business plan for etsy shop

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Etsy Business Plan Template: Prepare For Selling On Etsy

Are you considering turning your hobby into a business using the Etsy marketplace?

Well, you’ll be joining a platform that gets around 81.9 million buyers these days looking for handmade goods just like yours.

Before you dive in though, we invite you to lower the tools for a moment and funnel that creative flow into a top-notch Etsy business plan. It’s crucial to understand exactly what your business does, its identity and how it’s going to function so that when it comes to making costly decisions, you have a road map to guide you.

If you put some groundwork and goals in place from the beginning, then making decisions later on can be based on a bigger picture.

If knowing what to include doesn’t come naturally that’s ok, we’re here to help outline what goes into great business plans, why they’re so important and how to get cracking.

In this guide on preparing to sell on Etsy:

Table of Contents

Are you ready to take the guesswork out of your etsy accounting.

Etsy is a great place to sell unique products, and it’s perfect for creative entrepreneurs who aren’t necessarily excited about accounting. Discover the easy way of looking after your Etsy finances so that you can spend more time doing what matters most to you.

Let’s get started.

Why You Need An Etsy Business Plan

A good business plan for Etsy shops should answer questions around who, what, why, how and when for your business, so that as the inevitable bumps in the road arise, you can fly over them.

A plan will start your business off in the right direction, it will give you measurable goals and a feel for your progress.

What you can do with a business plan

• Understand your competition and target market.
• Plan for cash flow and price your products accordingly.
• Create and track a marketing strategy.
• Develop goals and objectives and measure successes.
• Pitch your business to investors or business partners.

The content in a business plan will vary depending on the type of business, so we’ve prepared a guide specially curated for Etsy.

Before Starting Your Etsy Business Plan

Competition is rife online, including on Etsy .

You need to research before anything else to understand who and what your business will be, and where it fits into the bigger picture.

See what your competitors are doing, where you slot in and what niche you could fill.

Only by finding your point of difference will you be able to forge your own path and following.

Creating An Etsy Business Plan

Exciting! You’re at the first step in your Etsy career, congratulations.

This step is all about your brand identity. Creating this will give you the inspiration and roots you need on which to plan everything else.

Giving your store a personality will help customers connect with it, remember it and hopefully, keep returning to and talking about it!

Once you have a good idea of who you are, you can start figuring out what you want to do and how.

What to include in your plan

Executive summary.

Sum up your business goals and strategy in one or two lines. A sort of introduction to your store and your business plan.

Business description

Answer questions like:

• What is the purpose of your business?
• Why did it start, what problems does it solve?
• What makes it different from others?

Product description

Next up, talk about your product or product line. Think about including these areas:

• What is it and how is it sourced or made?
• How many items will be available for sale at any one time? Think about the time it takes to make the product yourself or to source.
• Are there any products you’d like to sell in the future or variations you’d like to add?

Your business takes more than just you to run it. Here, explore what you might need and want to do with regards to:

• Storing inventory.
• Fulfilment options.
• Packaging materials.
• Studio or facilities for making your products.

Bear in mind whether these solutions are scalable too, if you wish to grow.

Hopefully you’ve had a little dig into what your competitors are doing by this point. This should inspire marketing ideas and things to try out with your target audience.

To plan your marketing activity, think about the following questions:

• How does your brand interact with customers?
• Where do your customers spend time?
• How can you reach your customers in those spaces?
• What are your customers most interested in or concerned about?
• Can you play to those interests in your marketing?

Remember the basics too. Etsy will have its own SEO algorithms so learn what it looks for and leverage this free advantage.

It might be 6th on this list but it should be a top priority: Managing your money. Just some of the things that you’ll need to account for as an Etsy seller are:

• Listing and subscription fees.
• Fulfilment, shipping and packaging.
• Sales tax and VAT or GST if selling outside of the US.
• Returns and reimbursements.
• Costs of goods sold and profit margins.
• Costs of materials, studio facilities and equipment.

Be realistic about your time and production volumes. Can you produce enough product to sell and make a profit? If not, what can you automate or take away from your tasks to give you more time?

Crunch some numbers to find out whether your business idea is viable from the start. We highly recommend turning to a specialized ecommerce accountant for this step, if not for the long-term. Find one from our trusted directory here .

They can also help advise you about loans if you think you might need one to get started.

Finally, set some goals!

The best way to measure progress and most importantly, to feel like your business is succeeding and going somewhere is to set yourself some milestones.

These can be short-term or long-term and be simple or complex.

The key is to make them SMART : S pecific, M easurable, A ttainable, R elevant and T ime-based.

Don’t worry if you don’t meet them because each time, you’ll learn what worked and didn’t work, and adjust your goals more accurately as you go.

You’re off to a good start, but keep it going!

There we have it, you’ve now become a knowledgeable Etsy business planner and should be about ready to open your Etsy shop.

And don’t let all that hard work planning go to waste! With the right automation, you can free up your time to keep making and growing your business.

The place to start? Your accounts, the lifeblood of your business.

Including Accounting In Your Plan And How A2X Can Help

As you’ve probably gathered by now, a sole business owner has rather a lot on their plate. And one who makes their own products? They have even more.

Accounting is something that could get pushed to the side, but this can’t happen for a business to survive and thrive.

Fortunately, automation exists designed to take these tasks off your to-do list, ensuring that they still meet industry standards and provide you with accurate, reliable numbers.

Use A2X to integrate your Etsy store with QuickBooks Online or Xero today!

Do I need an Etsy business plan?

You don’t need a business plan to set up an Etsy shop, but it’s a great first step in your Etsy seller career. It enables you to make sound decisions based on long-term goals, track your progress and centralize your strategy.

How much does it cost to set up an Etsy shop?

It’s free to set up a shop on Etsy. Fees are charged when you list an item and when the item is sold.

Before you sell, Etsy does require a credit or debit card number and your checking account info (account and routing number).

How much does it cost to have a business on Etsy?

There is a fee of $0.20 for each item you list on Etsy, and when your item sells, a transaction fee of 5% is charged based on the sale price.

Also on the blog

• The Etsy Accounting Hub
• Etsy Integration Guide: Simplify Your Business
• Ecommerce Accounting and What Makes It So Different
• Ecommerce Accounting Principles
• Find an Ecommerce Accountant

Read similar posts

• Etsy Sage Integration: How to Set it Up
• eBay Business Plan Template [Highly Actionable]
• eBay Selling Guide: Strategies For Success
• eBay Growth Guide: How To Increase eBay Sales
• How To Save Time With eBay Automation [Sellers Guide]

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Are you looking to take control of your Etsy accounting, to ensure that your business is running like a well-oiled machine?

How to write a business plan for an Etsy shop?

Putting together a business plan for an Etsy shop can be daunting - especially if you're creating a business for the first time - but with this comprehensive guide, you'll have the necessary tools to do it confidently.

We will explore why writing one is so important in both starting up and growing an existing Etsy shop, as well as what should go into making an effective plan - from its structure to content - and what tools can be used to streamline the process and avoid errors.

Without further ado, let us begin!

In this guide:

Why write a business plan for an Etsy shop?

• What information is needed to create a business plan for an Etsy shop?
• How do I build a financial forecast for an Etsy shop?

The written part of an Etsy shop business plan

• What tool should I use to write my Etsy shop business plan?

Having a clear understanding of why you want to write a business plan for your Etsy shop will make it simpler for you to grasp the rationale behind its structure and content. So before delving into the plan's actual details, let's take a moment to remind ourselves of the primary reasons why you'd want to create an Etsy shop business plan.

To have a clear roadmap to grow the business

Running a small business is tough! Economic cycles bring growth and recessions, while the business landscape is ever-changing with new technologies, regulations, competitors, and consumer behaviours emerging constantly.

In such a dynamic context, operating a business without a clear roadmap is akin to driving blindfolded: it's risky, to say the least. That's why crafting a business plan for your Etsy shop is vital to establish a successful and sustainable venture.

To create an effective business plan, you'll need to assess your current position (if you're already in business) and define where you want the business to be in the next three to five years.

Once you have a clear destination for your Etsy shop, you'll have to:

• Identify the necessary resources (human, equipment, and capital) needed to reach your goals,
• Determine the pace at which the business needs to progress to meet its objectives as scheduled,
• Recognize and address the potential risks you may encounter along the way.

Engaging in this process regularly proves advantageous for both startups and established companies. It empowers you to make informed decisions about resource allocation, ensuring the long-term success of your business.

Need a convincing business plan?

The Business Plan Shop makes it easy to create a financial forecast to assess the potential profitability of your projects, and write a business plan that’ll wow investors.

To get visibility on future cash flows

If your small Etsy shop runs out of cash: it's game over. That's why we often say "cash is king", and it's crucial to have a clear view of your Etsy shop's future cash flows.

So, how can you achieve this? It's simple - you need to have an up-to-date financial forecast.

The good news is that your Etsy shop business plan already includes a financial forecast (which we'll discuss further in this guide). Your task is to ensure it stays current.

To accomplish this, it's essential to regularly compare your actual financial performance with what was planned in your financial forecast. Based on your business's current trajectory, you can make adjustments to the forecast.

By diligently monitoring your Etsy shop's financial health, you'll be able to spot potential financial issues, like unexpected cash shortfalls, early on and take corrective actions. Moreover, this practice will enable you to recognize and capitalize on growth opportunities, such as excess cash flow enabling you to expand to new locations.

To secure financing

A detailed business plan becomes a crucial tool when seeking financing from banks or investors for your Etsy shop.

Investing and lending to small businesses are very risky activities given how fragile they are. Therefore, financiers have to take extra precautions before putting their capital at risk.

At a minimum, financiers will want to ensure that you have a clear roadmap and a solid understanding of your future cash flows (like we just explained above). But they will also want to ensure that your business plan fits the risk/reward profile they seek.

This will off-course vary from bank to bank and investor to investor, but as a rule of thumb. Banks will want to see a conservative financial management style (low risk), and they will use the information in your business plan to assess your borrowing capacity — the level of debt they think your business can comfortably handle — and your ability to repay the loan. This evaluation will determine whether they'll provide credit to your Etsy shop and the terms of the agreement.

Whereas investors will carefully analyze your business plan to gauge the potential return on their investment. Their focus lies on evidence indicating your Etsy shop's potential for high growth, profitability, and consistent cash flow generation over time.

Now that you recognize the importance of creating a business plan for your Etsy shop, let's explore what information is required to create a compelling plan.

Information needed to create a business plan for an Etsy shop

You need the right data in order to project sales, investments and costs accurately in the financial forecast of your Etsy shop business plan.

Below, we'll cover three key pieces of information you should gather before drafting your business plan.

Carrying out market research for an Etsy shop

As you consider writing your business plan for an Etsy shop, conducting market research becomes a vital step to ensure accurate and realistic financial projections.

Market research provides valuable insights into your target customer base, competitors, pricing strategies, and other key factors that can significantly impact the commercial success of your business.

Through this research, you may uncover trends that could influence your Etsy shop.

Your market research might reveal that customers may be interested in products related to sustainability, or products that are handmade with natural materials. Additionally, customers could be drawn to items that are unique and customisable, such as items that can be personalised with a customer's name or a meaningful message.

Such market trends play a significant role in forecasting revenue, as they offer valuable data about potential customers' spending habits and preferences.

By incorporating these findings into your financial projections, you can present investors with more accurate information, helping them make informed decisions about investing in your Etsy shop.

Developing the sales and marketing plan for an Etsy shop

As you embark on creating your Etsy shop business plan, it is crucial to budget sales and marketing expenses beforehand.

A well-defined sales and marketing plan should include precise projections of the actions required to acquire and retain customers. It will also outline the necessary workforce to execute these initiatives and the budget required for promotions, advertising, and other marketing efforts.

This approach ensures that the appropriate amount of resources is allocated to these activities, aligning with the sales and growth objectives outlined in your business plan.

The staffing and equipment needs of an Etsy shop

Whether you are at the beginning stages of your Etsy shop or expanding its horizons, having a clear plan for recruitment and capital expenditures (investment in equipment and real estate) is vital to ensure your business's success.

To achieve this, both the recruitment and investment plans must align coherently with the projected timing and level of growth in your forecast. It is essential to secure appropriate funding for these plans.

The possible staffing and equipment costs that a Etsy shop might incur could include the cost of hiring a staff member to manage the shop, such as a customer service representative, a photographer, or a web developer. Additionally, the shop might need to purchase equipment such as a computer, printer, camera, and other materials such as boxes and packaging for shipping items.

To create a financial forecast that accurately represents your business's outlook, remember to factor in other day-to-day operating expenses.

Now that you have all the necessary information, it's time to dive in and start creating your business plan and developing the financial forecast for your Etsy shop.

What goes into your Etsy shop's financial forecast?

The objective of the financial forecast of your Etsy shop's business plan is to show the growth, profitability, funding requirements, and cash generation potential of your business over the next 3 to 5 years.

The four key outputs of a financial forecast for an Etsy shop are:

• The profit and loss (P&L) statement ,
• The projected balance sheet ,
• The cash flow forecast ,
• And the sources and uses table .

Let's look at each of these in a bit more detail.

The projected P&L statement

The projected P&L statement for an Etsy shop shows how much revenue and profit your business is expected to make in the future.

A healthy Etsy shop's P&L statement should show:

• Sales growing at (minimum) or above (better) inflation
• Stable (minimum) or expanding (better) profit margins
• A healthy level of net profitability

This will of course depend on the stage of your business: numbers for a startup will look different than for an established Etsy shop.

The projected balance sheet of your Etsy shop

The balance sheet for an Etsy shop is a financial document that provides a snapshot of your business’s financial health at a given point in time.

It shows three main components: assets, liabilities and equity:

• Assets: are resources owned by the business, such as cash, equipment, and accounts receivable (money owed by clients).
• Liabilities: are debts owed to creditors and other entities, such as accounts payable (money owed to suppliers) and loans.
• Equity: includes the sums invested by the shareholders or business owners and the cumulative profits and losses of the business to date (called retained earnings). It is a proxy for the value of the owner's stake in the business.

Examining the balance sheet is important for lenders, investors, or other stakeholders who are interested in assessing your Etsy shop's liquidity and solvency:

• Liquidity: assesses whether or not your business has sufficient cash and short-term assets to honour its liabilities due over the next 12 months. It is a short-term focus.
• Solvency: assesses whether or not your business has the capacity to repay its debt over the medium-term.

Looking at the balance sheet can also provide insights into your Etsy shop's investment and financing policies.

In particular, stakeholders can compare the value of equity to the value of the outstanding financial debt to assess how the business is funded and what level of financial risk has been taken by the owners (financial debt is riskier because it has to be repaid, while equity doesn't need to be repaid).

The cash flow forecast

As we've seen earlier in this guide, monitoring future cash flows is the key to success and the only way of ensuring that your Etsy shop has enough cash to operate.

As you can expect showing future cash flows is the main role of the cash flow forecast in your Etsy shop business plan.

It is best practice to organise the cash flow statement by nature in order to show the cash impact of the following areas:

• Cash flow generated from operations: the operating cash flow shows how much cash is generated or consumed by the business's commercial activities
• Cash flow from investing activities: the investing cash flow shows how much cash is being invested in capital expenditure (equipment, real estate, etc.) either to maintain the business's equipment or to expand its capabilities
• Cash flow from financing activities: the financing cash flow shows how much cash is raised or distributed to financiers

Looking at the cash flow forecast helps you to make sure that your business has enough cash to keep running, and can help you anticipate potential cash shortfalls.

Your Etsy shop business plan will normally include both yearly and monthly cash flow forecasts so that the readers can view the impact of seasonality on your business cash position and generation.

The initial financing plan

The initial financing plan, also known as a sources and uses table, is a valuable resource to have in your business plan when starting your Etsy shop as it reveals the origins of the money needed to establish the business (sources) and how it will be allocated (uses).

Having this table helps show what costs are involved in setting up your Etsy shop, how risks are shared between founders, investors and lenders, and what the starting cash position will be. This cash position needs to be sufficient to sustain operations until the business reaches a break-even point.

Now that you have a clear understanding of what goes into the financial forecast of your Etsy shop business plan, let's shift our focus to the written part of the plan.

The written part of the business plan is where you will explain what your business does and how it operates, what your target market is, whom you compete against, and what strategy you will put in place to seize the commercial opportunity you've identified.

Having this context is key for the reader to form a view on whether or not they believe that your plan is achievable and the numbers in your forecast realistic.

The written part of an Etsy shop business plan is composed of 7 main sections:

• The executive summary
• The presentation of the company
• The products and services
• The market analysis
• The strategy
• The operations
• The financial plan

Let's go through the content of each section in more detail!

