According to a survey by digital polling firm Walr, 15% of UK adults are looking to set up an arts and crafts business in 2025, with this being the largest sector, even beating out food and drink. The question arises, though; where exactly should you set up your arts and crafts business? Simply put, wherever you happen to be.
Being in London, with its population of around 9 million people, is both a blessing and a curse. Your potential customer base is obviously wide, but there’s also a lot of competition, and it can be hard to avoid getting lost in the shuffle.
Let’s go through everything you need to know if you want your arts and crafts business to really make a splash.
Market research
With any business venture, you need to know what you’re getting yourself into. There isn’t a shortcut or a list of ‘5 simple hacks’ (sorry) but the time you spend thoroughly researching your chosen area will be well worth it.
You have to know what your competition is doing if you want to beat them – or at least be different from them. Offering something unique which can’t be found elsewhere will help you cultivate a loyal following. In a nutshell, what’s your niche?
Your research should also include different selling options (e.g. online or in person). Look at the pros and cons of each and decide which is right for you based on what you’re ultimately trying to achieve with the business. This will help you draw up a plan.
How to set up a business
So, you’ve had an idea and have a decent enough understanding of what you’re getting yourself into. Now what?
Choosing the right business structure
Although this is a personal decision, choosing how you want your business to be structured does have practical considerations which impact how you pay tax, and potentially even your ability to access funding. For most people this is a case of choosing between being a sole trader or a limited company.
For example, the process of setting up as a sole trader is generally much quicker and easier than starting a limited company, involving a lot less paperwork. It also means you’re not legally separate from your business, so your personal assets might be at risk if the business can’t pay its bills. In terms of paying yourself, you can keep any profits after paying tax, although this does mean you’ll pay tax on them whether or not you take them from the business for yourself!
A limited company, on the other hand, is legally separate from the people in it, and so you (and your personal assets) are protected in the event of any kind of financial crisis. It can also be more tax efficient. This is because limited companies are required to pay corporation tax, which is charged at a lower rate than the income tax paid by sole traders. Again, this is just a general overview and it all depends on your circumstances, so it might be worth chatting with an accountant about it.
Location, location, location
The nature of running an arts and crafts business means you do have some options here. Do you want an actual brick-and-mortar shop where you can sell to customers in person, or would you prefer to go the online route?
The former would of course be more costly (rent in London!), but maybe you have your heart set on a cute little shop in Notting Hill. Even so, you might still benefit from some form of social media or other online presence, and this can be as simple as having an Instagram account that you use semi-regularly.
Even if you did opt to run your entire business from your laptop, you wouldn’t necessarily have to set up a website of your own. There are many third-party sites and online marketplaces where you can sell your wares. This can be a cost-effective way of reaching customers, and Etsy is an example of a third-party platform that’s often associated with arts and crafts specifically.
Without a dedicated shop or office space, though, you may find that you don’t really have anywhere to work. Yes, you can just work from home, but this isn’t always the best idea and can lead to you going a bit stir crazy. If you do need a spot of human interaction, there are hot desks and coworking spaces can be found throughout the city. These are exactly what they sound like: workstations which can be used by anyone according to availability (and for a small fee). Who needs an office, eh?
Raising funds
The first port of call will usually be looking at grants because they won’t need repaying but these aren’t the only options available to you.
Crowdfunding is another option, where individuals donate small amounts of money based on some kind of pitch or proposal. They might choose to do this out of the kindness of their hearts or with the expectation of receiving something down the line (for example, the product or service itself) – it all depends on the crowdfunding platform you use, and what you’re willing to offer.
As a global business hub, London often plays host to pitch competitions for start-ups, which can be a great way to show off your business and, ultimately, attract investors. If you’re a local, be sure to take advantage of them.
You might also want to think about ways you can start your business as cheaply as possible to help minimise those costs.
Naming a new business
While choosing a name for your business can be one of the most fun (and important) parts of the process, it can also be a little tricky. Great minds tend to think alike, and so there’s always a chance you’ll end up with a bunch of businesses which all have similar names – or even the exact same one!
- ‘Same as’ names are those with only minor differences from other ones – for example, particular punctuation or special characters. You’ll need permission from the existing business to use a name like this.
- ‘Too like’ names are notably similar to existing ones, to the point that it almost looks deliberate. Having a name like this can also be problematic if you want to try and trademark it.
The bottom line is that you need to do your research before landing on a name for your new business, otherwise you could find yourself in legal trouble.
Marketing your business
There are lots of opportunities for marketing your business, from Etsy and other online marketplaces, to a whole host of craft fairs and events. Social media can be a good way to showcase products, and there are lots of online (and in-person) groups that will be worth making contact with. You could also look at local magazines and press which might feature you! This article mentions a few things which you might want to consider first.
Keeping financial records
In a nutshell, bookkeeping is the process of recording everything that happens in your business, such as purchases, sales, loans, and debts.
The amount of tax you pay is based on your total profit, and so you need to know exactly what this figure is. Careful bookkeeping also gives you the best chance of being able to claim tax relief on allowable expenses. Lots of businesses miss out on claiming expenses because they’re not sure what they can claim for or their books aren’t up to date. Don’t let that be you!
You might decide to hire a bookkeeper to do this for you, or you can do it yourself using software. Another option to consider is hiring an accountant. It’s not mandatory, but lots of people like the idea of having an expert take care of the technical side of tax returns and claiming relief for them.
Do I need a local accountant?
The main benefit is that you’re able to meet your accountant in person and have face-to-face meetings or check-ins. This can be a bit of a double-edged sword though, as you might end up paying more because of their higher costs. You also have significantly less choice if you decide you want a local accountant.
Looking for an online accountant widens your options, so it’s well worth doing some research to see what suits you best.
Find more help with accounting and finance for your London-based business in our information centre.
