I recently read a very interesting blog entry by Sarah Graham about the art of setting yourself apart to stay competitive. The entry discusses the retail jewelry industry but it is applicable to all arts and crafts businesses.
Basically, the point is to weather the ebbs and flows in the economy by making sure you offer your customers a product or service they can't easily find elsewhere. Of course, our artistic or handmade craft items are inherently unique, but the emphasis is to increase revenue by aggressively marketing the unique aspect of our products.
This could be as simple as making small changes in your production methods to be able to sell your goods at a slightly lessor price than the competition. Or how about using a hard-to-find component or advanced technique that makes your item scarce and therefore allows you to charge a price higher than market?
I found the red background for this blog very distracting but the entry is well worth a quick read.