Startup cost
$50k–$500k
TRUiC Business Ideas
How to Start a Craft Store
Decision Snapshot
Craft Store
Idea Score
31
Profit margin
6%
Break-even
4 mo–12 mo
Time to launch
12 wk–36 wk
Demand trend
Stable
5-yr failure rate
—
Capital intensity
Very high
Time commitment
Flexible
Part 1 - How to start a Craft Store business - Background
Craft store businesses provide the necessary supplies for creating unique handmade items for shoppers who prefer originality over mass production. A craft store business can exist online, in a physical location, or both. Some craft store businesses sell a wide range of various types of arts and crafts supplies, while others cater to specialized niche markets.
Our guide is in 3 parts:
- Part 1 - How to start a Craft Store business - Background
- Part 2 - Our planner tool to see if this idea is the right fit for you
- Part 3 - Action plan to get started
What are the costs involved in opening a craft store?
For tax purposes, you’ll need a tax ID number for your small business. The cost of opening a craft store business varies widely depending upon whether it is an online operation or a physical location. Online businesses can be started with very little initial cost other than the supplies. The costs of opening a physical location would include the cost of renting and outfitting a building as well as a more substantial initial inventory of craft supplies and items for sale.
What are the ongoing expenses for a craft store?
Ongoing expenses for a craft store business can include:
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Real estate rental
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Utilities
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Maintenance of office equipment
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POS/inventory software service
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Cost of wholesale supplies
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Shipping costs
Who is the target market?
Preferred clients are those who enjoy participating in arts and crafts projects for gift-giving and home decoration or those who appreciate products that demonstrate the artistic and creative talents of others.
How does a craft store make money?
One way a craft store business makes money is by buying craft supplies in bulk at wholesale prices and reselling them at a profit. Another, less common way this type of business makes money is by designing and creating original arts and crafts products. Some craft stores sell those products directly to other craft stores, while others charge a royalty fee for the use of their original designs.
How much can you charge customers?
Costs for craft supplies vary according to demand and manufacturing costs. Buying popular items in bulk at wholesale prices allows you to increase your profit margin. Pricing handmade items can be challenging. This article offers some tips for finding the right price for your products.
Pricing finished products is more difficult than pricing the supplies to make them because one-of-a-kind items are valued and priced, differently. To price according to similar items can result in undervaluation and lost profits.
How much profit can a craft store make?
The profits from online craft store businesses vary widely, depending on the cost of materials and pricing.
Joann Stores, a leading craft store in the US, reported profits of $2.4 billion in 2015. This is a very large chain, so expect to make significantly less than this. However, this number does indicate that there is a very profitable market for craft supplies.
How can you make your business more profitable?
Creating a number of finished products and offering your customers the option to purchase a kit containing all the necessary supplies to make those products themselves can be a very effective sales strategy. It’s important to offer something unique to compete successfully with larger, more established businesses like Joann Fabrics. Some craft store businesses offer classes for specific crafts such as felting, quilting or creating jewelry. There is nothing more unique than a specific group of people coming together in the same place at the same time to participate in a creative activity. Attending craft fairs is another way that craft store business owners can increase public awareness of their products as well as their profits. Many craft store businesses expand their businesses to sell finished craft products on sales platforms such as Etsy, which charge a percentage of sales.
Day-to-Day and Growth
What happens during a typical day at a craft store?
Here are some of the typical activities a craft store business owner might engage in on a daily basis:
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Pricing craft supplies based on market research and customer feedback
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Writing product descriptions
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Photographing sale items and updating website content
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Conducting inventory, negotiating prices with vendors, and ordering supplies
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Filling and shipping orders
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Attending craft workshops to get ideas for new classes and activities to provide for customers
What are some skills and experiences that will help you build a successful craft store?
