Hobby to Business: 3 Types of Customers

Hobby or Business?

If you make crafts and sell them, then the main difference to worry about is the difference that the IRS requires. Either way you can manage your accounting and keep track of your income and expenses the same way. The main difference is if the IRS says you have a hobby, then you report income, and you can subtract expenses, but you aren't allowed to report a loss. If the IRS says you have a business, then you are able to report a loss which will lower your taxes overall.

Check here for the official IRS classifications:
http://www.irs.gov/newsroom/article/0,,id=172833,00.html

IRS vs. Reality

Now that you know what the IRS thinks of you . . . (the IRS doesn't care what we think of them unfortunately,) how do you classify yourself? Almost all business big and small have two sets of books. One for the IRS and one for personal use. Even if you only count as a hobby for IRS purposes, you can still do everything else as a business.

The main difference in being a hobbyist or a business is how you present yourself. If you only want to make your crafts and maybe go to a craft show or two, or sell them to friends, then you probably don't want to go to the trouble of acting as a business.

To come across to your customers as a business, start creating a professional image for yourself. Building a website is a good start. It doesn't have to be anything super. Maybe just put together a blog that talks about your business and where people can buy your things.

Then order a set of business cards. I highly recommend Vista Print if you haven't noticed already! Then when you do your craft shows, make sure everyone who buys, and everyone who seems interested gets a business card. Voila! You have a business. From there, just take things a little bit at a time to include more advertising, nicer displays, and a phrase a certain salesman taught me to live by . . . Shameless Self Promotion.

Wednesday, January 28, 2009

3 Types of Customers

Just Looking - these customers probably don't have any intent to buy. They may not even actually be interested in your product but are just killing time. Don't spend too much of your time on them. Give them a couple minutes to "just look." If they're still hanging out, start asking questions to guage if there is a real interest or not. If not, be polite, but just back off and let them be.

I'm Sold - these customers already intend to buy your product, they are just looking around to figure out which one they want to buy. So just be friendly, and offer help if they seem to need it. Point out specifics to help them make a choice if necessary. Find reasons to get them to buy more. Offer discounts for additional purchases, ask if they need to purchase gifts for anyone while they're at it. Point out that you take credit cards (if you do.)

Give Me a Reason - these are the people you really need to work. They are interested in your product. They want to buy. They just need a little push to make the actual decision. It's your job to give them that push. Point out why they need your product. How they can use it. If they don't need it, the kind of people it would make a good gift for. Any holidays or events coming up that it could be useful for. Tell them why they want it, and keep working that angle until they either buy or walk away. If they do walk away, be sure they at least take a card. Shameless Self Promotion.

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Shameless Self Promotion

There's a rule when interviewing for a job that goes something like, "if you can say good things about yourself, then who else will?" Keep that same mentality for selling your products. After all, each customer is the same as a job interview. You want to be paid for your work. The only way the customer is going to place value on your work is if you place value on your work.

So how do you do this? Most important, be excited about your items!!! You put a lot of work into what you do. Because you love it. Make your customers excited through your excitement. If they put one item down, don't give up on getting a sale, put a different thing in front of them. Most people won't be rude to you. At the very least they'll humor you and look at what you're trying to show them. And it might end up being just the thing they were looking for once they've seen it close up.

When not actively selling, find any reason possible to bring up your business in other settings. This past year when I was handing out candy to trick or treaters, I handed out candles with business cards to the mommies. It may seem inappropriate at times when you're bringing up your business to the person you're sitting next to at the movies or church or the person standing behind you in the line at the grocery store. But get used to it! You aren't actively selling, you're just promoting. Big difference. People are usually open to the conversation.