25:["$","$L26",null,{"category":"$27","relatedArticles":[{"id":"cG9zdDo1Mzc0MQ==","databaseId":53741,"postId":53741,"author":{"node":{"id":"dXNlcjo1MA==","databaseId":50,"userId":50,"avatar":{"url":"https://secure.gravatar.com/avatar/10ca58872f36412ceff58616bb971c22?s=96&d=mm&r=g","size":96,"__typename":"Avatar"},"description":"Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.","additionalMeta":{"expertise":null,"__typename":"User_Additionalmeta"},"email":null,"firstName":"Amelia","fullName":"Amelia Josephson","lastName":"Josephson","name":"Amelia Josephson","postCount":{"pageInfo":{"offsetPagination":{"total":334,"__typename":"OffsetPaginationPageInfo"},"__typename":"UserToPostConnectionPageInfo"},"__typename":"UserToPostConnection"},"slug":"ajosephson","__typename":"User"},"__typename":"NodeWithAuthorToUserConnectionEdge"},"categories":{"nodes":[{"id":"dGVybTo4OQ==","children":{"nodes":[],"__typename":"CategoryToCategoryConnection"},"databaseId":89,"categoryId":89,"link":"https://smartasset.com/career/articles","name":"Career","postCount":{"pageInfo":{"offsetPagination":{"total":38,"__typename":"OffsetPaginationPageInfo"},"__typename":"CategoryToPostConnectionPageInfo"},"__typename":"CategoryToPostConnection"},"slug":"career","ancestors":null,"parent":null,"__typename":"Category"}],"__typename":"PostToCategoryConnection"},"content":"$28","date":"2016-09-16T13:00:44","excerpt":"

\n","featuredImage":{"id":"cG9zdDoxNjk4Mzc=","databaseId":169837,"altText":"The Pros and Cons of Unions","date":"2022-11-08T12:57:02","fileSize":51786,"mimeType":"image/jpeg","modified":"2022-11-08T12:57:02","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2016/09/pros_and_cons_of_unions_1-1.jpg","__typename":"MediaItem"},"modified":{"datetime":"2023-5-30","readable":"May 30, 2023"},"multipleBylinesByRole":{"editedBy":null,"reviewedBy":null,"writtenBy":null,"factCheckedBy":null,"secondEditor":null,"hideAuthor":null,"__typename":"Post_Multiplebylinesbyrole"},"adTargetingOverrides":{"fieldGroupName":"adTargetingOverrides","pageGroupNewKey":null,"__typename":"Post_Adtargetingoverrides"},"seo":{"canonical":"https://smartasset.com/career/the-pros-and-cons-of-unions","metaDesc":"Curious about the pros and cons of unions? You're not alone. With an issue as controversial as union membership is in the U.S., there's a lot of talk and...","metaKeywords":"","metaRobotsNofollow":"follow","metaRobotsNoindex":"index","readingTime":6,"title":"The Pros and Cons of Unions - SmartAsset","__typename":"PostTypeSEO"},"slug":"the-pros-and-cons-of-unions","status":"publish","title":"The Pros and Cons of Unions","uri":"/career/the-pros-and-cons-of-unions","tags":{"nodes":[],"__typename":"PostToTagConnection"},"__typename":"Post","adPageGroupOverride":null,"bylines":{"writtenBy":{"id":"dXNlcjo1MA==","databaseId":50,"userId":50,"avatar":"$29","description":"Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.","additionalMeta":"$2a","email":null,"firstName":"Amelia","fullName":"Amelia Josephson","lastName":"Josephson","name":"Amelia Josephson","postCount":"$2b","slug":"amelia-josephson","__typename":"User"},"editedBy":null,"reviewedBy":null,"factCheckedBy":null,"secondEditor":null},"category":{"id":"dGVybTo4OQ==","children":"$2e","databaseId":89,"categoryId":89,"link":"https://smartasset.com/career/articles","name":"Career","postCount":38,"slug":"career","ancestors":null,"parent":null,"__typename":"Category"},"isModifiedBeforePublished":false,"contentBlocks":["

Unions are controversial in the U.S. – more controversial, in fact, than they are in some other countries. Here in the States, some people tout unions as essential to a strong working class, while others criticize unions for putting too many restrictions on workers and employees. To help you get a handle on this debate, we put together a guide to some of the pros and cons of unions. Consider working with a financial advisor as you invest, save and plan for retirement.

