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.

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. 

Pros and cons

We’ve put together a list of pros and cons to help you determine if it could work for you:

Vinyl cutting industry trends

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.

Industry size and growth

• Industry size and past growth – The US arts and crafts market, of which vinyl cutting is a key part, saw $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)) 
• Growth forecast – The global arts and crafts market is predicted to grow around 4% annually through 2027.((https://www.marketwatch.com/press-release/arts-and-crafts-market-growth-analysis-2022-by-top-manufacturers-company-overview-cagr-status-revenue-and-forecast-till-2027-2022-04-20))
• Number of people employed – There were more than 48,000 jobs for craft and fine artists in 2020, according to the US Bureau of Labor Statistics.((https://www.bls.gov/ooh/arts-and-design/craft-and-fine-artists.htm))

Trends and challenges

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
• Troubleshooting mechanical or software-related problems

Consumer spending

• Average consumer spend – Crafters spent $60.49 on average a month in 2016.((https://www.statista.com/statistics/694498/craft-and-hobby-participant-average-monthly-spend-us-by-gender/))
• Potential customer base – Survey by data analyst Statista finds more than 25% of respondents in the US consider arts and crafts as a hobby or interest.((https://www.statista.com/topics/3908/crafts-and-creative-activities-in-the-united-states/))

What kind of people work in vinyl cutting?

• Gender – 65% of all crafters are female, while 35% are male.((https://www.zippia.com/crafter-jobs/demographics/#gender-statistics))
• Average level of education – 36% are high school graduates, while 34% hold a bachelor’s degree.((https://www.zippia.com/crafter-jobs/education/))
• Average age – The average age of a crafter is 48 years old.((https://www.zippia.com/crafter-jobs/demographics/#age-statistics))

How much does it cost to start a vinyl cutting business?

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:

• Vinyl Cutter
• Heat Press
• Vinyl Rolls (in various colors such as white, blue, black, red, pink and silver)
• Application Tape
• Transfer Tape
• Camera
• Cutting Mat
• Squeegee
• Packing

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

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 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. 

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

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.

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. 

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

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

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.

Magnets

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.

Banners

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: “Vinyl Visionaries” over “Vinyl Home Decorators”
• 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 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.

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: Present an overview of your vinyl cutting business, highlighting its focus on creating custom vinyl designs for a variety of applications, including signage, apparel, and vehicle wraps.
• Business Overview: Describe your business’s specialty in offering vinyl cutting services for creating custom graphics and lettering for personal and commercial use.
• Product and Services: Detail the range of vinyl cutting services offered, such as custom stickers, decals, signage, and heat transfer vinyl for apparel.
• Market Analysis: Assess the demand for custom vinyl products, identifying potential customers like businesses, event organizers, or individual consumers.
• Competitive Analysis: Compare your business to other local vinyl cutting services, focusing on your advantages in design quality, material variety, or customization options.
• Sales and Marketing: Outline your strategy for attracting customers, using methods like online marketing, local business partnerships, or participating in trade shows.
• Management Team: Highlight the experience and skills of your team, especially in graphic design, digital fabrication, and customer service.
• Operations Plan: Describe the operational process, including design creation, vinyl cutting, weeding, and application or installation.
• Financial Plan: Provide an overview of financial aspects, including startup costs, pricing strategy, and revenue projections.
• Appendix: Include supplementary documents such as design portfolios, client testimonials, or detailed market research data to support your 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.

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 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 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 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 options, 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.

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. 

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.

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 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.

Marketing

Here are some powerful marketing strategies for your future business:

1. Social Media Showcase: Leverage the power of visual platforms like Instagram and Pinterest to showcase your vinyl-cut creations, emphasizing their versatility and unique designs.
2. Local Partnerships: Collaborate with local businesses such as coffee shops, boutiques, or event planners to offer customized vinyl designs for their spaces, products, or events.
3. Tutorial Videos: Create engaging and informative tutorial videos showcasing the creative process of vinyl cutting, positioning yourself as an expert and building trust within the community.
4. Influencer Collaborations: Partner with local influencers or those within the crafting and DIY community to promote your vinyl-cut products, reaching a wider audience with a genuine endorsement.
5. Workshop Hosting: Organize workshops or classes to teach the basics of vinyl cutting and its applications, establishing your business as an educational resource and attracting potential customers.
6. Seasonal Promotions: Design special vinyl creations tied to holidays, events, or seasons, and promote them through limited-time offers, creating a sense of urgency and increasing sales.
7. Customer Referral Program: Implement a referral program that rewards existing customers for referring new clients, fostering customer loyalty and word-of-mouth marketing.
8. Localized Online Advertising: Utilize targeted online advertising on platforms like Facebook or Google, focusing on your local area to reach potential customers interested in personalized products.
9. Collaborative Giveaways: Partner with complementary businesses for joint giveaways, expanding your reach and tapping into new customer bases interested in creative and personalized items.
10. Testimonials and Reviews: Encourage satisfied customers to leave testimonials and reviews on your social media pages or other relevant platforms, building credibility and attracting new clients.

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 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: 

• 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 

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 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. 

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
• Accountant
• Procurement Officer
• Designer

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!

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!