9781118378380 cover for reprint - Providing tips, tools & know...

Contents

Foreword Timothy Adam xi

Preface xv

Acknowledgments xvii

Chapter 1 Etsy 1 Entrepreneurship 5Etsy-preneurship 1The World of Etsy 1Entrepreneurship Is for You 2Etsy-preneurship Defined 3The Etsy-preneurship Model 4My Etsy-preneurship Story 7Instructions for Etsy-preneurship.com and

Accessing Digital Downloads 9Download: Mission, Vision, Values, and

Competency Statements 10

Chapter 2 Creating a Business Plan 13Starting the Foundation 14Benefits of Planning 14Breaking Down the Business Plan 15Download: Creating Your Etsy Business Plan 25

Chapter 3 Bookkeeping 27Benefits of Bookkeeping 28Talking the Bookkeeping Talk 29Core Bookkeeping Functionality 30Most Popular Etsy Bookkeeping Solutions 32Key Bookkeeping Topics and Tips 37Download: Bookkeeping Quiz—Finding

Your Solution 42

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vii

Chapter 4 Taxes 43Tax Prerequisite 44Do I Need to File Taxes? 45Am I a Hobby or a Business? 46Federal ID: EIN 48Form 1040 48Schedule C 49Self-Employment Tax 52Quarterly Estimated Tax Payments 53Sales Tax 54Home Office Deduction 56Equipment Taxation 57Other Tax Topics 59Download: Tax Calculator—Schedule C 61

Chapter 5 Finances 63A Tale of Two Financial Approaches 63Bank Accounts 66PayPal 68Pricing Your Products 71Budgeting 79Managing Your Cash 79Three Financial Mistakes to Avoid 80Financial Tips 83Download: Pricing Tool and Formula 84

Chapter 6 Legal 85Choosing Your Business Structure 85Contracts 88Intellectual Property 89Small Business Insurance 91Other Legal Topics to Consider 93Following Etsy’s Rules 95Small Business Ethics 95Download: Business Structure

Quiz—Finding Your Perfect Fit 96


viii Contents

Chapter 7 Operations 97Why Operations Matter 98Etsy-preneurship Operational Standards 99Example: Operational Standards for

Providing Customer Feedback 104Setting Your Operational Standards 106Failing Operational Standards and

Correcting the Gap 110Download: Productivity Log and Defining

Your Operational Standards 110

Chapter 8 Marketing 113Marketing Isn’t What It Used to Be 114The Etsy-preneurship Practical Marketing

Framework 114The Marketing Disciplines 118Marketing Strategies Need Structure 121The 30-Day Etsy-preneurship Marketing Plan 122An Example: The 30-Day Etsy-preneurship

Marketing Plan 124Free and Low-Cost Marketing Methods

for Etsy Sellers 127Good Product Photos Sell: 10 Tips to

Make Etsy’s Front Page 128Download: The 30-Day Marketing Method 129

Chapter 9 Etsy Community: 40 Etsy Tips,Tricks, and Nuggets 131How to Implement Tips, Tricks,

and Nuggets 131Download: Sales Countdown Goal Tracker,

Customer Service E-Book, and Must-ReadEtsy Articles (Top 100) List 151

Chapter 10 Practicing Business Self-Development 153Developing the Foundation 153The Top Etsy Seller Resources 155


Contents ix

Top Etsy Seller Apps 162Download: Self-Development Resource

Guide and Learning Opportunity Planner 164

Chapter 11 Encouragement and Next Steps 165Real-Life Etsy-preneurs 166Practicing Etsy-preneurship and

Finding Your Inner Etsy-preneur 170Your Internal Source of Encouragement 170What Do I Do Next? 172Download: Extended Interview E-Book

and Next Steps—Commitment Statementand Planning Tool 173

Advanced Application Internal Study:Etsy Shop Ratios 175Seven Etsy Shop Ratios (Stories) 176Three Etsy Shop Forecasts (Predictions) 181Download: Etsy Shop Ratio Calculator 183

Advanced Application External Study:Etsy Marketplace Trends That ImpactYour Business 185Etsy Weather Reports 186Etsy Seasonality 192Revenue Estimates 193Etsy Wages and Efficiency 194Day-by-Day Statistics 194In an “Etsy” Minute 195The Future of Etsy? 195Download: Etsy Weather Reports Analysis 197

Download Details andClosing Thoughts 199

About the Author 201

Index 203


x Contents

1Etsy 1 Entrepreneurship 5Etsy-preneurship

The World of EtsyEtsy.com is a place where e-commerce has a heart. Since 2005, Etsyhas been, and continues to be, the place to buy and sell hand-made, vintage, and craft supplies. It is a community of commerce—crafters, artists, entrepreneurship, hipsters, nerds, moms, dads,grandmas, grandpas, kids, and collectives all call Etsy their home. Etsyis where creativity and commerce are linked together, and opportu-nities for businesses are ripe!

According to its website, Etsy’s mission statement is “ . . . toempower people to change the way the global economy works. Wesee a world in which very-very small businesses have much-muchmore sway in shaping the economy, local living economies arethriving everywhere, and people value authorship and provenance asmuch as price and convenience. We are bringing heart to commerceand making the world more fair, more sustainable, and more fun.”