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Check out our 401(k) calculator.

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Pro 1: Unions increase pay and benefits for workers.

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Data from the Bureau of Labor Statistics (BLS) shows that non-union workers have median weekly earnings that are only 83% of the earnings for union workers. And while union membership is declining nationally – declining by 241,000 workers from 2020 to 2021 – unions in some states are more robust than in others. It’s not just unionized workers who benefit. Employers hiring for non-union jobs have to increase their wages, too, in order to compete for employees.

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Pro 2: Unions set up formal processes for disputes and complaints.

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When unions work well, they make it easier for workers to handle disputes and complaints, with other workers and with management. There are formal processes in place, which makes it easier for any worker – regardless of their individual status – to raise grievances. Many unions will also subsidize legal fees for unionized employees who want to sue their employers (such as for discrimination or wrongful termination).

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Pro 3: Unions make political organizing easier.

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By channeling workers’ energies into national organizations – and collecting money at the same time – unions make it easier to advance political causes that working people support. In effect, unions amplify the political voices of their members. Of course, not every union member agrees with the candidates and causes his or her union supports but, in general, unions help keep candidates focused on issues like the loss of manufacturing jobs, which might otherwise not have a politically powerful constituency behind them.

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Pro 4: Unions set norms that extend to the rest of the economy.

","

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You may have seen bumper stickers that say something like, “The Labor Movement: The Folks Who Brought You the Weekend.” Before the labor movement, things we all take for granted in the workplace now – weekends, safety provisions – were not the norm. So, even though the U.S. workforce has never been completely unionized, unionization spread certain norms throughout the economy to the benefit of even non-unionized workers. The minimum wage, OSHA guidelines and overtime rules are all part of the legacy of the labor movement.

","

Related Article: The Pros and Cons of Raising the Minimum Wage

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Con 1: Unions can make it harder to promote great workers and get rid of not-so-great workers.

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Unions tend to put a lot of influence on seniority. That can be a good thing for creating a steady career path, but it can also make it hard for superstars to advance up the hierarchy. It can also make it hard to demote or dismiss workers who are consistently under-performing. And because unions have their own internal leadership structures, favoritism and cronyism can impede progress toward a meritocracy.

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Con 2: Unions can require dues and fees that some workers might not want to pay.

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Some workplaces are closed shops, which means you must be a union member to apply to work there. Others are union shops, where you can apply as a non-member but you must join the union if you’re hired. Still others are agency shops, where you can work there as a non-union-member but you have to pay agency fees to contribute to the work the union does on your behalf (contract negotiations, etc.)

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Critics say that all three of the above scenarios are unfair to people who might have practical or ideological objections to the union and don’t want to comply with requirements to pay dues or fees. That’s why some critics of unions prefer open shops, where employees can’t be required to pay dues or fees. Other critics of unions work to pass right-to-work laws that limit the power of unions to collect dues and engage in collective bargaining.

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Con 3: Unions can lead to a closed culture that makes it hard to diversify the workforce and weed out bad actors.

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Unions aren’t just systems for organizing workers. They also have distinct cultures, which can vary by union and by “local.” Teamsters and teachers might both be unionized, but their union meetings probably look and sound different. Some unions can be tough to break into. This is particularly true of some of the older, more homogeneous unions. The closed cultures of some unions can make it hard for outsiders (e.g. women and people of color who want to be union welders) to feel comfortable in union shops, advance in their fields and take on union leadership roles. The closed culture and strong sense of solidarity can also lead union members to protect each other from scrutiny or cover up member misconduct.

