Finance Expert Coaches Etsy Sellers in New Book
When Etsy launched in 2005, the e-commerce site turned thousands of hobbyists into professional craftspeople. Woodworkers, knitters, seamstresses, and others suddenly had a virtual storefront through which they could sell their handmade wares for a profit.
Their efforts thoroughly impressed Jason Malinak, a CPA who watched wife Katie’s crafting career blossom after she debuted on Etsy. He supported her business’s growth with bookkeeping services, tax help, and legal advice. This led him to set up his own Etsy shop, JJM Finance, which sells bookkeeping, tax, legal, and financial tools geared toward crafters.
In his book Etsy-preneurship: Everything You Need to Know to Turn Your Handmade Hobby into a Thriving Business, published in October, Malinak (pictured) gets into nitty-gritty finance issues for crafters.
The Intuit Small Business Blog recently caught up with Malinak to talk about how entrepreneurs with Etsy shops can make 2013 their best year yet.
ISBB: After a crafter sets up a shop on Etsy, how should they drive traffic to it — and encourage repeat customers?
Malinak: I recommend an Etsy seller focus on five key areas to drive additional traffic to their Etsy shop.
1. Improve keyword-search positioning within Etsy. Section titles and descriptions can also help better define your product. Using the correct keywords or short search phrases can bring an Etsy seller’s products to the top of the results, generating additional views and more sales. The first three words are the most important.
2. Improve keyword-search positioning in search engines. Explore how products appear using similar keyword searches on Google or Bing. What types of keywords are potential customers searching for while on these major search engines?
3. Use social media. A successful Etsy seller uses social media for driving traffic to their shop, connecting with their customers and building their brand. Approximately 96 percent of Etsy sellers use Facebook as their primary social media marketing connection. Other popular social media marketing connection methods include Twitter and Pinterest.
4. Advertise online for new audiences. A few well-spent dollars each month on key blogs, websites, or Facebook ads can bring products to a wider circle.
5. Blog to build a brand and gain connections. Blogging is a popular way to feature other Etsy sellers, as well as [your] own products. It allows an Etsy seller to connect with existing and potential customers on a much more intimate level. The easiest way to gain repeat customers is to build a brand that the customer connects with and trusts. Make sure your customer has opportunities to stay in touch with you through social media connections, a blog, or an email list.
How can Etsy help take a crafter’s career to the next level?
Etsy is an easy way for a local artist to gain exposure beyond their immediate community, storefront, boutique, or craft show. In a matter of minutes, anyone can set up an Etsy shop and immediately expand their customer base to all around the world. Etsy is a global marketplace, and with that level of exposure come great opportunities to build something that can grow large.
Compared with previous models, such as consignment sales at boutiques or even personal websites, does Etsy make it easier to launch a career in selling handmade art? If so, how?
Etsy has lowered the barriers of entry so low that anyone can begin selling in a matter of minutes. You can start and run your business in your pajamas yet become an international superstar handmade sensation!
Etsy provides the storefront, the audience, and the support community to get started quickly. Knowing that you are not alone in your quest of staring a new business is encouraging. [Members of] the Etsy seller community help one another out and provide encouragement when your business might hit a rough spot.
What are some key differences between a hobbyist and a business owner when it comes to handmade art?
A business owner is more likely to make sure passion for their craft always has a profit motive — driving a decision or action. Often, a hobbyist will let their passion take them anywhere, whereas a business owner has a better idea where they want to go and how to get there.
Successful business owners apply greater levels of discipline to their actions. For example, they have a marketing, branding, or promotional purpose while on social media rather than just checking their friends’ statuses.
What financial advice do you have for beginning Etsy-preneurs to ensure they find and stay on a profitable path?
It is really easy for a beginner to go overboard by buying too many supplies and new equipment and to lose track of how much money is being spent. A basic bookkeeping system allows a way to watch how fast expenses are occurring in relation to revenues and also to help track raw-materials costs that go into finished products to be sold. These costs can be used to help set appropriate selling prices to ensure that every product is making adequate profit.
A surefire way for an Etsy shop to lose money is [for the vendor] to sell an item for less than it costs to make it. Pricing must cover costs, provide a profit, and meet marketplace norms.
What’s an example of a common financial mistake you see with your clients at JJM Finance — and what’s the remedy?
Waiting to perform bookkeeping months after they have started their Etsy business. It becomes very difficult to re-create financial records months after a transaction takes place.
Forgetting that their business requires them to file taxes. Many times Etsy sellers are surprised about paying self-employment taxes. It is just as easy to make bad business financial decisions as it is to make bad personal financial decisions.
Inappropriate debt can sink a business. Underpricing your products can put the business in a profitability hole.
Kristine Hansen is a business writer for Intuit and is passionate about solving small business problems.