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How to Start a Crochet Business in 10 Easy Steps (2023)

If you’re dedicated to the art of crochet, you may give baby blankets and stuffed animals to thrilled parents-to-be or have friends and strangers admire your stylish cardigans. You may have also considered making money by sharing your talents with the world. Consult this guide for how to start a successful business selling crochet products. 

How to start your own crochet business

  1. Assess your skills
  2. Conduct market and audience research
  3. Design your product line
  4. Create a brand identity
  5. Decide where to sell your products
  6. Make a marketing plan
  7. Price your products
  8. Form your business
  9. Purchase supplies and make products
  10. Set up your online store

If you’re a novice entrepreneur, you’re probably excited (and maybe a bit overwhelmed) by the prospect of selling your handmade items. Follow these 10 steps to develop your crochet business plan and start earning extra income off of your crochet talents. 

1. Assess your skills

The first step in starting a crochet business is to take stock of your crocheting skills. Crochet projects can be as simple as placemats and as complex as a lace bridal gown. Do you seek out the most challenging projects, or do you prefer simpler designs? How comfortable are you with pattern writing? 

Evaluate your skill level and estimate how long it takes you to produce each piece. This information will help you design and price your product line later. 

2. Conduct market and audience research

Market research is the process of gathering and analyzing information about your potential customers and competitors. Your findings will shape your business positioning, marketing strategy, product pricing, and the types of products that you sell. 

You can conduct market research by reading trade journals and industry reports, consulting ecommerce blogs, and looking up existing crochet businesses. You can also use data from online marketplaces to evaluate competitor performance—an individual Etsy shop, for example, displays total sales, average customer rating, and customer reviews.

Market research also involves identifying specific target audiences within your target market and researching their needs, decision drivers, and buying habits. For example, if you make intricate lace dresses and shawls, your research might tell you the primary consumers of your products are women between the ages of 35 and 60 in middle- and upper-income brackets. You can then conduct interviews or hold a focus group to learn more about this group’s specific needs and buying patterns. 

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3. Design your product line

The next step is creating your initial line of crochet items. Use your audience and market research to design products to meet customer needs. You can also look for gaps in competitor offerings. For example, if you’ve determined crochet dresses are popular and there’s an unmet need for inexpensive options, you might use this information to create a line of affordable, quick-to-create dresses that can work as beach cover ups or be layered over slips for more formal occasions.

Some crochet businesses also sell patterns. Even if you focus on physical products, consider selling several patterns as digital downloads to create a source of passive income. 

4. Develop your brand identity

You can think of your brand identity as your company’s unique personality. It includes your business name, logo, typography, color palette, and voice and tone. A strong brand identity will represent your work and resonate with your target audiences. For example, if you sell crocheted baby clothes and other baby items, you might select bright colors and a playful tone of voice, while if you make cottage-core doilies and table runners, you might opt for a more vintage aesthetic. 

5. Decide where to sell your products

The next step is to decide where you’ll offer your products. You can sell through your own online store on an ecommerce platform like Shopify, use an online marketplace like Amazon Handmade or Etsy, sell at local craft fairs or markets, or approach local craft stores about carrying your crocheted products. To make your choice, consider where your target audiences are most likely to shop and compare the costs associated with selling in each venue. It might even make sense to combine two or more of these strategies.

6. Make a marketing plan

A marketing plan is your roadmap for getting your products in front of your target audiences. It includes your marketing goals, primary selling points, and key marketing channels. If you plan to sell products online, consider digital marketing strategies and use social media, search engine marketing, and email marketing

You can also use these channels to distribute free resources, a strategy known as content marketing. For example, you might post a free pattern to your company’s Facebook page or publish regular blog posts on topics like how to style various crochet pieces to get potential customers more familiar with your brand. 

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7. Price your products

Planning your finances is an important step in starting a profitable business. This involves estimating your expenses and setting prices for your products.

Expenses can include fees for permits, equipment, packaging, marketplace charges, or any of a number of different recurring costs.

Next, calculate the direct expenses associated with fulfilling an order. For example, let’s say yarn, packaging, and shipping adds up to $10 per order. Price in your labor and assign yourself a fair wage, say $20 an hour. If a product takes five hours to complete, your labor cost is $100 and the total cost to your business is $110 per item.

Next, factor in your overhead and startup costs. If you anticipate 10 sales a month and your monthly overhead is $200, your overhead costs will average $20 per product, bringing the total cost to your business to $130 per item, when taking into account the figures above. You might add another $5 per sale as part of your plan to pay down your startup costs, arriving at a total cost of $135 per item.

Once you’ve calculated the costs associated with an order, apply your markup. Markups, which represent your profit, typically run between 20% and 100% of item cost. You can use a profit margin calculator to determine yours. 

If you’re unsure about how much to mark up your products, you can use your market research to select an initial markup percentage that will bring your prices into alignment with competitor price points—for example, if a 20% markup means that your products will be 40% cheaper than competitor offerings, you can probably charge more. 

If your prices come out on the high end, resist the urge to lower your markup below 20%. If you do, you’ll risk taking a loss on your orders. You might be using higher-quality materials or executing more complex patterns than rivals, resulting in a more expensive final product. Look for other businesses charging the same amount for comparable projects to confirm you’re headed in the right direction.

8. Form your business 

The next step is to form your business, which involves selecting an entity structure and opening a business bank account. In some cases, you might also need to obtain a business license. Consult your state’s website—typically, either a Department of State or Department of Revenue and Taxation page—to determine if you do.

If you structure your businesses as a sole proprietorship, you might not need a business license or to register with the state, but you’ll still need to register your business name using a “doing business as” (or DBA) to open a business bank account and accept payments made out to your business.

9. Purchase supplies and make products

Once you’ve formed your business, you’re ready to buy supplies and start production. If you plan to sell made-to-order crocheted items, you won’t need to worry about establishing an inventory. Instead, you can focus on creating sample pieces to showcase on your online store. If you plan to sell items in person or anticipate larger order volumes, you may choose to postpone launch until you’ve built up enough inventory to fulfill your estimated early orders.

10. Set up your online store

Once you’ve created your product line, you can photograph your products, create your own website and online store, list your items, and start selling. Using an ecommerce platform can make it easy to design your online store and accept multiple payment methods. 

How to start a crochet business FAQ

Do you need an LLC for a crochet business?

You don’t need to form a limited liability company, or LLC, to sell crochet products. Many small craft business owners form sole proprietorships, although you’ll still need to register a DBA to open a business bank account.

Can I start a crochet business from home, or do I need a separate workspace?

You don’t need a separate workspace to start a crochet business. Many crochet and craft business owners operate out of their homes.

Should I focus on selling online, in-person at markets, or both?

Many crochet business owners sell products online and in person. Selling online can allow you to reach a larger customer base and minimize the inventory you need to hold by allowing made-to-order projects, and selling in person can help you form personal connections with customers.

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