profitability

221: Foundations of a healthy business: What you truly need to succeed

Where should you spend in your business? What actually matters for a profitable, thriving business? And how in the world do you get there? Today we’re going to discuss the foundations of a healthy business.

Today we’re going to talk about what really matters in your business. Now, these are the foundations, but this isn’t just for new business owners. In fact, if you’ve got your business together and you’re wondering how you can scale it, or make it more profitable, or make more sales, the answer is almost always in these foundations. But before we go into foundations, I want to remind you that Starship is open right now.

The Starship was just overhauled and GOOD NEWS, when you join, you are walked through these foundations, in a series of classes that serve as deep dives into your business. Over the course of three months, you’ll be guided with weekly lessons in these foundations, plus you’ll get access to our community, where you can ask your questions 24/7, our weekly check-in to hold you accountable, and monthly group coaching calls with me – where I will go deep on whatever your question is.

In the past, I’ve just given you access to the classes and told you “take what you need”, but I’ve learned over the last 6 years that the biggest transformation happens when work on your foundations in a specific order, and when you have access to ask your questions, when you’re held accountable and when you get coaching help as you go.

And now, when you’re done with the 3 month program, you can choose to stay inside the community at an affordable price. As I mentioned, we go through the foundations, but the Starship is for a business that’s set up – that knows what it sells and know how it will sell it. Maybe you don’t have sales yet, but you’re committed to this business and to doing the work to make it thrive.

Now, let’s talk about what those foundations actually ARE!

There's so much you *could* focus on, but there are a few areas where, if you focus, you can dramatically improve your results. They are:

Clarity of your own biz dreams (as opposed to what other people have or want)
Honesty about where you ARE
Breaking down the gap into goals, and the goals down into actions
Profitability (you gotta know your products will make money)
Marketing (someone's gotta buy your work – marketing is how you communicate with those buyers)

These can be split up into 4 main areas:

Mission and Mapping (everything from big-picture to this-month goals)
Profitability
Marketing
Effectiveness (not just doing things quickly, but doing the right things, and feeling good about your workday)

Here’s the good news: Just knowing that these are the areas that matter can help you defeat the “OMG WHAT DO I FOCUS ON” overwhelm. You can just come back to this list: Which area needs work? And then work on it!

(Not sure HOW to work on it? Or where to start with each area? This is what I teach in the Starship.)

What’s super cool is that these areas actually all build on each other – you can’t get a clear picture of your marketing if you don’t what your mission is and you don’t want to do marketing until you KNOW your item is profitable. And you can’t reach your number goals (which we talk about with profitability) unless you actually, ya know, share your work with the right people, using the right language.

In other words, working on ONE area is working on ALL areas. It’s like a fractal. Everything you do is reflected around your business. When you work on how you want to communicate with your people, you’ll see the same words and feelings show up in your Mission. Or… exponential: working on one area improves that area (and often improves sales), then improves the other areas, which improves sales.

When I got really clear about my Mission – what I wanted to do in the lives and businesses of makers and artists, my marketing became so much more clear. From the words I use, to the topics I talk about, to the images I use. I suddenly know what to say, because I know what the end goal is; I know what I want my work to do in the person’s life. And that has improved my sales – it doubled within a year of getting ultra-clear!

So how about you? Which foundation of your business needs work right now?

As you think about that, you may feel really frustrated that you’ve wasted your time on other things, that you didn’t focus on the main foundations and instead got swept up in figuring out the perfect hashtag for your photo – that is ok! We all do it. We all read a blog post or listen to a podcast that is about a specific tactic and without asking “is this what matters to my biz right now?”, we dive into learning about it and trying to implement it.

A while ago a few friends started talking about Facebook ads. So they’ve been talking about it in our group and I have to admit, even though I KNOW advertising isn’t where I want to spend my energy right now, it was tempting! It’s so tempting to work on something that’s outside of my strategy.

On the other hand, a lot of makers tell me that they’ve avoided thinking about ANY of this. They just make their thing, put it in their shop… and hope it turns into a business.

And you know what?

If that’s you, you’re not alone either. That is absolutely where to start. You haven’t done anything wrong if you haven’t started working on profitability or marketing yet. There is a tiny tiny percentage of artists who just make their work available and it all sells out. They don’t have to do any marketing and the numbers magically work out.

But those are the unicorns. And you may be a unicorn, but if you have big dreams for your business, I don’t want you to waste your precious life waiting around to find out.

Instead, I want you to do the work that makes your biz successful, so that you KNOW it will be. So that you don’t have to rely on outside circumstances, or being “discovered” or wait for someone else’s approval before you build the business you want.

And how do you do that?

You build each of your foundations. Here’s a few things that each foundation needs.

For the foundation of Mission and Mapping, you may need to:

Define your dream biz
Get clear on your Mission
Identify your assets and support
Choose a goal
Create a plan to reach that goal.

For Profitability, you may need to:

Know your numbers and how to get them.
Identify the profit margin for each item and your Break Even Point
Variables to experiment with

For Marketing, you may need to:

Improve how you talk about your work
Make it easier for strangers to find you
Look at how you build a relationship with potential customers
Identify how customers buy + make it easier for them
Work to keep customers happy and coming back

For Effectiveness, you may need to be:

Doing what matters each day
Keeping track of all your tasks
Streamlining all of your recurring tasks
Getting the level of accountability you need in order to get it all done

So which one of these, in your business, needs your focus? Which one of these matters MOST for you right now?

