 |
||
|
|
 .
|
HOW TO SUCCESSFULLY MARKET YOUR HOBBY PRODUCTS
1996 Home Business Publications
If you are not necessarily trying to get rich buy but would like
your hobby to at least pay for itself and perhaps grow into
something someday, try considering your hobby as small business.
Even if you don't get rich you may be able to deduct the cost of
your materials.
A serviceman stationed in Alaska loved to go fishing but found it
to be very expensive sport up there. So he bought a fishing fly
winding outfit and started making his own flies to save money.
When discovered his lures were as good if not better for Alaskan
fish he decided to try and sell some of them to help cover the
costs of his "vice." he sold a few dozen to an Anchorage
department store every few months and not only made enough to pay
for his fishing, but helped his photography "habit" as well!
For tax purposes there is a fine line between a hobby and a
business. The IRS defines a hobby as "an activity from which you
do not expect to make a profit" (this makes the U.S. Government a
hobby!). The general rule is that you must make some profit in
three out of five years to legally take the hobby expenses as
business deductions.
This rule is not generally applied to obvious businesses like a
shoe store on Main Street. However, it is for racehorses and
leather crafts, which they consider more likely to be hobbies
than businesses (and they're probably right most of the time).
Business expenses and losses are deductible; hobby losses can ply
be deducted up to a amount taken in, and then only if you itemize
on Schedule A.
When you make the decision to convert you hobby into a business
it is necessary to do several additional things.
First, you should figure out exactly what it costs to make each
product (including you labor at the going rate). You must be able
to intelligently predict how many you can turn out and how soon.
Keep accurate records of all business related transactions. You
can only deduct expenses for which you have records! Once you
compute your production costs, you can estimate your retail
and/or retail rates.
A general rule is 2 times your cost for
wholesale; 4 times for retail.
For example, something that costs $5 to make would be priced at
$12.50 wholesale and $20.00 retail. You must be able to make a
fair profit at the wholesale price and dealers should receive
about 40% of the retail price as their profit.
Note that if you retail and wholesale both, you must be careful
not to undercut your dealers. When you say the suggested retail
price is $20, make sure you do not sell that product for any less
of your dealers will leave you cold!
It really doesn't matter what your hobby is, so long as it is a
product or service that others will buy. As you convert to a
business, it might (or might not) be necessary to alter your
production methods and even the products themselves.
If you make a nice hobby horse you will probably want to make
some jigs and figure out a way to make them more efficiently. You
have the choice of turning out one masterpiece a week for $100 or
10 good ones at $10 apiece.
Your decisions may well be influenced by demand as well as your
personal preference. If you make pillows and someone likes your
work and wants a bedspread, why not?
You can do just that one bedspread or expand your business to
include bedspreads as an additional product if it looks like they
will sell well.
Depending on the degree that you would like to go into marketing,
plan to {"showcase" your products or show them in their best
possible light. Notice how jewelry stores display their wares
exquisitely on dark velvet under small spotlights (not ordinary
florescent lights) to make them gleam and sparkle. That's
showcasing!
If you are artistic and have the means to make up a catalog to
send prospective customers, fine. Take flattering pictures of
your products with complementing backgrounds and have them
printed in brochures or booklets. Black and white pictures are
better for non-color reproductions because they offer better
contrast.
You can also advertise (with pictures, if available) in the
local media: newspapers, radio, cable TV, small magazines or even
by mail. It is usually a good idea to test market your products
(and ad comparison) before spending a lot on advertising.
If the response to your testing is poor it could be yours ads,
timing, prices, the vehicle or that you simply haven't reached
your intended audience. The testing period is when you
experiment: try various size ads, wording, pricing, etc.
How do you get usable advice? In some cases, merely by asking.. A
tip is to check with retailers of similar products. Since they
don't make them, they will often give you their unbiased opinion
of why they do or do not sell.
When you find one that will advise you, ask for their suggestions
on quality, pricing and potential salability of your products
(this, by the way, may help your chances of selling to them
later).
Once you have determined that your product will sell at a price
to make you a reasonable profit, make up samples and good quality
photographs and start contacting potential markets. If you -plan
to wholesale, call on prospective clients and give them full
information pricing, quality and your return policy (yes, you
should have one).
A shorter method is to offer your products on consignment to
local stores. They usually won't buy very much until they know
there is a market (why should they replace something that DOES
sell with something that MIGHT?).
remember, however, that your intent is to get as many of your
products on display as possible, so consignment is good for both
you and the store in the early stages.
If you plan to retail, you need an advertising plan for ads,
displays, notices, announcements, news coverage and perhaps
prizes in local contests. Ads in the local paper (also, radio and
cable TV) might start out with a larger (e.g. 3" x 5")
announcement of your product and possibly an introductory
special, followed by smaller display and a less expensive,
permanent classified ad.
Displays are any means of showing your product to the public,
such as renting space in a vacant store window or giving a
merchant a special deal to allow you to set up a display.
Notices can be put up on store and church bulletin boards or
listed on cable TV. Announcements can be ads, radio spots,
posters, signs that simply inform the public that your product
exists.
News coverage is usually very effective and should be a major
consideration. When you place your initial ads in the local
paper. ASK THEM to send out a reporter!
Most local and small town papers are happy to do this because the
articles are local interest. Make the best use of their exposure:
focus on your products, not your ego!
