How to Start an Etsy Entrepreneur Business

Etsy Entrepreneur Business Image

Our guide on starting an etsy entrepreneur business covers all the essential information to help you decide if this business is a good match for you. Learn about the day-to-day activities of an etsy entrepreneur business owner, the typical target market, growth potential, startup costs, legal considerations, and more!

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Start an etsy entrepreneur business by following these 9 steps:

You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple step guide to starting your etsy entrepreneur business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.

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:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Luckily we have done a lot of this research for you. Skip on ahead to the Business Overview for more detailed answers to all your questions.

Choosing the right name is very important. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.

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STEP 2: Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your etsy entrepreneur business is sued. Consider using a registered agent service to help protect your privacy and stay compliant.

STEP 3: Register for taxes

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

STEP 4: Open a business bank account

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.

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.

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.

STEP 7: Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

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.

STEP 9: Establish your Web Presence

A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Business Overview

Even in today’s modern age, people still seek out vintage and handmade goods. Often, they do so through online platforms like Etsy, Zazzle or CafePress. These platforms are dedicated to artsy goods.

An Etsy entrepreneur business sells vintage or handmade goods on Etsy or these other platforms. By selling through an established platform, businesses are often able to reach more customers than they could through their own website or storefront.

Who is this business right for?

Anyone who enjoys making handmade goods or finding vintage items might enjoy running an Etsy entrepreneur business. This is a great outlet for artists looking to sell their works.

What happens during a typical day at an etsy entrepreneur business?

An Etsy entrepreneur business owner spends their time on four main tasks:

  • listing new products as items sell

  • making or finding products to sell

  • shipping sold products

  • marketing their business

Business owners also perform administrative duties. These may include paying bills, ordering supplies, and restocking shipments.

What is the target market?

An Etsy entrepreneur business’ ideal customer is someone who likes handmade or vintage items, and has some discretionary income. Such a person may be interested in the wares an Etsy entrepreneur business sells, and they have money to spend on goods.

How does an etsy entrepreneur business make money?

An Etsy entrepreneur business makes money by selling handmade or vintage goods. Most businesses sell only to customers, but Etsy has a platform for launching into wholesale.

What is the growth potential for an etsy entrepreneur business?

An Etsy entrepreneur business may be a part-time endeavor run by a single person, or it might be a sizable business that has several employees. The overall top sellers on the platform have total sales totaling in the hundreds of thousands. Each day’s top sellers usually have several hundred sales in that day.

Many Etsy entrepreneur businesses only sell on the platform. Some businesses, however, expand to other platforms or even their own site as they grow. (Etsy has a program for launching an independent website supported by Etsy.)

What are some skills and experiences that will help you build a successful etsy entrepreneur business?

Etsy entrepreneur business owners need to have a good to sell, and they need to be familiar with how to sell on Etsy.

Most business owners already have a passion for the goods they want to sell. They normally know how to make the goods or where to find them. Those that don’t may want to take an art course at a local community college, or a crafting class at a nearby arts and craft store to learn how to make something. Alternatively, there are also YouTube videos on how to make many different types of handmade goods.

For many business owners, learning how to sell on Etsy is the bigger challenge. First, business owners should familiarize themselves with Etsy’s Seller Policy. This provides the terms and conditions that sellers must follow. There are several other resources that cover strategies. Some include:

What are the costs involved in opening an etsy entrepreneur business?

The startup costs for an Etsy entrepreneur business are low. The main expense is the cost of materials for making good (if selling handmade items) or the cost of buying goods to sell (if selling vintage items). The other startup expense is Etsy’s listing fee, which is $0.20 per listing.

Many business owners keep only a small amount of inventory on hand. They make or buy more inventory as their current stock sells. This lets them keep their inventory in a small space, usually somewhere in their home so they don’t have to lease space.

Where can I 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.

What are some insider tips for jump starting an etsy entrepreneur business?

When starting an Etsy entrepreneur business, it helps to focus on a particular niche. Even a sub-niche can help a business get started. For instance, a business might focus on pet portraits, religious jewelry or vintage paper goods.

Narrowly defining a business’ focus has two benefits. On the sales side, it helps distinguish a business from generic ones that are in many niches. On the management side, it lets business owners buy fewer supplies. The same supplies can often be used to create several different goods within the same niche.

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Growing Your Business

How to promote & market an etsy entrepreneur business

Since Etsy is an online marketplace, all advertising efforts should grow a business’ online presence. Etsy’s Seller Handbook recommends using the following marketing channels:

  • search engine optimization
  • social media marketing
  • email marketing
  • giving samples to influencers

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

How to keep customers coming back

When setting up an Etsy entrepreneur business, it’s important to have high-quality photos. Not only should photos be clear and focused, but they should also be unique. Different backgrounds and angles can help make products pop -- and that’s what convinces visitors to buy items.

How and when to build a team

Many Etsy entrepreneur businesses are run by one person. Some business owners bring on employees as their business grows. They usually hire their first employee when they’re no longer able to keep up with demand by themselves.

Legal Considerations

State & Local Business Licensing Requirements

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

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.

For information about local licenses and permits:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

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

Two of the simplest steps that will protect your business, and yourself, are to:

Open a business bank account

  • This separates your personal assets from your company's assets, which is necessary for personal asset protection.
  • It also makes accounting and tax filing easier.

Get a business credit card

  • This helps you separate personal and business expenses by putting your business' expenses all in one place.
  • It also builds your company's credit history, which can be useful to raise money and investment later on.
A smiling man sits at a computer and learns about corporate veils

CORPORATE VEIL

To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Trademark & Copyright Protection

If you are developing a unique product, concept, brand, or design, it is prudent to protect your rights by registering for the appropriate trademarks and copyrights.

Learn more about trademark and copyright protection

Earning Potential

How much can you charge customers?

Business owners get to choose how much they charge on Etsy. Most price their items below $50, though. It’s easier to sell items at this price point than above $50. Also, Etsy’s editors highlight items priced below $50.

What are the ongoing expenses for an etsy entrepreneur business?

The ongoing expenses for an Etsy entrepreneur business are also low. They include:

  • material or inventory costs
  • a $0.20 listing fee for each new item listed
  • a 3.5 percent transaction fee for each transaction
  • a 3 percent + $0.25 payment processing fee for each transaction
  • shipping fees for each order

How much profit can an etsy entrepreneur business make?

How much Etsy entrepreneur businesses make varies. Some businesses have only a couple of sales per month or even per year. Others have hundreds of sales each day. The most successful businesses bring in well over six figures a year.

How can you make your business more profitable?

An Etsy entrepreneur business can improve its marketing and add a revenue stream by starting an art blog. A blog related to the items that the business sells will increase the amount of exposure the business receives. The blog can also be used to sell other items through affiliate links or sell advertising space.

Next Steps

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