Take the Next Step

Take the Next Step
by Donald Clark

Courtesy of Handmade Business

I am aware that we are our own bosses and can make our own rules, but I am interested in what handmade industry standards are for turn-around times for wholesale orders from retailers?
Also, how does payment work for custom wholesale orders? Do you get a certain percent of a deposit first, or make them pay upfront for the entire amount like you would on a normal Etsy/website order? – Mandy Johnston

It's true we are our own bosses with limitations. When selling in the retail market this is certainly true. We can make what we love and be as creative about it as possible. Selling in the wholesale marketplace, on the other hand, is all about pleasing the buyer--which will involve the art of compromise. I'm not aware of any industry standards for handmade wholesale delivery times. I do know that wholesale buyers can dictate when they want factory made goods delivered. Typically these items are produced before they are sold.

Determining delivery time is a bit more complicated when it involves handmade items. Before a wholesale show, a buyer will establish the timing for their opens to buy in each department, and specifically from each craftsperson they work with. On the other hand, each craftsperson has to establish a work schedule that will determine the amount of product they can produce in a given time period. Typically these items are not made until they're ordered, therefore requiring a longer lead time. A savvy buyer tries to determine the makers they want to buy from before the show. Often we would contact the maker and reserve a dollar amount for a particular date. At the show, we'd choose the actual items.

Buyers who don't plan ahead or are new accounts have to operate differently. In this situation, there needs to be give and take. The buyer may want the goods at a particular time that isn't available. The two parties will need to negotiate a compromise; for instance, the maker may have availability at another time that will work for the buyer. Or the buyer may be from a highly respected shop where the maker wants their work, and they will figure out a way to deliver the goods to meet the shop's schedule.

The only time a maker can ask for money up front is if they are accepting a commission--meaning they are making something that is not a part of their normal production. In this case, a negotiated series of payments are acceptable.

What is a custom wholesale order? As stated above, almost all wholesale orders of handmade goods are made-to-order, so in a way they're all custom orders. This isn't custom enough to ask for any kind of up-front deposit, however. I'm not aware of makers who require a deposit at the time an order is placed, and as a buyer I probably wouldn't have operated that way. In the olden days--say until 1990-ish--new orders were shipped C.O.D., which has been replaced by credit card payment when, not before, the goods were shipped. Good, well-established accounts were granted 30 day terms. The only time a maker can ask for money up front is if they are accepting a commission--meaning they are making something that is not a part of their normal production. In this case, a negotiated series of payments are acceptable.

I'd suggest you enter the wholesale marketplace slowly. Start with one show, and be careful not to overcommit. Work through the orders, and use this experience to plot a plan for future shows. Remember, you'll need to have the capital up-front to pay for materials before you see any money from your sales.

Woman Painting

I just learned about your magazine and am excited to learn about the business side of handmade. I have been dabbling in making things by hand my entire life, mostly as a hobby and for gift-giving. However, I think it's time for me to get serious about my passion and start making some money from it. What is the very first step you would suggest I take in order to get started? – Mikah Morris

''What is the very first step you would suggest I take?'' Look at your bank account. Yes, seriously! Beginning a new business under capitalized is one of the biggest mistakes you can make, and a sure cause of failure. Not only do you need money for the startup materials and equipment, you will also need funds to pay your personal bills until the business begins to make money. I'd suggest you set out a personal budget for one year. This would include housing costs and other recurring financial commitments. Then do the same for your business.

Now back to the bank account: How long can you live on your savings? Let's say you have resources to fund the new business and to support yourself for a year. What next? Keep your day job.

It's possible, typical, and advisable to transition from outside employment to a crafts-centered business without breaking the bank or compromising your creative self. But creating a suc-cessful new crafts business will require careful planning and a commitment to hard work. I'd suggest two first steps: First, develop a line of items to make. You could choose a group of items from your current production--you know, the ones you really like to make--the ones your friends have really enjoyed having.

Often makers new to the retail world try to produce too many different items. This can lead to production slow downs and extra costs for materials that don't get used. It is important to offer a complete line, which means if you make dinnerware, you'll need to have complete place settings. If it's jewelry you make, you'll need to offer matching pieces. What you don't need is a dozen dinnerware patterns or endless earring choices. Begin with pieces you already make and really enjoy making. As you pull your line together, determine production costs and set the retail prices.

Second, find a show that is close enough for easy travel. Apply/sign up, and give it a go and grow from there. You'll be amazed at the value of the comments shoppers make. Go slowly, grow carefully, and of course, thank you for your interest in Handmade Business.