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Why selling more might be a bad thing

When selling more is a bad thing


This is one of the trickiest things to grasp, but one of the easiest things to fix, in most of the crafty businesses I work with:

Selling more products doesn't necessarily equal making more money.

I think most of you know this, somewhere … but it's so counter-intuitive to how the rest of our monetary world works. At a job, if you work more hours, you make more money. At the store, if you buy more products, you spend more money. But in your small biz, it's possible that having more sales does not create an increase in profit.
And while you know that, have you done the math to really work it out? Have you figured out what your break-even point is – and if you're close to it? Not just for a usual month in your business, but for each craft show and wholesale order?

I'm guessing … not, because I know I didn't when I first started my business. Heck, I even quit my day job and did shows around the country before I really figured out all the ins and outs of my profit margin.

It's easy to skip this because it's easy to sucked into the simplicity of what a zillion articles  tell us: more sales = better. When that (more sales) becomes your goal, it's easy to forget all about profit margins and expenses and do whatever it takes to sell more products. You make shipping free, you discount heavily, you throw in extras and specials and fanciness. And you sell a big pile of products – but you don't have any money.

This frustration, from successful sellers, is something I've been hearing for the last three years.  But honestly, I resisted doing anything more than having deep (somewhat uncomfortable) conversations in the Starship. Because I'm not accountant. and I don't like math. And I still haven't figured out how to pay my estimated quarterly taxes in a way that doesn't leave me with a big tax bill at the end of the year (because I do make a profit, which means I do owe taxes!).

But the more I've talked about this over the last year, with online and traditional crafters, the more I've come to realize that this is exactly why I need to talk about it. Because if I – math-avoiding, mistake-making, bold explorer – figured it out but I don't talk about it, we might just keep going on thinking that more sales = better, and that only math-geniuses, accountants and non-creatives have to do the work of finding out what makes their business profitable.

And that's dis-empowering and discouraging.  If I figured it out, then you can too.

We – artists, writers, makers, and designers – we deserve to live comfortably with our work. We are capable and smart and can figure this out, if only we know where to start.

So that's what we're going to do in Pay Yourself. We're going to find your numbers: the profit of each product and the profit/expense of your entire business. And then we'll use those numbers to make good decisions in the future.

In the last year of teaching this class online and in person, I've seen this material transform businesses. From a full-time artist who changed the galleries she works with to a yarn-maker who shifted her focus, to a maker who cut back on craft shows in order to do more wholesaling (and found more profit). I was convinced by their successes to offer this live online again and to make it even better – to reshoot all the videos, update the worksheets, and offer it in a self-paced e-course.

The class is now available as a self-paced e-course – every lesson will be delivered to you, when you're ready for it. You can read more about the class and register for it here: https://taraswiger.com/product/pay/.

 

 

How to have a profitable business, Step 1

The first step to a profitable business


When I quit my dayjob to make yarn full-time, I had worked for months towards an income goal. But then, life fell apart. In one month, my car caught fire, my husband lost his (only-part-time-anyhow) job, and my house was broken into (yep, everything electronic was stolen. Thank goodness they didn't know how valuable my little wooden spinning wheel is!)

Since that inauspicious start, my creativity has been my ticket to paying bills, traveling the country, going to movies and generally living life. In the beginning, I didn't know what to do except: SCRAMBLE. And, to be honest, sometimes it's still a scramble.

But I make it work.
 I take my family to a hotel + fancy dinner + the Chocolate Lounge for Mom's birthday. I take a week off to be in San Diego after teaching at TNNA. I get stuck overnight in an airport and can afford to get a hotel room at the last minute. I drive 3 hours and get a hotel to visit my husband's grandpa before he dies, then the next week for the funeral…then the next week for Thanksgiving.

These aren't glamorous rolling-in-the-dough stories. But this is real life.
I'm a 31-year-old married French major who likes to watch movies in a sofa cinema and can't bear “office casual”.
I bring home the puppy chow from my ideas and my words and my hands.

And in the nearly 5 years of doing this full-time, I've learned how do it, and do it with some ease.

And so, I think long and hard before I answer a question like the one Laura asked: “How do you create the income of your dreams when creating the products by hand?”

The answer is GINORMOUS.

But it's also kinda small: Profit. 

Everything you sell, every project you work on, and every opportunity you jump on must be profitable for your overall business to be profitable.

But doing that! It involves…math, my dear friends.
And it involves bold honesty. We tend to avoid the things we're not-so-comfortable with, so I created a class that walks you through all of it. From individual product profit-testing, to the things that keep your whole business paying you. It's the systems I use (and that I've helped other crafters in the Starship use) to launch new products, find new income streams, and pay the bills.

In the meantime, I can begin to answer Laura's question, with the very first step of profitability: Knowing your numbers.

Watch the below video to learn about your numbers and what they teach you:

(I made this video last year. Pay Yourself  has newer, better quality videos – watch a sample here.)

 

Once you know your numbers, it's time to learn from them + to  Pay Yourself