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Con 4: Unions can drive up costs and lead to an adversarial relationship between labor and management.

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The flip side of unions providing higher wages for workers is that labor costs are higher. Using only union labor, which the government sometimes requires, can make big projects (think: building a new NYC subway line) much more expensive than they would otherwise be. And because unions “unite” workers to tackle negotiations with management they can sometimes lead to hostilities between labor and management. If you think the relationship between workers and management is inherently adversarial you might not see a problem, but if you want to work in a place where lines between labor and management are blurred and relations are friendly you might not feel comfortable in a union.

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Related Article: What Is a Pension Plan?

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Bottom Line

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It’s hard to generalize about the pros and cons of unions because there are so many different unions and locals. And the face of union membership is changing. It’s less white and male than it used to be. Though union membership has declined significantly, there are some signs of a resurgence of interest in union membership. Time will tell how far that resurgence goes.

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Tips on Financial Planning

","$30","

Photo credit: ©iStock.com/Susan Chiang, ©iStock.com/Christopher Futcher, ©iStock.com/andresr

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\n","featuredImage":{"id":"cG9zdDoxNzAwMTg=","databaseId":170018,"altText":"Pros and Cons of Franchising","date":"2022-11-08T12:59:56","fileSize":34614,"mimeType":"image/jpeg","modified":"2022-11-08T12:59:56","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2016/11/pros_and_cons_of_franchising_1.jpg","__typename":"MediaItem"},"modified":{"datetime":"2023-5-7","readable":"May 7, 2023"},"multipleBylinesByRole":{"editedBy":null,"reviewedBy":null,"writtenBy":null,"factCheckedBy":null,"secondEditor":null,"hideAuthor":null,"__typename":"Post_Multiplebylinesbyrole"},"adTargetingOverrides":{"fieldGroupName":"adTargetingOverrides","pageGroupNewKey":null,"__typename":"Post_Adtargetingoverrides"},"seo":{"canonical":"https://smartasset.com/career/the-pros-and-cons-of-franchising","metaDesc":"Starting a business is always a risk, but franchises present a special set of challenges and opportunities. We break down the pros and cons of franchising.","metaKeywords":"","metaRobotsNofollow":"follow","metaRobotsNoindex":"index","readingTime":5,"title":"The Pros and Cons of Franchising - SmartAsset","__typename":"PostTypeSEO"},"slug":"the-pros-and-cons-of-franchising","status":"publish","title":"The Pros and Cons of Franchising","uri":"/career/the-pros-and-cons-of-franchising","tags":{"nodes":[],"__typename":"PostToTagConnection"},"__typename":"Post","adPageGroupOverride":null,"bylines":{"writtenBy":{"id":"dXNlcjo1MA==","databaseId":50,"userId":50,"avatar":"$32","description":"Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.","additionalMeta":"$33","email":null,"firstName":"Amelia","fullName":"Amelia Josephson","lastName":"Josephson","name":"Amelia Josephson","postCount":"$34","slug":"amelia-josephson","__typename":"User"},"editedBy":null,"reviewedBy":null,"factCheckedBy":null,"secondEditor":null},"category":{"id":"dGVybTo4OQ==","children":"$37","databaseId":89,"categoryId":89,"link":"https://smartasset.com/career/articles","name":"Career","postCount":38,"slug":"career","ancestors":null,"parent":null,"__typename":"Category"},"isModifiedBeforePublished":false,"contentBlocks":["

Opening a franchise can be a lower-risk way to start a small business, but it’s not for everyone. For one thing, franchisees have to abide by company rules and the terms of their licensing agreements. So if you prefer to be independent, opening a franchise might not be your best bet. However, if you decide to apply to open a franchise, there are a number of hoops you’ll need to jump through to make it a reality.

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What Is Franchising?

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Franchising gives aspiring business owners the ability to buy into a much larger company and become the owner of one or more locations of that business. A franchisee could be one person or a group of people buying into a franchise together. The franchisee agrees to terms with the larger company on how the business will be run, and in turn they receive the right to operate under that company’s name, logo, reputation etc. They’ll also receive marketing materials, a location, supplies and more.

