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How to Start a Vinyl Cutting Business
Vinyl cutting is a versatile, creative process with a wide range of applications, from stickers and car decals, to signs and even T-shirt designs. Once a costly industrial process requiring heavy machinery, the technology has now advanced to the point that desktop vinyl cutters are the size of a smallish printer and the process is easy enough for anybody to do at home.
Thanks to the pandemic, home-based arts and crafts are booming, which means now is a great time to start a vinyl cutting craft business. The wide range of products will draw in customers, and the investment needed to get started is minimal. It can also be the ideal business to run on the side and add another income stream.
But starting a business is rarely easy, as it requires a great deal of planning and preparation. Lucky for you, this step-by-step guide provides all the insight and information you need to start cutting your way to entrepreneurial success.
Time to build
Step 1: Decide if the Business Is Right for You
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:
- Express yourself with your own design style
- Low startup costs
- No technical skills or expertise needed
- Run from home and work when you want
- Demand will fall during economic downturns
- Can be challenging to meet tight deadlines
The US arts and crafts market, of which vinyl cutting is a key part, saw nearly $1.2 billion in sales in 2021, up nearly 11% from the previous year.https://www.statista.com/topics/3908/crafts-and-creative-activities-in-the-united-states/#dossierKeyfigures This 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 Step By Step article on starting a Cricut business.
Trends in vinyl cutting include:
- New and trending applications include unique wallpapers, monogrammed items, and appealing placemats.
- Increased demand for 3D printing is expected to drive greater demand for vinyl cutters, particularly as more and more people seek customization and personalization of their crafts.
Challenges in the vinyl cutting industry include:
- The rising popularity of DIY crafting is creating more competition for vinyl cutters
How much does it cost to start a vinyl cutting business?
Start up 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 a 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:
- Vinyl Cutter
- Heat Press
- Vinyl Rolls (in various colors such as white, blue, black, red, pink and silver)
- Application Tape
- Transfer Tape
- Cutting Mat
|Start-up Costs||Ballpark Range||Average|
|Licenses and permits||$200-$500||$350|
|Marketing and advertising||$400-$1,000||$700|
How much can you earn from a vinyl cutting business?
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 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.
What barriers to entry are there?
Barriers to entry for a vinyl cutting business are low, but they include:
- Low capital requirements, plus the potential for a home-based operation, mean you’ll have to stand out from countless competitors to win a decent market share
- No switching costs for consumers, which limits customer loyalty
- Big firms dominating the market keep prices low via economies of scale
Step 2: Hone Your Idea
Why? Identify an opportunity
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.
What? Determine your products or services
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:
T-shirt with vinyl design.
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.
How much should you charge for vinyl cutting?
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.
Who? Identify your target 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.
Where? Choose your business premises
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:
- 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 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 “vinyl cutter” or “vinyl crafts”, boosts SEO
- Name should allow for expansion, for ex: “Jim’s Bakery” over “Jim’s Cookies”
- Avoid location-based names that might hinder future expansion
- Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
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 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: Brief overview of the entire business plan; should be written after the plan is complete.
- Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
- Product and Services: Describe your offerings in detail.
- Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
- Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
- Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
- Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
- Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
- Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
- Appendix: Include any additional financial or business-related documents.
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.
Step 5: Register your Business
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!
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 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.
Choose your business structure
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:
- 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 ZenBusiness’s 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.
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.
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.
- Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
- Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities.
- 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 vinyl cutting business. You might also try crowdfunding if you have an innovative concept.
Step 8: Apply for Licenses/Permits
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.
This 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.
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 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.
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.
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. 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.
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.
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’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.
Some of your business will come from the casual passerby or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
- Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area.
- Instagram: Same benefits as Facebook but with different target audiences.
- Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
- Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
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 ___ 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:
- Stand out from the crowd with outstanding stickers and decals
- Market to the cool kids with branded stickers and T-shirts
- A variety of vinyl crafts delivered to your door in 24 hours or less
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
- Flyering – Distribute flyers in your neighborhood and at industry events
- In-Person Sales – Offer your vinyl crafts at local markets, trade shows
- Post a video – Post a video about your vinyl cutting. Use humor and maybe it will go viral!
- Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal.
- Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
- Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.
- Influencer marketing – Pay people with large social media followings to promote your vinyl crafts. You can find micro-influencers with smaller followings and lower rates.
- Testimonials – Share customer testimonials about how they love your crafts!
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.
- 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.
Step 12: Build Your Team
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:
- Production Workers
- Admin and HR
- Sales Executives
- Marketing and PR
- Procurement Officer
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: Start Making Money!
You’ve gained all the knowledge and insight you’ll need to launch your crafts business, so now it’s time to get out there and start building your vinyl cutting empire! Thought you might want to bookmark this page, just in case.
Vinyl Cutting Business FAQs
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 lot of products with your own vinyl cutter. The most popular, best selling vinyl products are listed below:
- T-shirts with vinyl image
- Vinyl car decals
- Vinyl laptop decals
- Vinyl mobile decals
- Product labels
- Logo stickers
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.