If you are a crafter, collector, or artist, you have probably thought about bringing your wares to Etsy, one of the most popular and visible online marketplaces. Having an Etsy shop offers creators and collectors the chance to expand their hobbies into viable small businesses.
As of 2020, more than 4.3 million independent sellers had sold goods on Etsy, making it a prime locale for entrepreneurs looking to connect with a vast community of creative sellers and buyers. Setting up an Etsy shop is a relatively simple affair, but there are a few administrative and legal steps that need to be addressed in that process. This article will provide details on how to start an Etsy business successfully while following all relevant guidelines.
Designing Your Etsy Shop
Like all entrepreneurs, Etsy business owners need to take the appropriate amount of time to strategize the workability of their business idea. While no business is ever guaranteed success, researching your target market and the competition before you begin setting up your shop allows you to have the maximum amount of insight into what works well on Etsy and how to market your product in a way that catches attention.
Start by checking out a few other Etsy sellers who specialize in goods similar to your own. Not only will you get a feel for how your product presents best in the e-commerce world, but you can also draw inspiration from other crafters about how best to structure your business Etsy account.
This research stage is also where you can get a sense of how to structure your pricing in a way that draws customers and turns a profit. You'll want to calculate your break-even point and set prices that pay you a living wage. The suggested equation provided by Etsy appears as follows:
|= Wholesale Price
As you design your Etsy business, figure out indirect and direct costs, as they will apply to your new startup. Examples of indirect costs include licensing, Etsy fees (explained in detail later in this article), and taxes. Direct costs entail expenses like craft supplies, packaging, and shipping.
There are also both indirect and direct costs associated with the labor you put into producing your products. Whether it's time spent managing your Etsy.com account, the actual creation of your goods, or even sourcing materials, these are all important factors to weigh when setting your Etsy shop up for success.
Launching Your Etsy Business
Once you feel ready to get your Etsy business off the ground, there are a few more crucial components to put in place. Deciding on your business structure is one key item that determines your tax liabilities as a shop owner. Many Etsy sellers choose to run their businesses as sole proprietorships because they are the only "employee," but others may choose to become a limited liability company (LLC) so that their business finances are formally separated from their personal funds.
It's advisable to spend reading the Etsy Seller Handbook as you begin. This reference is deemed the ultimate guide on succeeding as a seller on Etsy because Etsy created it. The following sections offer insights into a few other basic considerations that new Etsy business owners may face.
Naming Your Etsy Business
The first area where you want to make sure that your new business is aligned with legal requirements is choosing your business name. While choosing an Etsy shop name may seem like a trivial aspect in the launching of your startup, it's actually one of the cornerstones of your brand. Bear in mind that your shop name must be entirely different from your Etsy username and that no shop names or usernames can be used twice once taken, even if the names were never formally used.
Begin by making a list of qualities or attributes that you want potential buyers to associate with your small business. Think of words that convey those traits and test out different combinations that could spark interest. Once you have whittled your list down to a few options, you'll need to check the availability of those names during your shop creation via the "Check Availability" tab.
Another consideration in the naming process is to be aware of words or names that are trademarked. Check out the United States Patent and Trademark Office's website to access the database of trademarked names. Do the same with your local trademark authority.
Your Etsy Shop Finances
Whether you choose to run your Etsy business as a sole proprietorship or LLC, you'll want to open a business bank account. This allows you to separate your Etsy payments, the expenditures you make toward the materials needed for your handmade items, and any fees associated with your Etsy listings from your personal finances.
Although Etsy is an open marketplace that all sellers are invited to utilize, selling on Etsy isn't free. Another vital consideration is the Etsy fees that come with every listing. Understanding how Etsy fees work is essential for accurate and profitable financing. Here's a short breakdown of Etsy fees:
- Listing fee: $0.20 is charged each time you list an item on your Etsy store and is due to Etsy whether a sale originates from the listing.