I personally know the power that Etsy brings to individuals whocall Etsy their virtual storefront. Etsy provides freedom to succeed orfail in a business venture without breaking the bank. Crafters used torely only on craft shows and boutiques to sell their products; whilethese are still important sales diversification revenue streams, Etsyopens the door to building something better. Etsy gives you a way to

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1

make sales around the world, build your business brand, and do it in asafe and encouraging environment. Selling on Etsy usually starts as amicrobusiness, but can quickly grow into something more.

Etsy is booming! In just the one month of December 2011, morethan 3.3 million items were sold on Etsy—with a value of $69.8 million!In that month, about 789,000 newmembers joined Etsy. Theworldwideeconomy is hungry for commerce that is different. People are tired ofgiving gifts that are corporate-cookie-cutter look-alikes. Handmadeand vintage is unique, original, and memorable. Behind every hand-made and vintage item is a person—a person with passion and astory—not assembly lines, manufacturers, or corporate identities.

$600Goods Sold on Etsy ($)

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$500

$400

$300

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Etsy’s popularity is not slowing down. If you are or plan to be an Etsyseller, now is the time to claim your percentage of this market share.Creativity and quality are rewarded with success. Thousands ofunclaimed craft and vintage niches are waiting for sellers to control, butcreativity, crafting ability, andpassion takeyouonly so far—tobea lastingsuccess, an Etsy seller must have a solid business foundation. Without astrong entrepreneurial foundation, Etsy businesses are not sustainable.

Entrepreneurship Is for YouStarting a business is not only for those individuals who have an MBA,hang out with venture capitalists, or are extreme risk takers. I firmly

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2 Etsy-preneurship

believe that most people should be small business owners at somepoint in their lives! Every person has creativity and untapped potentialto make the world a better place through their respective businesses.In fact, I believe every person has a role in the global economy’s futuresuccess by starting and running his or her own small business.

Starting and running your own business is an exciting adventure—it shows your passion. Etsy sellers start their businesses for a variety ofreasons, including:

� The need for a productive and creative crafting outlet� To make additional money to pay off debt, save for a vacation,or achieve other financial goals

� To take the first step toward quitting their day job� To work for themselves� Because they love buying things on Etsy and think they can sell,too!

There are just as many reasons for starting an Etsy business asthere are Etsy sellers. No matter what your reasons are, I’m here to tellyou, “Go for it! You can do it!” I’ve helped thousands of sellers startlegal, legitimate, and sustainable businesses on Etsy, and I’m going tohelp you do it, too. Starting and running a business can be a littleintimidating, but the way to overcome this fear is with the properknowledge, tools, and guidance. I take great joy in empowering othersto create businesses that are sustainable, thriving, and provide joy foryears to come. I will teach you the art and science of Etsy-preneurship!

Etsy-preneurship DefinedEtsy þ entrepreneurship ¼ Etsy-preneurship. This is the formula forthe operational success of your business. Etsy-preneurship is theadventure you are about to embark on or are currently embracing.

Since 2007, I’ve been in conversation with every type of Etsy sellerthat seems to exist, selling everything imaginable, all unique and differ-ent. Not so unique are the business-related questions I am asked. MostEtsy sellers have the crafting side of their business downwell. I amalwaysamazed at the new items I see for sale on Etsy! You already have the“Etsy” part of the formula—amazing crafting, artistic, and design skills.

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Etsy 1 Entrepreneurship 5 Etsy-preneurship 3

Of course, there are components to this side of your business that youmay want to improve on. If you are like most Etsy sellers, you are moreconfident in your crafting abilities than in your business skills.

The “Entrepreneurship” part of this formula includes the businessfoundations that make your creations soar! Over the years, throughhearing and answering thousands of Etsy sellers’ business-relatedquestions, I know what it takes to build a successful business on Etsy. Ihave created a model, or method, on which businesses can thrive! Mymotto has always been, “Helping your Etsy shop thrive!” I want to helpyour business thrive!

The Etsy-preneurship ModelThe Etsy-preneurship model will help your Etsy shop thrive! The fol-lowing topics will help you build a firm business foundation, whichwill create success for you and your business. Tips and tricks arehelpful, but a rock-solid foundation will help you build a business thatwill last. Each chapter of the remainder of this book corresponds to thefollowing Etsy-preneurship model.

Etsy-preneurship:The Business Foundation

Handmade Business Plan

Community: Etsy Tips, Tricks, and Nuggets

Practicing Business Self-Development

Starting the foundation

Building the foundation

Developing the foundation

Bookkeeping

Taxes

Finances

Legal

Operations

Marketing

CREATING A BUSINESS PLANIf you do not have an initial business plan, you are setting yourself upto fail. A business plan gives you a fighting chance at success. Planningin your head is not good enough. The process of putting it into writtenwords really does make a difference, because it often shows so-calledgood ideas to be impractical and helps develop weak ideas intoblockbusters of success.

