The Ultimate Guide to Starting a Side Business on Etsy

This post was originally published on Unsettle.org

In a four month period in 2014 I turned $0.30 into $5,000 with Etsy.

Maybe it was timing or maybe it was luck, but I stumbled across a way of using Etsy that helped my Etsy shop start making sales just days after the first listing.

And since it seems as if many of you are interested in opening Etsy shops, I thought it would be helpful to show you how to start an Etsy shop so you can open your shop with a bang.

With the right product and a few key actions, and you should be able to make far more than I have, but note that Etsy is only good for side businesses. Rarely will you be able to quit your job and become an entrepreneur just with an Etsy shop. Here are 11 reasons why, but if you're interested in just sticking with an Etsy side hustle, this guide is for you.

Here's how I did it, and a few lessons I learned along the way:

How I Turned $0.30 into $5,000 with Etsy

It was May, 2014 and my fiance and I were gearing up to tie the knot.

We would marry on July 19 and were throwing a DIY wedding.

We were trying to incorporate bits and peices of our personalities into the wedding, and since I freaking love popcorn, we thought it would be fun to have a popcorn bar.

Always looking for ways to personalize aspects of the wedding, I decided to design custom popcorn bags.

I opened up Adobe Illustrator, obsessed over the design for our bags and then bought one paper bag to test the design with. It cost $0.10.

I was thrilled when the bag printed perfectly.

A couple of days later, I was on the treadmill searching a wedding Facebook group for popcorn machine rental suggestions, and I noticed some brides asking about custom paper bags for their favours, candy bar or popcorn bar.

The chronic side hustler that I am, I wondered if I would make any sales if I listed our design on Etsy.

I had a photo of the bag on my iPhone, so that morning I downloaded the Sell on Etsy App, set up a shop and listed my first item for the $0.20 listing fee.

A week went by, then a week and a half. And then I got my first sale.

As I customized the design for the first sale, a second sale and then a third rolled in.

And within the four months of opening the shop -- including a two week hiatus while we were getting married -- we managed to earn over $5,000 in our shop.

Here's how you can do this, too.

How to Start an Etsy Shop: The Ultimate Guide to Getting Started on Etsy

So many people get stuck on the logistics of starting their shop, so they just never do it.

After all, you have to:

• Think of a name
• Design a logo
• Make your items
• List your items
• Decide on pricing

..and it all seems daunting.

But don't let these small things prevent you from making your first listing on Etsy.

Here are a few tips to help it go smoothly and get your shop up and running as soon as possible:

Naming Your Shop

When you set up an Etsy shop, the first thing you have to do is name it.

But when you go to name your shop, don't obsess over it!

Think about it. When you last purchased something from Ebay, Amazon or Etsy, do you remember the name of the shop you purchased it from?

Sure, it's important, but it's not going to make or break your success.

You have one chance to rename your shop, so pick a name right away, and you can always give it more thought later on.

I picked the name for my shop quickly by just choosing two words and smushing them together.

Designing Your Shop

Many sellers obsess over their shop design, but people generally come across your items through the search engine, so it pays off to spend more time on your listing rather than the shop design.

Basic is better than messy or under construction, and you can always design your shop after your first item is listed.

Creating a Logo

Creating a logo is relatively important, but unless you have graphic design skills, I would outsource the logo to somebody on Fiverr. Give them your vision for what you want it to look like, or a color pallete if you have one in mind, and let them design one for you.

I didn't even have a logo for my shop until at least two months after I listed my first item.

Creating The Perfect Listing

The idea of this post is to have you "just ship it".

I don't want you entering analysis paralysis and freaking out about every aspect of your Etsy shop.

Sure, you want to do things right the first time, but you can have the prettiest design in the world and the best shop name and it won't do you any good if you haven't listed your product.

So here's what I want you to do:

Create a Prototype

One huge mistake that many people make when they initially start their Etsy stores is making more than one test item before they open their shop. They think they need several listings and variations on their item before starting.

Here's why this is flawed:

  • Realistically, nobody will even pay attention to your shop except for your friends and family initially. So you don't need to impress potential buyers right away with a lot of choices.

  • If you spend hours creating your item in half a dozen colours or designs, how will you feel if nobody buys it? You're going to feel discouraged. If you just create one prototype of the item, you can test and troubleshoot without being discouraged by all your hard work being ignored.
  • If your item and shop is set up in a way that allows special orders, you'll find that you get a lot of special order requests, and your hard work will be under appreciated because everyone wants something custom.
  • It's a waste of money and time, and it's also a great excuse to not get the shop up and running, which is really just your self-doubt and fear pretending to be practicality.
  • So pick a design or color you think will do the best and create just one. Then you have to take amazing photos of it.

    Take a Photo

    The photo is the first point of contact between your potential customer and your product. If you spend 6 hours starting your shop, I want you to spend 4 of them taking the perfect photograph.

    Yes, my first photo was an iPhone photo with a grainy background and the contrast turned up too high, and I have no doubt that if I spent just a little bit more time taking a nice set of photos I would have been able to make $10,000 with that $0.30.

    Some photo tips:

    • Neutral backgrounds always perform better than busy backgrounds
    • Use props sparingly, but don't underestimate the power of a good prop
    • If you're using a DSLR, turn up the aperture on your camera so that the item is in focus and the background is blurred
    • Don't worry about investing in a great camera. Use whatever you have -- an iPhone or point and shoot will do
    • If you are using an iPhone, download the free Snapseed app. You can blur out the background with the app and adjust the color as necessary
    • Study the photographs of successful stores who sell similar products to you. What makes them good? Try to replicate their technique.

    Etsy itself has some great guides on their blog for taking great product photos. Once you have the perfect photo(s), you need to set your price.

