7 pitfalls to making your hobby a business

Demand is hard to gauge

You might hang a shingle hoping to sell a few handmade mugs and be inundated with orders. On the flip side, you could knit an entire line of dog sweaters that never sell.

While estimating demand is almost impossible, author Kari Chapin, who has written two books about building a craft business, suggests asking event organizers about the projected number of attendees.

"If 500 people are expected to walk through the doors, it’s safe to assume at least 200 will want a cupcake," she says.

For special events, Chapin suggests bringing enough inventory to cover 10 times the event fee. In other words, if it costs $100 to rent a booth at a craft fair, you should have $1,000 in merchandise available for sale.

But, Chapin says, "You never want to be stuck with more product than you can sell."

If products sell out, be sure to have a mailing list to get in touch with prospective customers when you have added new inventory.