CRAFT TO CONSUMER
As the peak Victorian body representing crafts people and designer makers, part of our responsibility at Craft Victoria is to encourage and assist makers to engage in what we call ‘best practice’ methodologies:
Professionalism, innovation, excellence in execution, and sustainability in manufacturing and business practices.
TAKE YOUR BUSINESS SERIOUSLY AND EVERYONE ELSE WILL
If you don’t already, start taking your business seriously, right now. Taking this simple step fundamentally changes the way you organize your time, your practice and your plans. While each business is unique the common fundamentals outlined here will help guide you as you work from concept to marketplace.
PART ONE: CONCEPT TO PRODUCT
As a starting point most businesses will benefit from accurately assessing the nexus between creative concept, market need and strategic planning. Crucially this is not a compromise between creativity and business but a matter of designing something new that is the best of both worlds. The best and most successful creative business’ are built on the development of a range of products of which the practitioner excels, matched with carefully selected customers targeted in the most appropriate way. This allows makers to unleash their creativity without compromise and achieve commercial success.
KNOW YOUR PRODUCT
You need to be able to sell your product to the retailer in order for them to be able to sell it to a consumer. Similarly if you want to sell your work directly to the consumer via a market or online platform you need to be able to confidently ‘sell’ your work. The best way for you to able to do this effectively is to know what you are selling. Consider the following questions:
What is the nature of the product?
• Is it a one off design?
• Is it part of an ongoing range?
• Is it able to be replicated accurately?
• What is the repeat production turnaround?
• How many can you make at once?
• What is the delivery method and schedule on orders?
• Is it open to customisation options?
• Are there specific care instructions?
Does the product ‘work’?
• Does it represent a successful synergy of form and function?
• Has it been thoroughly tested for wear and tear?
• Is it good looking?
• Does it do what you say it will do?
Is the product saleable?
• Does it meet a need in the market?
• Does it have shelf appeal?
• Is it competitively priced?
• Is it unique?
• Is there an ‘angle’ that adds value to the product?
• How will it be packaged?
GETTING THE PRICE RIGHT
This is easily the most frequently asked question, but one with possibly the simplest answer. No matter what you are making or selling, the most successful pricing model is a combination of research, compromise and accurate costing. Generally speaking the equation for pricing is materials + labour = wholesale price, however you must also research what the standard ‘market price’ for similar products and pitch your price in order to be competitive. Research your market by visiting retail outlets, galleries and online shops. Whether you intend selling your work online, at a market or to a retailer it is essential you establish both a wholesale and recommended retail price. Most important is your wholesale price as it will determine what you expect to be paid for each item, however it is also useful to establish a recommended retail price if you are considering presenting your work to multiple retailers or wanting to sell it online or at a market.
• Materials + Labor = wholesale price.
• Research the pricing of similar products
• Have you covered your material costs?
• Have you covered your manufacturing costs?
• Have you accurately costed your labour costs?
This means replacing exactly the materials used in the manufacturing of your product. It is especially important if you are using recycled materials, or materials that you have already collected, factor in how long it would take you to replace the materials once you have used them.
Initial material costs
Using recycled materials
Replacing found/collected materials
To keep costs down try to maximize the use of each design to spread design and prototyping costs across as many units as possible. This methodology can be applied to both one off pieces and limited production runs.
Wear and tear on tools
Lighting, heating, studio rental
Product design and development
Different types of work attract different labour costs, consider the level of skill and engagement needed to manufacture the product and cost your time appropriately. Things that can be finished at home in front of the TV should attract a different labour cost to those that need significant levels of attention, skills and equipment.
KNOW YOUR MARKET
RESEARCH! RESEARCH! RESEARCH! It is imperative irrespective of whether you intend to sell your work online, at a market or to a retailer that you have accurately determined who will buy your work, where they will buy it and how much they will spend on it.
• Who is your target market and where do they shop?
• Is there room within the current market for your product?
• How will you promote yourself to this target market? E.g. through a website or blog
• Who are your competitors?
• What are the retailers that represent the same ethos, aesthetic and philosophy that you align yourself and your products with?
TOP FIVE TIPS CONCEPT TO PRODUCT
1. Know your product and your audience
2. Build relationships and LISTEN to feedback
3. Keep your integrity as a maker
4. Be flexible and keep learning
5. Research, Research, Research
PART TWO: BUSINESS PLANNING FUNDAMENTALS
Once you have answered some of these questions about your product, your business and your market, you will be ready to develop a “business plan” with some clear goals and objectives. Accurately assessing the nexus between creative concept, market needs, and strategic planning, provides a business with its best opportunity for long term success.