","

Generally speaking, the process of opening a franchise location involves applications, interviews, background checks and more. While this might sound similar to the process of getting a job, the major difference is that franchisees also need the cash to back up their deal. For instance, McDonald’s requires franchisees to have at least $500,000 in liquid assets and pay a $45,000 franchise fee.

","

Below, we break down the pros and cons of franchising for those looking into the process.

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Pro #1: Franchises come with a ready-made business plan.

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If you want to start a business but you don’t relish the process of crafting a business plan, choosing what to sell, decorating your store and all the other minutiae involved in setting up an independent shop, buying a franchise might be good option for you. Becoming a franchisee offers a lot of the benefits of starting a small business without some of the start-up headaches.

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Pro #2: Starting a franchise can make it easier to secure financing.

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Some franchised businesses have their own financing arm, meaning that they provide loans for people who want to buy and open a franchise. Now, in-house franchise financing might not always offer the lowest interest rates, and it’s always a good idea to comparison shop. But if you think you might have a tough time getting a traditional small business loan from a bank, going the franchise route can be a good work-around.

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Pro #3: Franchises are less risky than independent businesses.

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If you buy a franchise, you already know that the product is successful. It has brand recognition, for one thing. Assuming the franchise is in a good location and the brand continues to attract customers you should have a pretty solid business on your hands. If you want to be a small business owner but you don’t want to risk a lot of time and capital on a venture that could fail, you might be drawn to franchising.

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Pro #4: It’s easier to get advice about a franchise.

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If you’re considering becoming a franchisee, you can talk to other people who have done the same or read about their experiences online. You can get guidance and learn from the mistakes of others who have opened up branches of the same franchise. Of course, if you open an independent small business you can get general advice, but you’ll have access to more tailored tips with a franchise.

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Con #1: Franchises can come with high start-up costs.

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Starting a franchise might involve higher start-up costs than you would incur if you started an independent small business. If you’re trying to start a small business without taking out a hefty loan or putting a lot of your own capital on the line, becoming a franchisee might not be your best option. Before you commit to one form of business or the other, it’s worth doing a cost comparison.

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Con #2: You have less flexibility with a franchise.

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When you become a franchisee you have to abide by the rules of the franchisor and keep to the terms of your licensing agreement. You can’t shake up things like the products you carry, the look of your store and the uniforms the staff wear. With a franchise, you have less scope for innovation and for personalizing your business.

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Con #3: Franchise fees can really add up.

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Franchisors don’t let you take their logo and run with it. You’ll owe fees to the business from which you buy the franchise. A portion of each month’s profits will leave your coffers and go to the franchisor, per your licensing agreement. Those fees can add up, which is why it’s a good idea to enlist the services of a lawyer to help you get a good deal on your franchise. If you’re fee-averse, you might decide to forgo a franchise altogether.

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Con #4: The fate of your business isn’t entirely in your control.

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$\"Pros$

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Franchisees benefit from the brand recognition of the company whose franchise they buy. However, this also makes them vulnerable if the public turns against that brand. Therefore, your franchise is dependent on the current state of the larger company, as opposed to being able to manage your reputation with your own business. Health scares at another franchise branch, corporate scandals and more can all leave franchisees vulnerable and put their profits in jeopardy.

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Bottom Line

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Becoming a franchisee is a good idea for some, and a bad one for others. Before you commit, it’s a good idea to weigh the pros and cons, do your research and seek legal advice. Different franchisors may offer radically different terms and conditions, so it pays to comparison shop.