- Transaction fee: This fee is charged to sellers whenever a sale occurs. The transaction fee will vary from sale to sale, as it's always figured at 5% of the total cost of the transaction, which includes the price of the product, shipping, delivery, and any special wrapping requests.
- Multiple quantity fee: A $0.20 per additional item fee applies to sellers when they sell more than one quantity of a single listing in one transaction. The standard listing fee covers the first item sold, and all other items sold within that same transaction go at $0.20 each.
- Payment processing fee: This fee is set at 3% of each total sale with an additional $0.25 order fee.
Setting up smart bookkeeping practices from the beginning makes selling on Etsy more straightforward and simple. Accounting software, such as that available through Skynova, can take the guesswork out of small business finances and leave you free to focus on creating new items and serving potential customers on Etsy.
Best Practices for Marketing Your Etsy Store
Etsy entrepreneurship comes with many creative options for marketing. While standard networking that entails handing out business cards, visiting local boutiques to leave samples, and promoting your wares by word of mouth are all still fantastic for Etsy, social media marketing is one of the best ways to promote your Etsy products.
The basics of social media marketing for businesses are similar to the strategies individuals use to increase their personal web presence: use keywords in descriptions, enlist help from influencers, and create a great homepage. You want your Etsy shop to rank on any search engine that a potential customer might be using, so it's important to factor search engine optimization (SEO) into your online marketing strategies.
Doing a bit of homework on selecting keywords helps your shop's name pop up when a potential buyer conducts an Etsy search. If it fits into your budget, you can also set up Etsy ads so that your products are guaranteed to be advertised during designated Etsy searches.
One of the most useful and unique aspects of Etsy is that it offers new sellers the ability to join a team. If you are just starting and feeling overwhelmed, there is a huge community available to help support the success of your online business. Engaging with other shop owners is one of the best ways to ensure that your new business is up to par in every department, and the Etsy community provides sellers a more friendly and open pathway to that first sale.
A Few Essential Etsy Tips
- High-quality product photography is a must. Product photos should appear in a sharp, brightly lit, clutter-free environment that engages the eye and promotes shopping with no distractions.
- Learn to think like a customer. When generating an item title, product description, or product listing, put yourself in the place of your potential buyer. How will this item be used? What keywords would you personally use to search for this item? Etsy allows for 13 tags.
- Customer service is the life of your shop. Repeat customers and word-of-mouth referrals are always the goals. Never let a customer feel as though you missed a step or failed to make the experience fun and easy for them. Include personal touches like a branded logo in your email communications or freebies, such as stickers of your shop's name or motto in your shipments, to make your customers feel special.
Even once your Etsy business is up and running, you need to continuously improve your shop via tools like the Shop Stats function on your My Etsy homepage to learn what attracts the most traffic. Adjusting and refining your shop preferences can lead to greater brand awareness and a higher likelihood of sales.
Day-to-Day Operations of an Etsy Shop
Etsy shop owners will face a wide variety of tasks and challenges in the process of running their businesses. Whether you choose to run your Etsy shop as a full-time business or just a side hustle, you'll be competing with online giants like Amazon and handling sensitive data, such as credit card and PayPal information for your customers.
Other basic components in an Etsy shop owner's day include calculating shipping costs, preparing shipping labels and packing slips, sending order confirmations, and managing receipts. These activities are, of course, on top of the constant creation of new products and the time it takes to promote them.
Keeping up with daily business functions is immeasurably easier when you have a system in place. Skynova's business templates eliminate the need for you to generate a new form every time you receive an order or make a formal exchange with a customer and allow you to concentrate on customer needs without organization worries.
Open Your Etsy Shop With Confidence
Setting up an Etsy shop can be a fun and rewarding career for anyone who wants creative control over their products and presentation. Etsy careers can be lucrative and fulfilling when set up properly and designed for growth.
Skynova specializes in helping small business owners get organized and is here to help with everything from invoices to accounting. Check out Skynova today to open your Etsy shop with the confidence that comes from professional small business support.