I'm being naïve about this business idea aren't I ???

[KittyFourPaws]

HI

I have the idea to start as business making craft items and if it goes well expand to have " employees" .

I've designed the items so that they can be made in the home, the skill can be mastered by most.

I'm imagining I would pay on a piece by piece basis, with the "pay" equivalent to £10 ph .

I envision offering employment to those who find traditional jobs difficult to manage. Maybe even referred from SS / charities etc

It would give SAHM / vulnerable etc work in their own time , even grabbing 20 minutes when a baby naps. It is small so in a DA situation could easily be hidden.

Am I living in la-la land ?

There's bound to be masses of issues I haven thought of that will make it unworkable.

Over and above the " Legal" side of things ( pay, taxes) etc what else is going to trip me up ?

Insurance for instance , if it in their own home do I have to provide insurance ?

Thanks

@delilahbucket

I run a handmade business. It took nine years of sheer graft before I became an employer. Food for thought there OP. It isn't as easy as you think. You will need insurance, you will need reliable employees, you will need to pay holiday pay, possibly sick pay and maternity/paternity pay (because you can't just advertise to mums). What about fees to sell, Etsy costs me 12%, Amazon handmade 12%, eBay 20%. Returns, missing items, all have to be factored in. It's hard enough running a business, let alone being an employer. Doesn't sound like you will have the margin to pay someone £10 an hour while still earning for all the work you will have to do. And if no one else is selling this product, why is that? It's very hard to introduce a brand new item to market without a marketing budget, honestly, been there and done that!

Yup. I speak as someone who used to run a business with employees who made handmade stuff from their homes and it was a nightmare. Quality control, reliability and output were the main issues (if you want a job done properly do it yourself etc) but then, as others point out, there is a host of admin stuff that goes alongside it all like staff management, payroll, sick/holiday/maternity pay, pension, liability insurance etc. The stress was horrendous and I'd never go back to that life.

I also don't think you've factored in the cost of posting the kit to your employees for them to build and then having them post it back to you for you to mail to the end purchaser. Depending on the size/weight, this could eat into your margins a lot.

A good place to start would be to look into social enterprise or community interest companies - there is also a lot of support around business planning and setting these up.

@Hotelhelp

Love the idea OP but not sure you’re there yet.

@SinkGirl tell me more about these maps!

They are drawn from actual maps and then cut by hand with a scalpel - I designed them to sell the templates to other paper cutters but have had a big response so will be selling them myself. They can take a long time though - 12-30 hours for these, and about to start on one that likely to take at least 50 hours.

It used to be called “piece work” and many women were employed in their home doing this.
Lots of clothing manufacturers, including big names, used these out workers. Not too sure of the legalities now and the health and safety aspect.

But yes I agree that costs of where you sell and VAT if selling a considerable amount are a factor. I sell digital downloads on Etsy which is a good source of passive income when it work, but VAT is automatically added for those in the U.K. and EU so I lose 20% there and that’s before fees, advertising etc. It makes a massive dent.

@KittyFourPaws I think if you can start it up home based and with low initial investment, it could work. A friend of mine took early retirement and did such a thing which involved reselling small value items on eBay (think value £1-2 per item max). I caught up with her recently and the business took off to a ridiculous extent in that she now has full business premises and employs her sons full time.

Whilst an amazing success, this is not what she actually wanted as she has ended up being so busy it was was in excess of the small income and activity she wanted. She is at the point of handing the business over to her sons and retiring again..except this time she won't start another one based on how she did before as she struggled to control it growing....know that sounds perverse !

Good luck

You need to start selling them yourself first and make sure there is a market before considering expanding your business.

Selling on etsy, eBay etc isn't guaranteed, you don't just turn up and suddenly sell 100s!

I don't think it's pie in the sky at all to dream up ideas and put the effort in to research it which is what you're doing.

I investigated setting up this exact type of business. I decided against it because the overheads and legal complexities of emplying the people who make the stuff was just too much. The crafters would have made more money than i was!

I've put it on the back burner. Focus on making and selling your own stuff, for eg I'm developing my own ranges of products. If i can create enough demand i will look for skilled people to help me fill the demand. I wanted to help women who couldn't work outside the home to use their skills. But it turned out i wasnt anywhere near experienced enough in running a business to be trying to do that at this point so I've scaled it back. A business is supposed to make money for you. I've learnt this the hard way if you can make craft kits, that's probably quite a good thing to explore.

It's still called piece work and still goes on with sewing.

I think you need to have a proper go at making, marketing and selling it yourself before getting others involved. But if you’re going to be paying other people to make it, then either your margins will have to skyrocket OR per item the price they’re getting paid will have to be very low indeed.
I run a business and having “employees” is an enormous undertaking and sounds unrealistic tbh. However that is different to paying people to do bits for you. Ideally everyone would be registered as sole traders and do their own tax returns.

Also, are you looking at wholesale costs for materials or retail? Finding a wholesaler is weirdly still quite tricky for some industries but I’ve managed to find some for my paper cutting kits - when I’m turning over enough volume I can go to suppliers directly and get prices down further.

I can't imagine what kind of cheap tat that takes such little time to assemble would really be raking in so much interest that you'd need to take on staff?

I can understand the kind of thing you are thinking of doing OP. A relative bought a laser printer 2 years ago, what started as something to earn a couple of hundred quid a week is now earning 2k a month, more in busy times. Some of her products need assembly after printing so if its something like this I can see where you are coming from.