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4 Etsy-preneurship

BOOKKEEPING

The first time you spend or receive your money related to yourbusiness, a transaction has occurred and the need for bookkeepinghas begun. Etsy sellers who sweep this administrative task under therug to worry about later are asking for trouble. Good, simple, andpractical bookkeeping systems help Etsy sellers are able to better pricetheir products, make smarter business decisions, and meet tax obli-gations that all Etsy sellers face.

TAXESDeath and taxes—you know the spiel! All Etsy sellers have tax obli-gations, even if they consider their business a hobby! The tax law mayseem confusing, but it is manageable in bite-sized pieces. I will helpyou cut through to the parts that impact most Etsy sellers and explainthe tax code in everyday language. As a CPA, the tax code is some-thing I read regularly. It isn’t always fun, but it is necessary. Having abasic understanding of the tax laws that face your business will makeyou feel more confident, especially when an IRS agent is sitting acrossfrom you asking about your Etsy business during an audit!

FINANCESRunning a successful business is dependent upon making goodfinancial decisions. The way you manage your cash, bank accounts,PayPal account, and budgeting is just as important as performing yourcraft with great skill. I will reveal financial tips to help your businessthrive, as well as the financial nightmares that you can easily avoidwith a little foresight.

LEGALThere is only one way to run your Etsy business—legally! Knowing thelaw gives you confidence to run a business well. There are legalimplications regarding how you form your business, contracts youenter, and business insurance. Intellectual property (copyrights, trade-marks, patents) are a hot topic for Etsy sellers. The law protects you,your business, and your creations. Legal knowledge empowers youand your business.

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OPERATIONS

Operations are the day-to-day activities that make up your business.Consistency and standards are your friends when dealing withshipping, producing your products, photographing your products,managing your Etsy shop, managing your inventory, scheduling, andmore. Solid operations set clear expectations for you and your cus-tomers to rely on. Stable operations that are sustainable will helpprevent you and your business from burning out.

MARKETING

Just because you list your product on Etsy does not mean it willautomatically sell. Sometimes this happens, but it is not the norm.Marketing is where creativity gets to shine, but without the propermarketing framework and disciplines, your business will be all overthe place and without focus. Marketing is an art that requires a littlescience to make its impact most effective.

ETSY COMMUNITY: 40 ETSY TIPS, TRICKS, AND NUGGETS

The Etsy community is special. Most of the corporate business world isa dog-eat-dog environment, but the Etsy community is different. Etsysellers help other Etsy sellers—yes, even direct competitors sometimeshelp direct competitors! Relying on the communal tips, advice, and wis-dom from those who have gone before you and are in the same journeywith you is a treasure chest of gold nuggets! Together, we will begin dig-ging into these tips, advice, and wisdom and explore where to findmore.

PRACTICING BUSINESS SELF-DEVELOPMENT

The fact that you are reading this book shows that you value devel-oping yourself and your business. You must grow personally in thecomponents you already know about business. This does not happenmagically, but rather with intentionality. Business self-development isthe water, fertilizer, and fertile soil that will help your business growfaster. It will also help you avoid costly mistakes. Together, we willlook at the most helpful resources available for Etsy sellers.

NEXT STEPS AND ADVANCED APPLICATION STUDIESFinally, you will be encouraged by the stories of a few Etsy sellers, andyou can plan your next steps toward creating a thriving business.

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6 Etsy-preneurship

I have also included two advanced application studies that can helpboth newbie and experienced Etsy sellers improve their business bylooking within their own shop and at the Etsy marketplace as a whole.

My Etsy-preneurship StoryMy wife, Katie, started selling on Etsy in 2007, thus beginning her Etsy-preneurship story. She loves babies, had worked with babies in herjob, and naturally started making baby-related handmade products.She sewed burp cloths, baby bibs, diaper bags, and the cutest littlebaby girl dresses and jackets! She started her Etsy shop as a way tobe able to work from home and not take on a full-time job. Duringthis time, we were saving money to purchase our first home, withhopes of soon expanding our own family with little ones to use allthese cute things, too!

During this time, we learned our way around Etsy: buying rawmaterials, making products, taking pictures, writing product descrip-tions, pricing products, shipping products, and all the other fun Etsyactivities (posting in the forums, Etsy blogs, and Etsy teams). It did nottake long to realize, “Whoa, we are starting our own business here!What about the legal requirements of running our own business? Whatabout the tax implications? What will we use for a bookkeeping sys-tem? Oh, we need a business plan, too! And wait, we don’t even have abusiness-only bank account! What will our day-to-day operations looklike?” This is where my Etsy-preneurship story begins.

I have an undergraduate degree in accounting and a master’sdegree in accountancy from Baylor University. I am a Certified PublicAccountant (CPA) and Certified Treasury Professional (CTP). I haveworked as an international accountant, financial reporting manager,and treasury professional. I have also always been passionate aboutfinance and entrepreneurship—saving money in a tiny jar at theencouragement of my grannie at a young age, buying candy andmarking it up for a profit as a freshman in high school, and, with afriend, starting and running a lawn care service in high school andcollege. Business and finances are part of who I am, and I saw anopportunity to help my wife make her business succeed.