1. The executive summary

In your Etsy shop's business plan, the first section is the executive summary — a captivating overview of your plan that aims to pique the reader's interest and leave them eager to learn more about your business.

When crafting the executive summary, start with an introduction to your business, including its name, concept, location, how long it has been running, and what sets it apart. Briefly mention the products and services you plan to offer and your target customer profile.

Following that, provide an overview of the addressable market for your Etsy shop, current trends, and potential growth opportunities.

Next, include a summary of key financial figures like projected revenues, profits, and cash flows.

Finally, in the "ask" section, detail any funding requirements you may have.

2. The presentation of the company

As you build your Etsy shop business plan, the second section deserves attention as it delves into the structure and ownership, location, and management team of your company.

In the structure and ownership part, you'll provide valuable insights into the legal structure of the business, the identities of the owners, and their respective investments and ownership stakes. This level of transparency is vital, particularly if you're seeking financing, as it clarifies which legal entity will receive the funds and who holds the reins of the business.

Moving to the location part, you'll offer a comprehensive view of the company's premises and articulate why this specific location is strategic for the business, emphasizing factors like catchment area, accessibility, and nearby amenities.

When describing the location of your Etsy shop to a third party financier, you could mention that your operations are primarily conducted online through the Etsy platform. While you may not have a physical storefront or office space, your virtual presence on Etsy allows you to reach a global audience and conduct business transactions seamlessly. Your "location" is the digital realm, where you connect with customers, showcase your products, and manage sales and orders.

Lastly, you should introduce your esteemed management team. Provide a thorough explanation of each member's role, background, and extensive experience.

It's equally important to highlight any past successes the management team has achieved and underscore the duration they've been working together. This information will instil trust in potential lenders or investors, showcasing the strength and expertise of your leadership team and their ability to deliver the business plan.

3. The products and services section

The products and services section of your business plan should include a detailed description of what your company offers, who are the target customers, and what distribution channels are part of your go-to-market. 

For example, your Etsy shop might offer handmade jewelry, custom designed greeting cards, and unique home decor items. These products and services would allow customers to find quality and unique items that are not easily found elsewhere, making it possible for them to find the perfect gift for any occasion.

4. The market analysis

When you present your market analysis in your Etsy shop business plan, it's crucial to include detailed information about customers' demographics and segmentation, target market, competition, barriers to entry, and any relevant regulations.

The main objective of this section is to help the reader understand the size and attractiveness of the market while demonstrating your solid understanding of the industry.

Begin with the demographics and segmentation subsection, providing an overview of the addressable market for your Etsy shop, the key trends in the marketplace, and introducing different customer segments along with their preferences in terms of purchasing habits and budgets.

Next, focus on your target market, zooming in on the specific customer segments your Etsy shop aims to serve and explaining how your products and services fulfil their distinct needs.

For example, your target market might include craft enthusiasts who are looking for handmade items. They may be looking for items to decorate their home, or to give as gifts. They may also be interested in items that are unique and have a personal touch that is hard to find in regular stores.

Then proceed to the competition subsection, where you introduce your main competitors and highlight what sets you apart from them.

Finally, conclude your market analysis with an overview of the key regulations applicable to your Etsy shop.

5. The strategy section

When you write the strategy section of your Etsy shop business plan, remember to cover key elements such as your competitive edge, pricing strategy, sales & marketing plan, milestones, and risks and mitigants.

In the competitive edge subsection, elaborate on what makes your company stand out from competitors. This becomes especially important if you're a startup, aiming to carve a place for yourself amidst established players in the marketplace.

The pricing strategy subsection should demonstrate how you plan to maintain profitability while offering competitive prices to attract customers.

Outline your sales & marketing plan, detailing how you'll reach out to new customers and retain existing ones through loyalty programs or special offers.

For the milestones subsection, outline your company's achievements to date and your main objectives for the future, complete with specific dates to set clear expectations for progress.

Lastly, the risks and mitigants subsection should address the main risks that could affect your plan's execution. Explain the measures you've put in place to minimize these risks, assuring potential investors or lenders.

Your Etsy shop faces many risks. For example, your items could be damaged while in transit to a customer. This could lead to a costly refund or replacement. Additionally, your shop may experience decreased sales due to competing businesses. This could cause you to lose customers and revenue.

6. The operations section

In your business plan, it's also essential to provide a detailed overview of the operations of your Etsy shop.

Start by covering your team, highlighting key roles and your recruitment plan to support the expected growth. Outline the qualifications and experience required for each role and your intended recruitment methods, whether through job boards, referrals, or headhunters.

Next, clearly state your Etsy shop's operating hours, allowing the reader to assess staffing levels adequately. Additionally, mention any plans for varying opening times during peak seasons and how you'll handle customer queries outside normal operating hours.

Then, shift your focus to the key assets and intellectual property (IP) necessary for your business. If you rely on licenses, trademarks, physical structures like equipment or property, or lease agreements, make sure to include them in this section.

Your Etsy shop could have two key assets and IPs that may help you stand out from the competition. Firstly, you might have a unique logo for your shop that could be used to identify your products and distinguish them from others. Secondly, you could also have a website and online presence that could help you build a recognizable brand.

Lastly, include a list of suppliers you plan to work with, detailing their services and main commercial terms, such as price, payment terms, and contract duration. Investors are interested in understanding why you've chosen specific suppliers, which may be due to higher-quality products or established relationships from previous ventures.

7. The presentation of the financial plan

The financial plan section is where we will include the financial forecast we talked about earlier in this guide.

Now that you have a clear idea of the content of an Etsy shop business plan, let's look at some of the tools you can use to create yours.

What tool should I use to write my Etsy shop's business plan?

There are two main ways of creating your Etsy shop business plan:

• Using specialized business planning software,
• Hiring a business plan writer.

Using an online business plan software for your Etsy shop's business plan

Using online business planning software is the most efficient and modern way to create an Etsy shop business plan.

There are several advantages to using specialized software:

• You can easily create your financial forecast by letting the software take care of the financial calculations for you without errors
• You are guided through the writing process by detailed instructions and examples for each part of the plan
• You can access a library of dozens of complete business plan samples and templates for inspiration
• You get a professional business plan, formatted and ready to be sent to your bank or investors
• You can easily track your actual financial performance against your financial forecast
• You can create scenarios to stress test your forecast's main assumptions
• You can easily update your forecast as time goes by to maintain visibility on future cash flows
• You have a friendly support team on standby to assist you when you are stuck

If you're interested in using this type of solution, you can try The Business Plan Shop for free by signing up here .

Hiring a business plan writer to write your Etsy shop's business plan

Outsourcing your Etsy shop business plan to a business plan writer can also be a viable option.

Business plan writers are skilled in creating error-free business plans and accurate financial forecasts. Moreover, hiring a consultant can save you valuable time, allowing you to focus on day-to-day business operations.

However, it's essential to be aware that hiring business plan writers will be expensive, as you're not only paying for their time but also the software they use and their profit margin.

Based on experience, you should budget at least £1.5k ($2.0k) excluding tax for a comprehensive business plan, and more if you require changes after initial discussions with lenders or investors.

Also, exercise caution when seeking investment. Investors prefer their funds to be directed towards business growth rather than spent on consulting fees. Therefore, the amount you spend on business plan writing services and other consulting services should be insignificant compared to the amount raised.

Keep in mind that one drawback is that you usually don't own the business plan itself; you only receive the output, while the actual document is saved in the consultant's business planning software. This can make it challenging to update the document without retaining the consultant's services.

For these reasons, carefully consider outsourcing your Etsy shop business plan to a business plan writer, weighing the advantages and disadvantages of seeking outside assistance.

Why not create your Etsy shop's business plan using Word or Excel?

Using Microsoft Excel and Word (or their Google, Apple, or open-source equivalents) to write an Etsy shop business plan is a terrible idea.

For starters, creating an accurate and error-free financial forecast on Excel (or any spreadsheet) is very technical and requires both a strong grasp of accounting principles and solid skills in financial modelling.

As a result, it is unlikely anyone will trust your numbers unless - like us at The Business Plan Shop - you hold a degree in finance and accounting and have significant financial modelling experience in your past.

The second reason is that it is inefficient. Building forecasts on spreadsheets was the only option in the 1990s and early 2000s, nowadays technology has advanced and software can do it much faster and much more accurately.

And with the rise of AI, software is also becoming smarter at helping us detect mistakes in our forecasts and helping us analyse the numbers to make better decisions.

Also, using software makes it easy to compare actuals vs. forecasts and maintain our forecasts up to date to maintain visibility on future cash flows - as we discussed earlier in this guide - whereas this is a pain to do with a spreadsheet.

That's for the forecast, but what about the written part of my Etsy shop business plan?

This part is less error-prone, but here also software brings tremendous gains in productivity:

• Word processors don't include instructions and examples for each part of your business plan
• Word processors don't update your numbers automatically when they change in your forecast
• Word processors don't handle the formatting for you

Overall, while Word or Excel may be viable options for creating an Etsy shop business plan for some entrepreneurs, it is by far not the best or most efficient solution.

• Using business plan software is a modern and cost-effective way of writing and maintaining business plans.
• A business plan is not a one-shot exercise as maintaining it current is the only way to keep visibility on your future cash flows.
• A business plan has 2 main parts: a financial forecast outlining the funding requirements of your Etsy shop and the expected growth, profits and cash flows for the next 3 to 5 years; and a written part which gives the reader the information needed to decide if they believe the forecast is achievable.

We hope that this in-depth guide met your expectations and that you now have a clear understanding of how to write your Etsy shop business plan. Do not hesitate to contact our friendly team if you have questions additional questions we haven't addressed here.

Also on The Business Plan Shop

• How to write a business plan to secure a bank loan?
• What goes on the cover page of a business plan
• Pitch deck vs business plan
• What should you include in your business plan appendices?
• Key steps to write a business plan?
• Top mistakes to avoid in your business plan

Do you know entrepreneurs interested in starting or growing an Etsy shop? Share this article with them!

Founder & CEO at The Business Plan Shop Ltd

Guillaume Le Brouster is a seasoned entrepreneur and financier.

Guillaume has been an entrepreneur for more than a decade and has first-hand experience of starting, running, and growing a successful business.

Prior to being a business owner, Guillaume worked in investment banking and private equity, where he spent most of his time creating complex financial forecasts, writing business plans, and analysing financial statements to make financing and investment decisions.

Guillaume holds a Master's Degree in Finance from ESCP Business School and a Bachelor of Science in Business & Management from Paris Dauphine University.

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Key takeaways

• To start an Etsy shop, you'll need to create an account, set up your storefront, add items to your shop and set up payments
• You don't need a business license to sell on Etsy but you do need to be aware of local rules and regulations
• To attract buyers to your shop, make sure you have accurate and engaging product descriptions and well-lit, clear product photography

Not so long ago, if you wanted to sell your handmade or vintage item, you needed to find a way to do so in person. But thanks to the rise of e-commerce, your options have exploded. While you can list products on sites like Amazon and eBay, you might have the most luck getting in front of more than 96 million buyers actively looking for vintage and handmade goods.

Enter: Etsy.

Over 9 million people have leveraged Etsy to sell handmade and vintage goods to people all across the globe. And if you’re considering joining them, you’ll need to figure out how to start an Etsy business. Fortunately, we’ve gathered all the steps you need to take here.

1. Create an Etsy account

You’ll first need to set up an Etsy account. The platform makes this relatively easy: Just head to Etsy and click “Sign In” in the top-left corner (This is the easiest way to get started).

In the sign-in popup that opens, choose “Register” from the top-left corner. You can fill out the form to establish your account or use Google, Facebook or Apple logins.

You’ll get an email from Etsy to confirm your contact info. Follow the steps to get your account set up.

• There are over 9 million active sellers on Etsy ( Etsy key figures )
• There are over 96 million active buyers on Etsy (Etsy key figures)
• Annual gross merchandise sales in 2023 were $13.16 billion (Etsy key figures)
• 86% of Etsy sellers are female entrepreneurs ( Etsy study ) The majority of Etsy shops are sole proprietorships ( Etsy Seller Handbook )
• 7.72 million people are estimated to be repeat buyers, averaging six purchases in 2023 ( Capital One )

2. Set up your storefront

Creating your account is the first step as you learn how to start a small business on Etsy, but you can’t stop there. You also need to establish yourself as an Etsy seller. That means heading to the Seller page while you’re logged into your account and clicking “Get Started.”

You’ll need to answer a few questions to set up your Etsy shop, like where your business is located and which language and currency you want to use. As part of that process, you can also get resources from the company, like selling internationally and branding your shop.

Note that you don’t technically need a business license to sell on Etsy, but local rules still govern you. Check whatever legislation applies in your jurisdiction to find out if you need to get licensed before you can start selling.

While you don’t always need a license, you do need to be ready to choose your shop name. It has to be between 4 and 20 characters with no spaces, special characters or accented letters. (Don’t stress too much here — you can change your shop name later.)

3. Add items to your shop

You’ll need to stock your shop as you continue through the Etsy seller setup process. This can be one of the biggest hurdles as you figure out how to start an Etsy business because you can’t establish your shop without this piece. In other words, if you’re not ready to upload pictures of your products, write descriptions, and decide on pricing, you won’t be able to set up your Etsy shop.

In addition to listing the products themselves, you also need to make some shipping decisions. Fortunately, this is one of the areas where it can be easier to start a business on Etsy than on other sites. Etsy can calculate shipping costs for you and allows you to buy your shipping labels directly through the platform.

For help listing an item, Etsy has a guide .

4. Set up payment and billing details

After you click “Save and Continue” on the “Stock your shop” page, you’ll get taken to a page focused on getting you paid — and paying Etsy.

Here, you’ll need to connect a business bank account so Etsy can pay you, and you’ll need to add a credit or debit card to pay the company.

If you have a U.S.-based bank account, connect it to your Etsy shop through Plaid , which has several tools to keep your data safe. Etsy requires sellers to set up two-factor authentication to further safeguard your info. Once you do that, you’ll be able to get your shop established.

5. Open your Etsy shop

Congrats! Once you reach this step, you’ve officially figured out how to start a small business on Etsy.

At this point, you’ll have the link to your shop to share with friends, family, your social media network and anyone else you want. You can officially start advertising too, whether buying an ad on Facebook or a spot in a local paper.

How to personalize your Etsy shop

While your shop is technically open, meaning you’ve mastered how to start a small business on Etsy, there’s a lot more to explore when it comes to actually running it.

You’ll want to personalize your shop to stand apart from your competition. You can do that through your:

• Shop icon (essentially, your logo on Etsy)
• Welcome message

You can customize those through your Shop Manager . Ideally, you want your icon and banner to accurately reflect your shop and flow well with the imagery you’ve chosen for your product listings.

Apply that personal touch as you interact with customers, too. Stay responsive as people buy your products or message you through your shop. If you consistently provide good customer service, you could be eligible to become an Etsy star seller .

How much does it cost to sell on Etsy?

Before you start a business on Etsy, you want to make sure it’s going to be profitable. As you’re crunching the numbers — from totaling up the cost of materials to budgeting for shipping costs — don’t forget to factor in Etsy’s fees.

The platform charges sellers in three different ways:

• Listing fees. Etsy charges a flat rate of $0.20 per listing. That fee applies whether or not the item sells. This cost can go up if you decide to add options like auto-renewal, which means the item gets automatically relisted on your page after it sells.
• Transaction fees. When one of your products sells, Etsy collects 6.5 percent of the order total (including shipping, gift wrap costs, etc.).
• Payment processing fees. These vary by location , but in the U.S., sellers pay 3 percent plus a $0.25 flat rate per payment that is processed through Etsy.

How to finance your Etsy business

Starting an Etsy shop may include costs like buying materials to make your products and keeping inventory on hand. While some Etsy owners might take these costs out of pocket, you can also finance your Etsy business in a number of ways, including:

Small business loans

Small business loans can be a great way to finance your Etsy business if you have some market experience under your belt. Lenders often want to see that you’ve been in business for a few years and generate a steady flow of income when approving you. You’ll need to provide business bank and financial statements to show that you can pay for the loan. That said, you can find lenders that offer startup financing , lowering the barrier to eligibility.

Crowdfunding

Crowdfunding allows you to raise money for financing your business, usually through an online platform like Kickstarter or Kiva . You can gather financing from a large group of people interested in investing in your business. Depending on the type of crowdfunding you use, you may not pay interest or may not even need to pay the investors back. Types of crowdfunding include:

• Donation crowdfunding raises money through donations that you do not have to repay
• Reward crowdfunding offers individuals a reward like swag or the product you’re creating in exchange for funding
• Debt crowdfunding allows you to borrow money that you will repay with interest, like a business loan offered through a large group of individuals
• Equity crowdfunding gives investors ownership of your business in exchange for financing

Small business grants

Small business grants are a form of funding that your business will not have to repay. You can find small business grants from federal, state or local governments, and some corporations fund their own private grants. The amount of funding varies with the grant, but even a low grant, like $5,000, might be enough to get your Etsy business started.

