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How to Start an Etsy Business

Etsy has opened up the world of creativity and ecommerce to a whole new generation of entrepreneurs. They make it easy for artisans and crafters to create innovative, curious, beautiful products and share them with the world.

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Developing a Plan for Your Etsy Business

Before you start your business, there are a few key areas you need to focus on. You will need to establish whether there’s a demand for your Etsy products, look at potential benefits and pitfalls, understand how your business finances might look and ensure everything is in order.

In short, you need a business plan — here’s how to think about your business idea.

Do Market Research and Validate Your Etsy Products and Services

Before you launch your Etsy business, you need to understand if there’s a demand for what you’re selling. That means carrying out market research and “validating” your products and services. Here’s how to go about it:

Identify your business’s unique selling points (USPs)

These are the areas that will set you apart from competitors and encourage customers to come to you. You might have better pricing, a higher-quality service, faster delivery, unique products or some other special feature. Be sure to bring this out in what you do.

Look at who your competitors are in the space

Carefully review all the possible Etsy sellers who will be competing by selling similar products to you. Look at how they structure their shops, products and pricing. Think about what you could do differently.

Validate your products and services

Test whether people will commit to spending real money on what you’re offering before over-committing. Create prototypes of key products and test them in the marketplace to see if they generate interest and sales.

Talk to clients

Speak with potential customers to understand what they want from your Etsy products. See if you can identify new trends that you could take advantage of. Get involved in forums where your likely customers are hanging out.

Get involved with business communities and discussion groups

Ask questions about Etsy businesses. You can find links to some excellent discussion groups later in the article.

Understand Your Etsy Business Model and Financial Projections

All businesses need a business model, which is how you will generate sales, provide services and make money. Think about your business model now, because it’s better to have that in place so you can start acquiring customers and generating revenue from day one.

You will also need to look at financial projections for your Etsy business. What are your expected sales and revenues? What is your profitability? How much money will you keep in the business to grow it? How much will you pay yourself? If you can, try to plan your revenue for the next month, three months, year and two years.

Write a Business Plan for Your Etsy Business

Finally, you should put your business plan together. Business plans do vary slightly, but they should cover the following areas:


An executive summary with the most important points from your business plan


Your goals and what you hope to achieve with your Etsy business


A description of your business, background information, and context


A description of your business, background information, and context


An overview of how your business is structured


Your business model


How you will market and sell your offerings


Financial projections, revenue, and profitability



We’ve got the perfect guide to writing your business plan.

Setting up Your Etsy Shop

Once you've legally created your Etsy business, you’ll need to get some other things in place. The most obvious first step is to create your Etsy seller account at Etsy will walk you through creating a seller profile, adding your products, and creating store policies, like those for returns and exchanges and customer service. You'll want to have attractive product photos and descriptive listings to help people find your products.

There are other logistical matters you'll need to consider in order to get your Etsy shop up and running. These include:

Location of your workshop

Where are you going to create your products and run your business from? Some crafters may have a workshop at home, but remember you will need to store inventory and manage shipping. This can take up a lot of space. As your business grows, you might think about getting a more professional crafting space, complete with an area that's well lit for product photos.

Software that Integrates with Etsy

Is there software that can help you manage and market your Etsy business? Some tools integrate with Etsy to help you manage your orders, estimate profits, create email campaigns, manage social media posts, or take better photos. There are also software platforms that help you cross-sell on other platforms, like Facebook. Explore whether these tools can help you run your business more effectively.

Marketing on Etsy

You will need to develop a brand and use digital marketing channels to drive traffic to your Etsy shop. This can include using keyword optimization in your Etsy listings so you show up in results, or it could include email and social media marketing. You also might want to consider paying for Etsy ads to get your listings more views. You'll find lots of great advice on these topics in the "Etsy Business Resources" later in this guide.


What equipment do you need to manage your Etsy business? You will need a computer and smartphone at minimum, but you will also require crafting tools, machinery and raw materials. Make sure you account for likely demand and possible waste. Understand exactly what you need to spend so you can write it off against business expenses.

Finances and Taxes

What kind of bank account will you get? How do you find the best business credit card? How will you pay your business taxes? These are important questions to consider so your Etsy business stays in the green. Here at Bizee, we can even help you file your taxes.

Certification and Training

Running an Etsy business comes with certain rules, regulations and legalities you need to be aware of. Bizee offers a Business License Research Package for you or you can take the time to do the research yourself.

Business Maintenance

Most states require businesses to file an Annual Report once a year. You will also be expected to pay estimated taxes on what you plan to earn in the current business year. Your federal, state, regional and city business licenses and permits may need to be renewed on a regular basis, typically once a year.


Do you need to hire employees to help you? More on that below.


Make sure you have the right processes in place to understand what your most popular products are and analytics on how your business is doing. Etsy has some built-in analytics that will help you here, but you'll want to make sure you know how to get these reports and that you look at them regularly. Again, you'll find helpful advice on developing these processes in the "Etsy Business Resources" later in this guide.

You'll also want to find ways to manage your finances carefully and create your products in a cost-effective manner. Sometimes this can mean searching out cheaper resources for your raw materials, or cutting down on the time it takes to craft each individual item.

The Complete "Start Your Business" Checklist

A Clear and Comprehensive Guide to Starting Your Business the Right Way

Hire Employees for Your Etsy Business

If you’re just running your Etsy business solo, you don’t need to worry about employees. If you are hiring people to work for you, you will need to know what to do.


Get an Employer Identification Number (EIN)

Contact the IRS and let them know you will need an EIN for your Etsy business. This is a number you will use to file and pay your taxes. We put together this guide to getting your EIN. You need this even if you don’t plan to hire employees.


Make Sure Your Employees Can Work in the U.S.

Your employees must be legally able to work here. Carry out background checks and ensure they have all necessary legal documentation.


Report Employees as “New Hires”

In most cases, you will need to report the hiring of employees to your state.


Learn About Legal Requirements and Responsibilities to Employees

You do have certain responsibilities and requirements for hiring employees. In addition to getting a proper employment contract in place with them, you have a duty to provide them with a safe working environment, proper training, regular pay and certain other criteria. OSHA covers your health and safety requirements, while the U.S. Department of Labor provides information on other responsibilities.


Get Workers’ Compensation Insurance in Place

As listed above, you will need to make sure you have proper workers’ compensation insurance to cover injuries, illness, medical costs and the like.


Pay Employees on a Regular Basis

You will need to run payroll and compensate your employees on a regular frequency. Your state may mandate how often employees need to be paid.


Withhold Income and Payroll Taxes

You will need to calculate and keep back income tax so you can pay the appropriate bodies. You will also need to pay the employer portion of the payroll tax.

Social Media and Discussion Groups for Your Etsy Business

Connecting with other business owners in your industry can be incredibly helpful. Here are some of the best social media and discussion groups:

Useful Online Tools for Your Etsy Business

Here are some really great online tools for managing your Etsy business. They will reduce the time you spend on administration, help you collaborate with others and free up your time to grow and manage your new venture.

Project Management


Marketing Automation

Customer Relationship Management (CRM)

Customer Support

Human Resources

Website Development

Please note: This page contains affiliate links and we may receive a commission if you make a purchase using these links.


Etsy is a very empowering marketplace. In particular it’s a great way for female entrepreneurs to get started and with the right approach and discipline, it can grow from being a side project to becoming a powerful revenue stream. Follow the advice in this Etsy guide, and you’ll be able to create an Etsy business selling beautiful and amazing crafted products to the world.