","

Tips for Managing a Business

","$39","

Photo credit: ©iStock.com/PIKSEL, ©iStock.com/kate_sept2004, ©iStock.com/Zerbor

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\n","featuredImage":{"id":"cG9zdDoxNzI4MDY=","databaseId":172806,"altText":"The Pros and Cons of Outsourcing","date":"2022-11-08T17:46:01","fileSize":53074,"mimeType":"image/jpeg","modified":"2022-11-08T17:46:01","sourceUrl":"https://smartasset.com/wp-content/uploads/sites/2/2016/09/pros_and_cons_of_outsourcing_1-1.jpg","__typename":"MediaItem"},"modified":{"datetime":"2023-5-30","readable":"May 30, 2023"},"multipleBylinesByRole":{"editedBy":null,"reviewedBy":null,"writtenBy":null,"factCheckedBy":null,"secondEditor":null,"hideAuthor":null,"__typename":"Post_Multiplebylinesbyrole"},"adTargetingOverrides":{"fieldGroupName":"adTargetingOverrides","pageGroupNewKey":null,"__typename":"Post_Adtargetingoverrides"},"seo":{"canonical":"https://smartasset.com/career/the-pros-and-cons-of-outsourcing","metaDesc":"Outsourcing is something many Americans feel has had a negative effect on their livelihoods. Is there a case to be made for the practice, though?","metaKeywords":"","metaRobotsNofollow":"follow","metaRobotsNoindex":"index","readingTime":7,"title":"The Pros and Cons of Outsourcing for Small Businesses - SmartAsset","__typename":"PostTypeSEO"},"slug":"the-pros-and-cons-of-outsourcing","status":"publish","title":"The Pros and Cons of Outsourcing","uri":"/career/the-pros-and-cons-of-outsourcing","tags":{"nodes":[],"__typename":"PostToTagConnection"},"__typename":"Post","adPageGroupOverride":null,"bylines":{"writtenBy":{"id":"dXNlcjo1MA==","databaseId":50,"userId":50,"avatar":"$3b","description":"Amelia Josephson is a writer passionate about covering financial literacy topics. Her areas of expertise include retirement and home buying. Amelia's work has appeared across the web, including on AOL, CBS News and The Simple Dollar. She holds degrees from Columbia and Oxford. Originally from Alaska, Amelia now calls Brooklyn home.","additionalMeta":"$3c","email":null,"firstName":"Amelia","fullName":"Amelia Josephson","lastName":"Josephson","name":"Amelia Josephson","postCount":"$3d","slug":"amelia-josephson","__typename":"User"},"editedBy":null,"reviewedBy":null,"factCheckedBy":null,"secondEditor":null},"category":{"id":"dGVybTo4OQ==","children":"$40","databaseId":89,"categoryId":89,"link":"https://smartasset.com/career/articles","name":"Career","postCount":38,"slug":"career","ancestors":null,"parent":null,"__typename":"Category"},"isModifiedBeforePublished":false,"contentBlocks":["

Outsourcing is the practice of hiring someone outside of your business to complete a specific project or task. The work that would either fall onto the business owner’s plate or require an internal hire can be completed by a third party. Outsourcing is completed by a number of different types of people and businesses, from individual freelancers to large businesses specializing in a single function. Outsourcing is different from offshoring, which has been a big political issue in the past.

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Find out now: How much should I save for retirement?

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Outsourcing vs. Offshoring

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The terms outsourcing and offshoring are often used interchangeably, but it’s helpful to know the difference between the two concepts. Outsourcing means using a third party to make a product or perform a service the company used to make or perform itself. When a startup or small business uses a third-party company to administer its benefits and HR, it’s outsourcing. When a consumer uses a service like TaskRabbit to hire someone to perform a service, he or she is outsourcing, too. You can outsource to U.S.-based companies or individuals. Outsourcing doesn’t have to involve foreign providers of goods and services.

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Some companies do outsource to foreign countries, though. For example, a U.S. car company may manufacture cars in the U.S. which include parts made in Mexico. The manufacture of those parts was outsourced to a Mexican company. But when a company offshores, it moves some of its own operations to another country. So, if the same U.S. car company opened its own factory in Mexico it would be offshoring. If a company opened call centers in other countries it would be offshoring, too. In most U.S. political discussions, people use the term “outsourcing” to refer to either outsourcing to a foreign company or offshoring – or both.