Because grants provide free access to money, they tend to be competitive. You will need to meet the qualifications outlined for the grant application. You’ll also need to be patient about hearing back from the grant organization since they can take weeks or months to announce the winners.

Small business credit cards

Small business credit cards are an ideal way to finance short-term costs, and many come with rewards like cash back or travel points. They may require strong personal credit like a personal credit score of 670 or higher, though you can find business credit cards for bad credit . Otherwise, credit card companies don’t look as closely at your business’s time in business or financial statements the way a business loan does.

To avoid paying interest, you’ll want to pay the balance in full each month. Doing so will mean that you’ll receive a grace period of at least 21 days from your next statement to the time the credit card payment is due.

Whether or not you make payments in full, your business credit card can help you build positive business credit as long as you make payments on time.

Bottom line

Now you know the steps you need to follow to figure out how to start an Etsy business. Fortunately, the platform makes it relatively easy. Really, the hardest part is getting your product pricing and photos set up so you can load them in as you establish your shop. As you figure out that pricing, make sure you account for the fees Etsy charges its sellers.

Frequently asked questions

How do i attract buyers on etsy, do you need an llc to sell on etsy, does etsy report my shop income to the irs.

Article sources

We use primary sources to support our work. Bankrate’s authors, reporters and editors are subject-matter experts who thoroughly fact-check editorial content to ensure the information you’re reading is accurate, timely and relevant.

Key figures . Etsy. Accessed on October 25, 2023.

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How to Open an Etsy Shop in 8 Steps: Etsy Fees and More

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Etsy is an online marketplace for handmade goods and artwork. Opening an Etsy shop is free and relatively easy, and it can provide a home for your products — however niche — without having to build your own e-commerce website .

Here’s how to start an Etsy shop in eight steps, plus information on Etsy seller fees and tips for success on the platform.

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Basic Plan. Shopify & Advanced Plans Available.  

1. Create an Etsy account

You can set up an account with Etsy by visiting Etsy.com/Sell, then selecting “Get Started.” You can create an account with your email address or an existing Google, Facebook or Apple account.

If you’ve shopped on Etsy before and have an existing account, you can log in with your credentials and then select "Open Your Etsy Shop" to start creating your own store.

2. Set your shop preferences

Next, you’ll be prompted to share some information about your business, like how long you’ve been selling goods. You have the option to skip these questions if you’d prefer not to answer.

Then, you’ll be directed to the "shop preferences" screen where you'll designate the basic settings for your store — your default language, the country where you’re based and what currency you plan to use.

If you list products using a different currency than the one in your Etsy Payments account, you’ll have to pay a 2.5% currency conversion fee on each sale.

3. Name your Etsy shop

Here’s where you can start to get creative: coming up with your Etsy shop name. Your store name can be anything you’d like, as long as it falls within Etsy’s guidelines:

Four to 20 characters long.

No spaces or special characters.

Not a name that’s already in use by another Etsy seller.

No trademark infringements.

No profanities.

You can change your shop name up to five times. After that, you can still request a name change, but it’ll have to be reviewed and approved by Etsy Support.

If you try to enter a name that's already in use, Etsy will suggest some similar names that are available:

To get the ball rolling, consider the following name suggestions:

Try suggestive, descriptive names: You can use words or phrases that evoke the feeling of your brand or describe what you're selling. 

Try abstract names: Abstract names can set your store apart and make it easier for customers to find your store when searching online. 

Use your name: Your own name can be a quick and simple option — and allows you to easily change or adapt the products you sell. Consider adding a modifier like "Studio," "Inc," or "Workshop." 

If you think you might eventually expand your Etsy shop into a larger e-commerce business , do some additional research to ensure that you can acquire things like a business domain name or DBA (doing business as) that match your shop's name.

4. Add items to your shop

Listing physical and digital items (think printable stationery, patterns, stickers, gift tags) in your Etsy shop involves separate processes. We’ll show you the basics of how to list a tangible item; you can consult Etsy’s guide if you’re listing a digital item .

Add photos and videos

You can include up to 10 product photos per item. Etsy recommends shooting in natural light, showing items in use and including other objects to show scale.

You can also include one video lasting five to 15 seconds.

Complete your listing details

Give your item a title that describes the product in as much detail as possible, but keep in mind there’s a 140-character limit. You’ll also have the opportunity to provide an in-depth description, a bulleted overview of the product, and additional details like the product’s category and type.

As you start to fill in product details, Etsy will prompt you for additional information specific to that type of product — like whether a piece of art comes framed, whether it’s designed for a certain holiday or occasion, or whether it belongs in a particular room in the home.

Pay attention to the section called "renewal options." If you select "Automatic," your listing will automatically renew after it expires every four months. Each time the listing renews, you'll be charged a 20-cent fee.

If someone else helps you produce your goods, you may need to add information about them too. Etsy defines these “production partners” as any person who’s not part of your shop’s staff or any outside company that helps produce your goods. This might mean they have some skills or equipment you don’t have or that you’re contracting out some work in order to keep up with orders.

Finally, take advantage of all 13 tags available per item. Shoppers find your item by searching for keywords in the search bar, so work backward and think about what a customer might type into search to discover your item and use those words as your tags.

Complete your inventory and pricing

In this section, you'll enter your product’s price, sales tax (if applicable), quantity (if you have more than one in stock) and SKU number (if you have one).

You can also add variations — like sizes, materials and colors — and link photos to those variations.

Don’t short-sell yourself; price your products so that you can cover your material, labor and production costs, plus Etsy’s fees. But keep in mind that one of Etsy’s major draws is the prospect of buying unique items at prices that won’t break the bank. Try to strike a balance between the two.

Set your shipping prices

Here, you’ll include all the details needed for shipping, like the shipping services you use, costs, country of origin, processing time, and item weight and size.

You can opt for Etsy to calculate your shipping prices for you. In this case, you'll be required to fill in item weight and size when packed. Then, based on that information, you'll be able to preview the buyer’s shipping price.

If you ship to the European Union, you may need to enter a tariff number for your items. A tariff number is a code that specifies the product type.

Create your return and exchange policy

Etsy offers sellers a templated returns and exchanges policy. This policy allows buyers to return or exchange items within 30 days of receiving them, but requires buyers to cover return shipping costs. If you prefer, you can create your own custom return policy, including policies for specific items or types of items.

Publish your listing

You can preview your listing to see how it’ll look to customers before it goes live.

5. Choose your payment preferences

Once you've added an item to your store, you'll need to set up your Etsy payment preferences.

Etsy generally requires sellers to use Etsy Payments, which allows you to accept credit cards, debit cards, Apple and Google Pay, Etsy gift cards and store credit, Klarna and more.

Etsy Payments charges a payment processing fee of 3% plus 25 cents per transaction in the U.S.

6. Set up billing

You’ll need a credit or debit card on file so that Etsy can charge you for selling fees. This cannot be a non-reloadable prepaid debit card.

If you're a U.S. seller, you have the option to enroll in auto-billing, in which case Etsy will automatically charge your credit card on file for the selling fees you incur. Etsy will either charge you at the time that your last month’s statement is due or when you cross your fee threshold — either $25 in fees if you’re a new seller, or the highest of your last three monthly statements.

Even if you're starting an Etsy shop as a side hustle, strive to keep your business and personal finances separate. The easiest way to adopt this best practice is to open a business checking account dedicated to your Etsy store’s revenue and expenses.

Etsy fees for sellers

Like most e-commerce website builders , Etsy charges its merchants fees associated with listing and selling products. Although joining and starting an Etsy shop is free — unless you opt for a paid subscription plan — you'll need to pay listing and transaction fees for each item you sell.

If you're using Etsy Payments, these fees will be deducted automatically from your sales funds. If you still owe additional fees at the end of the month, Etsy will automatically charge the credit card you have on file, or you'll have to make payments yourself.

Here are the fees Etsy charges.

Etsy listing fees

Etsy charges 20 cents per listing at the time each item is listed.

You have to pay this Etsy fee for each product, regardless of whether or not the product sells. Listings expire after four months; if you want to keep them active for an additional four months, you’ll have to pay the fee again.

Etsy transaction fees

Etsy charges 6.5% of the total order amount, including shipping and gift wrapping costs.

Etsy payment processing fees

Etsy charges 3% + $0.25 per transaction in payment processing fees .

Additional Etsy seller fees

Etsy may also charge other fees, including:

Shipping label fees : If you ship with FedEx, USPS, Canada Post or several other carriers, you can buy and print your shipping labels directly through Etsy. Shipping label fees vary for each purchase.

Square fees : If you sell items from your Etsy store in person using Square POS and don’t sync them with your Etsy shop inventory, Etsy will charge a 20-cent fee. 

Etsy ads : Fees vary, but you can set your daily maximum spend.

Offsite ads : You’ll be charged 15% or 12% of any order made as a result of an offsite ad, depending on how much revenue your shop generated the previous year, up to $100.

7. Open your Etsy shop

Once you click "Open Your Shop," your store will be live. Etsy shoppers will be able to see and purchase your listings.

The URL for your shop will be in one of two formats:

https://www.etsy.com/shop/yourshopname.

https://yourshopname.etsy.com.

8. Customize your shop

Now that you've actually opened your Etsy shop, it's time to start selling online. Just like a brick-and-mortar store, your digital store should be easy to find, well curated, intuitively organized and regularly updated.

Here are a few sections you can fill out to ensure that your Etsy shop opens (and runs) successfully:

Add a personal bio and photo

Your public profile is how visitors to the site can learn more about you, both as a business owner and as a person outside of your work.

You can add four different images to customize your Etsy shop:

A shop banner, which appears at the top of your shop on desktop and mobile.

An order receipt banner, which shows up at the top of customers’ receipts.

A shop icon, which is a small image that conveys your shop’s brand.

A shop owner photo, which is a photo of you that appears in your Etsy Conversations threads.

Rearrange your items

Feel free to move your items around on the page. You can also "feature" up to four items, which will show up high on your shop’s homepage.

Add sections

Group your items into up to 20 categories so that buyers can more easily sift through your products. Sections will appear on the left side of your homepage and include the number of products within each category.

Add your shop’s "about" section

Just like your personal "about" section, your store deserves its own bio, too. You have 5,000 characters to tell customers your business’s origin story. Keep in mind that Etsy (and customers) value transparency and openness, so don’t worry too much about writing traditional marketing copy — just be genuine.

You can also provide photos or a video of your studio space or creative process and add links to your store’s social media profiles.

And you have to list anyone you employ to help you make and sell products.

Add a shop announcement

This text appears on your shop’s homepage, under your listings. It should broadly summarize what your shop is about and include any time-sensitive information, like whether you’re on leave or vacation and when you’ll return.

A version of this article initially appeared on Fundera, a subsidiary of NerdWallet.

While it's free to create your Etsy shop, Etsy charges 20 cents per listing and 6.5% per transaction for U.S. sellers. You'll also pay 3% plus 25 cents per transaction in payment processing fees.

You’ll most likely have to process your customers’ online payments through Etsy Payments. Customers can use credit or debit cards, Apple or Google Pay, Klarna, Etsy gift cards, store credit and more. Etsy Payments takes a payment processing fee of 3% plus 25 cents per transaction in addition to Etsy’s transaction fee of 6.5%.

Sellers are responsible for shipping sold items to buyers. If you're using a shipping or fulfillment service, the seller is still ultimately responsible for getting the items to the buyer. However, you can pass the cost of shipping on to your customers.

You can choose to receive deposits daily, weekly, biweekly or monthly, as long as you don’t owe more in Etsy fees than you’ve made in sales.

On a similar note...

Creating an Etsy Business Plan

Creator Economy Expert & Etsy Seller

Lindsey Becker

Creating an Etsy business plan is essential for anyone looking to start a successful Etsy shop. A business plan can help you define your goals, identify your target market, and develop a strategy for achieving your objectives. It can also help you secure funding if you need it and provide a roadmap for measuring your progress.

When creating an Etsy business plan, it’s important to consider your products, target market, competition, and marketing strategy. You should also include financial projections, such as your startup costs, revenue projections, and profit margins. By taking the time to create a thoughtful and well-researched business plan, you can increase your chances of success and avoid common pitfalls that many new Etsy sellers face.

Understanding Etsy

Etsy is an online marketplace where people can buy and sell handmade, vintage, and unique goods. It was founded in 2005 by Rob Kalin, Chris Maguire, and Haim Schoppik. Since then, it has grown into a global community of millions of buyers and sellers.

One of the unique aspects of Etsy is that it is a platform for creative entrepreneurs. It allows sellers to showcase their creativity and connect with buyers who appreciate handmade and unique items. Etsy also provides a variety of tools and resources to help sellers grow their businesses, such as analytics, marketing tools, and educational resources.

To sell on Etsy, sellers must create a shop and list their items. Etsy charges a small fee for each listing and takes a commission on each sale. Sellers can customize their shops with branding, policies, and more. Buyers can search for items by category, keyword, and location.

Overall, Etsy is a vibrant and diverse community of creative entrepreneurs and buyers who value handmade and unique items.

Related Posts:

• Etsy History: The Ultimate History of Etsy
• Etsy Views vs. Etsy Visits

Setting Up Your Etsy Shop

Before creating a business plan for your Etsy shop, you need to set up your shop. This involves choosing a shop name and creating a shop logo.

Choosing a Shop Name

Choosing a shop name is an important step in creating an identity for your business on Etsy. Your shop name will be displayed at the top of your shop page and part of the URL or web address of your unique Etsy shop. It’s important to choose a name that’s memorable, easy to spell, and relevant to your products.

To choose a shop name, consider the following tips:

• Keep it short and simple.
• Make it easy to remember and spell.
• Use keywords that describe your products.
• Avoid using special characters or numbers.
• Check if the name is already taken on Etsy.

Once you’ve chosen a name, you can customize your shop URL to match your branding. Learn how to change your Etsy shop URL here .

Creating a Shop Logo

Creating a shop logo is another important step in establishing your brand on Etsy. Your logo should be eye-catching, memorable, and reflect your brand’s personality. You can create a logo yourself using free design tools like Canva or hire a professional designer.

To create a shop logo, consider the following tips:

• Keep it simple and easy to read.
• Use colors that match your brand’s personality.
• Incorporate relevant symbols or images.
• Make sure it looks good in different sizes.

Once you’ve created your logo, you can add it to your Etsy shop page and use it on your product listings.

• How to Change Your Etsy Shop URL
• How to Close Your Etsy Shop
• What is an Etsy Shop Announcement? (+ 10 Examples!)

Creating a Product Line

When creating a business plan for an Etsy shop, it’s important to consider the product line that will be sold. This includes developing products and determining pricing strategies.

Product Development

To create a successful product line, it’s important to start with brainstorming and researching. Consider what types of products are currently popular on Etsy and what niche can be filled. Look for inspiration and ideas from other successful shops, but also ensure that the products are unique and have a personal touch.

Once product ideas have been generated, it’s important to develop prototypes and test them out. This can involve creating a small batch of products and testing them with potential customers to gather feedback. This feedback can be used to refine the product design and make necessary improvements.

Product Pricing

Pricing is an important aspect of creating a successful product line. It’s important to determine the cost of materials, production, and labor, as well as overhead costs such as shipping and Etsy fees. Researching competitors and the market can also help determine a fair and competitive price.

It’s important to find a balance between pricing that is fair to the seller and attractive to customers. Offering discounts, bundle deals, and free shipping can also be effective strategies for attracting customers and increasing sales.

• How to Make and Sell SVGs on Etsy
• How to Make and Sell Cricut Designs on Etsy
• Ideas for 3D Printed Products to Sell on Etsy
• What Art Sells Best on Etsy?
• How to Make and Sell PNG Files on Etsy

Marketing and Promotion

To increase sales and attract more customers, it is essential to have a solid marketing and promotion plan for your Etsy shop. Here are some effective strategies to consider:

Social Media Marketing

Social media platforms such as Facebook, Instagram, and Pinterest can be powerful tools for promoting your Etsy shop. Create a business account on each platform and share high-quality images of your products. Use relevant hashtags to increase visibility and engage with your followers by responding to comments and messages.

Consider running social media ads to reach a wider audience. Facebook and Instagram ads can be targeted based on demographics, interests, and behaviors, making them a cost-effective way to reach potential customers.

Email Marketing

Email marketing is a great way to nurture relationships with existing customers and encourage repeat purchases. Collect email addresses from customers who make a purchase and send regular newsletters with updates on new products, sales, and promotions.