I started out by building a bookkeeping system to help her keeptrack of her sales, purchases, and inventory. We started using it to track

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her finances, and then I had my “aha” moment: If my wife needed thisbookkeeping system, other Etsy sellers did, too. I made the system alittle more user-friendly and robust and opened my own Etsy shop tosell it to other Etsy sellers. The shop’s name is JJMFinance, where I stillsell and am part of the Etsy community.

The first time I listed my bookkeeping system on Etsy, I wasnervous! I remember looking at the pictures, reading the descriptionover and over, wondering whether what I was putting up there wasgood enough. A few days later, it sold! I was so excited! After a fewmore days, I received my first positive feedback. I was hooked!

I began reading Etsy sellers’ business-related questions in theforums and answering them. Then I started getting more convos(conversations, or messages from Etsy sellers) with various businessquestions. Soon, I started creating more products to help address theseadditional business questions.

I got involved with Handmadeology.com (“The Science of Hand-made”), which helps Etsy sellers run their business. Also, I am acontributing editor for Handmadeology Pro, a member-only site thatprovides instructional videos, e-books, and spreadsheet tools to Etsysellers.

I also provide business advice for Etsy sellers through Etsy-preneurship.com and my related Etsy shop, Epreneurship.

This is my Etsy-preneurship story over the past six years. I loveEtsy and Etsy sellers!

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8 Etsy-preneurship

Instructions for Etsy-preneurship.com and AccessingDigital DownloadsEach chapter in this book has one or more digital downloads that canbe downloaded at etsy-preneurship.com. On this site, each chapterhas a specific web page with information outlining that chapter’s topic,including videos, useful links, downloadable spreadsheet tools, andother helpful information. Accessing this information is paramount tocompleting your study of Etsy-preneurship. When prompted, as youare downloading each chapter’s supplement, simply enter the pass-word located in the back of your book. As you read through this book,here are the steps I suggest you follow:

1. Read a chapter.2. View the specific web page for that chapter on www.etsy-

preneurship.com to watch related videos, read supplementalmaterial, and become more knowledgeable about the specificbusiness foundation you are learning about.

3. Download the chapter’s supplemental content (spreadsheet,printable PDF form, or e-book)—available at www.etsy-preneurship.com/downloads.

4. Work through the supplemental content, and then proceedwith the same steps for the next chapter, working your waythrough the entire book.

All spreadsheets are designed for use in Excel 2007 (and higher)products on a PC for maximum functionality. The spreadsheets mightwork on earlier versions of Excel, but with possible changes in func-tionality and formatting. Google Docs, Openoffice.org, and otherspreadsheet programs may or may not operate these spreadsheetscorrectly. For those Etsy-preneurship readers who do not have aspreadsheet system that will open these files, I have also providedprintable downloadable PDF files. Every computer should be able toopen PDF files using Adobe Reader (http://get.adobe.com/reader/).

For all downloads, I suggest you save an initial copy that you keepas a permanent copy and then save a second version of the file with anew filename for your working copy. I have left all formulas unpro-tected in these spreadsheets so you can customize them as you see fit.You do not need to know how to operate a spreadsheet program to

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use these tools. I have designed them in a way that, if you can navigatethe web, you should be able to navigate the spreadsheets. At the endof each chapter, I will provide any special instructions or teachingsrelated to that chapter’s specific download.

Download: Mission, Vision, Values, and CompetencyStatementsThe first step toward practicing Etsy-preneurship is to know the “why”behind your business. The “why” behind your business can be found infour statements: the mission statement, the vision statement, the valuesstatement, and the competency statement. These four statements cansound a little stuffy, but I have found them to be very helpful to focussmall business owners on what their business is really about. Thesefour statements will helpmake up the first section of your business plan.

MISSION STATEMENT

A mission statement defines the purpose of your business. It is a high-level goal that provides context and guidance to help you make futurebusiness decisions. It shows the aims of your business. The missionstatement is broad enough to growwith your business, wherever it mighttake you years from now. Mission statements are for both you and yourcustomers to read. It tells a customerwhyyouare inbusiness and is a formof your business brand. A mission statement is a type of philosophy youcan fall back on when you are uncertain about a direction your businessis taking. Here are a couple examples of Etsy sellers’mission statements:

Coil and Flame designs and creates miniature pieces of art injewelry form using sterling silver with mixed metals and gemstones.Each finished design is a one-of-a-kind or limited production piecethat is a jewelry wardrobe investment for the discerning customer.Through online sales, home parties, and local networks, we main-tain and attract customers with exceptional quality and service.

—Coil and Flame, by DLPom LLC

The purpose of my business is to share how I view the world throughphotography. Photography is a passion. With the advent of the digitalage, I use my trained eye through the monitor of my digital camera,taking advantage of color saturations, macro close-ups, and the fullrange of editing. It is of utmost importance that any business

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10 Etsy-preneurship

transactions are for the customer. Whatever I can do to assure apositive experience for the customer is exactly what will happen.

