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Etsy Entrepreneurs Share 7 Secrets to Success

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It started as a mix of desperation and creativity. Claudia Lucero was up to her ears in student loans, and she needed some extra cash to make her payments. So in 2009 she took her hobby — making homemade cheese — and launched an Etsy business selling cheese-making kits.

Her goal was humble: Earn $100 a month to put toward her student loan repayments. But within months, she was able to repay her loans completely and had enough left over to take a much-needed vacation. By 2011, her Portland-based business, Urban Cheesecraft, was strong enough that she left her job to run it full time.

Lucero, pictured above, and hundreds of thousands of other entrepreneurs have launched successful businesses on Etsy. Below are a few money-making secrets from some seasoned Etsy shop owners.

1. Small-business loans can give you a leg up

Lucero’s business grew fast, with national brands including Whole Foods and Williams-Sonoma approaching her with big orders. Although grateful for the opportunities, she didn’t have the upfront cash to fill monthly orders of 5,000 and 10,000 kits. A $75,000 line of credit from her local bank gave her the capital she needed.

“It has just taken all the pressure off,” says Lucero, who previously relied on credit cards, which have higher interest rates than bank loans.

If you don’t qualify for a bank loan — you need to have been in business at least two years and have good credit — online small-business loans are another option. Online lenders charge higher rates, but they offer funds quickly and conveniently. And if you’re a woman who needs business financing, check out this list of small-business loans for women.

2. Smart purchases build the business

In the excitement of launching her homemade dog-treats business, Treat Dreams, Kaitlin Anderson was tempted to buy a computer and a new desk. But Anderson, pictured with mom and co-founder Kerri Anderson, stepped back and considered: Would those purchases lead directly to sales? She decided they wouldn’t, so she put the money toward a camera to capture high-quality photos of her decorated dog treats.

She needed pictures to draw customers in, she says: “Etsy is all about pictures.”

3. Negotiating terms can help cash flow

Lucero, of Urban Cheesecraft, was thrilled when Williams-Sonoma wanted to sell her cheese kits. But the upscale home goods retailer typically pays vendors in 30 days, and Lucero couldn’t afford to wait that long for payments. So she asked Williams-Sonoma to pay her within two weeks instead, and it agreed.

“That has been extremely helpful,” she says.

4. Zero-interest credit cards are your friend

If you decide to use credit cards instead of small-business loans, look for a zero-interest business credit card. You’ll be able to carry a balance without paying interest throughout the introductory period, which typically lasts six to 15 months.

Anit Hora, founder of the Brooklyn-based beauty products company Mullein and Sparrow, used several zero-interest business credit cards when she needed to buy supplies to fill a large Etsy order. She was confident in her ability to pay down her balance before the introductory period ended because she had pending invoices she was ready to collect.

5. Sales goals can help you live your dream

Victoria Allison, owner of Victoria Allison Jewelry, has been a full-time entrepreneur since she graduated from the Fashion Institute of Design and Merchandising in San Francisco in 2010. She’s reluctant to take on small-business loans, so she lives and works within her means.

“I’ve basically been growing it steadily as it progresses,” she says.

Allison’s income has supported her and her husband throughout his time in college studying mechanical engineering. She reviews the family budget and her business finances yearly and sets monthly sales goals to make sure she earns enough to live comfortably. Any extra goes to savings.

6. Free classes can make you business-savvy

Hora, of Mullein and Sparrow, has a design background and was taking classes in herbal medicine when she launched her business in 2012. Her company sells herbal skin-care products. But despite her other qualifications, she didn’t know the basics of running a business. A quick Google search told her that her local Small Business Administration office offered free business classes, so she took one to learn how to use the accounting service QuickBooks.

You can find your local SBA office here; there are hundreds around the country. The SBA also sponsors hundreds of small-business development centers nationwide. Each offers free one-on-one business counseling to help business owners do market research, write business plans and assess small-business loan options.

7. Remembering your passion can keep you inspired

No matter how creative or driven you are, every entrepreneur hits a rut. To resist burnout, find a way to keep yourself motivated. For Hora, that meant incorporating her business right away, even when it was a side gig.

“It made it seem more real to me,” she says.

When Allison, of Victoria Allison Jewelry, is feeling uninspired, she reads customers’ positive feedback.

“I remember that I love what I do,” she says.

Photo credits from top: Sarah Eischen, Treat Dreams, Victoria Allison, Matt Coch.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: teddy@nerdwallet.com. Twitter: @teddynykiel. To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans page.