Michigan State University Extension
Home-Based Business - 09159418
10/01/98
Journal, September 1991, Vol. 21, No.1.
Introduction A research study focusing on craft producers has information that might be of interest to a wide variety of home-based business owners. The study was done to develop profiles of successful and struggling craft producers.
Methods Seventy Iowa craftspersons, who had started businesses in their home, were chosen to participate in the study. The ordinal list included 77 eligible names, which was a response rate of 91%. Names were obtained from craft organizations, craft retailers, and extension program lists. All craftspersons in the study had been in business a minimum of three years and were selected across a wide variety of media including fiber, clay and wood.
Participants Sex - 80% were female, 20% male. Age - average age was 44.5 with a range of 28 to 79. Marital status - 90% married. Dependent children - 55% had dependent children, of those 89% had one or two children. Education - 72% had education beyond high school; 23% went to technical or vocational school and 31% completed a bachelors's degree, 4% completed a masters of fine arts.
Interview A telephone interview was conducted including both closed-ended and open-ended questions. The interviews were conducted by two professional staff members of the Survey Unit of the Iowa State University Statistical Laboratory. Interviews lasted from 35 to 60 minutes.
Results: Profiles of successful and struggling craft persons were developed.
Successful Struggling
N=34 N=43
Sales of typical medium price
items in past year $13,722 $785
Sales of best-selling item in
past year $11,830 $1,145
Hours worked per week 43 30
Self-rating of personal qualities:
(Scale of 1 - 7 (7 is high)
Creative ability 4.35 4.22
Craft skills 4.56 4.33
Trend recognition 3.79 3.69
Business skills 3.41 3.08
Organizational skills 3.85 3.83
Communication skills 4.21 3.89
Ambition 4.41 4.22
Hard work 4.71 4.52
Discipline 3.74 3.92
Luck 3.85 3.64
Percentage indicating yes to
the following characteristics:
Business practices
Business plan 26% 6%
Sales tax permit 88 83
Business insurance 44 19
Separate bank account 82 46
Employees/volunteers
Volunteers 59 49
Paid employees to produce 41 19
Paid employees to help 26 11
Criteria for employees
Artistic talent 59 50
Technical skills 76 38
Business skills 35 25
Family or friends 47 50
They need financial help 29 50
Products and supplies
Original designs 100 83
Magazines-sources for ideas
Specific products to make 41 57
General ideas about trends 96 78
Marketing practices
Retail sales
Consignment 59 75
Mail order ads 21 0
Home or shop 85 86
Catalog 26 11
Bazaars, non-jured fairs 41 56
Open houses 35 36
Jured craft fairs 68 83
Wholesale
Trade shows 59 21
Craft fairs 32 42
Sales reps 48 37
In-state sales
Own community 76 80
Large metropolitan area 79 80
Tourist towns 74 32
Out-of-state sales
Midwestern states 100 88
Eastern states 43 23
Western states 71 38
Southern states 64 23
Promotion
Advertising
Less than $100 38 75
$100-200 12 17
More than $200 64 23
Special services
Gift wrap 21 3
Shipping 91 81
Written care or safety info 50 47
Written info on craftsperson 41 6
Accept credit cards 41 17
Interpretation The profile of the struggling craftspersons was highlighted by personal characteristics and a localized concept of the business. Successful craftsperson developed a business in response to family economic need or reach a specific financial goal. They had a written business plan and committed over 40 hours per week to the business. Skilled employees were used to produce unique crafts. Marketing was done beyond the local community with participation in wholesale trade shows, marketing to tourists, and selling in a broad geographic region.
Discussion While this study focused on craftspersons, the lessons can carry over to many home-based owners. In particular are the differences in the profiles between the two groups on employees and marketing practices. As home-based business owners think through their business, some strategies for success could include: 1. If employees are hired, base employment on skills rather than on the employee needing work. 2. Marketing to a wider geographic area, including tourist marketing, wholesale, out-of-state and mail order, may be important. 3. Promotion and advertising does cost some money. It cannot be done on very small amounts of money. It is a cost of doing business. 4. Special services can be an important part of being a success.