How to Start a Craft Store

Craft store businesses provide the necessary supplies for creating unique handmade items for shoppers who prefer originality over mass production. A craft store business can exist online, in a physical location, or both. Some craft store businesses sell a wide range of various types of arts and crafts supplies, while others cater to specialized niche markets.

Learn how to start your own Craft Store and whether it is the right fit for you.

Ready to form your LLC? Check out the Top LLC Formation Services.

Start a craft store by following these 10 steps:

  1. Plan your Craft Store
  2. Form your Craft Store into a Legal Entity
  3. Register your Craft Store for Taxes
  4. Open a Business Bank Account & Credit Card
  5. Set up Accounting for your Craft Store
  6. Get the Necessary Permits & Licenses for your Craft Store
  7. Get Craft Store Insurance
  8. Define your Craft Store Brand
  9. Create your Craft Store Website
  10. Set up your Business Phone System

We have put together this simple guide to starting your craft store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

Exploring your options? Check out other small business ideas.

STEP 1: Plan your business

A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Craft Store Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

  • Your state's business records
  • Federal and state trademark records
  • Social media platforms
  • Web domain availability.

It's very important to secure your domain name before someone else does.

Want some help naming your craft store?

Business Name Generator

What are the costs involved in opening a craft store?

For tax purposes, you’ll need a tax ID number for your small business. The cost of opening a craft store business varies widely depending upon whether it is an online operation or a physical location. Online businesses can be started with very little initial cost other than the supplies. The costs of opening a physical location would include the cost of renting and outfitting a building as well as a more substantial initial inventory of craft supplies and items for sale.

What are the ongoing expenses for a craft store?

Ongoing expenses for a craft store business can include:

  • Real estate rental
  • Utilities
  • Maintenance of office equipment
  • POS/inventory software service
  • Cost of wholesale supplies
  • Shipping costs

Who is the target market?

Preferred clients are those who enjoy participating in arts and crafts projects for gift-giving and home decoration or those who appreciate products that demonstrate the artistic and creative talents of others.

How does a craft store make money?

One way a craft store business makes money is by buying craft supplies in bulk at wholesale prices and reselling them at a profit. Another, less common way this type of business makes money is by designing and creating original arts and crafts products. Some craft stores sell those products directly to other craft stores, while others charge a royalty fee for the use of their original designs.

How much can you charge customers?

Costs for craft supplies vary according to demand and manufacturing costs. Buying popular items in bulk at wholesale prices allows you to increase your profit margin. Pricing handmade items can be challenging. This article offers some tips for finding the right price for your products.

Pricing finished products is more difficult than pricing the supplies to make them because one-of-a-kind items are valued and priced, differently. To price according to similar items can result in undervaluation and lost profits.

How much profit can a craft store make?

The profits from online craft store businesses vary widely, depending on the cost of materials and pricing.

Joann Stores, a leading craft store in the US, reported profits of $2.4 billion in 2015. This is a very large chain, so expect to make significantly less than this. However, this number does indicate that there is a very profitable market for craft supplies.

How can you make your business more profitable?

Creating a number of finished products and offering your customers the option to purchase a kit containing all the necessary supplies to make those products themselves can be a very effective sales strategy. It’s important to offer something unique to compete successfully with larger, more established businesses like Joann Fabrics. Some craft store businesses offer classes for specific crafts such as felting, quilting or creating jewelry. There is nothing more unique than a specific group of people coming together in the same place at the same time to participate in a creative activity. Attending craft fairs is another way that craft store business owners can increase public awareness of their products as well as their profits. Many craft store businesses expand their businesses to sell finished craft products on sales platforms such as Etsy, which charge a percentage of sales.

Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your craft store is sued.

Form Your LLC

Read our Guide to Form Your Own LLC

Have a Professional Service Form your LLC for You

Two such reliable services:

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.

STEP 3: Register for taxes

You will need to register for a variety of state and federal taxes before you can open for business.

In order to register for taxes you will need to apply for an EIN. It's really easy and free!

You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

STEP 4: Open a business bank account & credit card

Using dedicated business banking and credit accounts is essential for personal asset protection.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

  • Separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • Makes accounting and tax filing easier.

Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.

Get a business credit card

Getting a business credit card helps you:

  • Separate personal and business expenses by putting your business' expenses all in one place.
  • Build your company's credit history, which can be useful to raise money later on.

Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.

STEP 5: Set up business accounting

Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

STEP 6: Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.

State & Local Business Licensing Requirements

Certain state permits and licenses may be needed to operate craft supply business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.

In particular, Most states require retail businesses to obtain a seller’s permit. A seller’s permit allows states to record and collect taxes from goods (and sometimes service) sales.

Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.

Certificate of Occupancy

A craft supply business is generally run out of a physical location. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.

If you plan to lease a location:

  • It is generally the landlord’s responsibility to obtain a CO.
  • Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a craft store.
  • After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.

If you plan to purchase or build a location:

  • You will be responsible for obtaining a valid CO from a local government authority.
  • Review all building codes and zoning requirements for you business’ location to ensure your craft store business will be in compliance and able to obtain a CO.

STEP 7: Get business insurance

Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.

There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.

Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.

FInd out what types of insurance your Craft Store needs and how much it will cost you by reading our guide Business Insurance for Craft Store.

STEP 8: Define your brand

Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.

If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.

Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.

If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.

How to promote & market a craft store

Business cards with your website address and contact information are as important as creating a brochure or catalogue of all the craft supplies your store will carry. Good photos and product descriptions help your customers find exactly what they are looking for, as well as introducing them to new products. Another good way to promote your business is to offer classes in specific types of arts and crafts that utilize your supplies.

How to keep customers coming back

Attending craft fairs and community events is a good way to introduce your business to those who already have an interest in your products. Creating a website and keeping it updated with fresh new items on a regular basis is another. Loyalty programs that offer money-saving coupons after a certain number of purchases are also popular. Offering discounts on classes for those who bring a friend is a great way to expand the local creative community as well as your customer base.

STEP 9: Create your business website

After defining your brand and creating your logo the next step is to create a website for your business.

While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.

Here are the main reasons why you shouldn’t delay building your website:

  • All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
  • Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
  • Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.

Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.

STEP 10: Set up your business phone system

Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.

There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.

Recommended Business Phone Service: is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.

Is this Business Right For You?

This type of business is ideal for people who enjoy providing supplies for people to participate in creating various types of arts and crafts.

Want to know if you are cut out to be an entrepreneur?

Take our Entrepreneurship Quiz to find out!

Entrepreneurship Quiz

What happens during a typical day at a craft store?

Here are some of the typical activities a craft store business owner might engage in on a daily basis:

  • Pricing craft supplies based on market research and customer feedback
  • Writing product descriptions
  • Photographing sale items and updating website content
  • Conducting inventory, negotiating prices with vendors, and ordering supplies
  • Filling and shipping orders
  • Attending craft workshops to get ideas for new classes and activities to provide for customers

What are some skills and experiences that will help you build a successful craft store?

Some of the skills necessary to succeed in this type of business include:

  • A good eye for spotting popular trends in fashion and home décor
  • The ability to manifest your creative vision into physical reality using craft supplies
  • Negotiating skills for obtaining the best prices from vendors
  • Accounting skills for calculating the cost of supplies, production, shipping and determining accurate profit margins
  • Writing skills to describe your products accurately yet invitingly
  • Marketing skills to enable you to create email offers, loyalty rewards programs, and special sales promotions

There are a number of resources that provide education and additional information about how to succeed with a craft store business.

What is the growth potential for a craft store?

Some craft stores, such as Michaels, have expanded nationwide. The nation’s largest craft store business, Michaels has 1,262 stores, each of which sell an average of 40,000 different items. produces 10 exclusive private brands. As of June, 2014, the company, which also produces 10 exclusive private brands, was valued at $3.86 billion dollars.

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Take the Next Step

Find a business mentor

One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.

Having a support network in place to turn to during tough times is a major factor of success for new business owners.

Learn from other business owners

Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.

Resources to Help Women in Business

There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:

  • Funding
  • Events
  • Guides
  • Support

If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.

How and when to build a team

In this business, any time is a good time to build a team. The more different types of products your store offers; the more people will be attracted to shop there. A good team consists of people whose talents and abilities complement one another. Those who enjoy teaching others can provide classes, while those who prefer staying behind the scenes can focus on creation and production. Participation in arts and crafts can be a group activity as well as a solitary occupation, which is one reason it is so popular.

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