Integrating your Etsy shop with an email marketing platform such as Mailchimp can streamline the process of sending targeted campaigns to your subscribers. Use personalized subject lines and high-quality images to increase open rates and click-through rates.

• Mailchimp Etsy Integration
• Are Etsy Ads Worth It?
• How to Set up Google Analytics for Your Etsy Shop
• How to Run Facebook Ads on Etsy
• How to Run a Sale on Etsy

Managing Finances

When it comes to managing finances for an Etsy business, there are a few key things to keep in mind. This section will cover setting up a business account and understanding Etsy fees.

Setting Up a Business Account

It’s important to have a separate bank account for your Etsy business to keep your personal and business finances separate. This will make it easier to track your expenses and income, and will also be helpful when it comes time to file taxes.

When setting up a business account, it’s important to choose a bank that offers low fees and good customer service. Some popular options for small business accounts include Chase, Bank of America, and Wells Fargo.

Understanding Etsy Fees

Etsy charges fees for listing items, selling items, and processing payments. It’s important to understand these fees so you can price your items accordingly and avoid any surprises when it comes time to pay your fees.

The current fees for selling on Etsy are as follows:

• Listing fee: $0.20 per item
• Transaction fee: 5% of the item’s sale price (including shipping costs)
• Payment processing fee: 3% + $0.25 per transaction

It’s also important to note that if you offer free shipping on your items, Etsy will still charge you a transaction fee based on the total sale price (including shipping costs).

By keeping these fees in mind and factoring them into your pricing strategy, you can ensure that you’re running a profitable Etsy business.

• Can I Sell My Etsy Business? How to Sell Your Etsy Shop
• Should I Charge A Handling Fee On Etsy?
• Why Etsy Requires Your SSN for Selling
• When Do Etsy Sales Pick Up?
• How to Sell on Etsy Without a Bank Account

Customer Service

Customer service is an essential part of any business, and an Etsy shop is no exception. As a seller, it is crucial to provide excellent customer service to ensure customer satisfaction and repeat business. This section will cover two critical aspects of customer service: handling customer queries and managing returns.

Handling Customer Queries

Prompt and friendly communication is vital when it comes to handling customer queries. As an Etsy seller, it is essential to provide customers with quick and accurate responses to their questions. Setting response times is a good practice to ensure that customers know when to expect a response. The response times should be clearly communicated to customers, and it is recommended to respond within 24 hours.

It is also essential to be polite and professional when communicating with customers. Sellers should avoid using negative language or being dismissive of customer concerns. Instead, they should be empathetic and try to find a solution that works for both parties.

Managing Returns

Returns are an inevitable part of any business, and Etsy shops are no exception. As a seller, it is essential to have a clear and easy-to-understand return policy. The return policy should be communicated to customers upfront and should include information on how to initiate a return, the timeframe for returns, and any other relevant details.

When handling returns, it is crucial to be prompt and professional. Sellers should respond to return requests promptly and provide clear instructions on how to return the item. Once the item is returned, it should be inspected promptly, and the refund should be processed in a timely manner.

• Returning or Exchanging Items on Etsy
• How to Block a Buyer on Etsy
• What to Do if Your Etsy Package is Stolen
• How to Edit Review on Etsy
• How to Cancel an Etsy Order for Buyers

Scaling Your Business

Once your Etsy business takes off, you may want to consider scaling it to reach a wider audience. Here are a few ways to do so:

Hiring Help

As your business grows, it may become challenging to manage everything on your own. Hiring help can take some of the load off your shoulders and allow you to focus on the bigger picture. Consider hiring a virtual assistant to help with administrative tasks or a freelance designer to create new products.

Expanding Product Line

Expanding your product line can help attract a wider audience and increase sales. Consider adding complementary products to your existing offerings or expanding into a new niche altogether. However, be sure to conduct market research and ensure that there is demand for the new products.

• How To Use Etsy Search Analytics Tool as a Seller
• Selling Manufactured Goods on Etsy
• How to Sell Google Sheets on Etsy
• How to Sell Excel Templates on Etsy
• Selling on Etsy vs. Selling on Instagram: A Comparison

• 212 best farm names

How to Start an Etsy Shop (and Make $60K/Month)

October 4, 2023

Cash is not king. Creativity is. Have you ever wanted to start your own Etsy shop? Vlad Kuksenko started TagPup and in 18 months became the top pet product seller. You can do it, too!

We sat down with Vlad and learned how he loved art but earning a living as an artist wasn’t an option until graphic design became a major field. Today, he creates personalized dog collars, leashes, and bandanas that fill the number one pet products shop on Etsy.

What is Etsy?

What to sell on etsy, what is the industry outlook, who are the major etsy sellers, write an etsy business plan, sign up or log in to etsy, open your shop, choose your shop preferences, name your shop, stock your shop, add clear photos, set your prices, choose your payment methods, establish shop policies, calculate shipping costs, promote your shop, fulfill orders promptly, provide excellent customer service, monitor your shop, consider etsy ads, stay compliant with etsy policies, reinvest in your business, where to buy materials and equipment for an etsy store, do i need a business license to sell on etsy, learn more about etsy businesses, start your own etsy shop.

Get ready to become your own Etsy shop manager.

Etsy is an online marketplace where shop owners can sell products to Etsy’s 82 million buyers looking for handmade and vintage products. Etsy listings fall into eight major categories:

• Jewelry & Accessories
• Clothing & Shoes
• Home & Living
• Wedding & Party
• Toys & Entertainment
• Art & Collectibles
• Craft Supplies
• Seasonal Offerings (think Valentine’s Day, Veterans, Memorial, and Labor Days, 4th of July, Halloween, Thanksgiving, and Christmas)

Keep reading for things to sell on Etsy.

What to do before opening an Etsy shop

Before you sell items on Etsy, there are a few things you should do, including answering:

• Who are the major players on Etsy?
• What will my Etsy business plan be?

If you’re wondering what sells best on Etsy, check out the Etsy best sellers list . The best-performing segments according to Etsy’s 3rd Quarter 2021 Earnings Presentation are:

1. Homewares & Home Furnishings: $4.2 billion 2. Jewelry and Personal Accessories: $2.1 billion 3. Craft Supplies: $1.4 billion 4. Apparel: $1.4 billion 5. Paper & Party Supplies: $600 million 6. Beauty & Personal Care : $300 million

Many of these are vintage items, handmade goods, or personalized items that do particularly well with Etsy shoppers. Vintage items are classified as over 20 years old, while handmade means that each is unique.

Vlad spent a lot of time talking about the decision-making process of what to sell in an Etsy shop. He explained:

Etsy is a want-based business. If you can personalize it, you can sell it.

He went on to explain:

You need a keyword to be able to sell it. If there is no keyword people are searching, you can’t sell it.

He suggests using eRank to help with your search engine optimization (SEO). eRank has various tools to help small business owners come up with product ideas, optimize their listings, and track their shop page against the best Etsy shops.

Vlad described his product development process as:

• Research what has a high search volume using eRank.
• Input the term you are targeting into the Etsy search bar.
• Look for products with at least one review per day because that means they are selling at least 5 to 10 per day.
• What is frequently favorited?
• What do the favorited items have in common?
• Design your offerings based on this search.

Vlad gave two additional pieces of advice that small business owners should follow when wondering how to start an Etsy shop:

• “You need multiple products that work well together. Carrying a single product doesn’t do as well.”
• Be aware of seasonality. For instance, items like planners, weight loss tools, and wall hangings tend to do better at the beginning of the year.

Now that you understand how to decide what to sell on Etsy, you’ll want to know the differences between Etsy and other major players in the industry. Let’s take a look.

According to eMarketer , U.S. eCommerce sales are expected to grow by 10 to 15% per year and total over $1.6 trillion by 2025. Most of the earnings will be from top players like Amazon and Walmart.

Etsy had an industry-leading 107% increase in Gross Merchandise Sales, which means if you meet the requirements to start an Etsy shop, it is the place to be.

Now that you know where the industry is going, keep reading to learn how to start an Etsy shop.

Etsy doesn’t share each company’s revenue, but they share the number of transactions for each Etsy shop and the number of followers. Some of the most prominent players are:

• Planner Kate : An organization shop with 1.8 million transactions and 60K followers
• Bead Boat : Craft supply shop with 1.4 million transactions and 57K followers
• ModParty : A bridal shop with over 1.22 million transactions and 113K followers
• Peggy Sue Leather : Leather supply shop with almost 790K transactions and 25K followers

Pro Tip: See more top sellers on Practical eCommerce’s blog 20 Top Selling Shops on Etsy.

Etsy offers plenty of opportunities for shop owners to make a great living. Here are a few business owners that we’ve interviewed who run businesses similar to Etsy sellers:

• Urbanity : $102K per month in revenue selling clothes
• Check out our interview with Marcus .
• Blk Sunflower : $180K per year selling homemade candles.
• TagPup : The Etsy seller we’re featuring in this article. Check out our first of two videos with him below.

You don’t need a business plan for an Etsy shop, but it will be much easier to start an Etsy shop if you start by writing a business plan. A business plan is something we recommend for every new business.

Your Etsy business plan should include:

• Your business name, idea, and goals
• Market research
• Size of market
• Gaps in market
• Whether Etsy is the best place to reach your market
• Are there gaps between the money you have and the money you need? How will you solve them?
• Marketing goals and processes.
• The path to achieving your set goals

Check out our interview with Mike Andes on how to write a business plan.

We’ve gathered some templates and resources for you to make creating a business plan for an Etsy shop easier. Check them out below.

Etsy Business Plan Templates

We’ve gathered templates to help you develop your business plan. Here are some of the best:

• UpFlip business plan template
• One-page business plan
• U.S. Small Business Administration (SBA) Business Guide
• Get help writing a business plan.

EXCITING ANNOUNCEMENT: Stop guessing and gambling with your time and money on Etsy. Discover Vlad’s Secrets to building a $3.2M Etsy business. Start boosting your success and stop making costly mistakes with a 30% discount on his course.

How to start an Etsy shop

Starting an Etsy shop can be a great way to sell handmade, vintage, or unique items. Here are step-by-step instructions on how to get started:

• Consider Etsy advertising

Let’s start by opening getting an Etsy account.

If you don’t already have an Etsy account, you’ll need to create one. If you do, log in.

Click on “Sell on Etsy” in the top right corner of the Etsy homepage.

To create an Etsy shop, you’ll need to go to the Etsy official site and create an account. You can use Etsy sign-in through Google or Facebook to make it easy. After you have created an Etsy account, you’ll want to go to etsy.com/sell . Review everything and click “Open your Etsy Shop.”

It will take you to a “shop preferences” page that asks for your shop language, shop country, and shop currency. You can change these with the drop-down menu.

It also asks, “Which of these best describes you?” and gives the following options:

• Selling is my full-time job.
• I sell part-time but hope to sell full-time.
• I sell part-time, and that’s how I like it.

All the answers on the shop preferences page have default answers already added. If you wish to change the answers, do so, then click “Save and Continue.”

In this step, you’ll choose a unique shop name for your new Etsy shop. The shop name needs to meet the following guidelines:

• Shop Name Length: Include a maximum of 20 characters, only Roman letters and numbers, no spaces or punctuation.
• Shop Name Availability: Push “Check availability” to verify whether the name is available.
• Descriptive: Does it describe what you sell?
• Memorable: Is it easy to remember?
• Use our business name generator to verify the name is available as a domain.
• Search “[your location] business license search” to check availability in your location.
• Use uspto.gov to check trademark availability.

Once you’ve settled on a great name, enter it then click “Save and continue” to proceed to the next page, where you will create listings.

Want to hear more about Vlad’s TagPup success? Listen to his podcast episode below.

On this page, you’ll want to add all your listings. You’ll click the blue box that says “+ Add Listing,” which will take you to the “Add a new listing” page. This page is relatively long, so we’ve broken it into sections to make it easier to follow.

• Listing Details
• Inventory and Pricing
• Personalizations

What should I include in my Etsy listing details?

You’ll want to include the following information in the listing details:

• Example from one of my hoodies: “Unisex Shaded Hands Heart Hoodie- Artwork by Daisy Gray”
• Who made it? Me, member of my shop, or another company or person
• What is it? Finished product or supplies and tools
• When was it made? Made to order (use this for print-on-demand), Recent (choose dates between 2003 and today), Vintage (Pre-2003)
• Category: Search for and select your product type
• Sizes and Colors: Select the option that describes it best, or select “multiple” to create variations.
• There are a lot of attributes, and they change based on the category. Review them and select whatever fits best as they can help with search results.
• Optional for clothing: Sleeve length, closure, and clothing style
• Renewal: Auto or manual
• Type of Product: Physical or digital
• Read Etsy’s tips on product descriptions .
• Preview the description on Google straight from the listing page.

Vlad told us:

Read your competitors’ descriptions. Use graphics as opposed to descriptions when possible. For instance, take the dog collars and a ruler to show the different sizes.

• Partner name
• Additional information
• Why you work with them, your role, and their role
• Tags: Keywords you want your product to show up for, maximum of 13 tags
• Materials: Type of raw materials. For instance, cotton and polyester.

The tags are the key to getting your shop name in front of your target audience. Don’t forget to use eRank to help with the tag selection.

We asked Vlad, “What Etsy tags should I use?”

When creating tags, think about ‘Where should I show this product?’

If you’re creating t-shirts, you don’t need the word ‘t-shirt’ in each one. Just include it in the first three, and use other tags that will put it in front of other people.

To do this section right, expect to spend an hour per product or more.

Example of tags

Given Vlad’s suggestion, you may want to use the following tags if you have a Taylor Swift shirt (which is one of the trending topics for t-shirts this year):

• Taylor Swift tour shirt
• Taylor Swift Eras shirt
• Eras tour shirt
• Taylor Swift tour
• Taylor Swift Eras
• Taylor Swift outfit
• Taylor Swift merch
• Red Taylor Swift
• Lover shirt
• 1989 Taylor Swift

How to set up an Etsy shop video

Etsy recommends creating a product video. They give you instructions on how to take listing videos in the Etsy Seller Handbook. If you add product videos, they should meet the following qualifications:

• 1080p or higher resolution
• 5-15 seconds long
• Less than 100 MB file size
• 30 frames per second
• Don’t edit the video before loading it into Etsy. (If you edit the video from standard video sizing to a 1:1 height-to-width ratio, you may have issues uploading from an iPhone.)

You can make a video with a 1:1 ratio after adding the video to Etsy by using the editing tools on their site.

Now that you know how to add a video to your Etsy listing page, let’s look at the other information covered in Etsy listing details.

High-quality images are crucial to start selling. Take well-lit, clear photos that accurately represent your items.

Etsy allows you to add up to ten photos on the website. Want some tips on how to create great product images? Check out the list below.

• Use natural light and no flash. Late afternoon is the best time to photograph.
• Include a common object for scale, or use a ruler if needed.
• Show the item being held, worn, or used.
• Shoot against a clean, simple background. Most platforms require white backgrounds for the primary photo, so it’s best to have at least one that shows the image on a pure white background because you’ll probably sell on other platforms too.
• Add photos of your variations so buyers can see all their options.
• Set the pixels per inch to 72 and 2000 x 2000 pixels.
• Verify that the combined photo image sizing is no larger than 1 MB total. Otherwise, it slows pages on mobile devices not connected to WiFi.

After you add photos, remember to edit the meta description to help with search engines by hovering over the image and clicking on the pencil. You can also crop or delete the image in the hover menu. If you click and hold onto an image, you can change its placement.

Consider the cost of materials, time, and any fees when setting your prices. Be competitive but also make sure you’ll make a profit. The pricing should be high enough to cover the following:

• The cost of the goods
• Etsy’s $.20 listing fee
• Etsy transaction fees of 5% of the product price plus shipping price
• The Etsy payment processing fee of 3% + $.25 in the U.S. (varies by country)
• Etsy’s 15% off-site marketing fee, which is charged every time Etsy randomly places your product in an off-site ad that results in a purchase
• Cost of shipping labels ($6.99 at the time of writing; learn more about shipping labels in Etsy’s Seller Handbook)
• Any other costs associated with your Etsy shop

How to start an Etsy shop with no money

You can open an Etsy shop without money, but the Etsy platform requires a $.20 per item listing fee that you’ll have to pay when the product sells. If your items are not made-to-order, Etsy shop owners can get started for free. This is especially true if you can start selling vintage goods you already own as you won’t have to buy new materials.

Now that you know how to start an Etsy shop, let’s look at Etsy payments.