    Choose a Price

    Choosing price can be difficult.

    There is a lot of advice out there to "charge what you're worth", but if you're a new Etsy shop without any sales under your belt, here's what I'd do in your position:

    1. Add how much it costs to make your item:

    How much does the material cost?

    Here is the calculation for my item:

    Paper bag: a $0.10
    Printer ink: about $0.10

    Total: $0.20

    2. Add how much the upfront costs are:

    Do you have to buy any equipment, or design elements?

    I had to buy a commercial font for a one time fee of $5, and a vector for the design at $1.

    I could print an unlimited number of these designs with the purchase but I divided $6 by 100 sales as a moderate estimate.

    This is about $0.06/bag.

    3. The cost to list the item:

    Unless you have free listings, the cost to list your item with Etsy is $0.20 -- not per item, but per listing.

    That means that you have 100 of the same item in one listing, but it will only cost you $0.20 to list it. Etsy won't charge you $0.20 for every item you sell.

    They do, however, take a small portion of your sale, but you won't have to worry about that now.

    4. Total

    With the three steps above, the total for my bags was $0.26 per bag, plus an additional fee of $0.20 to list the item.

    So each bag might cost $0.30 if I only sold a few orders for that listing.

    Value of your time

    If it takes you an hour to make an item, how much do you want your time to be valued?

    If you want to make $30/hour, add the cost of material to the value of your time and then you have what you need to make to have a profitable product.

    Stalk Your Competitors

    Go to the Etsy home page and type in some keywords to find other sellers who offer items similar to yours. What are they selling? How do their products differ? And what are their prices?

    New sellers need to be competitive, so price your item slightly lower than the competitors.

    As you begin to gain reviews on your item, you can increase the price from there.

    Crafting the Perfect Description

    Every single time I list a new item, I realize just how much I hate writing descriptions on Etsy.

    They need to be ultra-detailed, and although this may surprise you considering I tend to write detailed posts, unless I am super excited by the subject matter, detail isn't really my jam.

    But luckily, I have a shortcut for you...

    Find a seller who offers something similar, and use their product descriptions as a template for yours.

    No, I'm not suggesting you plagiarize their product description!

    You don't want your listing to be exactly like another, and they also worked long and hard to come up with a detailed description.

    But it's completely okay to use tested methods.

    Make note of the details they've included, because chances are, they have included those details because their customers have asked about them.

    You might consider including these details for your own product.

    As I was doing this for my shop, I found that other custom paper bag sellers on Etsy took custom orders. And I found that they usually had a separate item for special orders that the buyer could add to their cart.

    They usually had a "policy" for the size options and had some key words like "customized," "personalized" and "rustic".

    I emulated them, personalizing and changing the content as per my item as well as my "brand".

    Now that you have the perfect photo, an awesome description and a prototype of your product, you can sit back and wait for your first sale.

    Well, sort of.

    Landing Your Very First Sale

    Getting to your first sale is exhilarating. And it's also like getting to the top of a small mountain. Once you are at the top, you gain momentum and it's downhill from there.

    It's fine if you want to just sit back and wait for the sale to come to you. But there are better ways.

    You can do one of two things, after you have your first product listed:

    Sit back and wait for your first sale
    Track interest and test different scenarios until you hit a sweet spot.
    I'll be completely honest and let you know what I did, but then I'm going to tell you what I would do if I were to do it over again:

    How I Lucked Out

    Because the shop was meant to be a side hustle for me, as opposed to a career, I took door #1 -- to sit back and wait for my first sale.

    Luckily, I didn't have to wait long, and about a week after I posted the listing, my iPhone notified me that I landed my first sale.

    I was lucky that before I'd even shipped my first sale, I landed my second and third.

    What I'd Do Next Time

    If I were to take the Etsy shop very seriously, I would have taken a different approach with landing my first and subsequent sales.

    And this just so happens to be the approach that I've taken with a couple of new items I've released:

    Create a spreadsheet and record how many views and favorites my listing(s) had daily.
    Include the price of the item, and the photo that is shown, and the keywords on the spreadsheet.
    If your item has 100 views each day but only 1 person is favoriting your item and you haven't made a sale, the keywords are probably fine, but your photos or description is missing the mark.

    If many people favorite the item but you haven't made a sale, the photograph is probably fine, but the price or description is failing.

    So test different solutions.

    For instance, in the photograph scenario, test what happens if you drop the price by 10 percent. Test it for a week, and if you still haven't received any more sales, play with the description of your product.

    All the while, track your views, favorites and sales in your spreadsheet with the appropriate information.

    Advertising or Sponsoring Your Listing

    Many people take a different approach to landing sales:

    Advertising.

    There are a number of ways to go about this.

    You could:

    • Create a Facebook page for your shop and pay for a promoted Facebook post linking back to your shop
    • Promote the items directly in Etsy to show up above the rest of the "like" items
    • Create Google ads for your listing
    • Sponsor posts on Twitter

    There are a myriad of other ways to advertise for your item, but these are the best bet.

    If you have studied the listings of successful sellers who sell similar products, test the market and advertise your listing and you still don't have any sales, you may have picked the wrong product.

    But because you only made one prototype (right?!) it's no big deal. You can just go ahead and test another.

    Now Go Out and Conquer Etsy

    This isn't rocket science. You can definitely create a successful Etsy side business.

    And the beauty of having your own eCommerce business?

    You can choose to grow it, or just have fun with making some extra money on the side with it.

    And Etsy even has a vacation mode. So you won't have to worry about your shop when you go away.

    Now stop procrastinating and start working on listing your first product!

    Sarah Peterson encourages people to never settle for careers they don't love. Find your perfect lifestyle business idea with her free course so you can stop settling and start building your dream.