—Lilleypics by Amy Lilley

VISION STATEMENT

A vision statement is like looking into the future through a windowyou never looked out of before. What do you see? It provides inspi-ration to you by revealing your hopes and dreams for your business. Itis bigger than a year in the future: It is what your business looks like 5or 10 years from now. A vision statement should make you want to getout of bed in the morning and get right to work. Passion is poking itselfinto the vision statement. A vision statement is not typically seen byyour customers, but is for your eyes only. Following are someexamples of Etsy sellers’ vision statements:

Coil and Flame’s handmade jewelry business will be a recognizedname in North America for modernly classic, sterling, and mixedmetal jewelry designs. Visibility and demand of innovative jewelrydesigns will be increased through a presence in galleries and juriedshows, ultimately growing the small business into a full-time venture.

—Coil and Flame, by DLPom LLC

My vision for my Etsy shop, Lilleypics is expansive. It is my hope to seemy work, art, and photography broaden in depth and width over thenext five years. Having just relocated to Colorado from New Eng-land, my inner and outer landscapes feel like they are being coloredwith a very, very broad brushstroke. Looking forward is easy, asevery day is a new, awe-inspiring adventure for my eyes!

—Lilleypics, by Amy Lilley

VALUES STATEMENT

A values statement defines what behaviors are important to you as yourun your business. It defines your core traits. These core traits thenhelp you represent your highest priorities. Your personal beliefs canalso influence your values. Your values will help you define how youspend your time and with what type of attitude.

Mybusinessvaluesareexcellence, integrity, and service. I valuea lotofother traits, but these are the few I focus on. I believe that if you choose toomanyvalues,noneof themwill beevident inyourbusiness.Otherpopularbusiness values include honesty, love, kindness, patience, humility,persistence, wisdom, courage, flexibility, optimism, fun, compassion,

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learning, generosity, dignity, respect, loyalty, innovation, customerservice, creativity, discipline, communication, reliability, responsibility,quality, timeliness, orderliness, accuracy, and hundreds of others.

COMPETENCY STATEMENT

A competency statement is a list of what you do well that makesyour business distinct. These strengths can be things that set youand your business apart from other individuals and their businesses.These competencies are not always unique, but they are not easy toduplicate. Your competencies help your customers build additionaltrust in you, your products, and your business. Competencies can giveyour business a competitive advantage over other businesses.

Some of my business competencies include small business con-sultation, taxes, bookkeeping, customer service, and teaching. Otherbusiness competencies might include skills or strengths you have. Yourcompetencies can include specific skills related to your craft, your eyefor design, photography or literary abilities, or even business acumen.

DOWNLOAD INSTRUCTIONS

Note: To download this document, please go to www.etsy-preneurship.com/downloads.

Access the download and write your four statements. Thesefour statements will also serve as the first of five total parts of yourbusiness plan.

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12 Etsy-preneurship

2Creating a Business Plan

Abusiness plan is a written account of the who, what, where, when,why, and how of your business. Many successful Etsy sellers have

gone through the process of creating a business plan. Small businessowners create business plans in order to secure funding from banks orinvestors; this proves to the respective lending institutions that thebusiness owners will make a profit and run a legitimate business.

Most Etsy sellers do not need a well-polished business plan.Instead, Etsy sellers need a basic business plan that helps solidifydetails highlighting their purposes, what their business is, what pro-ducts they sell, their understanding of the market they sell in, theirbusiness strategies, and their understanding of the operational aspectsof their business. A business plan is for your eyes only. The Etsy-preneurship business plan incorporates elements that are typicallyfound in a business plan, but also includes elements that are found insome marketing plans. This plan is designed specifically with Etsysellers in mind.

Business plans are not just for businesses that are starting out, butalso for businesses that have been around for a while. I’ve read in theonline Etsy forums of some Etsy sellers who had been selling for a fewyears that they put together their first business plan after their businesshad developed. After creating their business plans, these individualslearned something new about their products, business, and the marketthat they are a part of; this helped them with the future direction of

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13

their business. I suggest creating a business plan in the start-up phaseof your business, but don’t skip this step just because you might havealready started your business. In fact, reviewing your business planevery year is a good exercise to see how things have changed orwhether your business focus might be going in a slightly differentdirection than you originally planned.

Business plans are living documents. What you put down todaywill be valid for the moment, but even a few days later, parts of theplan might change. This is to be expected, because the environment inwhich you sell and run your business is in constant fluctuation. Don’tworry about it! Also, don’t worry about writing down things you arenot 100 percent sure about. This is a plan, not a set-in-stone, never-to-be-changed, I-know-all-the-answers type of document. This is thebeginning of a firm foundation for your business.

Starting the FoundationAll buildings that last have a firm foundation. The type of business Iwant to help you build is one that lasts, thrives, and is strong enough towithstand the challenges and oppositions that will eventually face it.A hut built on sand will fall when the wind and waves hit it, just like abusiness without a solid foundation will fall when competitionincreases or a large challenge surprises the business owner. In fact, ifyou have already completed the exercise in Chapter 1 (creating yourmission, vision, values, and competency statements), you already havethe first part of the foundation complete. These statements are theintroduction to your business plan.

Benefits of PlanningSome of the benefits you will experience from creating your ownbusiness plan include:

� Understanding what your business is all about. No one in theworld knows your business as well as you do, and if you don’tknow it well, there is no way you can expect your customer toknow your business.

