Starting an Etsy Shop: 10 Key Insights and Tips for Success
Before diving into my Etsy small business journey, I conducted extensive research to ensure I was well-prepared for any challenges that may arise. While I believe I did a good job, there were important aspects I wish someone had informed me about beforehand, as they would have saved me considerable time, effort, and money. However, the unpredictable nature of entrepreneurship often makes it difficult to foresee these things. Here are some valuable insights I wish I had known about Etsy, crafting, and running a business in general:
1. Be prepared for higher expenses on materials, supplies, and tools than expected.
From finding better laminates to getting business cards made, acquiring storage bins, buying photo props, improving video lighting, covering shipping fees, and managing Etsy fees, all these business-related necessities come with costs. It's important to account for these additional expenses even if you feel prepared. Some are unavoidable and necessary, while others are optional but can significantly simplify your work. If budget is a constraint, prioritize your purchases by considering whether they will contribute to generating revenue.
2. Understand the legal and tax requirements before making any profits.
If you intend to make money from your business, make sure to apply for the appropriate legal business format, such as an LLC, S-Corp, or Sole Proprietorship, and comply with legal and tax obligations. The process is generally straightforward, although specific requirements may vary by state. Keep in mind that as a sole proprietor, your business and personal taxes are combined. To help with tax management, I recommend using Quickbooks Self Employed, which I obtained at a discounted price through my $10 monthly Etsy Pro license. This online software automatically tracks transactions from credit cards, banks, and Etsy, including sales, shipping fees, and transaction fees. It provides a helpful overview of your finances, including the amount "in the bank" and your tax liabilities, whether they are quarterly or annual. While taxes can be a significant expense, there are tax-exempt items you can include, such as mileage to the post office. Consulting a tax professional can provide more in-depth information to help you make the right decision regarding your business structure. If you're new to filing taxes in person, you can always reach out to a local office for guidance.
3. Consider getting a dedicated credit card for business expenses.
Having a separate credit card specifically for business-related purchases can simplify expense tracking and differentiate personal and business expenses. You can find credit cards that offer perks like travel points or cashback rewards without any fees. For example, the Chase Ink Preferred and American Express Blue Business Plus cards offer 2-3 points per dollar spent on shipping costs, which can add up if your business involves shipping heavy or oversized items domestically or internationally. Personally, I use the American Express Hilton Honors Surpass card, which grants 3-6x points on everyday expenses. These points can be redeemed for free hotel stays, and the signup bonus can provide up to 8 complimentary Hilton nights (depending on the hotel). By conducting thorough research, you can find a credit card that suits your needs and offers valuable benefits.
Learn more about the American Express Blue Business Plus Card
Learn more about the American Express Hilton Honors Surpass Card
4. Take advantage of Etsy Shipping.
Etsy offers a convenient and cost-effective shipping service, though its functionality may not be immediately clear. By using Etsy's $0.55 stamp labels, you can print shipping labels directly on letter envelopes using your printer. While the Pitney Bowes tracking system used by Etsy may not be the most reliable, it still provides some level of tracking for the $0.55 stamps. This service deducts charges from your account immediately and integrates with Quickbooks for easy financial management. While there are alternatives like stamps.com or PirateShip, these services either come with fees or do not support letter-size envelopes or stamps. If you're shipping stickers, it doesn't make sense to pay $3.50 for shipping on a $2 item, and it certainly doesn't make sense to the customer.
5. Be prepared for unpredictable customer reactions.
Every customer is different, and it's impossible to predict how they will respond to your products and services. Many people are unfamiliar with how Etsy works, as they are accustomed to platforms like Amazon or purchasing from large retailers. The concept of someone physically making and producing their product, with no immediate delivery, can be foreign to them. Some customers may not appreciate this and may not understand how custom orders work. It's important to treat customers well, as providing excellent customer service can lead to positive reviews and repeat business. However, it's worth noting that customers often do not read product descriptions thoroughly, leading to misunderstandings. While it can be frustrating, it's important to maintain a professional tone and address issues appropriately. Offering refunds or replacements for legitimate problems is preferable to receiving negative reviews, especially in the early stages of your business. As your positive reviews accumulate, negative reviews will become less impactful.
6. Running an Etsy shop is a full-time job.
Designing, creating, shipping, managing social media, listing and updating products, taking and editing photos, interacting with customers, analyzing data, and conducting product research all require significant time and effort. If you have a job or family responsibilities, managing your shop can be even more challenging. I admire those who successfully juggle a full-time job, family commitments, and their shop. The key is to prioritize tasks and be realistic about what you can accomplish in a day, as your to-do list will always be growing. Even when you step away from your business, it will continue to occupy your thoughts. If you're not working on it, you're still thinking about it.
7. Don't hesitate to adjust prices accordingly.
Setting the right prices is a delicate balance. You want them to be attractive to customers while ensuring you make a profit and find the venture worthwhile. If your products require high-quality materials or involve labor-intensive processes, don't shy away from charging accordingly. There's no point in running an Etsy shop if you're overworking yourself without sufficient reward. With hundreds of thousands of other shops on Etsy, it's important to differentiate yourself. I achieved this by using top-of-the-line materials like Oraguard 215 for laminating my stickers and magnets. Although it comes at a higher cost, the quality and durability it adds are worth it. Alongside unique designs, this justifies a fair price that reflects the time and effort invested. If customers value your products, they will be willing to pay a reasonable price. Periodically comparing your prices and products to similar offerings on the platform ensures competitiveness.
8. Understand that success takes time.
Expect setbacks and challenges along the way. Growth comes with discomfort, and it's important not to give up. Remember that success does not happen overnight. If things don't go as planned, be open to change and adapt your strategies. Give your best effort, evaluate results, and consider alternative avenues. For instance, during a slow sales period following a successful holiday season, I explored other monetization options such as starting a YouTube channel for tutorials, launching a podcast, and building a new website with a blog. I also dedicated time to producing content on TikTok to foster growth. As long as you are moving forward, the speed at which you progress is less important. Avoid comparing yourself to others and focus on your unique journey. Treat this current phase as the beginning of your success story.
9. Be prepared to make tough decisions.
Running a business involves making difficult choices. Determine whether investing in new equipment, such as an expensive phone for better-quality videos or improving your workspace with a new desk setup, is worthwhile. Consider the potential return on investment for marketing expenses and whether you can handle the increased volume. Balancing the demands of your business with other commitments can be challenging, and it may require deciding between quitting a job or scaling back on your business. These decisions depend on your priorities and the value you place on financial stability versus the freedom and potential for growth that running your own business offers. Ultimately, listen to your heart and consider your financial circumstances. (In my case, I chose to quit my job.) Starting a business involves making numerous tough choices, and you can't anticipate all of them.
10. Aim to do things right the first time.
In the past, I struggled with this concept, but as the sole responsible party for my business, I've learned to prioritize quality from the start. If you foresee the need to redo something in the future, invest the time and effort to do it correctly or in a way that aligns with your long-term vision. Don't rush into decisions if you're uncertain or unclear about the desired outcome. Conduct thorough research, plan meticulously, and ensure that your choices will bring long-lasting satisfaction. For example, when setting up my new website, I made choices that may have been more challenging at the time but would prevent the need for major changes in the future. Looking back, I appreciate the value of investing time initially to avoid unnecessary revisions down the line.
If you've gained valuable insights from your own journey or have questions about starting an Etsy shop, I encourage you to leave a comment. I would be delighted to discuss and share experiences!
Hey, I’m Nicole!
Following my successful national park-themed Etsy shop, I'm using social media to share my journey and everything I know, inspiring and empowering fellow crafters and small business owners.
