Why Investors Might Ruin Your Handmade Business (And What to Do Instead)

Is taking on investors a dream or a nightmare for handmade sellers? While outside funding can seem like the key to scaling, it often comes with hidden costs—ones that have nothing to do with money. Before you bring investors into your business, let’s talk about why they could actually hurt more than help.

Q: Why do investors seem appealing for handmade businesses?

A: Many handmade sellers believe investors will provide the capital they need to scale—whether for production, marketing, or hiring. The promise of cash flow without immediate repayment can sound like a dream, but the reality isn’t always so simple.

Q: How can investors actually hurt your business?

Here are five major ways:

1. Loss of Creative Control

   • Investors care about profit, not passion. They may push you to cut costs, change packaging, or discontinue products that don’t meet their profit expectations—even if they’re core to your brand.

   • If you pride yourself on small-batch, artisan quality, will you still love your business if an investor forces you to mass-produce?

     
     

2. Pressure to Scale Too Fast

   • Handmade businesses grow best when scaling is intentional. Investors, however, want returns—fast.

   • You could find yourself expanding beyond your capacity, leading to quality issues, supply chain problems, or burnout.

     
     

3. Profit Becomes More Important Than Passion

   • Handmade businesses thrive on authenticity and connection. Investors often push for high-margin items, meaning you may be forced to focus on what’s most profitable, not what your audience actually loves.

   • Your business could lose its unique touch in the process.

     
     

4. You’re No Longer the Boss

   • Investors don’t just give you money—they often take a say in your decisions. If they own part of your business, they may have voting rights on key choices.

   • Are you ready to justify every business move to someone who may not understand handmade?

5. Exit Strategies Can Get Messy

   • If things don’t go well, investors expect a return. They may push you to sell, take on more debt, or restructure your business.

   • If you want to exit, they’ll want their share—meaning you don’t walk away on your own terms.

Q: What are better alternatives to investors?

A: If you need funding but want to keep full control, here are a few options:

• Shopify Loans – No credit score impact, repayments based on sales, and fast deposits.

• Crowdfunding – Platforms like Kickstarter allow customers to pre-fund your growth.

• Small Business Grants – Free money with no repayment (though they require research and applications).

• Lines of Credit – Lower interest rates than investors’ expectations for returns.

• Pre-Orders – Get cash upfront from your customers before you invest in production.

I’ve personally used Shopify loans half a dozen times, and for me, it was the best option. It didn’t impact my credit score, repayments adjusted to my sales (so I wasn’t stressed about a slow day), and the funds were in my account the next day.

Q: Should handmade sellers ever take investor money?

A: Maybe—but only if:

✅ You fully understand the terms and long-term impact.

✅ You know you can maintain control over key business decisions.

✅ You have a clear exit strategy that protects your interests.

But for most handmade sellers, outside investors often do more harm than good.

Would you ever take on an investor, or do you prefer funding your growth in other ways? Let’s talk in the comments!