� Giving you greater clarity when setting goals for your business.

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14 Etsy-preneurship

� Providing you with a point of reference when making difficultbusiness decisions or when you need guidance.

� Giving you peace that although there are many moving partsand unknowns in starting and running a business, you are wellprepared.

� Making you proactive to the challenges that face your business.� Helping you quantify or measure what success will look like foryour business. Defining success helps you know when youreach or get one step closer to it.

� Ensuring that your implementation is consistent with your mis-sion, vision, values, and competencies.

� Providing you practical guidance toward financial funding andmanaging revenues, costs, and profits.

� Making you aware of the environment in which your businessoperates.

� Igniting you with motivation to achieve your plan.� Assisting you in focusing on setting the priorities that willeventually be the tasks that make your business great!

Breaking Down the Business PlanThe Etsy-preneurship business plan focuses on four additional keyareas: defining your product, analyzing your market, developing your

TheEtsy-preneurship

Business Plan

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Creating a Business Plan 15

strategy, and planning your operations. The fifth key area is definingyour purpose (mission, vision, values, and competencies), which youalready finalized at the end of Chapter 1. Let’s start learning about thefour new business plan topics before we create your Etsy shop’sbusiness plan in an exercise at the end of this chapter.

DEFINING YOUR PRODUCTThe product that you sell is the most important part of your business.If you have no product to sell on Etsy, you don’t have a business. Thevarieties of products that are sold on Etsy are numerous. There are 31categories of items for sale on Etsy: accessories, art, bags and purses,bath and beauty, books and zines, candles, ceramics and pottery,children, clothing, crochet, dolls and miniatures, everything else,furniture, geekery, glass, holidays, housewares, jewelry, knitting,music, needlecraft, paper goods, patterns, pets, plants and edibles,quilts, supplies, toys, vintage, weddings, and woodworking. Inaddition, these 31 categories are broken down into more than 500subcategories!

Some of these categories are more crowded and have morecompetition than others. However, do not let the fact that there is a lotof competition deter you. Also, do not let this stop you from entering amarket that has fewer sellers; it is merely something to be aware ofwhen defining your product.

Imagine that Etsy is a large grocery store. It is important to realizewhere your products would be located within the store to understandyour part in the larger Etsy environment. If there were 20 aisles in thisgrocery store, jewelry would make up four and a half aisles; vintagewould make up almost three aisles; and supplies would make upnearly two and a half of the aisles. This means that almost half of the“Etsy store” consists of products made up of jewelry, vintage items,and supplies!

It is important to think about which categories your products willbe sold under. Will you try to focus on one of these specific categories,or will you try to sell in many of these categories? Another option is tocreate one type of product that fits into many of the categories.

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16 Etsy-preneurship

Etsy

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17

Etsy has standards about what type of products can be sold on thesite. The three types of items that can be sold on Etsy are those hand-made by you, crafting supplies, and vintage goods. Details outliningthese three categories can be found onEtsy by visiting the help page andsearching the phrase, “What items can I sell on Etsy?” I suggest you readthese rules carefully, as you don’t want to start or run a business thatwould eventually be shut down because you are breaking Etsy’s rules.Clearly define your product by appearance, materials, and size.

Materials What are the core materials you will use in making yourproducts? Where will you get these materials? Where will you storethem? What quantity of raw materials will you have on hand at any onepoint? Will you buy materials on a just-in-time basis to make a product,or will you have supplies already on hand? Do you foresee yourselfbecoming a raw material hoarder? If so, what will you do to stop thisfrom causing too many expenses for your business? Will you buymaterials from the major crafting supply companies or from smallercrafting suppliers? Do your materials stand out from other materialsused on Etsy? Do your materials match your brand and image?

Quality What standards of raw materials will you use? Will they beenvironmentally safe? Organic? Mass-produced? Are your materials safeto sell to others? Do your materials lend themselves to creativity? Is yourend product of good quality, professional quality, or elite quality? Willthat quality of productmatch yourbrandand targetmarket of customers?

Pricing Philosophy There aremany things to considerwhen pricingindividual products. We cover this in greater detail in Chapter 5, “Finan-ces,”but now is the time to start considering yourpricingphilosophywithregard to the materials you use, brand image you are creating, and targetmarket. There is a psychology in pricing. Product prices ending in wholedollars are viewed as more upscale. Product prices ending fractions of adollar are often viewed by customers as value items.

What will your Etsy business’s price points be? Price points are therange of prices that are offered in your shop. A low price point mightbe an item for sale for a few dollars. Almost everyone can afford thisitem to “test out” your business at low risk to themselves. An averageprice point might be in the $15 to $40 range. High price point ranges

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18 Etsy-preneurship

will then be more expensive, with no limit in price. I believe it isimportant for Etsy sellers to include all three price ranges in theirshops, because of the variety of people who shop on Etsy. Oneexception to this rule is if you are specifically targeting low- or high-income individuals or customers who have specific connectionsassociated with a product and its related price. Your competitors’pricing, your material costs, and your profit margin desires should alsobe considered when creating your pricing philosophy.