Set up your preferred payment method. Etsy Payments is a commonly used option that allows buyers to pay for a physical or digital product assuming your payment account settings allow each of the options as Etsy payments :

• Credit cards
• Debit/bank cards
• Etsy Gift Cards and Etsy Credits
• Klarna Financing (U.S. only)
• Klarna installment payments (Australia, Canada, Spain, UK, U.S.)

Define your shop policies regarding shipping, returns, and exchanges. This helps set clear expectations for your customers. You’ll have to follow Etsy’s policies, but as a shop owner, you can also define your own about subjects like returns, exchanges, and cancellations. Printify goes into more detail about Etsy store policies .

Etsy offers a free shipping option, and I highly recommend using it. While Vlad didn’t specifically mention offering free shipping, he offers it on many of his products, and considering how much we love free shipping, we assume that’s part of TagPup’s success! He made some comments that suggest including the shipping in the price of the goods:

Be very clear in what they are buying to get better reviews.

Don’t trick people.

Additional shipping charges can be tricky at times, so I (the author) suggest using the free shipping feature. It is straightforward; they’ll ask you a couple of questions, including:

• Origin zip code: Where it’s mailed from • Processing time: How long it takes from when the customer orders until when it ships • Where I’ll ship: Continents or specific countries • Shipping services: Your offerings for shipping • Free shipping: Domestic or international (I would discourage offering free international shipping unless you are well-versed in shipping and pricing costs)

Then you’ll have an option to add shipping to the price of the product. Review Etsy pricing strategies to include free shipping and learn how to include the pricing in the product cost.

In addition to specifying shipping options, remember to establish and post a very clear return policy that details:

• When you accept returns (standardized product, within 90 days, not-made-to-order, manufacturer error)
• When you will not accept returns (damaged after shipping, custom made, after 90 days)
• Time frame to return the product
• Who pays for return shipping

Marketing is the trick to growing any business. You have to get your business and products in front of people to sell them. Fortunately, Etsy makes it pretty easy for a small business to sell on its marketplace.

If you don’t have much experience with marketing, it starts with market research . Mike Andes goes into great detail about market research, including identifying potential customers, target markets, and demographics. Check out our interview with him below:

Vlad had a lot of input on how to sell on Etsy. He emphasized the importance of product design:

Art ought to communicate to [potential customers]. If it doesn’t communicate, it’s not art and won’t sell.

He also told us you should “price your products based on the middle of the pack” because Etsy customers aren’t looking for items they need but that they want. They will go for the one that meets their desires the best.

He also shared this advice:

Don’t race to the bottom and satisfy the keyword.

His strategies for becoming one of the best Etsy shops for pet products are also used by retail giants, and you can leverage them, too. As you start marketing your Etsy shop:

• Vlad told us: Underbid, rank, then raise the price.
• Use Etsy promotional pricing.
• Utilize Etsy free shipping: Everyone loves something free. With the success of Amazon Prime, online shoppers expect every online marketplace to offer free shipping.
• Gather data and improve: While underbidding, he’s able to gather data.

He told us:

I’ll take a loss to gather data and improve my knowledge about whether it performs, then introduce new keywords.

Vlad also suggested:

Use the sales and coupons. I’ll set the product to the original price, then discount it heavily. I also match products together to create packages people love. Always create sales for holidays.

He also said that he throws in a small gift for repeat customers occasionally, but he doesn’t do it all the time.

For more on TagPup’s winning formula, watch our second video with Vlad here.

Helpful marketing tools

There are some useful marketing tools that small business owners use to market their companies:

• Canva: Simplify graphic design with Canva . Get access to thousands of templates for websites and social media for as low as $4.99 per month.
• SurferSEO: Write blog content faster and rank higher on search engines with SurferSEO .
• MailChimp: Email and SMS marketing automation is one of the keys to success that many small business owners mention. Get started with Mailchimp .

Ship orders as soon as possible after they’re placed. This will help you provide excellent customer service. You can use Etsy shipping labels to save up to 30% on your shipping cost. Learn more about shipping label fees on Etsy .

You can also provide tracking information by using Etsy tracking labels or providing the tracking codes to the customer by other means. You’ll need to check Etsy and your preferred shipping provider to figure out the best way to handle shipping.

Respond to customer inquiries and concerns in a timely and friendly manner. The service you provide both before and after a purchase will impact customer satisfaction, whether they return to your shop, and whether they review and suggest your shop to other people.

According to inc.com , it takes 40 positive reviews to fix the damage done by a single negative review. When someone is upset, take the time to solve their problem politely. Vlad told us:

I work with customers on returns as long as they are less than 90 days. After that, we don’t. I just try to make them happy.

The process I (the author) have found works wonders for dealing with unsatisfied customers is:

• Apologize for the inconvenience they are experiencing.
• Ask what you can do to fix it.
• Listen to their answer.
• Gather information about whether it was your error or theirs.
• Do exactly what they asked unless it is unachievable.

This can be a challenge because it may result in a single order resulting in a loss, but it’s far less costly than a bad review.

Vlad discusses his workflow at the 35-minute mark of UpFlip podcast episode 10. If you haven’t already listened to it, check it out now.

Review your store and each item for week-over-week growth. If that section of the pie doesn’t grow, stop. If the reviews for it aren’t good, consider discontinuing the product.

Etsy has a built-in ad feature where you can specify your daily ad spend limit, and they promote your products accordingly. The Etsy Seller Handbook answers how Etsy Ads work in more detail, but you basically create a budget of between $1 and $1,000 a day.

I typically spend between $300 and $1,000 per day on ads. Etsy really creates a level playing field, so going higher doesn’t mean it all gets spent.

He went on to tell us the best way to use ads is to utilize keyword research.

Find the most creative way to make the ad as quick as possible to make it where the ad budget goes as far as possible.

Familiarize yourself with Etsy’s policies to ensure you’re abiding by their rules and regulations.

You’ll want to reinvest in your business to help it grow and get more customers. Vlad told us:

Margins are 50-60% if you don’t reinvest in the business, but we tend to reinvest in machinery.

In addition to adding machinery, you can create new products or increase marketing to expand your business. Once you earn more income consider opening a retail location or hiring more employees to help.

Selling on Etsy FAQ

You can purchase materials from a variety of places. Some of the places to buy when you first start are:

• A brick-and-mortar store: JOANN Fabric and Michaels are two that offer lots of selections for craft businesses.
• Etsy Craft Supplies : Find craft supplies you know are selling well on Etsy.
• Amazon : Craft supplies and tools can come directly to your home from the number one online retailer.
• Alibaba: Get bulk orders from overseas (allow weeks to months for shipping).

If you’re looking for equipment, Amazon and Alibaba might have it, but you can also check places like:

• Global Industry
• Northern Tool

You can spend 200 bucks at JOANN and customize mugs with vinyl. The materials and equipment costs depend on what you’re making and what machines you need.

He also told us:

Inventory is such a big issue. Sometimes I spend $5,000 on shipping to get $10,000 of product. One of the ways to fix that is to pay half up front and half on delivery.

Etsy does not require a business license to start listing physical or digital product, but the government might if you make more than $600 from your Etsy shop. In addition, a business bank account, reseller’s license, and business credit card will all require a business license.

Each city, state, and country have different licenses, permits, and tax forms required. Refer to the SBA License and Permits page to identify what your Etsy shop needs.

Vlad suggested reading the book E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It . You can get it through our Amazon shop .

• Check out Vlad’s YouTube, TalkShop .
• Save 30% on Vlad’s course .
• Etsy Success
• Nancy Badillo , a highly successful Etsy seller, has almost as many followers as Etsy’s channels combined.

We’ve explained the market outlook for eCommerce, how to start an Etsy shop, licensing requirements in case you want to make your shop a formal business, and marketing strategies to improve your business results.

If you’d like to consider other business ideas, check out our blog about the 30 best businesses to start for under $10,000.

Etsy can be an extremely satisfying way to earn a living. What kind of products are you thinking about listing on Etsy?

80% of businesses fail... Learn how not to.

Learn from business failures and successes in 5 min or less. The stories, frameworks, and tactics that will make you a 10x better founder.

Brandon Boushy

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How to Calculate Profit Margins (and Improve Profitability)

• Where to find industry profit margins
• The seven most common equations for calculating profit margins
• Calculating industry profit margins
• Improving your business results by comparing your profit margin ratio to industry averages

What profit margins should you expect?

• IBIS World : Here’s their list of highest margin businesses . Their paid reports are phenomenal and are what is used in most blogs to help you get an idea of what your expenses should look like.
• NYU STERN : Analyzes 7,229 publicly owned businesses and publishes 17 different margins and percentages of revenue for each. They update the documents annually.
• UpFlip Featured Businesses : Our YouTube Channel and blog are full of business owners sharing how they run their businesses and where their costs go.

What is the profit margin?

• Gross profit margin
• Net profit margin
• Operating profit margin
• EBIT margin
• EBITDA margin
• Product margin
• Sales margin

What is gross profit margin?

Why are restaurant profit margins so low?

What is net profit margin.

• Cost of Goods Sold
• Administrative and Marketing
• Depreciation
• Amortization

Is a profit margin of 20% good?

What is operating profit margin.

• Interest income or interest expenses
• Returns and costs from investment in other companies
• One-time costs or gains like lawsuits
• Costs of Sales, General, and Administration (SG&A)
• Overhead Costs (OC)
• Depreciation (Dep) (how much your equipment and buildings go down in value based on their expected life)
• Amortization (Am) (lowering the book value of a non-physical asset)

What is EBIT margin?

What is EBITDA?

What is product margin?

• Which new products should a business carry?
• What products are best for upselling?
• Should you consider getting rid of an offering?

What is sales margin?

Net Profit vs Gross Profit

How to calculate profit margins.

• Find the revenue attributable to the type of profit margin.
• Calculate the expenses attributable to the profit margin.
• Use the formula in the picture below:

What are good profit margins?

• Gross Margin : 38.44% is average, but the range is from 1.41% for air transport to nearly 100% for money centers. 
• Net Margin : 9.84% is average, but it ranges from a high of 32.61% for money centers to a low profit margin of -28.57% for hotel and gaming. The gaming losses were due to light travel and shutdowns during the pandemic.
• Operating Margin : 10% to 14% is the average, depending on whether you want to include stock payments and taxes in the numbers. Like other margins, the range varies from -23% to as high as 45% operating margins. 

How can you improve profit margins?

• Increase the revenue.
• Decrease the total expenses as a percentage of revenue.
• Make more net income, a byproduct of the first two.

Increase Revenue

• SG&A or Advertising Budgets : If your marketing percentage is less than the industry average, you may have an opportunity to increase your sales revenue through marketing. A higher SG&A is a sign of inefficiencies in your processes.
• High Current Price : Consider lowering it to meet the industry average margins. It might stimulate sales.
• Low Current Price : Increase the profit margin to where you make more money per product.
• Labor Cost Percentage : If the labor cost percentage is really low, you may need to hire more people to provide a better service and create more revenue. If you aren’t working at capacity, you may want to add new products or services also.
• Sales Returns : If you experience lots of sales returns, you may want to figure out why. It will improve your efficiency and lead to more profit because returns still cost you money from transaction fees.

Reduce Expenses

• Returns : Shopify estimates that returns are typically 10.6% of purchases. This reduction would increase gross income and net income to better than average percentages and make the business nearly $75K more after-tax profit. You’d need to find patterns that are causing returns and figure out how to correct them.
• COGS : Reducing the material costs to 20% , which is a common recommendation for restaurants, would create a similar change as the returns. This would require finding lower-cost but comparable-quality vendors. 
• Rent & Utilities : Using the final column of the NYU Sterns sheet, you can see that most industries would have 1.62% of their revenue dollar going to the lease. If you use that number for utilities too, it would increase the profit by nearly $70,000.

Improve your profit margins for greater business success

• What are profit margins?
• How to find profit margin using the profit margin equation?
• What is a good profit margin?
• How do you find products with high-profit margins using the product and sales margin?
• How can I decrease sales expenses?
• How to improve net sales with an income statement comparison?

S-Corp vs C-Corp: Which is Better?

• Tax consequences
• Type of shareholder

What is a corporation?

C-corporation definition.

• Created by filing articles of incorporation.
• Double taxation (taxes charged on both corporate and personal income).
• Limited liability.
• Unlimited shareholders.
• Personal liability protection.
• Must abide by state and federal laws.
• Files under Internal Revenue Code Subchapter C .
• Best if you intend to have an Initial Public Offering (IPO).

S-Corporation Definition

• Requires the business to be an LLC or a corporation.
• Created by filing a Form 2553 with the IRS to opt to be treated as an S-Corp.
• Maximum of 100 shareholders.
• Shareholders must be U.S residents or select business entities. 
• Must pay owners that are actively involved in the business a reasonable salary.
• Profits are paid as dividends.
• Losses are pass-through income.
• Files under Internal Revenue Code Subchapter S .
• Best if you have less than 100 owners and more than $100,000 net income.

Other Types of Corporations

S-corp vs c-corp similarities.

• Both are considered separate legal entities.
• Both have the same incorporation documents (unless the S-Corp is filed as an LLC ).
• Both an S-Corporation and C-Corporation follow the same state laws.
• Both have a board of directors, shareholders, and a management team.
• Both provide limited liability protection.
• Both pay payroll taxes.

C-Corporation vs S-Corporation: Legal Entity Status

C vs s-corporation: limited liability protection.

• If the business breaks the law and the individual was not involved, there is no personal liability, meaning an employee or customer can’t file a lawsuit against you for something the company did.
• If a business owner is in a lawsuit, the corporation cannot be held liable unless the business owner was actively using company assets to break the law.

C-Corp vs S-Corp: What Filing Documents Do I Need?

• Certificate of Incorporation or Articles of Incorporation
• Organizational Minutes and bylaws
• Shareholder Agreement
• Share Certificate for each shareholder
• IRS Form SS4 – Application for Employer Identification Number

S-Corporation vs C-Corporation: Both Follow State Laws

Governing structures are the same for both.

• Stockholders : The number of people who hold shares in the company. They get to vote on important changes like dividends increases, dividend decreases, board of directors, and new executives.
• Board of Directors : Typically shareholders or experts in their field that advise the executive team. The person in charge of leading the meetings is called the Chairman (or Chairperson) of the Board. The Chairman is often the CEO or independent from the management team.
• The Executive Team : Made up of the people in charge of actively running the company. The executive team will typically include the CEO, COO, CFO, CIO, and an attorney.
• 1 Shareholder : 1 Director minimum
• 2 Shareholders : 2 Directors minimum
• 3+ Shareholders : 3 Directors minimum
• Flexible Board Sizes : Must follow the rule 2X – 1, where X = minimum based on fixed board sizes.

Cautionary Tale: Don’t Make Employees the Chairperson of the Board

C-corps and s-corps both pay payroll taxes , what is the difference between c-corp and s-corp.

• Ownership limitations
• Number of shareholders
• The goals of the organization

What is the Taxation Difference Between S-Corp and C-Corp?

C-corporations have corporate income tax, s-corp status uses personal income tax returns.

• Employee Income : If business owners are actively involved in a company that receives S-Corp status, the business owners must receive a reasonable salary and pay taxes at the personal income tax rates. The salary should be comparable to the median wage for the position.
• Dividend Taxes : All profits will be paid as dividends to the business owners and taxed based on the dividend tax rates which are 0%, 15%, and 20%. The limits for the brackets are far above the tax brackets for the standard personal income tax rate. 
• Pass-Though Income : Losses are pass-through income. If after paying reasonable salaries, the business loses money you can use the Qualified Business Income Deduction to claim 20% of your expenses as losses from your personal income tax.

So who wins between S-Corp vs C-Corp tax advantages?

S-corps have limitations on shareholders.

• No foreign entities or people.
• Only U.S residents, certain trusts, and estates can own shares.
• No partnerships or corporations can own shares.
• Cannot have multiple classes of shares, for instance, voting and non-voting shares.
• Financial institutions, insurance companies, and domestic international sales corporations cannot be shareholders of S-Corps shares.

How many shareholders can an S-Corporation have?

S-corp vs c-corp pros/cons: why would you choose an s-corporation.

Can a C-Corp Own an S-Corp?

How do you know if a corporation is s or c.

• Checking to see if it filed a Form 2553. If it did not, it is a C-Corporation.
• Review the tax returns. A C-Corp files 1120 vs 1120s for an S-Corp.
• Call the IRS at 1-800-829-4933.
• Ask the business owner.
• Check to see if it is a publicly held company. Only C-Corporations can be publicly held.
• Search Dun & Bradstreet’s business lookup . 
• Verify the company is not a Sole Proprietorship or Partnership. These small businesses can’t be corporations.

Can an S-Corp own a C-Corp?

Choose an s-corporation unless you have to be a c-corporation.

