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Written by: Esther Strauss
Esther is a business strategist with over 20 years of experience as an entrepreneur, executive, educator, and management advisor.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on October 12, 2021
Investment range
$2,000 - $5,000
Revenue potential
$50,000 - $260,000 p.a.
Time to build
0 - 3 months
Profit potential
$40,000 - $100,000 p.a.
Industry trend
Growing
Commitment
Flexible
Key considerations to remember when starting your vinyl cutting business:
Although a vinyl cutting business is versatile and easy to set up, it won’t be right for everyone.
We’ve put together a list of pros and cons to help you determine if it could work for you:
An increase in arts and crafts sales in the US dovetails with the lightning-fast growth of vinyl cutting as part of the pandemic-driven home crafting boom.
For instance, one of the leading vinyl cutter brands, Cricut, saw its revenue nearly double in 2020.((https://www.investors.com/news/technology/cricut-stock-is-riding-the-home-crafting-boom-crct-stock-hits-high/)) Sales of Cricut and other vinyl cutter brands continued to increase in 2021, which means the opportunity is there for the bold and creative entrepreneur.((https://www.investors.com/news/technology/cricut-stock-crafting-device-maker-fashions-second-quarter-beat/))
To learn more about Cricut, read this article on starting a Cricut business and check out some profitable Cricut business projects to sell.
Trends in vinyl cutting include:
Challenges in the vinyl cutting industry include:
Startup costs for a vinyl cutting business run from $2,000 to $5,000, with an average of about $3,500. Your main cost is the vinyl cutter itself, which should cost between $500 and $1,000, plus accessories and materials.
As the enterprise can be run from home, you also won’t have any costs associated with renting business premises or hiring staff, cutting down on the investment needed to launch. You just need to start producing appealing, high-quality products and start offering them for sale on an online platform like Etsy.
You will need to procure a number of different items to successfully launch a vinyl cutting business. Here is a list of things to get you started:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Licenses and permits | $200 - $500 | $350 |
| Insurance | $250 - $250 | $250 |
| Marketing and advertising | $400 - $1,000 | $700 |
| Website | $100 - $500 | $300 |
| Software | $150 - $250 | $200 |
| Equipment | $500 - $1,000 | $750 |
| Raw material | $200 - $1,200 | $700 |
| Miscellaneous | $200 - $300 | $250 |
| Total | $2,000 - $5,000 | $3,500 |
Vinyl products can vary in price from $1 and $30, so a realistic average price might be $10. After spending on materials and marketing, you should have a profit margin of around 80%.
In your first year or two, you might sell 100 items per week, which would give you more than $50,000 in revenue and $40,000 in profit. After you establish your brand, you might be able to sell 500 units per week, but you would also need to rent out a production facility and hire workers, bringing your margin down to 40%. Still, you’d bring in more than a quarter of a million dollars in revenue, and take home a tidy profit of about $100,000.
From there, you could really start building your vinyl cutting empire.
Barriers to entry for a vinyl cutting business are low, but they include:
Now that you know what’s involved in starting a vinyl cutting 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.
If you have a knack for creativity and enjoy crafting handmade products, a vinyl cutting business is likely to appeal to you. As we have seen, launching a vinyl cutting business can also be highly commercially feasible, as vinyl decals and stickers are equally popular among residential and commercial clients.
Research other vinyl cutting businesses online to examine their products, price points, and customer reviews, as well as what sells best. You’re looking for a market gap to fill. For instance, maybe the marking is missing a vinyl cutter that uses only sustainable materials.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as bumper stickers and decals.
This could jumpstart your word-of-mouth marketing and attract clients right away.
Vinyl cutting has a number of applications, which means a broad range of products are on offer for you and your customers to choose from. These include t-shirts, stickers, lettering, magnets, banners, and much more. You might want to try making a variety of them and see which work best for you. But you may initially want to focus on a single product and expand your portfolio as you go.
Let’s take a closer look at some of the potential products on offer:
Vinyl cutters can be used to create eye-catching, multi-colored designs that can be applied to T-shirts. The design is printed onto a vinyl sheet before being cut with a vinyl cutter. A heat press is then used to apply the vinyl to the shirt, creating a long-lasting design. You could use this technique to launch your own line of distinctive Tees.
