How to Start a Crochet Business

Hobbies don’t have to be just hobbies. With a bit of effort they can become profitable businesses, and crocheting is no exception. Do you like to crochet sweaters and baby blankets and give to friends as gifts? If so, you too can be a Crochetpreneur, just like crochet expert Pam Grice. The arts and crafts market, particularly online, is exploding and crocheted items are a big part of that. You’ll just need a bit of inventory and start offering your goods on an online platform like Etsy. 

To avoid mistakes, you’ll also need a good deal of business knowledge. Luckily, you’ve come to the right place, as all the information you need is woven into this step-by-step guide, designed to prepare you to crochet your way to success.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a crochet business has pros and cons to consider before deciding if it’s right for you.

Crochet industry trends

Industry size and growth

While market information for crocheted items is difficult to measure, Etsy statistics are reflective of the industry size. 

• Industry size and past growth – Etsy marketplace sellers had $1.3 billion in total revenue in 2020 from over 80 million active buyers.((https://www.statista.com/topics/2501/etsy/#dossierKeyfigures)). The US arts and crafts market achieved sales of nearly $1.2 billion in 2021, up nearly 11% from the previous year.((https://www.statista.com/topics/3908/crafts-and-creative-activities-in-the-united-states/#dossierKeyfigures))
• Growth forecast – The global arts and crafts industry is projected to expand more than 30% by 2026. Pinterest predicts crocheted products sales will grow sharply in the years ahead.((https://www.marketwatch.com/press-release/arts-and-crafts-market-size-in-2022-is-booming-across-the-globe-by-share-size-growth-segments-and-forecast-to-2026-with-top-countries-data-2022-07-13))

Trends and challenges

Trends in the crochet industry include:

• Trends in crochet include matching shorts and tops sets, and 70s style tops. 
• Crocheted fishnet bags and other crochet bags and purses are also trending.

Challenges in the crochet industry include:

• People have been spending more time at home, leading to more crocheting businesses and making it harder for new market entrants to stand out. 
• Prices of crochet supplies have increased, cutting into profit margins.

What kind of people work in Crochet?

• Gender –  69.6% of knitters are female, while 27.3% are male.((https://www.zippia.com/knitter-jobs/demographics/))
• Average level of education – The average knitter is high school educated.
• Average age – The average knitter in the US is 49.1 years old.

How much does it cost to start a crochet business?

Startup costs for a crochet business range from $2,000 – $5,000. The largest expenses are for a website and crochet supplies.

You can take crochet courses online on sites like Udemy for less than $20 and get on-demand videos that you can have unlimited access to. 

You’ll need a handful of items to successfully launch your crochet business, including: 

• Yarn
• Crochet hooks
• Patterns

Start-up Costs	Ballpark Range	Average
Setting up a business name and corporation	$150 - $200	$175
Business licenses and permits	$100 - $300	$200
Insurance	$100-$300	$200
Business cards and brochures	$200 - $300	$250
Website setup	$1,000 - $3,000	$2,000
Yarn, crochet needles, patterns	$500 - $1,000	$750
Total	$2,050 - $5,100	$3,575

How much can you earn from a crochet business?

Your prices will depend on the items you’re making for sale and the materials used. Scarves and mittens might be around $20, blankets $40, sweaters $50 and up. These calculations will assume an average sale price of $35. Your profit margin after materials should be about 70%.

In your first year or two, you could sell 25 items per week, bringing in more than $45,000 in annual revenue. This would mean nearly $32,000 in profit, assuming that 70% margin. As your brand gains recognition and you get referrals, sales could climb to 40 items per week. With annual revenue of nearly $73,000, you’d make a tidy profit of more than $50,000.

What barriers to entry are there?

There are a few barriers to entry for a crochet business. Your biggest challenges will be:

• Having excellent crocheting ability
• Attracting customers

Step 2: Hone Your Idea

Now that you know what’s involved in starting a crochet business, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research crochet businesses online to examine their products, price points, and what sells best. You’re looking for a market gap to fill. For instance, maybe the market is missing a crochet business that sells patterned sweaters, crocheted coasters, or tube tops.

This could jumpstart your word-of-mouth marketing and attract clients right away.

What? Determine your products or services

You’ll need to determine if you want to specialize in a certain product such as sweaters, or if you want to make a variety of items. This will depend on what your skills are and what types of items you can make.

How much should you charge for crocheted items?

Your prices will depend on the products you make and the materials you use. You should research businesses that offer similar products to see what they charge. You should aim for a profit margin after the cost of materials of at least 70%.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will depend on the types of items you sell, but it will generally be broad. You should spread out your marketing to include sites like TikTok, Instagram, and Facebook. You could also rent space at craft fairs to sell your products.