• Two separate tax returns
• State requirements
• Internal Revenue Service requirements
• 11 Types of Business Structures: Which One’s The Best Fit? 
• Sole Proprietorship vs LLC
• S-Corp vs LLC

How to Start a Clothing Brand (and Make 7 Figures a Year)

Have you ever wondered how to start a clothing brand? Starting a clothing line business only requires a little investment and some technical skills. You can start a clothing business and make a great living. We’ll show you how.

[su_note note_color="#dbeafc"] Read our guide from start to finish or click any of the links below to jump straight to the section you need to know about right now.

Case Study: Portland Gear

Learn design skills, create a clothing brand business plan, pay attention to fashion trends, create a brand identity, market your brand, source materials, curate a small clothing line, package & distribute your collection, promote your collection, sell your clothing brand, keep growing your clothing business.

• Go Start Your Own Clothing Brand [/su_note]

Marcus Harvey turned his love for Portland, Oregon, into a hometown clothing brand called Portland Gear . He started screen printing in college to make some extra money but stopped to take on his first job.

On Thanksgiving of 2014, he designed two shirts, posted them on Instagram, and sold $5K worth on the first day. Six years later, Portland Gear is making over $100K a month.

Marcus took the time to explain how to start a clothing brand. He gave us a ton of great advice about how to start your own clothing brand that we’ll include while providing a step-by-step guide to start a clothing brand.

How to Start a Clothing Brand

Starting a clothing brand is part art and part business. You’ll want to follow this 11-step process to start a clothing line.

• Learn design skills.
• Create a clothing brand business plan.
• Pay attention to fashion trends.
• Create a brand identity.
• Market your brand.
• Source materials.
• Develop your collection.
• Package and distribute your collection.
• Promote your collection.
• Sell your clothing brand.
• Keep growing your clothing brand.

Get ready to learn how to make your own clothing brand.

You don’t have to attend school to succeed in the fashion business. You can learn almost everything you need to about fashion brands online. While you can start a clothing brand without a formal education, many people find they benefit from the structured learning environment that comes with enrolling in some official courses.

Attending live in-person courses comes with access to networking opportunities, insights from an experienced fashion designer, and specialized resources and tools.

Educational institutions around the country and the world provide fashion design and small business programs that teach their students how to start successful clothing lines. Renowned schools like Parsons in New York and Central Saint Martins in the UK are globally recognized for their exceptional fashion education.

For those with more determination than resources or time, there are online courses from successful clothing line professionals including Marc Jacobs’ MasterClass and Maker’s Row Academy .

You can even use Udemy for accessible and flexible learning opportunities.

A clothing brand business owner may need skills in the following:

• Production and printing

Let’s dig deeper into each of these to see how they impact a clothing brand.

Clothing Design Skills

Every fashion brand needs a designer. This is the person who takes the idea and makes it a reality.

A fashion designer will typically include several steps in the design process. The steps to design your own clothing brand include:

• Draw design using paper or digital software, like Tailornova .
• Have a pattern maker cut the patterns for the design.
• Build a prototype.
• Make alterations.
• Create a tech pack (design specifications you give to a clothing manufacturer).
• Source the materials and begin manufacturing.

This process is called product development and is used consistently in the fashion business. Managing product development is one of the keys to a successful clothing company. Without a controlled design and development process, a company may fail or tarnish its brand identity.

I’m not going to go into all the details of each as these are highly technical fields, but there are a ton of great resources on how to design clothes. Here are some useful resources to consider:

• Best fashion design schools
• Free online design classes
• Best fashion design software
• Best print-on-demand companies

Pro Tip: I have a client who is in the process of starting their own clothing brand and have personally used Printful to help clients meet their print-on-demand needs. Their software helps you with all steps involved in creating clothing designs, making it easier to start building your fashion brand company and selling your designs to potential customers through an online store.

The next skill you need to develop is familiarity with the technology aspect of the industry. Paying a developer to help start your eCommerce store can be expensive. I’ve seen people spend $25K and not get what they want. It’s important to understand the technology aspect before you start.

Technology that will need to be used includes:

• An eCommerce platform (Find Investopedia’s review of the best ones here .)
• Payment processors
• Editing software
• Marketing software

Decisions around what tech you’ll use are crucial when trying to figure out how to start a clothing brand because the costs are much lower to run an eCommerce store with production from a print-on-demand company that handles the printing and shipping of the items you design than sourcing our own designs from a manufacturer.

Most tech companies offer free or low-cost tutorials on how to use their software. Make sure to use them. They were built to help you make the most of their offerings.

Production and Printing Skills

Your clothing business will need production, which can be done through a manufacturing partner, or you can print your own t-shirts and other apparel products. If you are going to take on the production, you’ll need to learn how to use the different types of machines.

Some techniques you might need to learn include:

• Screen printing
• Direct to garment
• Transfer printing
• Cad cut vinyl

The best way to learn these techniques is hands-on, which means purchasing your own machines or finding a manufacturing partner who will teach you. I’d like to remind you that drop-shipping companies reduce much of this workload. Once you’ve built the business up, learning to do it can save you some money, but production costs quickly increase the upfront costs to start a clothing brand.

Business Skills

Business skills encompass a wide range of essential tasks including accounting, pricing, shipping, and managing inventory. To educate yourself on all of these would require a lifetime of learning. We’ve provided a list of useful resources for leveling up your fashion business skills.

• Accounting: Udemy , EDX
• Pricing: Coursera , Udemy
• Shipping: Shopify , BigCommerce
• Inventory Management: TradeGecko , Unleashed

Pro Tip: You can also use YouTube videos to learn almost anything these days.

Starting a clothing brand has many of the same considerations as any new small business, including establishing how much money you’ll need, when to get financing, and planning for legal, financial, marketing, production, and distribution of the clothing—all of which we recommend including in your business plan.

Marcus told us,

[su_quote] We started by setting up at Portland events in our old Volkswagen van and expanded from there. [/su_quote]

Meanwhile, the owner of Urbanity started his successful clothing boutique by writing a 100-page business plan and getting a small business loan at 22.

Fashion Brand Business Models

The most important consideration when you start a clothing brand is how you’ll produce your clothes brand. These are the main ways that designer brands produce their clothing:

• Hand-produced clothing: You can create your entire clothing line by hand. This is usually something that designers will do when they are designing prototypes or one-off pieces. It’s time-consuming and only suitable for extremely small batches, but great for creating the first piece of custom-tailored clothing.
• Bulk manufacturing: Bulk manufacturing is a necessity if you are selling your clothing in major retailers. Minimum order quantities apply for bulk orders. The equipment is costly, so you’ll likely work with a manufacturing partner. This is one of the least costly per item but highest upfront cost business models for clothing production.
• Print-on-demand: You can avoid handmaking many products and having to manage inventory with print-on-demand. You won’t get as good of deals as you will with bulk manufacturing (and may have less design control and fewer options), but you’ll be able to produce more pieces than you would by handmaking products. Production doesn’t start until the product is ordered.
• Dropshipping: With dropshipping , you don’t have to worry about managing inventory or printing. You simply list the item on your website and when someone places an order, it is sent directly from the manufacturer to the customer.

Now that you know different clothing brand business models, let’s discuss how much creating a clothing brand costs.

How Much Does It Cost to Start a Clothing Brand?

Once you’ve come up with some ideas, clothing brand costs need to be estimated. Most clothing line owners self-fund, but that may be impractical if you are manufacturing in bulk. You’ll probably want a couple thousand dollars to start a clothing brand. Still, minimum order quantities from some businesses can mean buying $30K+ in inventory, which will dramatically increase your costs.

If you’re wondering how to start your own brand of clothing, you need to pay attention to trends in the fashion industry. At the same time, you have to maintain a consistent brand identity.

Understanding the seasonal and annual trends in clothing design will help you stay relevant. Depending on the time it takes to create a line, manufacture it, and promote it, you may need to think one to three seasons ahead to stay on track with seasonal changes. There are tools to help you predict trends , too.

Alternatively, you can try to find evergreen designs that people are always buying, like plaid, which can be traced back to as far as the eighth century B.C.

Next, we’ll discuss how to create a clothing brand identity.

Making a clothing brand is more than a logo and your name. It’s about something bigger than a collection of clothing items. It’s about your values, how you’ll make lives better, your standards, your lifestyle, the colors, fonts, and fabrics you use, and more.

Once you’ve defined what makes your clothing brand unique, create a brand guide that will help you make decisions as you launch and grow the brand.

Pro Tip: Need some inspiration as you make clothing brand decisions? Check out our handpicked boutique name ideas for 2024 .

Clothing Brand Name Ideas

Your business name is often the first thing your target market will see. It will communicate what the brand is all about and you’ll use it to make your logo, too. There are a ton of ways to name a clothing business. Some fashion designers use names that:

• Pay Homage to the Founder: Think Ralph Lauren or Louis Vuitton.
• Describe Clothing Items: CryptoLids creates hats for crypto and web3 communities.
• Show a Passion: Portland Gear celebrates the culture of Portland in its fashion line.

Your business name should be one that makes it easy to convey your brand story. Unless you’re already an established brand, you’ll want every advantage you can get when communicating with your target audience.

Try out our clothing brand name generator to find inspiration . Once you find a clothing brand name you like, just click on it to find out if the domain name is available. Learn more about naming a clothing brand .

Financial Management

A crucial portion of successfully starting a fashion business is managing its financial aspects. Marcus emphasized the benefits of starting small:

[su_quote] You get quantity discounts the more of the same item you buy, so it’s better to start small than have 100 different products. [/su_quote]

He typically aims for a 65% margin on the apparel.

You may need some extra funds to start your clothing brand. To find banks that work with small businesses, use this resource .

Let’s look at some tricks you can use to help your clothing brand become profitable.

Get a Business Bank Account

Almost every bank offers business checking and savings accounts. Which one will work best for you depends on how you do business.

If all business is by card and you don’t need a branch nearby, online banks typically pay better interest, but going with the big players like Chase or Wells Fargo means you get a ton of support. Here are some of the most highly recommended business banking accounts:

• Chase Business Complete Banking – Great new account bonuses.
• U.S. Bank Silver Banking Checking – Excellent for use with eCommerce and PayPal transactions because you can send weekly deposits to avoid some of their fees.
• Axos Interest Checking – My personal favorite! Offers higher interest payments for lower balances. I love that they hook up the little guy!
• Wells Fargo – I was with Wells Fargo for the better part of 15 years, but when I had some problems a few years back, it caused me a real headache because the nearest branch was two hours away and I couldn’t handle it by phone. Despite that, they normally have great customer service and seem to have gotten past all that.

Pro Tip: Investopedia gives a more thorough review of each of these accounts. Ultimately, the interest offered by online banks tends to be significant and the absence of a bank building won’t be a problem unless you need to deposit cash.

Payment Processors

The last time I took the time to review payment processors, they all seem to be basically the same unless you are doing hundreds of thousands of transactions. That being said, there are some new players on the market due to the changes in the financial markets brought on by cryptocurrency. The primary players in this field are:

• PayPal – We all know the company and use it frequently, but if you’ve never used it for business, be careful. They show a ton of love for customers, but not as much toward businesses. When I started my first business, they thought we were making money too quickly and placed a 30-day hold on withdrawals. It was a pain. Once I got past that, it’s all good. They offer third-party financing, too.
• Square and Cashapp – Square has a ton of useful features and is constantly expanding its ecosystem. It’s a reasonable competitor to PayPal. I recommend you consider offering both.
• Authorize.Net – Visa-owned payment gateway. If you go through a bank for your payment processor, this is typically who they use. The banks tend to charge a higher fee than going directly to them.
• Crypto.Com – Lower fees than traditional processors, but still hasn’t perfected the UI or UX experience. If you work with a bunch of cryptocurrency holders, you might want to have it available. I’ve personally added my own on my site. This may be the future of tech, but it’s still in its infancy.

Budget, Budget, Budget!

A budget is the most important tool you can use in business. Without it, your clothing brand might not make it through the first few years.

Marcus encourages you to “know your margins, reinvest in your business, and grow responsibly.”

Consider Your Many Funding Options

Starting a clothing brand doesn’t cost a fortune. The initial investment in owning a clothing brand can be less than $1,000.

Marcus suggests beginners use:

• A print-on-demand company
• A social media marketing budget of less than $500 a month

Common funding paths include:

• Personal funds
• Loans from family or friends
• Business partner(s)
• Government programs

The Small Business Administration (SBA) offers free courses on funding programs . For info on using personal funds to start a business, check out this article from The Hartford.

Alternative sources of funding include:

• Crowdfunding
• Home equity loans
• Rollover for business startups (ROBS)

Click on the link to find a list of the best offerings in each group.

Develop a Pricing Structure

How you price your clothing brand will impact how people view it. If your prices are too high, they’ll go elsewhere. Too low, and you’ll lose money. Based on the rules of thumb presented by Marcus in his interview,

[su_quote] Use a 65% markup, or half that if wholesale. T-shirts are typically $28, hats $35, and hoodies just under $70. [/su_quote]

Pricing Communicates Value

Shops will often sell their products or services for a lower price to bring in new customers. Be careful doing this. If you sell your clothing for a discount and they tell others, you might have to sell more clothing for the same price. People love a good deal! Just make sure it is sustainable for your clothing brand, or the “expiration date” is clear.

Marcus told us, [su_quote] You can go buy bargain basement t-shirts for $10, but I’m selling a brand, not clothing. I feel like $25 is really where people have to think about buying a t-shirt. If they have to think about buying it, they are more likely to wear it. [/su_quote]

Increase Prices Every Year

Inflation occurs every year. To keep your business running, raise your prices 5% per year. It gives you room to increase wages and to make some extra money. Makes sense, right?

Sales Taxes

All but five states and some cities (or counties) require sales tax. You can find a guide on applying for sales tax on TaxJar . After you register to pay sales taxes, you will need to keep track of the sales to pay them according to state laws.

Pro Tip: I highly recommend speaking with an accountant who specializes in taxes to help you comply with your business’s unique needs.

You’ll need some insurance depending on what kind of a business you are running. For example, you’ll need unemployment insurance and workers compensation if you have employees.

You may also want a general liability policy and cybersecurity insurance to protect against unforeseen events that could cause your clothing brand business substantial losses.

• Unemployment Insurance: Unemployment insurance (UI) protects employees from entirely losing income when they lose their jobs. It is paid for on both the federal and state level. The federal unemployment insurance is driven by a 6% tax on the first $7,000 of each employee’s income, a total of $420 per year per employee. Your state taxes can reduce the federal portion down to $42 per year per employee, but each state has different requirements. You can find a full list of agencies that deal with UI on nolo.com .
• Workers Compensation: Workers compensation is for when people are injured on the job. There are both federal and state requirements, which you can review on this Department of Labor webpage . The policies protect against excessive costs when an employee is injured through acceptable business practices.
• General Liability Policy: A general liability policy is not required, but it is highly advised if people other than employees will be at your physical location. It protects against lawsuits and other occurrences that may occur. Contact an insurance agent to get a quote.
• Cybersecurity Insurance: Cybersecurity insurance will protect your clothing brand against online store hacks. Given the average data breach is millions of dollars, this is highly recommended if participating in any kind of eCommerce.

You’re ready to start a clothing brand. You have clothes to sell, but no clients! How are you going to let people know about your clothing items?

Marketing is crucial for clothing businesses.

From a marketing standpoint, Marcus uses several strategies that he would suggest.

• Only sell what you love. Owning a business is hard work. If you don’t believe in it, it will wear you out.
• Be active within your community. Do popup shops where your target market is.
• Keep your advertising budget low—typically less than $500 a month.
• Have certain dates when you have sales and be prepared for them.
• Invest in photography!

Marketing is about going where your target audience is to help them become aware of your clothing brand and turning awareness into purchasing. Marketing can be done both online and through other channels.

You’ll need to be familiar with the largest three places where you can reach your clothing brand’s customers:

• Facebook and Instagram

Each of these has a ton of resources to educate people on how to reach your target market with their products for businesses. Make sure to familiarize yourself with them; otherwise, you’ll be operating in the dark and wasting a lot of money.

Pro Tip: Portland Gear only spends about $500 a month on advertising because they already had a built-in following from their Portland Instagram page. They also use a super cool 1973 VW Westfalia to do pop-up shops around Portland, which we’ll discuss in a bit...

When you start a clothing company, how you source materials for your fashion brand will create different challenges based on the business model you choose.

With a print-on-demand model, you’ll be constrained by the materials and manufacturing capabilities of each of the providers. Meanwhile, with handmade clothing and limited runs, you probably want to focus on ordering materials from online stores located in the U.S. or local craft shops where you can see and feel the materials before you buy them.

