Making handbags for profit - Part
Tall Poppy Craft Products,
21 April 2005
So, you've got the basics of sewing pretty much covered and you've made a few
handbags for your friends and family. You've been told that your handbags are
wonderful and that you should sell them, but you're just not sure if that could
work or where to start. The following tips and advice provides a base from which
to work …
Use good quality
fabrics in your bags.
Use fabrics which
are pleasing to the eye. It is human nature to be attracted to objects that are
aesthetically pleasing. Customers, particularly young, trendy customers are more
likely to purchase a colourful bag than a plain looking bag. You may like to
change your fabrics with the seasons – fruity colours in the summer, earth tones
for the winter, and in between for fall and spring.
designs. A customer may like the fabric used for one particular bag but not like
the shape of the bag. By producing custom designed handbags, you keep all your
customers happy and you also have the flexibility to charge a little extra than
you would your ready-made bags.
Ensure that you
maintain the quality of your finished product. The customer will not be happy if
the seams fall apart the first time they use their new bag, and you will end up
spending a lot of time doing repairs and providing refunds. To avoid having to
repair a bag or give a refund for bad quality, go the extra length to ensure the
quality of your bag – eg use interfacing, overlock/serge seams, add pockets, add
your label, add components that will give your bag a professional look such as
adding magnetic snap closures or a special type of handle to your bags. Adding
pockets, etc will give your bag weight and make them seem more professional.
It is easy to
become obsessed with achieving perfection in your handbags – keep in mind that
your goods are handmade and that minor imperfections are to be expected. Many
customers buy handmade goods because they have not been mass produced and they
like the little imperfections that adds to the charm of a handmade item.
If you find your
handbag sales getting slow, consider producing other things, such as
accessories, home décor items, etc.
purchase supplies in bulk at cheaper prices.
Have a system in
place - Make a daily routine and a timetable: set a dedicated timeslot during
the day to make your bags. You may even like to break it down further and set
aside time for cutting pattern pieces and then a time for sewing seams together
and a time for pressing seams out flat. When you get into the habit of doing all
your cutting at once, you will find that you are able to produce more bags than
if you were to work on one bag at a time.
Keep your supplies
well organised and easy to find. This will increase the speed with which you
produce your bags and eliminate wasted time in trying to find things under a
pile of fabric or patterns.
Tidy up when you
have finished for the day.
Where to sell your creations
Craft shows /
markets – probably the best option if you are strapped for cash and want to
make money reasonably quickly. The people who attend craft shows are people
specifically looking to purchase handmade items and know the amount of time
spent on each product.
eBay – if you
are looking to gain top money for your creations eBay is not for you. Most
buyers on eBay are looking for a great bargain and want to pay as little as
possible for it. Unless your products are particularly unique, you will not
receive the money that you are looking for.
Your own website
– you will need to purchase a domain name and web hosting and then general
html files to upload to your web server. Ensure your website is laid out
neatly and logically.
Make sure that
non-internet users will understand.
Shopping cart -
you have the flexibility to price as you want, you do not deal directly with
customers and can work at your own pace.
through online consignment sites and boutiques – if exposure is what you are
after, consignment via websites is the best way to go. Some small boutique
shops also offer consignment – take some of your products with you and spend a
day checking out shops near you to find out if they would be willing to
consign your goods. Before agreeing to any consignment, ensure that a contract
is made between yourself and the consigner so that each party knows where they
stand in relation to commissions, the time your products spend in the shop,
Pricing your goods
“right price” for your goods is the $64,000 question.
You must make
back the cost to produce the item plus a reasonable profit.
should: be high enough to cover all production and marketing costs.
Whether to become ‘official’
whether to become ‘official’, you must chose between 3 different business
structures. Each has its own advantages and disadvantages. There are many
resources on the internet which provide advice and suggestions regarding the
structure of your business which you should research properly (these things
may vary from State to State):
/ partnership: This is the most common structure for a small business. The
sole proprietor/owner keeps all the profits of the business and reports
business income and losses on her personal tax return and is personally liable
for any business-related obligations, such as debts or court judgments.
Partnerships are costly and complicated to set up and run, and are not
recommended for the average small business owner. Limited partnerships are
usually created by one person - the "general partner," who will solicit
investments from others.
and operating an LLC or a corporation is a bit more complicated and costly,
but well worth the trouble for some small businesses. The main benefit of an
LLC or a corporation is that these structures limit the owners' personal
liability for business debts and court judgments against the business.
For those in the
United States, you may need to obtain a tax id and a resellers permit. This is
another thing that you should research properly.
You should also
look into whether any licences are required to work from home you should find
out about specific licences or local government approvals you may need to
product liability insurance in case anything goes wrong.
It is important
to remember that when you register your business name this does not mean that
your business name is protected by use from anyone else. To ensure that your
business name is not used by anyone else, you should trade mark it. Trademarks
different in every country and every State so this is something that should be
properly researched. Professional advice and consultation is necessary.
– whether you are a sole proprietor, a partnership or a company you will have
to meet different tax obligations. This should be researched thoroughly before
registering your business.
These things are
all regulated by the State in which you reside and should be properly
researched prior to registering your business.
Keeping business records
If you are an
officially registered business, you are required by law to keep accurate
records for your business. Although this is not the ‘fun’ part of your
handmade bag business, it is important to keep track of your money in and out,
whether you are an officially registered business or not.
At the very
least you should keep all receipts for supplies purchased and a hard copy of
all invoices paid by your customers. If at all possible, this information
should also be entered into an Excel spreadsheet at the end of the month. This
way, you can generate graphs that show your profit or loss. If you want to get
really serious about it, you may decide look into purchasing an accounts
program, such as QuickBooks, MYOB or Quicken. These programs are very in-depth
and some training may be required to make full use of all the options.
If you find that
administration work such as record keeping is taking up too much of your time
and that you are neglecting the production of your bags, you should seriously
consider hiring a bookkeeper to take care of your record keeping. In the
beginning stages of your business keeping paper records is sufficient. Make
sure that you keep these organised, perhaps in a folder or filing system with
appropriate dividers for money in and money out.
Keep track of
who has paid and who hasn’t paid. Give customers at least 7 business to make
payment for an order, then follow up the order with a polite email reminding
them that their item is still waiting to be shipped.
business transactions on your personal account. You should open a new account
to ensure separation of your business transactions and personal transactions.
This will streamline your account keeping system and make it a whole lot
easier when tax time comes.
If you are an
officially registered business, you can open a bank account in your business’s
name and make cheques for supplies from your business account. Having a
business account also seems more professional to your customers if they make a
cheque out to a business rather than an individual.
Writing a business plan
This will be
probably the most arduous thing you will ever have to do in the course of your
business. There are many sample business plans available online that show
exactly what should be included in a business plan. There are many resources
on the internet which provide advice and suggestions regarding writing a
business plan. As a basic outline, your business plan should include the
summary and strategy
create a business plan primarily for yourself, but if you ever reach a point
where you need finance from a bank, the bank will request to see your business
plan. Business plans should be a “work in progress”. They should be read,
reviewed and updated at least each quarter. A business plan should be a
“roadmap” for your own information, a guide for where you want your business
to be in the future.
© Tall Poppy Craft Products 2005.
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