My advice (from watching cousin build her business) is that you need a decent etsy site with positive feedback and it's that rather than the products that makes the biggest difference. She also stands (in normal times) on farmers markets which not only makes a profit but also drives the online business.

I would do it yourself first, get the social media up and running, get the etsy store sorted then take it from there. If you get too busy (cousin has to limit orders over busy times) you could either outsource the assembly locally or use a local teenager for temporary work on a self employed basis. My dd occasionally helps cousin, she threaded ribbons over Christmas for instance. Dd gets well paid, cousin offloads the more basic mundane tasks.

You also need to consider if the people you employ will sell on themselves or ship products back to you for quality control checking and shipping.

I think you’re just ahead of yourself. Firstly you need to see if there is enough demand to employ anyone other than you. You can think about staff later.

I agree with a lot of what has been said but the other thing for me is Quality control. You would have to check every single one of the items is done to standard and what if one of your home worker produced a sub standard batch? You would have a load of wasted resources, a lack of items to fulfil the order and probably an employee who expected to still be paid. Not having control of your “manufacturing “ process could be a huge issue

Make as many as you possibly can yourself and see if they sell. Keep doing this until you've enough money to try employing another person.

You've not factored in postal costs to get the item to the home worker and back.

From the person to be employed perspective, I turned down a piecework job that would have worked out £10-15 per hour because it involved being unable to move around while doing it, delicate materials my children would find joy in running around with and and the maker wanted 3 done per week. It wasn't worth spending 8ish hrs of my child free time on to me.

I do know someone who took it up but they have a injury so will be seated anyway and their children are grown up.

How many of these kits will end up in employees homes unassembled, I think you'd need to be quite careful about the contacts specifying how long they have yo return completed kits, and if I were taking kn the job I'd also want a clear plan for how many I'd be expecting yo receive each week/month.

Quality control could be a major issue, as well as the assembly could thier be problems with the items being stored in pet owning or smokers homes.

Honestly without knowing what the end product is, how can people properly comment. Have you done your market research to determine whether there is a great demand for these craft items?

Good luck with it. Whatever it is

I would think carefully about the business model you choose to go down. You're looking at hiring employees to work remotely to assemble the kits, this could work, but as others have outlined there are a lot of potential pitfalls such as quality control, sickness, shipping the finished or unfinished product back and forth and loss or damage en route, your responsibilities as an employer. Other options are to directly sell the product as a kit for people to assemble at home, possibly looking to get your kit into retail or wholesale outlets (I have a friend who does this with craft kits, and earns I'd estimate a 6 figure salary doing so), or to bulk sell the kits to individuals to assemble to start their own craft business. This does not have to be an MLM, but could even potentially be more of a franchise situation (consider McDonalds as the most obvious example, they are all franchised businesses) but you don't even need to franchise if that's too formal/costly, just sell bulk lots of 100/1000/10,000 kits or whatever so Sally in Sheffield can offer something different to the market to hot chocolate bombs or vinyl on mugs.

I don't hold much truck with the argument that the employees could go it alone, they absolutely could, but if this requires specialist equipment then thats a signficant investment, and quite honestly a lot of people want the security and predictability of earning X wage for Y hours work, my company employs people who absolutely could all work as my competitors/freelance, but most of them don't leave to do this as they don't want the hassle of the legal, marketing, customer service etc side of running a business, they just want to turn up, work, get paid, go home and not have to be thinking about work on their off hours whereas the business owner is never 'off'.

The important thing is to start. You're thinking 10 steps down the road, which is fine, its what all entrepreneurs do, but your idea WILL change when you get it out there, you'll find what works and what doesn't. You always need to be your own first employee, so put in 6 months, a year, 5 years, whatever it takes to hone the product, the marketing and the route to marketing before you think about the structure for how you can grow the business.

Drop me a message if I can be of any more help.

As someone who runs a small business (food, not craft, but handmade all the same) my strong advice would be to start making it yourself and, when demand outstrips supply, look to take on staff.

You might also find that a small studio for your staff has significant advantages over getting them to WFH, even if it does cost a modest sum.

In terms of who would do this. I remember back in the recessions of the early 90s, lots of my friends and I were unemployed. Lots of them took on this kind of piece work, though it was more stuffing envelopes and the like.

A few people made it work short term while they were saving for something specific. A lot underestimated how long it would take and how little money they would earn. As a result most of them didn't complete their tasks and ended up not returning the finished items.

I don't mean to be negative as it was a lifeline for those with the right attitude, just that you might have to factor in that sort of wastage.

What have you got to lose if it doesn't work out? Just a bit of time?

Go for it.

Apart from the fact that any sort of 'craft' business is quite tricky because the market if flooded with loads of people trying to do the same sorts of things, I think your main issue would be in focussing on hiring people who are not particularly consistently employable.

If someone is a SAHP, they will have lots of competing responsibilities and distractions and probably not be especially reliable. There's a reason people need childcare to work properly in most cases. Online shoppers want stuff shipped to them now, now, now. Dh runs a mostly online business. People expect things shipped the second they order them, follow up with tracking details, someone on the other end of the phone to deal with complaints. Your SAHP worker may not be able to balance this with caregiving and you can obviously do it yourself but you'll need regular communication with them, keeping to deadlines, etc.

MIL works supporting vulnerable people returning to work after a mental health crisis. It's her literally full time job. They need a lot of support and there's safeguarding issues involved. I could easily see that people's struggles and poor mental and physical health, etc. could become a major obstacle to actually just getting work done. There are charities and whatnot who do support people to return to work, but I wouldn't want to take that on when I didn't have the training or the support available myself.