When your business model involves creating larger batches, it gets far more complicated because the materials have shipping costs that are incurred when they are shipped to the clothing manufacturer facility, then the manufactured product has to be shipped to you (or your clients). Every time you have shipping during the manufacturing process, there is a potential for the business model to experience additional costs in the form of tariffs and mileage charges.

True Story: I knew a clothing business owner who ordered a single roll of fabric from China as an expedited order. The shipping ended up costing almost 20 times the fabric cost and guaranteed that the batch he was designing would be a loss. It was a tough mistake to make, especially before the company made any revenue. Sign up for our UpFlip Mentorship program to get advice and avoid costly mistakes.

Starting a clothing brand is a lot of work.

I reached out to the friend of mine who owns Cryptolids.com , which has helped 26 web3 companies launch their clothing business this year. He told us:

[su_quote] I spend about 40 to 60 hours on a full store build including all front end and back end creation as well as mocking up merch for up to 50 t-shirts, hats, and other products. [/su_quote]

He does this every day, so he is super fast at designing a t-shirt or hat design and adding it to an online store. My takeaway: Expect to spend at least two to three hours per product until you get used to all the design work for your own clothing brand.

Custom designs that don’t use standardized t-shirts and hats could take even longer. Project Runway contestants, for example, normally spend one to two days creating each piece on the reality TV show, while a discussion about fashion industry design times reflects varying inputs and revealed that:

[su_quote] This whole process takes about 4 months. 4 weeks for research and sourcing. 4 weeks for cutting and toiles. 8 weeks for finalising, material creation, accessories et cetera [/su_quote]

Once you’ve created your own clothing line, you’ll need to decide how to package each clothing item. Like designing clothes, private label packaging contributes to how your clothing brand idea will be received.

If you’re selling in an online store, you might want a box that showcases your brand and offers coupons to encourage customer loyalty, while a retail store in the clothing industry might want paper or plastic bags. Make sure to use recycled materials if you’re trying to be eco-friendly. On the other hand, wholesale clothing suppliers might go for a plain box with a packing slip inside.

There are a number of ways to promote your collection when starting a clothing brand.

Consignment

Create an online store.

• Retail Locations

We’ll discuss how each of these can help you turn your clothing company into a successful fashion brand.

Many retailers allow a new business to sell their products in their retail store if you offer consignment. Unfortunately, consignment means you have to provide your clothing line to the retailer and only get paid when they sell the item.

When you start a clothing brand, consignment makes it easier to get your entire clothing line into a store. This business model can be really beneficial in the fashion world because of the risk-free nature to the retailer.

When you wholesale your clothing brand, retailers will buy your clothing designs in bulk. Retailers normally won’t want to do this when you start a clothing brand because it’s more costly. Start with consignment and work your way up to wholesaling.

Pro Tip: When you’re approaching a store, make a point to be respectful of their time. A good sales strategy for clothing brands is to provide a card or catalog and ask to schedule a meeting in the future to give the business owner or manager time to review what you do and prepare for a conversation.

Your clothing business needs to be capable of working as an online business idea before you launch your own online store. Your business plan should also include information about handling shipping and fulfillment. You’ll need to consider aspects like online customer service, the impact on your production model or clothing manufacturer, and your packaging.

As long as you know how your clothing line will handle these things, your existing clothing brand can use your website as online marketing and a way to sell your products directly to customers. That means you’ll be able to get the full retail price for your clothing brand without having to share the profits with other retailers or eCommerce platforms like Amazon, Etsy, or eBay.

There are plenty of web builders that you can explore if you’re wondering how to start a clothing brand online. When you are choosing which ones to use you’ll want to consider which web templates work best for your style of ecommerce and which will convey your brand messaging best. Learn how to build a website here .

Pro Tip: I personally prefer Shopify . You can start with a free clothing brand template like Boundless . You might also want an app that makes it easier for people to understand how your clothing line fits. You can use other online marketplaces directly from Shopify, too, which can magnify your clothing brand results.

Important Website Pages

Some of the most important web pages for the fashion industry include your home page, collections, product pages, about page, contact page, and FAQ. Make sure to use your brand guide when creating these pages to keep your website in line with your clothing line branding.

Great Photos

A clothing line benefits tremendously from great pictures. Have you ever seen a picture of a product and then when you receive it, the color is completely different? Your target customers probably won’t be happy, which means they might return the product. They might even tell potential customers not to buy from you. 

Finding a professional photographer who captures true-to-color lifestyle images with clothing brand models can really convey a brand image better than using stock photos or cell phone pictures. It may seem costly, but it can pay off over the long run.

Every business model struggles to market its services until it cracks the code of what works for them, but some strategies work if you take the time to get good at them. Some of the marketing strategies you should consider for your clothing brand include:

• Content marketing: Sharing photos, optimized video, and blog posts helps drive traffic to your brand.
• Email marketing: Start building an email list as soon as you start working on your clothing business. You can share updates about working on the collection to help people get excited about the clothing line and do giveaways to incentivize emails.
• Lend clothing: Beauty businesses use clothes during photo shoots and will pin your clothing brand when they share the pics if they use your clothes.
• Influencer marketing: Working with TikTok, YouTube, and Instagram influencers can help get your clothing line in front of lots of people.
• Loyalty program: Reward loyal customers and encourage them to refer potential customers.
• Collaborations: Find other brands with similar values to collaborate with for crossbranding opportunities.
• Search engine optimization (SEO): Optimize your high-performing website pages with SEO to increase traffic to your fashion brand store.
• Social media advertising: Use paid ads, promoted posts, and organic content.

Clothing brands can be sold through a variety of sales channels. Some of the most common for a new business include:

• Online marketplaces
• Your own retail store
• Other retailers
• Popup shops
• Partner brands

Online Marketplaces

Selling clothes can be done through various sites. The top places to list your clothing brand include:

• Facebook Marketplace

Pro Tip: Shopify connects to most of these sales channels easily, which makes it so clothing companies can sell their wear on multiple sites at once. Make sure to look at the percentage of sales that each one takes to make sure you set the retail price of your clothing line to cover any commissions that they collect.

Your Own Retail Store

Creating clothing brand stores is a great way to make your brand more accessible, but it is expensive. You should probably assume you’ll need at least $100,000 to open a clothing store, and there are a lot of considerations.

[su_quote] One of the things we’ve done to keep the symmetry of the business is we keep the warehouse, office, and store real close together so everyone can be on the same page. [/su_quote]

Marcus discussed his experiences with opening his first shop in the interview about how to make a clothing brand below.

To find spaces to rent in your area, contact a local commercial real estate agent. You can search for them by your area here .

Other Retail Stores

As we discussed earlier, there are a few ways to get your fashion brand into other clothing stores, including consignment and wholesaling. Consignment pays when the clothing is sold, while wholesaling pays before the clothing is sold or on a Net-30, net-60 or Net-90 schedule.

Popup Shops

Popup shops are fun marketing tools to meet your customers where they gather. These are great for brand identity because they help associate the business with another place people already like.

Common places where popup shops are allowed include:

• Music festivals
• Flea markets
• Sporting events
• Coffee shops

You’ll have to talk to the owner or manager of the location you have your eye on to get their permission and sort out details, but most are normally agreeable if you meet their conditions. Your municipality may also have laws governing pop-up shops.

With popup shops, spaces are typically limited to no more than 10’x10’ or 20’x20’, and the location will normally want to be able to see what your setup will look like beforehand.

Pro Tip: This SBA guide on business laws is a good reference that you can skim now and dig into as sales opportunities unfold.

Partner Brands

Providing your clothing line to partner brands is a great strategy. You can make it even more meaningful by offering combined deals where the customer gets a discount if they buy from both brands together. This can be done both in-store and online.

As you achieve milestones in your business plan, you’ll want to look for new ways to grow your own brand and provide valuable services for your target audience. You might open another store, take control of the manufacturing process from your existing clothing manufacturer, wholesale clothing, or provide consulting services to other prospective designers.

There are so many ways how to make your own brand of clothing successful. Read on to learn more about common strategies.

Keep Inventory

Carrying inventory is both a blessing and a curse for a fashion startup. You’ll have to pay more to create clothing brand inventory, but the per-unit pricing usually is less than using print-on-demand. That means when you sell your private label products to customers at a higher price point, your cost of goods sold leaves you with more gross profit.

A strictly online store can get away with using print-on-demand or dropshipping, but fashion brands will need at least some materials and clothing items when they sell in person. That means you’ll need product displays, registers, and mannequins.

Marcus started Portland Gear with just two designs and 1,000 shirts, which made it easy to sell out the first day.

Startingaclothingbrand.com offers a list of manufacturers by location and type of clothing. It’s a great place to start when looking for clothing manufacturers.

Take Over From the Manufacturing Facility

You can get used printing machines and product displays at huge discounts if you buy them used. You can find printers and product displays through most on-brand markets, pawnshops, going-out-of-business sales, and other places. Consider buying an existing business with the printers included in the purchase price.

Pro Tip: Learn more about valuing an existing business in our guide to buying businesses .

Taking over manufacturing may cost more upfront, but a business model in which you produce your existing or new clothing brand yourself can increase your margins and mean a successful business that’s that much more in your control. 

Hire Employees

Marcus emphasized the importance of hiring the right people when starting a clothing brand.

[su_quote] You need to hire people that fit the brand story. [/su_quote]

A clothing store that’s open to the public might need employees. Depending on your financial position when starting, you can work all the hours yourself or hire right away.

Even if you run a completely online clothing store, you might scale to a point where you need help with fulfilling orders, marketing efforts, sales strategy, and managing social media accounts so you can go from making your new business work to really taking on the fashion world.

Go Start Your Own Clothing Brand

Now that you know how to start a brand of clothing, take the next step. Start your own!

The truth is, all it takes is a great idea, some skills in design, and a good marketing strategy to get started. As Marcus told us:

[su_quote] If you like it, there are other people who will like it. You just have to find them. [/su_quote]

Have you started a clothing brand online, consigned your designs, or opened a retail shop? Or do you know someone who has? We’d love to hear about your brand in the comments below!

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How to Start an Etsy Shop

Steps to Starting an Etsy Shop

How big is the etsy industry, what are the key sectors of the etsy market, what external factors affect the etsy market, who are the key competitors in the etsy market, what are the key customer segments in the etsy market, what are the typical startup costs for a new etsy store.

• Is an Etsy Business Profitable?

What are the Keys to Launching a Successful Etsy Store?

How to start an etsy shop faqs, helpful videos, additional resources for etsy store owners.

• Other Helpful Business Plan Articles & Templates

Opening an Etsy shop is a great way to turn your creative passions into a profitable venture. With over 4 million sellers, Etsy provides the perfect platform to reach a worldwide audience of buyers looking for unique and handmade items. By taking advantage of Etsy’s features, you can create a cohesive online presence that showcases all your hard work and attracts new customers.

In this article, we will provide the steps to take to start your Etsy business, and some tips to help you succeed.

Importantly, a critical step in starting an etsy shop is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here .

Download our Ultimate Business Plan Template here

1. Create an attractive shop name and branding 

The business name that you choose can have a big impact on the success of your online store. Etsy recommends that you choose a name that is short, memorable, and reflects your personality or product offerings.

In addition to a unique Etsy shop name, it’s important to think about the logo and branding of your business. You should design an identity for your business that sets it apart from other shops while still being recognizable as part of the Etsy marketplace. In order to see how well your Etsy product names fit with your overall brand, consider searching for them on Google, Flickr and Pinterest before you start an Etsy shop.

2. Choose your product category 

Before you start an Etsy shop, take some time to think about the products you want to sell. Etsy offers a wide range of categories, including clothing and accessories, home and living, art and craft supplies, and digital downloads. Choose the category that most closely aligns with your product offerings.

3. Write compelling product descriptions

In addition to quality photos, Etsy shoppers also look for well-written product descriptions. Your Etsy product descriptions should be concise and interesting, explaining the unique features of your products. Be sure to use strong keywords throughout your product descriptions in order to increase your Etsy shop’s visibility in search engine results.

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4. Create a cohesive brand 

Your Etsy shop should be consistent with your personal brand or the brands of your business partners, if applicable. Use the same colors, fonts, and branding across all of your Etsy listings to create a unified look. This will help customers recognize your shop and increase the chances that they’ll return in the future.

5. Upload quality photos of your products  

High-quality Etsy photos are the key to selling your Etsy products. Etsy recommends uploading images of items that can be zoomed and cropped, as this will increase sales for your Etsy shop.  When taking product photos, be sure to use natural light and avoid harsh shadows. If you don’t have good photography skills, consider hiring a professional photographer to take your shop photos.

6. Market your shop and products online and offline

Finally, Etsy recommends that you actively market your shop to increase its visibility. Online marketing efforts include creating a website for your business and promoting your Etsy products on social media sites like Facebook, Pinterest, and Instagram. Offline marketing refers to networking in person at craft shows, flea markets, or other events.

7. Optimize your shop for search engines

Like any other business, it’s important to take steps to optimize your Etsy shop for search engines. This will help you increase the visibility of your shop in online search results. Etsy provides a number of tips for optimizing your shop, including using keywords throughout your shop name, title, and description.

Finish Your Business Plan Today!

Etsy is the largest creative marketplace in the world. Etsy has seen a significant increase in revenue and usage since it went public in 2010. However, this business growth was accelerated significantly in recent years. As a result, Etsy doubled its revenue to 1.72 billion in the last year.

Etsy is a very unique and diverse site, with users selling an extremely wide range of products.

However, Etsy reports that the top five most popular categories for Etsy sellers are:

• Craft supplies and tools
• Home and living
• Personalized items
• Clothing and textiles

Etsy is very dependent on the global market, as it is a worldwide site. Etsy has seen significant growth globally since its inception in 2005. The coronavirus pandemic had a particularly large effect on the industry and drove many users towards online shopping sites like Etsy.

There are a number of external changes that could affect Etsy’s market share. The growing strength of Amazon, for example, could drive buyers to Amazon rather than Etsy. Another major shift would be if Facebook continues to grow its online shopping presence – this could make it more appealing to buy established brands on Facebook rather than the Etsy platform.

The Etsy market is composed of a variety of competitors. This can range from small businesses to large businesses. The key competitors in the Etsy market can be identified by their size, the products that they offer, and the services that they provide. Some of the key competitors in the Etsy market include:

Etsy’s biggest competitor is Amazon. Amazon is a behemoth of a company and offers a variety of services and products. Etsy is more focused on handmade products, while Amazon has many different types of goods for sale. Etsy cannot compete with the size and scale that Amazon offers. However, Etsy does offer unique products that Amazon does not have.

eBay and Etsy are both similar in that they both allow users to sell products and goods. However, it is important to note that while Etsy does focus on handmade items, eBay has a much wider scope of products available. The sheer number of different types of products sold on eBay is too great for Etsy to compete with.

Etsy is an eCommerce platform that allows entrepreneurs and other small businesses to sell their handmade and vintage goods. The most common customer segments shopping on the Etsy platform include:

Craft Enthusiasts

These Etsy buyers are looking for unique or handmade items that they cannot find in traditional retail. Etsy is a more niche market, and the majority of Etsy product sales come from their core group of craft enthusiasts. This customer segment is loyal to Etsy and continues to shop on the platform because it provides them with a variety of unique items.

Culture Enthusiasts

These Etsy customers are interested in learning about and experiencing new cultures. As a result, they seek out products on Etsy that allow them to do this. They will largely frequent the site as there is such a wide variety of regions represented with different types of jewelry, clothing, or other goods for sale.

Other Consumers

While there are other customer segments shopping for specific items to purchase, consumers are typically window shopping on Etsy. Consumers may use Etsy as a resource to find inspiration about craftsmanship, trends, and other information. While these users may not be fully committed to purchasing something immediately, Etsy is a good platform for them to come across new ideas in the future.

When you start an Etsy shop, there are a few initial costs that you should keep in mind.

Purchasing Inventory

The first cost that you will have to cover is purchasing inventory for your Etsy store. If you are selling items that you already own, this step may not apply to you. However, if you are looking to purchase new supplies or materials to start producing more goods, these costs can be very high. It is important to remember that you should not invest more money into your Etsy store than you can afford to lose.

Offering Shipping Worldwide

Another cost that will be part of your startup is the cost of shipping items around the world. This step is extremely important when it comes to international sales, which has become significantly more popular in recent years. However, offering international shipping can also increase the costs of your products.

Creating Your Shop Logo and Brand Identity

The final cost that you will likely deal with when starting an Etsy shop is the creation of a logo and brand identity for your business. This step may not be necessary if you are selling new or unique items that already have an established brand image. However, if you are selling a new type of product or a product that does not have a well-known brand identity, it is likely that your business will need to invest in creating your own brand image.

