop - Marketing Basics listed in Session 2, covers the basics from developing your customer profile to promoting your business.

The federal Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act defines which marketing practices are illegal and the process of complaint investigation.

For more information see the document Competition Act - Misleading Advertising and Deceptive Marketing Practices or refer to the pamphlet on this subject administered by Industry Canada - Misleading Representations and Deceptive Marketing Practices or visit the Competition Bureau Web site.

Market Research
Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan.

In developing a marketing plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material that will make the customer aware and ensure product or service delivery.

For further information regarding marketing see the document Market Analysis, the document Guide To Market Research and Analysis, the document Marketing Plan Outline, or the document Recommended Information - Demographics/Statistics.

For more information on marketing and advertising refer to our web site; Links Sectors  and Business Fact Sheets.

For further information regarding Advertising, see the document Signs And Your Business , the document Plan Your Advertising Budget, the document Advertising Do's And Don'ts, or the document Ways To Promote Your Product Or Service.

Canadian Intellectual Property Office

• Copyright
  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.

For further information see the document Copyrights.

• Intellectual Designs
  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.

For further information see the document Industrial Designs.

• Trade-Marks
  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.

For further information see the document Trade-marks.

Labelling
Labelling Assessment Tools, indicates the labelling requirements for different products. Competition Bureau, Industry Canada, 1-800-348-5358.

In Canada, glazed ceramics and glassware are regulated under the Glazed Ceramics and Glassware Regulations. Cookware made of these materials cannot be sold, advertised or imported if it releases more than trace amounts of lead and cadmium. Products having greater than the allowable leachable levels of lead and cadmium must be identified by a label indicating the presence of lead and/or cadmium, or by a design feature such as a hole or a mounting hook, and should not be used for food.

Order the document Regulated Products Under the Hazardous Products Act (see Glazed Ceramics and Glassware) or contact Health Canada at 306-975-4502 in Saskatoon.

Source:  Safe Use of Cookware

Safety Guidelines to follow
If you are an artist or craftsperson, you may be working with materials that have the potential to harm your health. It is important to protect yourself by taking proper precautions. Visit Health Canada's web site for safety guidelines to follow as a craftsperson, Arts and Crafts Materials

LICENSES AND REGULATIONS

One area of rules and regulations that all new businesses must comply with is that of licenses and regulations. When creating a business, the entrepreneur must contact the municipality involved, along with the provincial/territorial and federal governments.

Each municipal government has the authority to issue its own business licenses within its jurisdiction. Since there is no uniformity throughout the country regarding municipal licenses for businesses, you should consult with the appropriate local officials to determine whether your business will be affected by local regulations and licensing requirements. Businesses (including home-based businesses) must also meet the zoning by-laws that control property uses in their municipalities.

You can get permit, license and regulation information by contacting your province/territory, local city hall, town or village office or rural municipal office. Contacts for local, provincial and federal governments can be found in the government listings of your telephone directory .

MANAGING YOUR OPERATION

Insurance
Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, it could be a wise decision to ask other business owners in your area to recommend one. Your local business association may also have information about insurance packages specifically tailored for craft businesses.

The following list is included to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent.

Basic insurance:

• fire insurance (extended coverage on buildings and contents);
• liability insurance;
• burglary protection (theft coverage);
• dishonesty insurance (covers thefts by employees).

Accounting/Bookkeeping
A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.
Note: All staff working with cash should be trained to recognize counterfeit currency.

The legal requirement concerning financial records specifies only that they be a permanent, accurate and complete record of your daily income and expenses. There are many types of record books and bookkeeping systems available. For example:

• double entry bookkeeping;
• commercial bookkeeping systems;
• one-write systems;
• computerized systems;
• single entry bookkeeping.
  For further information see the document Basic Bookkeeping, or the document Bad Cheque Control.

Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently.

As an entrepreneur, there are four main areas of professional services with which you may consult:

1. lawyer (contact a lawyer about legal issues);
2. insurance broker;
3. accountant;
4. banker - for tips and pointers on dealing with your bank, see the document Dealing With Your Banker & Other Lenders.

Furnishings and Equipment
The type, size and kind of service will determine the type of equipment you will require. For assistance in this area, you may get the advice of a sales representative or consult trade publications and manufacturers' Web sites. List that equipment and its cost to you. An important factor to consider when choosing equipment is the after-sales service and repair and their affordability.

Used Equipment - Consider buying used equipment as a cost-saving measure. Sources of used equipment could be a business that is closing or dealers in second-hand equipment. The drawback to this approach is that, often, there are no guarantees with the purchase.

Leasing Equipment - Another alternative is to lease equipment to help keep start-up costs down. To obtain financing for capital leasing for new or used equipment for the creation of your business, see the document Capital Leasing Pilot Project .

For more information on parts and materials, overhead, stock control and pricing, see the document Business Plan For Small Service Firms .

Setting Up A Pay System
Pay administration is a management tool that enables you to control personnel cost, increase employee morale, and reduce workforce turnover.