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Pros of Outsourcing

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So what are the pros and cons of outsourcing? There are benefits that impact the company that outsources directly and others that could impact the local or foreign economy. Here are the top four pros to outsourcing.

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1. Outsourcing Can Increase Company Profits

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Companies generally decide to outsource the production of goods and services if they think it can save them money and, by doing so, increase company profits. The most frequently cited example of this has to do with labor costs. Companies might outsource and/or offshore to a country that has lower labor costs. While some might see the local job loss as a negative effect of outsourcing, the increased profits that can result are hard for companies to resist. Companies may also outsource to save themselves the expense of training and hiring all in-house employees or to scale their business.

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2. Outsourcing Can Increase Economic Efficiency

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Sometimes companies outsource because of the opportunity costs of doing or producing a good or service themselves. For example, a CEO of a tech startup might outsource HR because she feels her time would be better spent meeting with venture capitalists and getting her tech team up to speed than with managing employee benefits.

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When highly skilled people can outsource lower-value tasks and spend more time on high-value tasks, businesses tend to benefit. Proponents of outsourcing say that it can also increase overall efficiency in the economy by distributing tasks to people who have the appropriate skill level for those tasks and letting highly skilled workers be more productive.

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3. Outsourcing Can Distribute Jobs From Developed to Developing Countries

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Some defenders of outsourcing say it’s true that outsourcing to foreign countries (and offshoring) results in the loss of some U.S. jobs but that less-developed nations benefit and that those benefits outweigh the costs to rich countries like the United States.

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Americans might object to this, they say, but outsourcing can lead to higher wages and more job opportunities in the developing countries to which U.S. firms outsource. Some analysts view this as an advantage, saying that over time it can narrow the gap between rich countries and poor countries.

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4. Outsourcing Can Strengthen International Ties

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Some experts feel that the more countries trade with each other the less likely they are to go to war with each other and the more easily they can cooperate in pursuit of shared goals. To the extent that outsourcing strengthens relationships between companies in two or more countries, it might also strengthen the relationships between the governments of those countries.

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Cons of Outsourcing

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When you’ve decided to outsource work, no matter how much, it can have a big impact on who you hire, the business itself and potentially the economy. Let’s look at the four biggest cons to outsourcing on a wide scale.

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1. Potential Job Loss in the U.S.

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The drawback to outsourcing that gets the most press is the loss of jobs in the U.S. (or whichever country is doing the outsourcing). The fact that workers in other countries may be getting job opportunities they hadn’t had before is little comfort to members of, say, U.S. manufacturing communities hit hard by factory closures.

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2. Lack of Transparency

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More and more, consumers want to know where their products came from and who made them. Outsourcing makes this kind of transparency difficult. A U.S. company might outsource part of its business to a company in, say, Bangladesh, which might also outsource to another Bangladesh company for staffing.

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So if the staff at a Bangladesh factory is working in unsafe conditions, is that the fault of the staffing company, the Bangladesh manufacturing company, the U.S. clothing company or all three? Outsourcing makes it harder to follow the money and labor to gain insight into a company’s supply chain.

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3. Labor Standards May Slip

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Some critics of outsourcing say that it leads to a general slippage in the labor and environmental standards that apply to the goods and services Americans consume. This is a critique that’s often cited by opponents of NAFTA.

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If a U.S. company outsources to a country with lower wages, more lax labor laws or lower environmental standards, the resulting good or service may not be up to the standards that the U.S. government has agreed should apply in our country. That’s not just a problem for U.S. consumers who want to feel good about where their products come from. It’s also a problem for workers in other countries who can’t get the wages they need to succeed and communities who feel the impact of pollution overseas.

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Plus, it increases the net contribution to climate change if more goods are produced in countries with lower environmental standards. Outsourcing may also crowd out local small businesses and small farms in developing countries.