Packing and Supplies

Another cost to consider before you open your Etsy store is packing and supplies. Depending on the type of product that you are selling, you may need specific supplies or boxes for shipping. If your products are fragile or breakable, then you will also have to factor in tape and other materials that can help protect your items as they travel.

Paid advertising is another key cost when you are starting an Etsy. This includes spending money on things like Google AdWords campaigns, Facebook ads, and other paid forms of promotion that will help drive traffic to your Etsy store.

Etsy charges a listing fee and a commission on each sale. The commission varies depending on the type of product sold, so be sure to check the Etsy Fee Schedule before listing your items.

Other Operating Costs

Other costs that you will have to consider when starting your Etsy store are things like utilities, business taxes, and even insurance. While these costs may be minimal, they are still an additional cost associated with startup.

Overall, the average startup costs for a new business range from $5,000 to $10,000. However, depending on your specific business needs, your costs may be higher or lower. For example, if you need to hire a designer to create a custom website, your marketing expenses will be higher than someone who is able to create their own site.

Keep in mind that these are just estimates; your actual costs may vary depending on the products you choose to sell and the marketing strategies you employ, but this gives you a general idea of what to expect.

Is an Etsy business profitable?

Etsy shop owners can make a lot of money if their business is successful. However, there are many costs that come with opening an Etsy shop, so it’s important to do your research before you launch.

In general, most Etsy shop owners make a couple of thousand dollars per year. However, this number varies significantly depending on the type of products you sell, the time you are committed to marketing and growing your business, and how successful your shop is.

Hands-on Approach

In addition to selling your products on Etsy, it’s a good idea to be proactive about growing your business. That means you should engage with other Etsy sellers and join relevant Facebook groups. You can also purchase advertisements through Etsy – though this is not advisable until you have built up a following and have some sales under your belt.

Marketing Plan

As mentioned earlier, having an effective marketing plan is key to getting customers as soon as you launch your shop. This includes developing a strategic social media presence – which could include paid ads on Instagram or Twitter – as well as partnering with local or national brands that would be interested in buying from small businesses like yours.

Branding & Logos

Oftentimes, the foundation of a good marketing plan is good branding. You can establish an effective brand presence by picking a memorable store name, creating a logo that’s versatile and relatable to your customer base, and developing clear messaging about your story, products, and services.

Hire a Professional Photographer

Photography is an important aspect of your new Etsy shop – customers can’t buy what they can’t see. It’s critical that you have high-quality pictures of the items in your shop, and this isn’t something you should try to DIY. You should hire a professional photographer or use a photo studio for all product photos.

Creating a Plan & Budget Ahead of Time

Before launching an Etsy shop, it’s crucial to create a solid Etsy business plan and budget. This means coming up with financial goals, as well as crafting a marketing strategy, designing your brand identity, and developing strong relationships with suppliers or manufacturers if appropriate. Before opening an Etsy shop, take some time to consider these questions: “What do I want for my hobby or side business?

If you want to open a side business on Etsy, it’s a good idea to use an alias so that your main job isn’t jeopardized. You should also develop a separate brand identity for your side business.

How to Finish Your Ultimate Business Plan in 1 Day!

Don’t you wish there was a faster, easier way to finish your Etsy shop business plan?

With Growthink’s Ultimate Business Plan Template you can finish your plan in just 8 hours or less!

What is the best Etsy business to start?

The best Etsy business to start is a business that is based on your skills and interests. For example, if you're good at making crafts, then you may want to start an Etsy shop that sells handmade goods.

You'll need to create a business plan and do some research to see what kind of products are in demand on Etsy. You'll also need to invest some time and money into setting up your shop and promoting your products. If Etsy is successful, then your business could be as well.

You can set up an Etsy shop even if you don't have any products made yet. Etsy has a section where you can sell digital downloads. For example, if you're good at making patterns for cross-stitch or knitting, then you may want to upload the designs that you've created and sell them on Etsy. Making digital items is quick and easy and it won't cost much to get started selling on Etsy.

How can I promote my Etsy business?

There are many ways to promote your business. Etsy offers some free marketing. Etsy has a blog with free marketing advice for new Etsy sellers, including Etsy 101 articles. Etsy also offers live help during the normal workweek.

You can also purchase Etsy's Marketing Package to promote your Etsy shop. The Marketing Package includes email marketing, advertising, and special discounts for Etsy purchases.  Etsy also offers Promoted Listings for Etsy sellers who want to promote their products on the platform.

To determine the best marketing campaigns for your business, it's important that you know your target audience. You can use Etsy Analytics to learn more about what your Etsy customers are interested in and how they behave on Etsy.

You can also make use of the free Etsy posts on tips and tutorials on their blog on topics like branding your Etsy shop, running successful promotions, increasing sales with SEO, promoting with social media channels like Facebook and Instagram.

What licenses should I get for my Etsy shop?

Etsy's seller policies do not require you to have a business license to sell on their platform. However, a seller of goods on Etsy may need a license or permit from municipal, county, state, or federal agencies regulating businesses.

You can check with your local business licensing office to see what licenses or permits you need to legally operate your Etsy shop.

How do I set up my Etsy shop?

Setting up your Etsy shop is a simple process that only takes a few minutes.

First, you'll need to create an Etsy account. Then, you'll need to provide some information about your shop, including its name, type of products sold, and location. You'll also need to choose a payment method and shipping carrier.

Once you've created your shop, you can start adding products and customizing your shop's appearance. You'll also need to create listings for your products and write descriptions of them.

What are the different Etsy fees?

Etsy sellers are charged a variety of fees, depending on the type of Etsy shop they have and the services they use. The main Etsy fees are:

Listing Fees: Etsy charges a listing fee for each item listed in an Etsy shop. The initial charge is $0.20 and Etsy does not charge a percentage of the final sale price. Etsy also charges sellers to renew items that have been sold or expired, this too is a flat rate fee depending on the type of listing.

Transaction Fees: Etsy takes 5% from every transaction as a transaction fee, plus another 3-5 cents if you use Direct Checkout through Etsy. Direct Checkout allows buyers to pay with credit cards without leaving the Etsy website. If you accept credit cards directly on your own site (not via Etsy), then there are no additional fees deducted from any part of your sale.

Payment Processing Fees: Etsy charges sellers 2.5% of the total order value plus 25 cents whenever a buyer uses Etsy's Direct Checkout to pay for an item. If you use a different payment processing system, such as PayPal or Google Wallet, then you are responsible for all fees associated with those services.

Shipping Fees: Etsy's shipping fees depend on the shipping carrier, and the origin, destination, weight, and dimensions of the package.

Etsy Business Resources

Etsy – How to Open an Etsy Shop  

Other Helpful Business Plan Articles & Templates

Etsy Business Plan Template [Updated 2024]

Etsy Business Plan Template

If you want to start an Etsy business or expand your current Etsy business, you need a business plan.

Fortunately, you’re in the right place. Our team has helped develop over 100,000 business plans over the past 20 years, including thousands of Etsy business plans.

The following Etsy business plan template and example gives you the key elements you must include in your plan. In our experience speaking with lenders and investors, the template is organized in the precise format they want.

You can download our business plan template (including a full, customizable financial model) to your computer here.

Etsy Business Plan Example

I. executive summary, business overview.

[Company Name], is an e-commerce company that owns a shop under the Etsy platform. The Company retails high-quality handmade and vintage items, as well as craft supplies. The Company aims to become one of the highest-selling shops on the Etsy platform in the United States.

Products Served

[Company Name] will provide the following products:

Customer Focus

[Company Name] will serve individuals who shop online. The Company will primarily offer its products to:

• Millennial Women
• Gen X Women
• Gen Z Women

Management Team

[Company Name] is led by [Founder’s Name], who has been crafting jewelry and décor for over [xx] years. While [Founder] has never sold her products on an ecommerce platform, she has a loyal and rapidly growing following. She will have the help and support of her business partner, [Insert Name], who will handle the marketing and admin tasks for the company.

Success Factors

[Company Name] is qualified to succeed due to the following reasons:

• There has been significant growth in general demand for unique, handcrafted jewelry and décor over the past few years. In addition, [Founder’s name] is a maker with some notoriety, and her clients have provided highly positive feedback pointing towards a national demand for her products.
• The management team has a track record of success in the e-commerce business.
• Easy access to the internet will be a major success factor for the company.
• The e-commerce business is a proven, successful business in the United States.

Financial Highlights

[Company Name] is currently seeking $200,000 to launch its shop on the Etsy platform. Specifically, these funds will be used as follows:

• Professional photography and listing service: $10,000
• Working capital: $190,000 to pay for marketing, salaries, equipment and supplies until [Company Name] reaches break-even.

Top line projections over the next five years are as follows:

II. Company Overview

You can download our Business Plan Template (including a full, customizable financial model) to your computer here.

Who is [Company Name]?

[Company Name], is an e-commerce company that owns a shop under the Etsy platform. The Company retails high-quality handmade and vintage items, as well as craft supplies. The Company’s primary product line includes jewelry, bags, clothing, and home décor. The Company aims to become one of the highest-selling shops on the Etsy platform in the United States.

[Company Name]’s History

[Founder’s Name] is an entrepreneur with a passion for hand-crafting unique jewelry, accessories, and décor. [Company Name] will establish itself as a well-respected business on the Etsy platform.

Upon surveying her existing customer base and finding a potential location for ecommerce expansion, [Founder’s Name] incorporated [Company Name] as a jewelry and décor production company on [date of incorporation].

Since incorporation, the company has achieved the following milestones:

• Developed the company’s name, logo, and website
• Created the list of hand-crafted products
• Determined equipment and inventory requirements
• Began recruiting key employees with experience in ecommerce or in artisanal crafts.

[Company Name]’s Products/Services

Iii. industry analysis.

[Company Name] competes against small, individually owned brands in the industry and major regional or national chains. The coronavirus pandemic supercharged Etsy’s growth, from $818 million revenue to $1.72 billion over the past three years. Etsy also doubled active buyers in that time period. Last year, the number of active sellers on the Etsy.com platform stood at 4.3 million and the site had 81.9 million active buyers who had bought goods through the platform.

Going forward, the hand-crafted goods market is forecast to reach a value of $448.5 billion in the next five years, registering a CAGR of 10.8%. Moreover, North American hand-crafted goods market reached a value of around $242.4 Billion. With the emergence of online retailing and proliferation of various e-commerce websites, the accessibility to artisanal products has significantly increased. Consumers can now buy artisanal items with the click of their smartphones and have them shipped anywhere in the world. Moreover, social media and the internet have made it more convenient for craftsmen to directly access their target markets.

IV. Customer Analysis

Demographic profile of target market.

[Company Name] will serve individuals with an eye for unique, artisanal jewelry and décor, who shop online.

Customer Segmentation

The Company will primarily target the following customer segments:

• Millennial Women – this demographic comprises the most significant market for [company name]. These women are comfortable making ecommerce purchases, and are established in their careers, which gives them disposable income.
• Gen X Women – this demographic is more likely to purchase higher-end products online, as their incomes are typically higher than the other target demographics for this industry.
• Gen Z Women – these women are digital natives, and are the most comfortable buying products online. While their disposable incomes are typically lower, the volume of purchases made by this age group make them a significant market.

V. Competitive Analysis

Direct & indirect competitors.

Competitor 1 The most widely recognized eCommerce platform around the world, Competitor 1 is accepted as the gold standard for corporate brands and small business owners alike. With Competitor 1, one can take advantage of an eCommerce platform that offers a website builder with hundreds of templates, all of which can be customized with the brand’s specific logos, images, videos, and text. With vast customization control and strong analytics, Competitor 1 offers the most powerful eCommerce functionality on the company’s list while also being user-friendly enough for most beginners to manage.

Competitor 2 Competitor 2 is an online marketplace that deals in artistic products of all kinds developed by independent experts. It not only provides a personalized platform for sellers to display their handmade goods but also helps them in creating a unique website/online gallery for the same. Competitor 2 provides a wide range of templates that can be modified with a simple bit of training. It accepts sellers of authentic artistic items on their platform for displaying their products, which they then allow the customers to buy. Competitor 2 ideally makes money through commissions from sales, but it also has paid plans for sellers wishing to utilize more resources on their platform.

Competitor 3 Competitor 3 is an online marketplace for artists that supports only US-based entrepreneurs. The seller needs to have US citizenship to sell on the platform, but the buyer ideally can be from anywhere in the world. Essentially, this C2C company focuses on promoting handmade products made by Americans for everyone! Competitor 3 provides a unique website for its customers. Its website builder is so easy to understand that even a novice can readily navigate through its technicalities.

Competitive Advantage

[Company Name] enjoys several advantages over its competitors. These advantages include:

• Management : The Company’s management team has xx years of business and marketing experience that allows them to market and serve customers in an improved and sophisticated manner than the competitors.
• Relationships : Having lived in the community for xx years, [Founder’s Name] knows all of the local community, media, and other influencers. Furthermore, she will be able to draw from her existing personal and professional relationships to grow her client base.
• Great service at an affordable price : The array of hand-crafted products offered by [Company Name] nearly equals the most premium positioned competitor, [Competitor Name]. However, [Company Name] will offer these products at a much more affordable price.

VI. Marketing Plan

The [company name] brand.

[Company name] seeks to position itself as an upper-middle-market competitor on the Etsy platform. Customers can expect to receive premium-quality, authentic, hand-crafted items. The [Company Name] brand will focus on the company’s unique value proposition:

• Offering a unique range of products
• Good packaging, which can enhance the safety of the products
• Affordable prices
• Providing excellent customer service and support.

Promotions Strategy

[Company Name]’s promotions strategy to reach the audience includes:

Pre-Opening Events Before opening a shop under Etsy platform, [Company Name] will organize pre-opening events designed for prospective customers, local merchants and press contacts. These events will create buzz, and awareness for [Company Name] in the area.

Advertisement Advertisements in print publications like newspapers, magazines, etc., are an excellent way for businesses to connect with their audience. The Company will advertise its products in popular magazines and news dailies. Obtaining relevant placements in industry magazines and journals will also help in increasing brand visibility.

Local Publications [Company name] will announce its opening several weeks in advance through publicity pieces in multiple local newspapers and publications. It will run regular advertisements to maintain exposure to relevant markets.

Social Media Marketing Social media is one of the most cost-effective and practical marketing methods for improving brand visibility. The Company will use social media to develop engaging content in terms of different handmade products and customer reviews that will increase audience awareness and loyalty. Engaging with prospective clients and business partners on social media platforms like Facebook, Instagram, Twitter, and LinkedIn will also help understand changing customer needs.

Word of Mouth Marketing [Company name] will encourage word-of-mouth marketing from loyal and satisfied clients. The Company will use recommendations and word-of-mouth marketing to grow the customer base through the network of its existing customers. The Company will be incentivizing its existing customer base to encourage their friends to come and try their unique, hand-crafted products.

Special Offers Offers and incentives are an excellent approach to assisting businesses in replenishing the inevitable customer churn each year. The Company will introduce special offers to attract new consumers and encourage repeat purchases, which will be quite advantageous in the long run.

Pricing Strategy

[Company Name]’s pricing will be moderate, so customers feel they receive great value when purchasing products listed in the Etsy shop. The customers can expect to receive quality products at a more affordable price than what they pay on a luxury e-commerce platform.

VII. Operations Plan

Functional roles.

To execute on [Company Name]’s business model, the company needs to perform several functions, including the following:

Service & Administrative Functions

• Product creation
• Logistics and Operations Manager
• Sales manager
• Customer service
• General & administrative functions including legal, marketing, bookkeeping, etc.
• Inventory management

VIII. Management Team

Management team members.

[Company Name] is led by [Founder’s Name], an entrepreneur with a life-long passion for hand-crafting unique jewelry, accessories, and décor. She has been crafting jewelry and décor for over [xx] years. While [Founder] has never sold her products on an ecommerce platform, but she has a loyal and rapidly growing following.

[Founder] graduated from the University of ABC where she majored in art. She has also earned an MBA in Sales and Retail Management from XYZ University.

Hiring Plan

[Founder] will serve as the Chief Executive Officer. In order to launch its shop on the Etsy platform, the company will need to hire the following personnel:

• Inventory and Quality Assurance Manager
• Sales and Marketing Manager
• Shipping and Logistics manager

IX. Financial Plan

Revenue and cost drivers.

[Company Name]’s revenues will come from the sale of products on the Etsy platform. The major costs for the company will be production and shipping costs, and salaries of the staff. In the initial years, the company’s marketing spend will be high, as it establishes itself in the market.

Capital Requirements and Use of Funds

[Company Name] is currently seeking $200,000 to launch its shop under Etsy platform. Specifically, these funds will be used as follows:

• Design and build-out: $10,000

Key Assumptions

  5 Year Annual Income Statement

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