ANALYZING YOUR MARKET

The second key area in your business plan is gaining a better under-standing of the market your Etsy shop will be a part of. Understandingyour customers, your market (on and off of Etsy), and your competition(on and off of Etsy) will give you knowledge of how to best brand yourbusiness. All of this knowledge helps you develop your brand, whichwill give your business its identity.

Customer Need Why should your customers buy your product?What need or want does it satisfy? What solution does it provide forthem? In what circumstances would they purchase your product? Arethey buying the product for themselves or as a gift? Are they buying itas a luxury or a necessity? Are they buying it as part of their regularbudget or a splurge? Is it a planned purchase or an impulse buy? Doyour customers have the option of buying this at a much lower price ata big-box retailer? Why would they purchase your product instead ofmaking it themselves? Can your customer make your product them-selves? Are they buying your product to save time? Are they buyingyour product because they heard about you from a friend? Are theytrying to impress someone with your product? Are they buying yourproduct because they have bought into your business brand? How fastdo your customers expect to receive your products in the mail?

Customer needs help you define how your business will meet theirneeds and wants. Let their needs influence your product, brand, andbusiness identity.

Customer Profile What do your average customers look like? Howold are they? How much money do they make a year? Are they repeat

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Etsy customers or brand new to Etsy? Are they male or female? Do theylive in the country or city? What part of the world do they live in? Whatculture are they part of? What are their values? What are their profes-sions? What are their hobbies? What websites do they visit? What doestheir social life look like? Are they married or single? What music dothey listen to? What style or design do they like? What books, maga-zines, or newspapers do they read? What are their education levels?What social media sites do they use?

Customer profiles help you understand who you are selling to andhow your brand matches their profile. Knowing your customer profilewill also help you build intentional relationships with your customersthrough social media.

Market Trends Your business is part of many markets. First, youare part of the global marketplace of products—this includes every-thing that is for sale in the world. Second, you are part of the Etsymarketplace. Third, you are part of specific categories or niches ofproducts within Etsy. What has been happening in these marketsrecently? What type of products are popular sellers? What colors arehot? What price points are selling well?

Looking at market trends helps you determine where your busi-ness needs to go to meet or create its own trends. Trends changethrough time. As a business owner, you will have to decide how muchtrendsetting and trend following you will perform. Both methods havetheir advantages and require different marketing tactics.

Competitor Analysis I enjoy competition and believe that com-petition makes businesses perform with excellence and at higherlevels. Although Etsy is a very community-centric environment, it isstill a capitalist environment, where limited money is purchasing alarge variety and quantity of products. You want the demand for thesupply of your products to be high. You can wish your competitorssuccess as your business also succeeds.

I think it is important to look at possible direct competitors who arealready selling on Etsy as well as your direct competitors who are sellingoff of Etsy. Direct competitor businesses that sell products very similar toyours. Indirect competitors sell products that are not acutely related

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20 Etsy-preneurship

to yours but that are related to your products. Here are some importantthings to learn from looking at your competitors:

� What are their strengths and weaknesses? Are there anyopportunities or threats they face?

� What do they do well?� What do they not do well, and how could you do better?� What experience or experiences do you have that they don’thave?

� Why would a customer choose your business over theirs?� What is their pricing strategy?� How does their product quality compare to your productquality?

� How would you describe their brand and image?� What target market are they trying to fill?� Do they advertise? How? Does it appear to be working?� How are their social media connections? What is working wellfor them? Why?

� How long has their business been in operation?� What can you learn from their business?

I suggest that you find small businesses that you admire thatare completely unrelated to your business and ask the same questions.Looking at other businesses is a way to be inspired and learn fromtheir mistakes.

Pure business copycats are oftentimes not successful, becausethey lack the spark of creativity. Watch out for the desire to imitatean Etsy shop that you regard highly. I suggest you find Etsy shopsthat embody qualities you appreciate, as they will inspire you to dobetter, but don’t copy them. Find aspects from many Etsy shops thatyou like, then emulate those qualities in your own way. A businessthat operates with great innovation often fails, but a business thatcomes along afterward often makes some tweaks and does a betterjob. Let your competition motivate you to greatness. Wish themsuccess. The market on Etsy is very large and there is room for manyto succeed. If someone else eventually imitates you, feel flatteredand keep on innovating! Business is not static.

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DEVELOPING YOUR STRATEGYThe third key area in your business plan is developing and refiningyour business strategy. A business strategy is a plan of action toachieve your main objectives. Developing your strategy is an impor-tant step toward implementing your business. Tactics are somethingyou do to achieve your strategies. Strategies come before tactics. Thetactics of your business will be the operational activities you perform.Strategies do not change as often as tactics change. Strategies have alonger-term focus.

Niche A niche is a small part of the market in which you will seek tooperate, influence, and succeed. A niche needs to be narrow enoughthat you can influence it, but wide enough that you have enoughcustomers. If your niche is selling “anklet charms for left-handedindividuals who live in France and enjoy soccer and only work part-time,” your niche might be too small. There is no magical way ofknowing whether a niche is the perfect fit for your business; it is abouttrusting your business instincts and evaluating the results of yourbusiness. Niches can change if they are not working out, but if you finda niche that works, stick with it! Use all your market analysis to helpdefine what your business niche is. My niche is this: “Etsy sellers whowant to improve their business.” My wife’s Etsy shop’s niche: “Momswho like Amy Butler fabric and like having stylish babies.” Clearlydefine your niche.

