The First Step: Initial Investment

If you're just starting out, you're probably wondering how much money you should invest in your business. How much to spend on supplies? How many supplies to buy? Should you find investors? How much should you spend on marketing and advertising? How much should you spend on your website?

Before I dispense my advice, I'll start with my own story. I started Chelleline Cards on almost nothing. I was unemployed (this time, it was by choice), and about to start law school in the fall. I saw a stack of cardstock on sale at Staples, for very little, and bought it. I had a pile of book catalogs from BookExpo that were simply sitting in my apartment. I had a pair of scissors that I used whenever I needed them. I set up a site on Etsy after a month of making cards.

I started to purchase supplies as my business grew. I abandoned the Staples cardstock pretty quickly and started to get my cardstock from Paper Source, which was of better quality, and then finally signed up for a wholesale account with Waste Not Paper. I started to buy paper and fine papers to make my collages (rather than using magazines and catalogs). I bought a bone folder to score the cards. I bought special cutting scissors. I had an official website made (by my then-boyfriend and now husband). I finally bought a cutting machine to help me cut some of my designs (sorry for throwing that one in, I know I've repeated it ad-verbatim!).

I never looked for investors. I spend nothing on advertising. I do very minimal marketing (that may have to change. We'll see).

So what's the lesson you can learn from this?

Don't spend too much money on supplies and materials.

Obviously, start-up costs will vary depending on your type of business. With crafts- and design-based businesses, however, the start-up costs are not very high and I would recommend not overloading or over-spending on supplies until you have a steady paying clientele. Yes, having more supplies at the beginning makes you feel more secure (like a safety blanket), but you might switch suppliers (as I did), or you might go in a different direction that doesn't use those supplies, or the products you make from those supplies might not sell, and then what will you do? The best is to be pragmatic and not spend more than you need at the moment on materials.

Consider investing in a website.

Please note that the key word here is "consider."

Having a business website will make you feel more official and may help retailers take you more seriously. The downside, however, is that if you don't have any website development skills and if you don't know anyone who does, you may end up spending a lot of money for a business website. Some people advocate waiting until your business makes enough money to hire a website developer to make your site (the "don't spend more than you earn" rule).

I'm on the fence about this. I ran my business, albeit part-time and kind of as a hobby, for two years before I had a website made (for free) by my now-husband. I was still able to generate interest from retailers with only my Etsy site as my main site. However, I did feel insecure about not having my own official site and I was so happy when Mitya made it.

So, my advice is this: if you're serious about your business from day one, I would invest in an official business website. It will be great for your confidence and give you the appearance of being serious about what you do. Think of it not as you're spending more than you earn, but rather as an investment. The extra money dropped at the beginning will pay off in the long run.

If you're approaching it as a hobby/side business, I would use whatever free platforms are available to you (Etsy, DaWanda, etc.) and then invest in a business website once you feel you want to make the leap to full-time.

Apply the 'wait-and-see' approach to Marketing. Don't invest in advertising at the beginning.

Before hiring a PR professional or investing in a marketing course, I would try to learn some marketing basics on my own and contact the press by myself. Not only does it save you from spending money that you might not yet have, many people may not be ready when they first start out to handle large-scale orders that result from successful marketing and PR efforts. Wait until you develop a sufficient line of products and a way of producing these products efficiently before you hire someone or invest in a marketing course - and experiment with learning it on your own yourself. This includes reading various websites on how to do marketing/PR for your small business as well as monitoring blogs and industry publications that you may want to target eventually.

For similar reasons, I also wouldn't invest in advertising in the beginning. Advertising is expensive and I'm not sure how effective it is for craft- and design-based businesses. Wait and see where your competitors place ads. Read online forums to see where people have met the most success. I also would not invest in things like the Etsy Showcase, which are inexpensive but not effective at all (I know - I've tried it a few times!). Your $7, $15, or however much it is now would be better spent elsewhere.