Teddy Bear Business Plan, With a Projection

A teddy bear business plan is two plans in one. A jointed mohair bear for a collector is a keepsake for an adult, made over six hours and priced like a piece of art. A plush teddy for a child is a toy, and toys for children have to meet a federal safety standard, be tested, and carry a label saying when and where they were made. The plan has to price the first and budget for the second. In the example below, a bear maker in New Hampshire sells collector bears, plush teddies for children, memory bears sewn from a loved one's clothes, and mini bears, and ends the first year about $4,400 ahead on $40,200 of sales, after paying every hour at $20, which is most of what the maker earns. Below is a description example, each part of the plan, the toy rules, the first year month by month, the startup budget, and a free template.

The short version

• Describe the business in a paragraph: the bears, who they're for, the goals.
• Decide which bears are for children and which are keepsakes for adults; the rules differ.
• Cost a bear from the fabric up: fabric, joints, eyes and stuffing, labels, hours, fees.
• Bears for children follow the federal toy standard, are tested, and carry a tracking label.
• Memory bears are made from the customer's own fabric; price the hours.
• Give every batch of children's bears a batch number, on the label and in your records.
• TaroStack gives each batch of bears a lot, records what went into it, and shows who bought it. More below.

Part 1: the business description

Monadnock Bear Co., a made-up teddy bear maker in Peterborough, New Hampshire, I use in these examples, writes:

Monadnock Bear Co. makes jointed mohair bears for collectors, tested plush teddies and mini bears for children, and memory bears sewn from a loved one's clothes, sold online, at New England craft fairs, and by commission. In its first year it aims to pay its maker $20 an hour and keep a four-week wait for memory bears.

Part 2: the toy rules

A toy made for children has to comply with the federal toy safety standard, ASTM F963-23 (16 CFR 1250.2). A children's product also has to carry permanent marks on the product and its packaging, to the extent practicable, giving the location and date of production and the batch or run, so a buyer can tell who made it and when (15 U.S.C. 2063(a)(5)). A small batch manufacturer may register with CPSC and use alternative testing or exemptions for some rules, though not for all (15 U.S.C. 2063(d)(4)). Collector bears sold as keepsakes for adults are a different product, and labeled as not for children. So the plan budgets $1,500 of lab tests for its first children's bears, $100 every month for new fabrics and parts, and a tracking label in every children's bear with its batch number. This is general information, not legal advice.

Part 3: what a bear costs

The children's bears have embroidered eyes, not glass or plastic ones, which suits the youngest children and avoids a small part. Every bear's biggest cost is the sewing. How to price sewn work from materials and time is in how to price handmade items.

Part 4: customers and prices

In a month at full speed the memory bears bring $758 of the $2,268 of contribution, the plush teddies $577, the collector bears $547 and the minis $386. A memory bear earns about $17 for each of its three hours on top of the wage, the plush teddy $16 an hour; the collector bear $23 an hour. Plush teddies sold to shops at half the price wouldn't cover their own cost, so this plan sells them direct. Wholesale pricing is in how to price handmade items for wholesale.

Part 5: the first year, month by month

Fixed costs are $935 every month: a studio share ($250), craft fair and market fees ($200), the website and online shop ($40), insurance ($60), ads ($250), lab tests for new fabrics and parts ($100), and software and card fees ($35). Sales start at 15% of full speed:

The year's sales are $40,200 and the profit $4,399. That's small, and it's after every hour of sewing is paid at $20: a full month is about 125 hours, $2,500 of wages, plus $1,333 of profit. The first four months lose money, $1,625 at the lowest, which the working cash covers. More memory bears and collector bears, not more plush, is where a better year comes from.

Part 6: the startup budget

The $5,300 spent before working cash isn't earned back in the first year; at $1,333 a month it is early in the second.

Get the template

Download the teddy bear business plan workbook. Four sheets: your bears with price, variable cost and a month at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Mohair and minky in a dozen colors, each bought by the yard, joints, eyes and stuffing by the bag, plush teddies sewn in runs of twelve with a batch number on every label, test reports for each fabric, and fifteen memory bears in progress, each in someone's own clothes. A notebook can't say which batch of plush teddies used which roll of minky, or who bought the bears from batch 14 if a part ever has to be checked.

How TaroStack does it

TaroStack gives each batch of bears a lot, records what went into it, and shows who bought it.

Each run a batch. A plush teddy is a recipe of minky, thread, stuffing and a label, so a run of twelve takes them off stock, records the fabric lots it used, and gets a lot of its own, the batch number for the tracking label. How lot numbers work is in what is lot tracking.

Test reports with the fabric. Each roll of fabric is received with its lot, and fields of your own on the lot, such as the lab report's number, so the test behind each batch is on the record.

Who got which bears. Each order records the lots each customer got as it ships, so one recall report shows who bought batch 14 and what's still on your shelf.

Lots, recipes, batches and recalls are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

Is a teddy bear business profitable?

It pays mostly as wages. In the example, the first year ends about $4,400 ahead on $40,200 of sales after paying every hour at $20; a full month pays $2,500 of wages plus $1,333 of profit.

How much should I charge for a memory bear?

Enough for the hours. In the example, a memory bear takes three hours and $7 of parts and packaging, and sells for $125.

Do handmade stuffed animals need to be tested?

A stuffed toy made for children follows the federal toy safety standard and the children's product rules, including a tracking label with the batch. Small batch manufacturers can register with CPSC for some testing exemptions, not all.

How much does it cost to start a teddy bear business?

In the example, $8,300, with the lab tests, the sewing machine, the first fabric and $3,000 of working cash the biggest parts.