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Related Article: The Pros and Cons of NAFTA

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4. It Can Backfire for the Outsourcing Company

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Outsourcing isn’t always a money-saving home run for the companies that do it. They might find that the company they’ve outsourced to misses deadlines, doesn’t perform well or otherwise, has a negative effect on business. There may be communication problems or costs might exceed expectations. For smaller companies, in particular, outsourcing can be a gamble.

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The Bottom Line

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Outsourcing is a complicated issue that tends to provoke strong reactions. Your feelings about the issue might change based on where you live, where you work and whose opinions you read or listen to, but it’s good to have the basic arguments for and against outsourcing in the back of your mind when you hear about it in political debates.

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Tips for Business Owners

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As American consumers increasingly long for a personal, local touch in the goods we buy, the craft industry seems to be booming. Have you ever dreamed of quitting your 9-to-5 job and starting a career selling handmade crafts? Or wondered whether selling goods at craft fairs would be a lucrative side hustle? Here’s what you should know about the economics of craft fairs, from how much it costs to participate to how much you stand to earn.

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Check out our cost of living calculator.

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What Counts as a “Craft?”

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You may have heard that in the case of craft beer, what’s marketed as “craft” is sometimes owned and produced by big corporate conglomerates. The same can be said for some of the items sold at craft fairs. If you head to a holiday craft fair in your area, particularly one that casts a wide net for vendors, you may be seeing mass-produced items. But in theory, a craft fair should have vendors selling items they made themselves, by hand. One reason to go to a craft fair is to “shop small” and support local businesses.

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Pay to Play

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As a craftsperson, you’ll generally have to pay for the privilege of selling your wares at a craft fair. The price you’ll pay for a booth or table at a craft fair will depend on several factors: the size of the fair, the prestige, the length of the fair and the perks involved.

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For example, an established three-day fair that draws a huge crowd and engages in a lot of promotion and advertising will charge vendors more than a small, local event held in a parking lot or church basement. According to Entrepreneur.com, booth space at a craft fair typically costs between $200 and $300. Some fairs also charge a percentage of your sales.

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Craft fairs come in two basic forms: juried and non-juried. Vendors who want to sell their crafts at a juried show have to apply for the privilege. Sometimes there is an application fee. Juried shows also charge higher booth fees. However, because they’re likely to attract customers with more to spend, the financial outlay involved in selling at a juried show is generally considered worthwhile.

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The booth fee won’t be the only fair-related expense you have to pay for. In some cases you’ll have to provide your own table and chairs, though these are often included. To attract visitors to your booth you’ll probably want to have more than just a table and the goods you’re selling. You may want to have a nice tablecloth, some cookies and lemonade or other enticements. It’s a good idea to pay for a sign and business cards to promote your business.

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You can save money by bringing your own food but you still might end up succumbing to temptation and spending money at the craft fair yourself. Another expense that may pay off is some sort of give-away, whether it’s a free sample or mini product with purchase, or a larger item that’s raffled off at the end of the fair.

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Costs of Doing Business

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Let’s say you’re a crafter who decides to take the plunge and spend $200 for a booth or table at a craft fair. Your costs don’t end there. You likely have to travel to the craft fair by plane, train, car or public transit. You may also have to pay for luggage or shipping.

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Want to get a credit card reader so your customers can pay with a credit card? You’ll have to pay for that, too. Square, which lets you use your smartphone as a card reader, charges a 2.75% swipe fee. Intuit charges the same percentage. Paypal and Shopify both charge swipe fees of 2.7%. All of these services charge a higher percentage for payments you enter manually.

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Then there’s the cost of the materials you use to make your wares. If your personal talent is making wallets out of old tires or picture frames out of salvaged wood, your costs will be fairly low. But if you make artisan jewelry out of gold and diamonds, you’re going to need to shell out a lot more for materials. Whatever their materials costs, many makers double, triple or quadruple their costs to determine the price they’ll charge customers.

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Those with the highest costs generally charge the highest prices, which means they need to sell fewer items to make a craft fair an economics success. If your goal is to make $2,000 at a craft fair and the average price of your goods is $20, you’ll have a different approach than someone whose average price is $200.