EMILY GREEN in her Brunswick East Studio, photograph Kim Brockett.
KNOW YOUR BUSINESS
Having your own business allows you to determine and then manage your work patterns, work pace and manufacturing scale. Carefully consider how much, how often and indeed how you want to produce. The following questions will be helpful in enabling you to build a business that is both successful and meets your lifestyle. And remember – you may need to register some business details with appropriate government bodies more information online at www.business.gov.au
• How do you plan to operate as a sole trader?
• Are you undertaking this as a hobby?
• Have you applied for an ABN?
• Are you GST registered?
• How much money do you intend to make?
• How much product can you make?
• How many stockists can you afford to take on, time wise?
• Do you want to manage all of your sales or would you prefer to work with an agent?
• Are you interested in marketing and promotion or would you prefer farming that out to a third party?
• Are you prepared to handle all your finances or do you need an accountant, a book-keeper or both?
Having your own professional business plan allows you to determine and then manage your work patterns, work pace and manufacturing scale. Possibly the most important thing to remember is that in choosing to create and run your business like this allows you to keep exploring and discovering new aspects to your skill set, interests and future possibilities.
GOODS AND SERVICES TAX
GST is a tax of 10% on most goods and services in Australia. It is important to remember that not all businesses in Australia are required to register for GST. You should register your business for GST if:
• Your Gross income exceeds $75,000 p/a
• Your income is greater than our outgoings. Outgoings include materials, manufacturing costs and studio rent. If you are working from home this includes a portion of your ongoing household costs, power, gas etc.
It is also worth noting that entities not registered for GST can’t charge GST on the goods and services they sell, nor can they claim the GST credits on their BAS (Business Activity Statement reports that businesses tax obligations to the ATO, including GST if applicable).
• The retailer will forward the GST to you with your payments.
• You will forward the GST component to the ATO.
Not GST Registered:
• The retailer will withhold the tax and forward it onto the ATO on your behalf. Craft Victoria takes this into account when paying supplier payments.
DEFINING YOUR BUSINESS AND PLAYING TO ITS STRENGTHS
While retailers around Australia are closing their doors, more and more designer makers are starting up niche businesses, and as a result there is a flood of handmade and handcrafted products on the market. In this environment, now more than ever it is essential that new products hit the right target with the right pitch. Think strategically about how you will build sustainability into your practice. A sustainable practice is one that is maintainable – build a business that matches your lifestyle, philosophies and desire to make. Some makers strive to develop their businesses into full time concerns, while others want to work around other commitments a few days a week.
GAYE NAISMITH hard at work
CASE STUDY: TEXTILE ARTIST GAYE NAISMITH
Gaye is a great example of a maker who has developed her business into one that is sustainable in each sense of the word: from product design and development through manufacturing and material selection.
KEY POINTS IN HER SUCCESS
1. Keeping it all under her control: simplicity in design and manufacture. Manageable.
2. Creating a product translates to a large audience, is widely accessible and is pitched at multiple price points.
3. Multi-tiered sale options: Consignment, wholesale, online and markets
4. Building strong relationships with her stockists , enabling her to test new products and get valuable feedback
5. Marketing and promoting her product with a comprehensive back story while maximizing both the common and unique elements.
PART THREE: TAKING YOUR PRODUCT TO MARKET
PUTTING YOUR BEST FOOT FORWARD
It does not matter how you intend to sell your product - whether through a retailer, a market or online - it is integral that you have set up the foundation for a sound business. In addition you need to be well prepared and well presented. Both consumers and retailers have an expectation that what is presented to them is ‘Market Ready’. The more professional you can make your business appear to potential clients the better. Consider how you want to present yourself, your brand and your work to the public and develop an achievable strategy – remember you only get to make a first impression once.
MARKETING AND PROMOTION
Unless you can afford to employ someone else, as a small business owner, you will be in charge of developing a marketing and promotions strategy. This does not have to be a huge undertaking, and should be built into your day to day work practices. It should also cover material concerns such as labels and packaging. Start by compiling a basic mailing list, be aware of which magazines promote which work and find the relevant stylist or editor - there is always a list of contacts at the front of magazines. Be prepared with relevant product, delivery, availability, manufacturing details AND great images before you contact the media!
MARKETING KEY POINTS:
• Identify your key market areas and potential customers.