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But if  your business grows to the next level, you’ll likely need to hire workers for various roles and may need to rent out a production facility or even a storefront. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Crochet Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “crochet” or “hand crocheted”, boosts SEO
• Name should allow for expansion, for ex: “Crochet Kingdom” over “Crochet Home Decor”
• Avoid location-based names that might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Crochet Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A concise overview of the crochet business, highlighting key goals, strategies, and financial projections.
• Business Overview: An in-depth look at the crochet business, detailing its mission, vision, and the niche within the crochet market it aims to fill.
• Product and Services: Clearly define the crochet products and services offered, specifying unique features and benefits.
• Market Analysis: Analyze the crochet market, identifying target customers, trends, and potential growth opportunities.
• Competitive Analysis: Evaluate competitors in the crochet industry, highlighting strengths and weaknesses to position the business effectively.
• Sales and Marketing: Outline strategies for selling crochet products, including pricing, distribution, and promotional activities.
• Management Team: Introduce key members of the crochet business team, emphasizing their relevant skills and experience.
• Operations Plan: Detail the day-to-day operations of the crochet business, covering production, sourcing materials, and quality control.
• Financial Plan: Provide a comprehensive financial forecast, including startup costs, revenue projections, and break-even analysis.
• Appendix: Include any additional information or supporting documents, such as market research data, crochet patterns, or supplier agreements.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to crochet businesses.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your crochet business will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a crochet business. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Licenses/Permits

Starting a crochet business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your crochet business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as LS Retail, Vend, or Retail Pro, to manage purchasing, inventory, and invoicing.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

For your crochet business, the marketing strategy should focus on showcasing the uniqueness, quality, and handmade charm of your crochet products. Emphasize the creativity, craftsmanship, and customizability of your items, whether you’re selling finished goods, patterns, or crochet supplies. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should reflect the warmth, texture, and artisanal nature of crochet, which can be incorporated into your logo, product packaging, and overall aesthetic.
• Direct Outreach: Connect with local craft stores, boutiques, and artisan markets to showcase your products. Attending craft fairs and community events can also increase your visibility.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a visually appealing website that showcases your products, shares your story, and allows for online purchases, if applicable. Use SEO best practices to optimize your site for search terms related to crochet, handcrafted goods, and artisanal crafts.
• Social Media Engagement: Utilize platforms like Instagram, Pinterest, and Facebook to showcase your creations, share behind-the-scenes glimpses of your process, and engage with your audience.

Content Marketing and Engagement

• Crafting Blog: Share posts about your crochet journey, tips and tricks for fellow crocheters, and stories behind your creations.
• Customer Spotlights and Reviews: Highlight happy customers, especially those who have creatively used or displayed your products.
• Tutorial Videos and Live Streams: Create video content or live streams showing your crocheting process, offering tips, or conducting Q&A sessions with your audience.

Experiential and In-Person Engagements

• Workshops and Classes: If applicable, offer crochet workshops or classes, which can attract both beginners and experienced crocheters.
• Participation in Craft Fairs and Markets: Regularly participate in craft fairs and markets to sell your products and engage directly with customers.

Collaborations and Community

• Collaborations with Other Crafters: Collaborate with other crafters or artists for special projects or joint promotional efforts.
• Community Engagement: Participate in community events or collaborate with local businesses for special occasions (e.g., creating custom pieces for local events or businesses).

Customer Relationship and Loyalty Programs

• Custom Order Options: Offer custom order options to cater to clients looking for personalized items.
• Loyalty Rewards for Repeat Customers: Implement a loyalty program offering discounts or exclusive previews of new products to repeat customers.

Promotions and Advertising

• Targeted Online Advertising: Use platforms like Facebook and Instagram, as well as Etsy if you use it, to reach individuals interested in handmade goods and crafts.
• Email Marketing: Build a mailing list to inform subscribers about new products, special offers, and crochet tips or tutorials.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your crochet business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your crochet business could be:

• Stunning hand-crocheted sweaters for the stylish woman
• Custom crochet – pick your color, style, pattern and it’ll soon be yours! 
• Funky crocheted hats that will be your best accessory

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a crochet business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in crochet for years and can offer invaluable insight and industry connections.

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in crochet. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from home, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a crochet business include:

• Crocheters – crochet items
• Store Clerks – make sales, customer service
• General Manager – scheduling, ordering, accounting
• Marketing Lead – SEO strategies, social media

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Crochet Business – Start Making Money!

Some of the most successful businesses started as hobbies, and your crochet hobby could do the same. The arts and crafts industry as a whole is booming, with all sorts of products, including crocheted items, selling online.  You just need some supplies, and you could start your own Etsy shop and make some good money. It’s a great business to start from home with just a small investment, and you’ll be doing something you enjoy.

So, now that you know what’s involved from a business perspective, put those hooks to work and launch your new crochet empire!