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For some vendors, customer volume is key to success, while for others it’s a question of finding a good match with a handful of customers who have more to spend. That’s why it’s important to do your research before you apply to sell at a craft fair. You want to make sure the crowd that attends is a good match for your merchandise.

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In fact, one successful jewelry artist wrote in an essay about why she quit doing craft fairs that the fairs weren’t a good match for her business model. Because her materials were more expensive, her prices were higher and craft fair attendees weren’t willing to spend that much. As a consequence, she was paying to attend craft fairs and not making a profit.

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For folks with high materials costs, selling online may make more sense than attending a lot of craft fairs. On the other hand, there are high-end craft fairs where a maker with high prices could do well. And selling at a craft fair could provide valuable marketing that would translate into greater online sales.

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Making a Living at Craft Fairs

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According to the Bureau of Labor Statistics, median weekly earnings in the U.S. were $803 in the third quarter of 2015. Let’s say you want to do a little better than that and earn $900 per week. At 50 weeks of work, you’ll earn $45,000 per year. You won’t be flying first class but you’ll have a solid income.

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In craft circles, there’s a lot of talk about the “7x rule.” According to this rule, makers should aim to sell 7 times what they pay for the booth fee at a craft fair. So, if you go to a craft fair that has a $200 booth fee, you’ll want to sell at least $1,400 worth of merchandise. 45,000/1,400 = 32.14. Does that mean you’ll have to attend 32 craft fairs per year to meet your income goal? Not exactly, because you’ll still have to cover your costs. You either need to make more money or attend more craft fairs.

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When you run the numbers, you can see why it’s pretty rare to make an income from craft fairs alone. If you already have a part- or full-time job and do, say, five craft fairs each year as a side hustle, you could rake in $7,000 ($1,400 x 5) in revenue. That’s a respectable side hustle for five weekends of work, plus the hours you spend making your merchandise. Or, you could supplement your craft fair income by selling your wares in a brick-and-mortar or online shop.

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Here’s a 2012 quote from an Etsy forum titled “Craft Fairs… it’s a living! Average income from craft fairs.” It shows how difficult it can be to make a living solely from the income made at craft fairs:

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“Usually about 10x my booth fee is a pretty profitable show for us. We take what we make and subtract about a third of it for materials, then subtract our expenses for the show (booth fee, gas, meals, possible motel?) and if we have a couple hundred dollars after that we’re good. Of course if you broke it down to hourly pay for two of us, including time to create, prepare, set up, sell, take down, drive to and from, our hourly wage is not too good.”
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Paying Your Small Business Taxes

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The income you make at a craft fair is income you’ll have to declare to Uncle Sam when it comes time to pay your income taxes. For starters, you’ll need to obtain a tax ID number for your small business, which may involve registering with the state where you’ll be selling your wares. If you don’t have a business you’ll declare your craft fair income on your personal income tax returns.

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Depending on where the craft fair is happening, you may need special paperwork or permits to sell, too. Each time you apply to sell at a craft fair it’s a good idea to ask the team running the fair if there are special licenses or permits you’ll need as a vendor. You should also ask if there will be someone on hand to collect local sales taxes at the close of the event.

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In some states, there is a floor for collecting sales tax, which means you might not need to collect the tax if your sales are small. The rules concerning local and state sales tax can be complex, but it’s important to comply with all relevant tax law. For more details on tax compliance for craft fair vendors, check out this page from the U.S. Small Business Administration. With mobile services like Square and Paypal, you can enter your tax settings before you start swiping payments.

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Bottom Line

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Anyone interested in selling at a craft fair can head to festivalnet.com or thecraftsfaironline.com. Both are sites that aggregate listings for craft fairs around the country. Unless you have an impeccable record of picking the perfect craft fairs for your work and racking up sales, you may decide to think of craft fairs as a complement to other income sources. One other income source could be your day job. Or, if you want to devote yourself to your craft full-time, you can complement craft fair revenue with sales in galleries and online.

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Small Business Planning Tips

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