When you are satisfied your market potential and ready to produce
in volume at a good wholesale price,, start contacting
progressively and larger markets.
Check on mail order companies, distributors and catalog of
publishers. If you retail, place ads in vehicles with larger
circulation. Send out professionally done brochures and price
lists among with a short but cordial cover letter describing your
product and offering additional information. Be sure to include
information on how to order. For retail customers, include a
"handy" order blank and possibly an addresses return envelope.
Depending on the product of your hobby and its acceptance, your
small business venture might keep growing. Many of today's large
businesses started out as small hobbies. Some craft products can
profitably be marketed through large catalog houses. Others are
best for local retail sales and a few lend themselves to
customizing, where customers come directly to you for personal
service.
Your success in marketing your hobby depends on the demand for
the product (which you try to stimulate), the price quality, plus
your ingenuity, determination and enthusiasm.
Something as uncomplicated as renting a flea market stall once a
week may be just the ticket. It may be as far as you really want
to go. But, if things go well, you may want to expand your
production and sales efforts.
When you expand, think about buying and selling COMPATIBLE but
non-competing items made by other hobbyists (or supplied by hobby
manufacturers). After all, your marketing system is in place and
is working, so why not make extra profit for relatively little
extra work or cost?
One mistake many hobbyists make in the business world is to put
so much time, effort and TLC into their products that can't
possibly sell for their actual worth.
If you are going into business, find a happy medium so you can
turn out quality products at an affordable price and still make a
fair profit. A second tip is to be able to separate your product
from your ego. Never take rejection for it to flop that have
nothing to do with you! Keep your mind and ego clear so you can
concentrate on improving the product's acceptability!
BUSINESS SOURCES
MIESEL HARDWARE SPECIALTIES, Box 247, Mound, MI 55364.
800/441-9870. Hardware for hobbies and toys: eyes, miniature
wooden wheels, brass hinges, etc.
LHL ENTERPRISES Box 241, Solebury, PA 18963. Hobby and craft
supplies.
TOYS, HOBBIES $ CRAFTS. Edgel Publishing Co.,545 Fifth Ave.,New
York, NY 10017. Magazine for hobby and craft dealers. Check their
ads for good supplier sources.
SBA MANAGEMENT ASSISTANCE PUBLICATION, P.O. Box 15434, Ft Worth,
TX 76119. SBB-1 lists 26 types of crafts and 341 available craft
booklets.
NATIONAL ASSOCIATION OF TOLE & DECORATIVE PAINTERS. Box 808,
Newton, KS 67114. Association of people interested in painting or
enameling on wood and metal.
HOBBY INDUSTRY ASSOCIATION OF AMERICA, 319 E 54th St.,Elmwood
Park, NJ 07507. Association of hobby crafters and hobby business
people.
HOBBY PUBLICATIONS, Box 420, Englishtown, NJ 07726. Publishes
ANNUAL TRADE DIRECTORY for hobby sources.
AMERICAN CRAFT COUNCIL. 44 West 53rd St.,New York, NY 10019.
Publishes CRAFT HORIZONS magazine for small crafts. Includes
information on craft shows... Good place to advertise crafts.
Also publishes AMERICAN CRAFT with coverage of Christmas ornament
crafts.
CRAFTS. 1529 East 19th St.,Brooklyn, NY 11230. Specialty magazine
about crafts.
INNOVATIONS, 1555 Ashdale, Sugarland, TX 77478. Buys handmade
crafts, especially Christmas and child heirloom merchandise. Send
color photo & price.
DOVER PUBLICATIONS, INC.,31 East 2nd St.,Mineola, NY 11051.
Discount books, clip art, stencils, etc.
QUILL CORPORATION, 100 Schelter Rd.,Lincolnshire, IL 60917-4700,
312/634-4800. Office supplies.
NEBS, 500 Main St.,Groton, MA 04171, 800/225-6380. Office
supplies.
IVEY PRINTING, Box 761, Meridan, TX 76665. Low priced letterhead
and stationery.
ZPS, Box 581, Libertyville, IL 60048-2556. Raised print business
cards and letterhead stationery. Will print your copy ready logo
or design. Excellent prices.
WALTER DRAKE & Sons, Inc.,4119 Drake Bldg.,Colorado, Springs, CO
80940. Short run business cards, stationery, etc. Good quality
but little choice of style or color. Can be difficult to deal
with (they are a "short-order" mail order house).
ARTS AND CRAFT NEWSLETTER. West Oak Hill, Willison, UT 05495.
Newsletter for people interested in arts and crafts.
ARTS & CRAFT CATALYST. P.O. Box 15102, Ft Wayne, IN 46885.
Bi-monthly publication with information on craft shows across the
country.
DISCOUNT CRAFT SUPPLY. 6234 2nd Ave.,North, St Petersburg, FL
33710. Beads, felt, etc.
HP BOOKS, Tucson, AZ 85703. Offers book: "catalog Sources for
Creative People" with 2,000 sources for patterns, plans, kits,
etc.. - $9.
CRAFT, MODEL AND HOBBY INDUSTRY DIRECTORY. 255 West 34th St.,New
York, NY 10001. Write for details about this directory.
GLASS STUDIO. Box 23383, Portland, OR 97223. Trade magazine for
Arts and Crafts Dealers.
Business Start-Up Fact Finder Manual
www.work-at-home.org - work at home jobs
Copyright 2002 Work-at-Home.org
|