The Reality of the Handmade World

I love the Handmade Marketplace.  I'm sure that is no surprise.

I have loved every minute of creating and building my Handmade Business.

I love the community of Handmade Business Owners.

But there is something that I think too few people are admitting, and I think it's time we start to talk about it.

The reality of having a "handmade" business is that you will probably not make money.  I don't say this to be Debby Downer... I say it because it is true, and I think people need to start admitting it so that we can find a solution.

I have many, many friends with handmade businesses.
I have a couple of friends with handmade businesses that are living off their income.
And I have one friend who turned her handmade business into a "real" business and now has a warehouse, a full staff, and a husband who quit his job to run her business full time. 

Last year I read an article in Inc. Magazine about Etsy.  The article stated that in 2010 the 400,000+ sellers on Etsy sold $314,000,000 worth of products.  It went on to say, "Three hundred and fourteen million dollars is an impressive sum, but it amounts to about $785 per seller after commissions - and before taxes.  It seems fair to assume, using statistics that the company has released, that there are fewer than 1,000 sellers who make $30,000 a year or more, and a mere handful who make more than $100,000.  As one of the site's top sellers wrote in a blog post in 2009: 'Your odds of making $10,000 per year [on Etsy] are better than winning $10,000 through the Powerball, though not by a ton.'  The only Etsy millionaires, it turns out, are Etsy shareholders."

When I read this article I was astounded.  Mainly because in 2010 I generated almost $20,000 in sales on Etsy {and I lost money}.  In 2011 I generated over $35,000 in sales on Etsy {and I made about $1300}.

So if I am one of the top selling stores on Etsy, {which according to this article I am} then the truth is... having a handmade shop is not a very successful way to make money.

I think {and this article also pointed out} that part of the problem is that most of the shops on Etsy are run by Hobbyists... people who are doing it because they enjoying crafting in their free time, and not people who are trying to run a successful business.  The problem with that is that Susie Hobbyist sells her handmade invitation for $2 {while anyone running a professional stationary business would tell you that her costs far exceed $2}, so Emmy Entrepreneur, who charges $8 per invitation cannot compete with Susie's pricing. 

So what do we do about this?  What do those of us that would actually like to be paid for our time and supplies do to make our business profitable?  How do we make handmade work???

I don't know for sure what the answer to this is.  If I did, Much Ado About You probably would have made more than $1300 last year.  But I definitely don't think that it is hopeless.

The reality is that most start-ups take three to five years to become profitable, and this handmade craze has really only just started in the last three to five years.  Hopefully that means that more and more of our businesses will begin to turn the corner in these next few years.

But I think the question that I am facing {and I'm sure some of you are too} is can we make it another few years???  And in order to make it, will we have to leave the handmade dream behind and embrace the small business reality of mass production?  And wouldn't it be great for our country's failing economy if we could figure out a way to make this work?

These are all questions that I am wrestling with.  These are all reasons why I'm not sure what the future is for Much Ado About You.

I think the first step is talking about it.  If handmade is going to work, I think we need to start educating our customers on the value of handmade.  We need people to understand that buying handmade will cost more than buying at Target or Costco, possibly a lot more, and then we need to see if there is a market that will value that cost and support it.

What are your thoughts?  Do you have a handmade business that you are struggling with?  Do you buy handmade?  Are you willing to pay more to support Small Business and the Handmade Community?

By the way... don't feel bad if you are not.  I realize that not everyone feels passionate about buying handmade, and that is totally okay.  I am not trying to make anyone feel guilty about shopping at Target or Costco... I shop at both places frequently.  But I think there is room in the market for both.  Do you???

Let's talk about it.