GROWING YOUR HANDMADE CRAFT BUSINESS
Artisans have many reasons for growing their business. Some want to go full-time, others try to transition from pure hobby to building a steady stream of income. Another common motivation for artisans is to get more revenue out of their side hustle. Growing a business has risks, but can also be immensely rewarding. As writer Anaïs Nin said:
“And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.”
Traditionally, artisans and other creative entrepreneurs turn to the web to learn more about how to grow their business. Most searches will yield between 500,000 and 10,000,000 results, which are impossible to read and digest. Even taking a more modern approach and checking textbooks from expert authors at the library can be discouraging. You will probably find several shelf-fulls of textbooks with thousands of pages and hundreds of suggestions. And you will still be none the wiser.
Fortunately, there are other options. Below is a planning tool to help you organize your thoughts and determine which growth strategies might be best for your business. It is adapted from the Ansoff Matrix, which remains one of the most used marketing tools of today.
Four Main Growth Strategies
The matrix summarizes the 4 basic growth strategies. They are based on 2 elements, Customers and Products and can be applied to any artisan business.
Strategy 1 - Quadrant A: Selling Existing Products to Existing Customers
This approach is about selling more of your current products in your current market segment. It is often called a Market Share Growth strategy.
The easiest strategy to grow your business is to sell products you are already making to your main target market segment. Some people in your main target market segment have already bought from you. However, quite a few probably have not. These potential customers are the easiest to convince to purchase from you.
For example, a leatherworker who makes purses and knapsacks might find that only 175 people of her 1000 member target list purchased a knapsack from her. From there, she builds promotion tactics designed to reach deeper into her target segment.
A reasonable goal is to increase her share in that segment to 40%, which amounts to sales of an additional 225 items. The value of this strategy comes from the vendors market knowledge. She knows her target market segment, and its personas and she has learned that her product does address the wants and needs of these shoppers.
Strategy 2 – Quadrant B: Selling a New Product to Existing Customers
This strategy is based on New Product Development. It carries more risk than Market Share Growth but is a very viable option for an artisan business. For example, a potter who has so far focused on vessels might consider expanding her product line to plates and platters and offer them to her existing target market segment.
Another maker might expand her product portfolio from greeting cards to include note-pads and notebooks and sell them to shoppers who are interested in buying her cards.
Growing your artisan business by expanding your product line will require time, effort and possibly investments into production and promotion. This is a worthwhile risk. The biggest upside is that you have already a deep understanding of the buying behaviour of your current market. Knowing your existing shoppers lets you develop new products tailored exactly to their needs and values.
Strategy 3 – Quadrant D: Selling Existing Products to New Potential Customers
This strategy, often called Market Development, is for expanding your business into new market segments. It is about reaching consumers who don’t know your business and products but might be interested in what you make.
For example, if you had good retail sales on the eastside of an urban area you might consider selling on the westside. Or, if your current target market segment is “urban women between 30-45 years of age”, you could test younger target market segment such as “urban women between 20 and 30 years of age.” Market Development carries more risk and requires more effort, at least until you have established your presence in the new segment. You can mitigate the risk by conducting enough market research to make sure the new shopper segment wants to buy what you sell.
Strategy 4 – Quadrant C: Selling New Products into New Markets
Selling new products into new markets is called Diversification. For artisans this is the most difficult and risky growth strategy because it is comes close to rebuilding the business. If a woodworker adds making pottery to his business, he or she is offering a completely new product to what is most likely an unknown market segment. The strategy will put significant stress on the existing woodworking business, mostly in the areas of production and marketing. Brand image can also be affected. Shoppers will find it difficult to identify and embrace the personality of the business. The dissonance between the concept of “woodworker” and “potter” will be too great to bridge.
Diversification is not a good option for artisans to expand and increase revenue. Your priority should be Market Share Growth. When the results become too meagre, Product Development or Market Development are the next-best options.