Checklist For Profit Watching
Making a profit is the most important -- some might say the only objective, of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits, you must raise revenues, lower expenses, or both. To make improvements, you must know what's really going on financially at all times.

ASSOCIATIONS AND CONTACTS

The Saskatchewan Craft Council is a non-profit organization which supports, develops and promotes excellence in craft. They offer a wide range of programs including: traveling and juried exhibitions; Saskatchewan Craft Gallery; Workshops, Seminars and Lectures; The Craft Factor, a thrice yearly magazine, and monthly informational Bulletins; Marketing Opportunities; Member Portfolios and Slide Library; Comprehensive Resource Centre.

813 Broadway Avenue,
Saskatoon, SK S7N 1B5
Telephone: 306-653-3616
Fax: 306-244-2711
E-mail: saskcraftcouncil@shaw.ca
Web site: http://www.saskcraftcouncil.org

Canadian Craft and Hobby Association is a non-profit association dedicated to the growth of the craft and hobby industry. The Association holds two annual trade shows (Calgary and Toronto) that feature exhibitors from across North America.

#24 1410 40th Ave NE,
Calgary, AB T2E 6L1
Telephone: 403-291-0559
Toll free: 1-888-991-0559
Fax: 403-291-0675
E-mail: ccha@cadvision.com
Web site: http://www.cdncraft.org

Canadian Crafts Council
345 Lakeshore Rd West
Oakville, ON L6K 1G3
Telephone: 905-845-5357
Fax: 905-845-8210
E-mail: kingfish@spectranet.ca

Canadian Quilters’ Association
PO Box 22010, RPO Herongate
Ottawa, ON K1V 0C2
Toll-free: 1-877-672-8777
E-mail: stowaway@ns.sympatico.ca
Web site: http://www.canadianquilter.com

Canadian Sewing and Needlecraft Association
224 Merton Street, Suite 204
Toronto, ON M4S 1A1

Embroiderers' Association of Canada , Inc.
3311 L'Arche Crescent
Regina, SK S4S 1M9
Telephone: 306-586-0697
E-mail: p.perkins@sk.sympatico.ca
Web site: http://www.eac.ca 

National Indian Arts & Crafts Corporation
a/s Les Artisans Indiens du Quc, 540, Max Gros-Louis
Village-des-Hurons, PQ G0A 4V0
Telephone: 418-845-2150

For additional information see the document Selecting a Business Association .

RESOURCES

Tradeshows and Exhibitions

• Uniquely Prairies/Uniquely Canada -Join the thousands of micro-entrepreneurs who have successfully marketed their products to the wholesale gift marketplace though the Uniquely Shows. They are shows where potential buyers will find a collection of unique arts, crafts, and gift items designed exclusively by Saskatchewan/Canadian artisans.

Contact Impact Communications Ltd. 1-800-672-0103

• Tourism Saskatchewan compiles an annual listing of Saskatchewan Art and Craft Shows. The price to obtain a copy of this listing is $10.00.

Call 1-877-2ESCAPE (Canada and USA) or 306-787-2300 (Regina).

• There are a number of links to trade show databases on our Links Trade website. Click on "Fairs and Missions".

Financial Performance Indicators
The CSBSC subscribes to this licensed database, published by Statistics Canada, which is used to determine the relative profitability of a particular industry in Canada/Saskatchewan and to compare financial ratios and balance sheets of a particular company with the industry average. See description under Industry Overview in this document to determine which type of business you will operate.

Contact the Canada-Saskatchewan Business Service Centre to obtain these reports.

Small Business Profiles -  Performance Plus
Performance Plus provides detailed financial and employment data on small businesses by industry for Canada, the provinces and territories. The Profiles have been produced every two years since 1985, with 1997 being the most current reference year available. The data provide performance benchmarks for the financial planning of start-up and established small and medium sized businesses.
Reports are available for:

• Gift, Novelty, and Souvenir Stores, SIC 6582

KOB Files
Saskatchewan Industry and Resources created "kinds of business (KOB's)" that include information on many different types of businesses. This information includes: product sources; fixture & equipment suppliers; trade shows; trade associations; trade journals; and other market data sources. Choose a KOB from the Table of Contents on the Kinds of Kinds of Business Web site.

The CSBSC also has files started on various kinds of business topics such as restaurants, bars, coffee shops. Information located in these files includes possible suppliers, statistics, sample business plans, etc. To access the information in these files please come into the office and request the KOB file or speak to a Business Information Specialist.

RECOMMENDED BOOKS IN OUR LIBRARY

Canada-Saskatchewan Business Service Centre resource library search engine - Saskatoon Reference Library. Once you have located a particular resource you think might be useful, please contact us at the CSBSC office and we will discuss the material with you.