• Investigate what steps and platforms other makers in your market are successfully utilising - blogs, websites, online shops, word of mouth, hard copy print media
• Create an online ‘space’ where people can find you e.g. Craft Victoria’s craftmaker.
• Identify key media commentators promoting the work of makers/artists you identify with and critically assess how well your promotional material meets their standards.
• Compile a mailing list for promotion – this can be done electronically via a blog or website or in person at markets.
• Once you’ve established your initial presence in the market remember to plan regular press releases to coincide with key developments within your business. E.g. launching a new range, new online store, an exhibition, press/editorial features studio sales etc.
PACKAGING KEY POINTS:
• Packaging is an opportunity to increase market appeal, saleability and promote your brand. Increasingly it is not enough just to have developed a great product - practical and creative packaging solutions add value increase both consumer and retailer confidence in your product.
• Identify comparative standards and develop compatible options that can be used across the spectrum from markets to high end retailers.
• Consider both the cost and development time of new object specific packaging versus customisable pre made options – as you will have to include the packaging into your wholesale price.
• Get feedback on options from your stockists and your customers and if possible a design professional before committing to a final package and ensure your packaging is working for rather than against your product.
WHERE TO SELL YOUR WORK
Part of the process of developing a keen understanding of your product and your business is establishing the best way to sell your work. As discussed previously, there are currently three major models for selling your work - through a retailer, at a market and online. Think carefully about the pros and cons of each model. Only you can determine which model/s suit you best.
THROUGH A RETAILER
• Someone else sells the work for you; all that you are required to do is deliver it.
• Someone else pays the bills (rent, rates, and staff) on your behalf.
• The retailer will actively promote themselves and your business will benefit.
• A retailer will take a cut of all sales and will mark your work up approx 100%.
• You can’t control how your work is displayed or contextualised.
Build a Relationship with your stockists!
These people are not only responsible for selling your products they can also give you invaluable feedback about how your products is received in the marketplace: use this relationship to help with existing and new product development, business expansion, pricing and packaging.
THROUGH A MARKET
• You take the full retail price, 100%, home with you after you have covered your costs.
• You can contextualise and present your work to its best advantage.
• Test new products.
• Get direct feedback from your clients.
• It is up to you to ‘sell’ your product, yourself and your brand. You must have customer service skills.
• You need to staff the market, either yourself or pay someone to be there for you.
Markets provide makers with an opportunity to meet their customers face to face. It is a great way of trialing new product and collecting literal market research as you can make notes of what people look at, pick up, and buy. Take advantage of interactions and questions like - Does this come in other colours? Or, how do I wear this? You may have to think about changing your color palette or packaging in response. Having successes at market level is a great way to convey consumer confidence in your product to prospective retailers.
This is a snap shot of some of the current markets in Melbourne:
Rose st. Artist Market (weekly)
Craft Hatch Market
The Big Design Market
The design Market
Marybrynong Makers Market
Shirt and Skirt Market
More and more markets mean more opportunities to sell your work directly to your customers.
Cost of markets depends on which one you are planning on doing, some are held weekly and others just one or two times a year.
• An online store can be very cheap to set up – you just need some know-how!
• If you manage your own online store you will receive full retail price on sales.
• Existing online stores have the advantages of a ‘real world’ retailer but charge lower commissions.
• Time consuming. It takes as long to run as a regular store.
• There is no guarantee of traffic.
• You are responsible for the design, marketing and customer service.
THE PITCH – APPROACHING A RETAILER
Different retailers have different systems and protocols for selecting new stockists. What is common however is that they all expect that you have done your work BEFORE you make a pitch. As a minimum make sure you have either visited the store in person or online and find out who to address your pitch to. At Craft both the SHOP and Craft Hatch have online application forms which require quality digital images, retail and/or wholesale prices, information about you and your work as well as current stockists. This procedure is now common practice for most art/craft and design markets.
More generally speaking, getting the three factors below right before approaching a retailer is critical if you want to ensure the best possible relationship is established from day one.
• When approaching a retailer, make sure you find out who is the right person to speak to about your work & make an appointment!
• Make sure you have good quality, high and low res images of your work.
• A standard artist statement of approx 150 words.
• Pricelist and current stockists.
• Link to your online presence.
• Develop a format and keep it consistent.
• Make sure you include:
– Your name
– Phone number / email
– ABN (or provide Statement by Supplier)
– Bank account details
– GST status
– Clear list of goods delivered
– Indicate wholesale or retail price
– terms of payment (e.g. 7 days)
– a ‘thank you’