Stickers are a very popular marketing tool for companies, who sell or give them to customers to apply to windows, cars, walls, cell phones, laptops and more, making the company’s branding more mobile and seen by a wider audience.
Vinyl lettering is an easy way to apply a company name or logo to any glassy or smooth surface, including store front windows or car windshields. It’s also a popular way to display a political or social slogan or message. For this application, you will need to purchase self-adhesive vinyl.
You can use a vinyl cutter to make and sell artistic magnets. The most popular type are die-cut magnets, which last long and can be stuck to fridges, lockers, cars or any other metal surface. You may want to consider applying a UV coating to the magnet, which will protect it from fading in the sunlight, making it suitable for outdoor use.
Vinyl banners are popular for special occasions such as weddings, birthdays or family reunions as well as commercial use. Vinyl banners are produced in a variety of sizes from as small as a couple feet to several meters. The orientation of the banner can be vertical or horizontal depending upon the customer’s needs.
Vinyl cutting prices will vary depending upon the product type, size, and order quantity. The most inexpensive items are vinyl stickers or magnets, which typically sell for $1-$5 each on Etsy. Vinyl banners and T-shirts go for about $15-$30 per piece on Etsy. You might want to aim for about $10 per item, and a profit margin of 80%.
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.
Vinyl cutting businesses can appeal to both consumers and businesses. You can find them on LinkedIn, Facebook, and Instagram. You may wish to target both markets, or you could focus on either one and carve out a niche. For example, promotional vinyl decals would allow you to tailor your marketing to corporate clients.
In the early stages of your vinyl cutting business, you’ll likely want to operate from home as it will keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent a production facility, or open your own crafts shop. 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:
Here are some ideas for brainstorming your business name:
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 below. 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 set 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.
Here are the key components of a business plan:
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.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
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 are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to vinyl cutting.
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.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your vinyl cutting business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
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.
Choose Your State
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.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a vinyl cutting business. You might also try crowdfunding if you have an innovative concept.
Starting a vinyl cutting 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.
his is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
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.
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 vinyl cutting 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.
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:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
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’ll likely need vinyl cutting software, such as VinylMaster Cut, Easy Cut Studio, or Sure Cuts A Lot, to enhance your cutter’s capabilities and store all of your designs and product options. You might also want Entreprise Resource Planning (ERP) software, such as SAP Business One or Sage Intacct, to manage and automate various production, inventory, customer management and billing.
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 services like WordPress, Wix, or Squarespace. 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.
Here are some powerful marketing strategies for your future business:
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 vinyl cutting 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 vinyl cutting business could be:
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 vinyl cutting business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in crafts 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 arts and crafts. 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.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a vinyl cutting business include:
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.
A vinyl cutter is a good investment since it can make a wide range of items, such as stickers, labels, decals, signs, and customized t-shirts.
But before you buy the machine, you should know there are various kinds. So it’s important to research and find out which machine has the right specifications for your business. Most of these machines come with software. But if you wish to use a different software, it’s wise to make sure it’s compatible with the machine. Now that you’ve gained all the knowledge and insight you’ll need to launch your crafts business, it’s time to get that vinyl cutter and start making money!
Vinyl cutting is a simple process. You don’t need heavy or pricey equipment to start your own vinyl cutting business – all you need is a vinyl cutter, specialized vinyl cutting software, and some basic tools and supplies to get going.
You can make a variety of products with your own vinyl cutter. The most popular and best-selling vinyl products include T-shirts with vinyl images, car decals, laptop decals, mobile decals, product labels, logo stickers, and magnets.
The “best” is a very subjective term and its definition may vary from person to person. For instance, if you are just starting out, you may be seeking the best “entry-level” cutter. If you are running a large business, you may be looking for the best vinyl cutter for “heavy duty and big projects”. One highly-rated option is the Cricut Explore Air 2.
No. The vinyl cutter simply cuts a pre-printed design to a high precision. The chosen design must first be created and printed onto vinyl paper before the process can take place.
Yes, you can start a vinyl cutting business from home. However, it’s important to check your local laws and regulations regarding operating a business from your home.
First, establish an online presence through a professional website or e-commerce platform where customers can view your products and easily make purchases. Utilize social media platforms like Instagram and Facebook to showcase your work, engage with your audience, and run targeted ad campaigns.
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