Some books of interest may include:

Crafts and Craft Shows
BUSINESS GIFTS & CRAFTS .029S
Allworth Press, 2000

Selling your Crafts
BUSINESS GIFTS & CRAFTS .028S
Allworth Press, 1998

Craftlink
BUSINESS GIFTS & CRAFTS .015S
Greener Pastures Publications Ltd., published quarterly

Business and Legal Forms for Crafts
BUSINESS FORMS .006S
Allworth Press, New York, 1998

Start and Run a Profitable Craft Business
BUSINESS GIFTS & CRAFTS .005S
International Self-Counsel Press Ltd., North Vancouver, November 1996

Start and Run a Profitable Gift Basket Business
BUSINESS GIFTS & CRAFTS .001S
International Self-Counsel Press Ltd., North Vancouver, 1995

Crafts Business Answer Book & Resource Guide
BUSINESS GIFTS & CRAFTS .008S
M. Evans and Company, Inc., New York, 1998

Gifts and Decorative Accessories
BUSINESS GIFTS & CRAFTS .016S
Geyer-McAllister Publications, Inc., New York, Magazine, Monthly

Crafts Business
BUSINESS GIFTS & CRAFTS .009S
Entrepreneur Inc., Irvine, U.S.A., 1995

VIDEO COLLECTION

Canada-Saskatchewan Business Service Centre resource library search engine can be viewed at the Saskatoon Reference Library Web site.

Once you have located a particular resource you think might be useful, please contact us at the CSBSC office and we will discuss the material with you. Material is available to view in our Saskatoon office or regionalization site where available. Videos and audio cassettes may be loaned out to residents in the Saskatoon area.

We have many videos available in the following categories: aboriginal, customer service , sales, marketing, training, entrepreneurship, business planning, financing, e-business, starting a business, business skills, home-based, management, intellectual property, trade, quality, computer skills, and miscellaneous. Search the A/V Library on our web site for descriptions.

RECOMMENDED INTERNET WEB SITES

More links available are also available on our Links Sectors Web site under the section titled "crafters".

CraftWEB
The CraftWEB project online community creates the opportunity for professional craftspeople, craft organizations and people interested in crafts to meet, share information and promote fine crafts worldwide.

Centre Contemporary Canadian Art Database (CCCAnet)
It is a project of the Centre for Contemporary Canadian Art which is an online arts organization which seeks to raise international awareness of Canada's professional artists.

Ceramics Web
The SDSU CeramicsWeb is an experimental website for ceramics. It includes such things as databases of glaze recipes and material analyses, links to other ceramics websites, health and safety information, and a variety of educational materials related to ceramics.

Giftware News
Giftware News Online provides up-to-date trends information, great book listings and new product releases for the giftware trade. Retailers can also browse through new management articles to help run your business better, find out about trade shows for businesses, learn about marts, manufacturers, and more.

Eastern Findings Corp
Located in New York City, has been a manufacturer and supplier of component parts for the jewellery, Crafts, Miniature, Lamp Finial, Bridal, Key Chain, and numerous other industries for over 65 years. Known to industry leaders and innovators as a key source for domestically manufactured items, as well as a sizeable imported inventory, we maintain and stock over 15,000 items. Most items are sold by the Dozen or the Gross (144 pieces), and are stocked for immediate delivery.

John Bead Corporation
From our modest start-up line of glass, fire polished, and crystal beads, John Bead Corporation Ltd. today is the largest importer of seed beads in Canada! With over 25,000 products available in our Toronto warehouse showroom, we serve customers across North America by telephone, mail, fax, e-mail, and now by e-commerce on the Internet.

Scrapbooking (Scrapbook Eh?)
Located in Calgary, Alberta. This site is for wholesale business customers with a valid business license and store front location only. Home businesses with a valid business license, but without a store front location are not eligible for full wholesale pricing.

Canadian Craft and Hobby Association 
The Canadian Craft & Hobby Association fosters industry awareness, interests, growth and prosperity by developing and implementing first rate programs, events and activities.

Wholesale Crafts
Wholesalecrafts.com is dedicated to serving Retailers wishing to purchase work from US and Canadian Artist-owned studios. The service is FREE to Retailers and each retailer must first apply and be screened by Wholesalecrafts.com (In most cases, a brick & mortar retail establishment is required - see the application area for more details).

Woodworking Machinery Industry Association

For further information regarding starting a business, contact the

THE INDIVIDUAL/BUSINESS/CORPORATION/PARTNERSHIP (HEREINAFTER REFERRED TO AS THE CLIENT) ACKNOWLEDGES AND UNDERSTANDS THAT THE CANADA-SASKATCHEWAN BUSINESS SERVICE CENTRE DOES NOT WARRANT OR REPRESENT THE ACCURACY, SUITABILITY OR APPLICABILITY OF THIS INFORMATION AND ASSUMES NO RESPONSIBILITY OR LIABILITY FOR THE USE THEREOF BY THE CLIENT AND ANY THIRD PARTIES AND THAT THE INTERPRETATION, USE AND APPLICATION OF SUCH INFORMATION SHALL BE THE CLIENT'S SOLE RESPONSIBILITY.

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.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.