Many of you probably harbor dreams of growing your business. I say dreams because, for many, your business seems stuck at a certain level. In order to grow your business beyond it’s current level, you have to first identify what is holding your business back from growth.
I think a lot of crafts businesses tend to hit one of two ceilings when trying to grow – you either hit a marketing ceiling or a production ceiling.
Because the solutions to breaking beyond those ceilings are drastically different, it’s important to recognize which one you’re running into in order to move your business beyond its current stage.
The marketing ceiling
Do you find yourself with more product than you know what to do with? Are you drowning in materials? Do you constantly make, make, make but are frustrated because you can’t seem to sell, sell, sell?
If this is the case, that inventory exceeds demand, then you’ve hit a marketing ceiling. When you hit a marketing ceiling, it means you either aren’t doing enough marketing, or the “marketing” you are doing is ineffective.
The first thing you need to recognize is that the solution to moving beyond a marketing solution is not more making. I think a lot of makers, particularly those who sell on Etsy, fall into the “make and list” school of marketing. You think, “if I just keep making more stuff, and I just keep listing more stuff, then eventually it will start to sell.”
But listing stuff online (or taking piles of stuff to a craft show) is not an effective marketing strategy. (I would argue that it’s not even marketing at all.)
So if you find yourself with more inventory than sales, I challenge you to put down your tools for a week and focus on your marketing plan.
The production ceiling
Do you find that you can never make enough products to keep up with demand? Do you go to craft shows and sell out consistently? Do you have a long lead time for products in your online shop?
If so, then you’ve hit a production ceiling. Your business can’t grow because you physically cannot produce anymore product, which means you can’t bring in any more revenue.
Dealing with a production ceiling actually has two solutions.
The first is to raise your prices. I’m constantly amazed by the number of clients who tell me that they are so stressed out, they spend hours and hours making product, only to sell out at every craft show they do. When I ask them if they’ve considered raising their prices, most haven’t even considered it.
Raising your prices in this scenario is actually good old-fashioned supply and demand economics. If your production (the supply) can’t keep up with demand, then the market dictates that you raise your prices.
Yes, you might sell less products when you raise your prices. But you can potentially earn the same income (or more) with less work, so the tradeoff is worth it.
However, there are times where your prices seem to be working. Where you do make a comfortable profit from each piece, and raising prices isn’t the right solution.
In that case, you’ll need to hire additional help with production to break through the ceiling. Help with production can take many forms, from hiring independent contractors to do piecework to hiring an employee that may handle more aspects of the production process.
I was incredibly humbled to watch this video interview that Tara recently conducted with Julie Boyles of JJBoyles. (I’ve embedded the video below so that you can watch as well.)
In the video, Julie talks about scaling her business by working with independent contractors. She mentions that when she was trying to figure out how to do this, there really weren’t resources to help her get started.
Which made me realize this is an area where I’ve been lacking on Crafting an MBA. I think I do a good job of helping those struggling with the marketing ceiling, but I don’t talk enough about how to scale production for your business.
To be fair, I talk about it less because it’s something I’m only now figuring out for my own business. In January, I hired a 30-hour a week employee to manage production, and we’re finally settling into a rhythm I’m comfortable with. But it has still left me with a lot of uncertainty about the direction of my jewelry business and how I want it to grow.
I’m incredibly interested in the topic of scaling production for many reasons, top among them is that I am interested in how crafts businesses can create meaningful employment and help improve the economy. I am also interested in learning how other crafts businesses make the leap from the “one person at home” model to a full-scale production studio, because this is the kind of business I hope to build.
I also want to make sure I’m serving the needs of my audience here on Crafting an MBA. To that end, I have a few questions for you. Which ceiling is your business running into – marketing or production? And if it is production, where are you stuck when it comes to bringing in or seeking outside help? And finally, what dreams do you have for your business? Are you happy as a solopreneur or do you have dreams of a bigger craft empire?
I’d really appreciate it if you could take a minute to answer these questions in the comments, or you can email me your thoughts at megan(at)craftmba.com.