You have some fantastic looking kids products which look beautifully made. The testimonials are very good and speak to your quality and high level of service. It would be great to see some video on your social media accounts of kids using your products at play.
As you point out, operating solely in a niche market like early childhood is likely to be challenging in the constrained environment we now find ourselves. Ideally you don’t want to have all of your eggs in one basket. One strategic option open to you is to pivot slightly into an adjacent market. An example might be the aged care area.I’m no expert on this sector but there may be an opportunity to broaden out your product offering and thereby enlarge your market potential. Tea trays, magazine and book holders, foot rests, and coffee tables are potential products you could look at. Aged care is just one example, but it is a growing industry, and I am sure there are others. Think of ways in which you can take your core value proposition (hand made, quality timber furniture) and broaden the offering. The craftmanship and quality of your products would seem to be a great point of differentiation.
I wish you all the best.