Keys to Success Every business faces some key hurdles or chal-lenges to overcome. These keys to success are constantly evolving.What do you think those keys to success are for your business rightnow? If you can’t list out your keys to success, the chances of yousucceeding are reduced drastically, because your direction lacks focus.Examples of keys to success include designing a brand, logo, andname that will last many years; learning how to market on Facebookand manage your brand, and creating a spending plan so you don’t gointo too much debt before you start to make a profit. Everyone’s keysto success are different based on skill levels and even personalweaknesses. Identifying what you think will help you succeed is agreat exercise in refining your strategies.

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22 Etsy-preneurship

Branding Strategy What is your business’s name? Does anyoneelse have that name or a similar name? Is the domain (dot-com) of thatname available? (Domain registration service links are available onEtsy-preneurship.com.) What is your business’s tagline? What is thepersonality of your business? If your business had a commercial, whatwould the commercial say? What color scheme matches your business?How will you use those color schemes? What is the tone you com-municate and relate to your customers and fans via social media? Doyour mission, vision, values, and competencies match your brand?

When you build a business, you are also building a brand. Thetwo are inseparable. Spend a good amount of time naming yourbusiness and its tagline. You don’t want to have to change the name ofyour business at a later date. Etsy currently allows you to change yourshop’s name once, but it is much better to get it correct the first time!

PLANNING YOUR OPERATIONS

The last area of your business plan helps to refine your strategies andstart considering specific tactics and big-picture operational con-siderations. This is the beginning of what will eventually become yourbusiness’s operational standards (the subject of Chapter 7).

Funding How will you fund the start-up or operations of yourbusiness? Will you go into debt to achieve this? What levels of debt areacceptable? What will your initial profits be used for (growing andexpanding your business or withdrawing them for personal use)? Doyou have a limit on how much money your business could lose beforeyou call it quits? Will you fund your business operations from yourbusiness revenues only or from personal funds? Setting some financialgoals and targets or budgets will also be important for your business.We cover these topics in more detail in Chapter 5.

Suppliers Where will you buy your supplies? Will you be able toavoid paying sales tax on the materials you purchase by having a statesales tax ID? How often will you buy supplies?

Revenue Streams Will you sell your products in venues other thanEtsy? On other websites? In boutiques? At craft shows or home shows?Or anywhere else you can think of? There are many sellers on Etsy

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who sell only on Etsy, but many Etsy sellers eventually branch out intoother selling venues. One benefit of diversifying your revenue streamsis that all your revenue eggs are not in one basket. All businesses haveto start selling somewhere, and I think Etsy is the best place to start.Over time, I do suggest all Etsy sellers diversify their selling venues tolower the risks of counting on revenue from only one source.

SMART Goals What goals do you want to set for your business rightnow? Goals should be SMART: Specific, Measurable, Attainable,Realistic, and Timely. Specific goals answer the who, what, when,where, why, and how questions related to a goal. The measurableaspect of a goal should have something that can be tracked. If youcan’t track a goal, you will never know if you achieve it. An attainablegoal is one that you can influence to come true. It is within your reach.The goal should also be realistic. Don’t shoot for making 100,000 salesin a month if you are currently making only 10 sales a month. Last, agoal should be timely. Put a time element on all goals so you know thepoint by which you must achieve the goal. This helps light the fire andmotivate you to make progress on the goals in incremental steps.

Depending on what stage your business is in right now will influ-ence what type of goals you have. I constantly have goals for mybusiness and know that businesses that are growing and thriving alwayshave evolving goals. I suggest you make five big goals. Underneatheach goal, write out the tasks that youwill have to accomplish to achievethat particular goal. Goals broken down into smaller pieces are easier toachieve. Try to initially set goals that can be achieved within threemonths. Three months gives you time to achieve some larger goals, butare not so long a time period that your goals are lost or lose momentum.

Planning Calendar Once you have your specific goals and thetasks related to these goals, it is time to make a plan to implementthese into reality. I suggest you plan out your three months week byweek. This gives you daily flexibility to pick and choose what youwork on, yet enough accountability to keep you on track and notfalling behind. Not everyone works well with such a detailed plan, souse your knowledge about yourself to plan accordingly. Maximizingyour effectiveness in scheduling will serve you well as your business

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24 Etsy-preneurship

grows and matures. Managing, planning, and scheduling your time is avaluable skill that can be learned with practice.

Download: Creating Your Etsy Business Plan

Note: To download this document, please go to www.etsy-preneurship.com/downloads.

Using this business plan tool will walk you through all the appli-cable parts to create your unique Etsy-preneurship business plan. Afteranswering all the questions in the tool, you will have details regardingdefining your purpose, defining your product, analyzing your market,developing your strategy, and planning your operations. Save a copyof this document to review periodically and modify as your market andenvironment change.

c02 11 September 2012; 12:36:46


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