Some of the skills necessary to succeed in this type of business include:
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A good eye for spotting popular trends in fashion and home décor
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The ability to manifest your creative vision into physical reality using craft supplies
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Negotiating skills for obtaining the best prices from vendors
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Accounting skills for calculating the cost of supplies, production, shipping and determining accurate profit margins
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Writing skills to describe your products accurately yet invitingly
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Marketing skills to enable you to create email offers, loyalty rewards programs, and special sales promotions
There are a number of resources that provide education and additional information about how to succeed with a craft store business.
What is the growth potential for a craft store?
Some craft stores, such as Michaels, have expanded nationwide. The nation’s largest craft store business, Michaels has 1,262 stores, each of which sell an average of 40,000 different items. produces 10 exclusive private brands. As of June, 2014, the company, which also produces 10 exclusive private brands, was valued at $3.86 billion dollars.
How and when to build a team
In this business, any time is a good time to build a team. The more different types of products your store offers; the more people will be attracted to shop there. A good team consists of people whose talents and abilities complement one another. Those who enjoy teaching others can provide classes, while those who prefer staying behind the scenes can focus on creation and production. Participation in arts and crafts can be a group activity as well as a solitary occupation, which is one reason it is so popular.
Part 2 - Is a Craft Store business the right fit for you?
Business Evaluation & Strategy Tool
We'll walk you through the four pillars every business needs: Points of Leverage, Marketing Strategy, Financial Model, and Personal Compatibility. At the end you'll see a personalized report and your action plan below will be tailored to your answers.
Step 1 of 4 — Points of Leverage
Every viable business has natural advantages. Below are common leverage points across four categories. Pick the ones that apply to your Craft Store business. We've pre-suggested a few based on your idea — review and adjust.
Step 2 of 4 — Marketing Strategy
Without a way to connect with customers, even great businesses fail. Pick the channels you plan to use to reach your customers.
Step 3 of 4 — Financial Model
Enter your monthly baseline costs — the minimum overhead to keep the business running. Then we'll calculate how many sales per month you need to break even.
Step 4 of 4 — Personal Compatibility
A business that doesn't fit your life will fail no matter how good the numbers look. Tell us how this business fits you.
Your Craft Store Evaluation Report
Complete the four pillars and your personalized summary will appear here.
Points of Leverage
Marketing Strategy
Financial Model
Personal Compatibility
Part 3 - Action plan to launch your Craft Store business in 90 days
Nine concrete steps to take you from idea to open business, grouped into 30-day phases. Complete the planner above and we'll highlight what's most important for your situation.
First 30 days — Foundation
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Form your legal entity
An LLC keeps your personal assets separate from business debts and lawsuits — the most common reason small business owners choose this structure. Sole proprietorships and partnerships do not provide this protection.
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Get an EIN and register for taxes
Apply for your free Employer Identification Number through the IRS, then register for any state or local taxes that apply to your business (sales tax, franchise tax).
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Open a business bank account and credit card
A dedicated business account is required to maintain personal asset protection. Mixing personal and business finances ('piercing the corporate veil') can void your LLC's liability shield.
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Set up business accounting
Recording expenses and income from day one makes tax filing easier and lets you see when the business is actually profitable. Use software (QuickBooks, Wave) or a part-time bookkeeper.
Days 30–60 — Compliance & Risk
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Get permits and licenses
State and local requirements vary widely. Brick-and-mortar businesses typically need a Certificate of Occupancy; service businesses may need specific professional licensing; food businesses need health permits.
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Get business insurance
General Liability Insurance is the most common starting point. If you'll have employees, most states require Workers' Compensation. Specific industries need additional coverage (product liability, professional liability, etc.).
Days 60–90 — Launch
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Define your brand
Your brand is how customers perceive and remember you. A clear name, logo, and visual identity make every later marketing decision easier and protect you legally as you grow.
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Create your business website
Every legitimate business needs a website. Social media pages are not a substitute — you don't own the platform. Modern website builders mean you can launch a clean site in a weekend without a developer.
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Set up your business phone system
A dedicated business number keeps your personal life private, makes the business look legitimate, and lets you route calls professionally. Cloud phone services start under $20/month.