If you want to work through each one of these and discover everything I listed for each one, join us in the Starship, it’s open now and it closes in a week. Learn more at taraswiger.com/starshipbiz

In the new Starship, we cover every one of these foundations, and we explore your answers to these questions: What are your goals? Who are your people? What is your ideal workday like? And instead of feeling overwhelmed about figuring it all out at once, you work on each area, one at a time, over the course of three months.

And all along the way you have support, encouragement, group coaching with me, and accountability.

An amazing overview of the foundations of a biz in this ep of #ExploreYourEnthusiasm!

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How to listen

You can subscribe to it on iTunes (If you do, leave a review!)
You can listen to it using the player above or download it.
Subscribe or listen via Stitcher (or subscribe in whatever you use for podcasts – just search “Explore Your Enthusiasm” and it should pop up!).

Find all the podcast episodes here.

5 Lessons I learned from your Income Reports

Over the last two weeks, I've shared the Real Numbers, via Income Reports, of other makers just like you. (Find Income Reports of Knitwear Designers here and Handmakers here.) This whole project has opened a lot of conversations and has taught me a lot. Today I’m distilling it all into 5 lessons.

So here's what I learned from looking at the numbers, feelings, and reflections of over a hundred makers and designers:

1. MANY many businesses (ie, people who specifically marked it as a “business” and not a “hobby”) had no idea what their numbers are, in a single month.
I got many messages from makers who wanted to fill it out, but they couldn't. They didn't know where to start in gathering their numbers, or maybe even what the terms meant. This bummed me out, because you can't fix what you don't measure. There's no way of knowing if what you're doing is working unless you've got a way to measure it.

(I share the very beginnings of how to track your numbers in this video.)

2. Many makers don’t know what they want.
When I asked in the survey “How do you feel after answering these questions?” the responses ranged from “Depressed” to “Scared” to “Excited!” That's perfectly normal. I feel all of the above, just about every week. That's just part of being an entrepreneur and building something completely new.

But what stood out for me were the number of respondents who said they didn't know how to feel about it. Is it good? Bad? They didn't know what their numbers meant for their business health. That makes sense, because numbers don’t mean anything on their own.

For example, let’s say you made $20 yesterday. That might be an awesome day if you sell $5 products, or if you don't make daily sales. It might be a miserable day if you sell $500 products, or if you want to make $2,000 a week.

If you don't know what you want from your business, you won't have any context for what a specific number means. Remember: No one number has meaning without context.

Solution: Put them in context! Get clear on what it is you want from your business by defining success.

If you don't know what you want from your business, you won't have any context for your numbers.

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3. Many makers feel disappointed and overwhelmed.
What's interesting is that disappointment and overwhelm aren’t correlated to the income numbers. We all feel it at one time or another. But it did seem to be correlated with how much the respondent understood cause and effect in their business. In other words, if a maker is measuring other numbers (conversion, email subscribers, etc.), they are less likely to be overwhelmed. Why? Because they know what they can do. They recognize that they have options, and that they can experiment. I've seen this to be true, time and again. Just understanding the variables that affect your sales, and how you can experiment with those variables to increase sales, can keep you from feeling so hopeless about your business.

4. When you focus in on what matters in your business, everything else becomes obvious.
Several of your fellow readers wrote me to say, “After doing these numbers I realized that I've been wasting my time worrying about X” (X = all the things that have nothing to do with the 4 important business foundations. All the things you think you “should” do).

5. You are not alone.
Whether you don't know what your numbers are, you don't know what you want out of your business, or you just feel overwhelmed with figuring it all out – you're really, really not alone. There are hundreds of other makers who feel just like you.

Good news: this confusion and overwhelm can be overcome by focusing in on what you want and building a business based on that. You don't have to feel like this forever. I've worked with dozens of makers who feel a zillion times better about their business. In fact, I created a program to help you do exactly that, and it's open now (come on inside here).

What did you learn from the Income Reports?

You deserve to be paid, no matter what you need

One thing that comes up every time I talked about money-making with a group of women is “need” and who needs what and how much and how this impacts their work. This is a loaded, emotionally-charged issue, but it's time we talk about this openly and without shame.

The simple fact is:

Some makers need to make money from their craft in order to pay the bills + some makers do not need this money to pay the bills.

I think of this as the Spectrum of Money Need. There are some of us on the far side of MUST make this money to pay the bills. If you're single or if you're the main “breadwinner”in the family – your business, no matter how much you love it, has to support you financially. On the far other end are those who have another income that pays all of their bills (this might be a day job or a partner's income). Most business owners are somewhere in the middle. (Perhaps you have a part-time job, or your creative work brings in 35% or 70% of your needs.)

Everyone, no matter their need, deserves to be paid for the work of their hands.

This is why I created Pay Yourself and this is the reason students across the spectrum love it – makers are ready to start valuing their work.

This is a common rallying cry around the craft community, but it usually get stuck in the “people should charge more” debate. I take it a step further. It is not your buyer's job to be sure you're paid fairly. It's not the community's job to set a standard of fair prices.

It's your job. It's your responsibility to price your work competently, to know your expenses, to be aware of your Break Even Point. It's your responsibility to not only know these numbers, but to make smart decisions informed by them. It's your responsibility to keep paying attention to what your business and customers are telling you. And it's your responsibility to stay open to change.

No matter what you need in terms of income – you have this responsibility if you want to build a sustainable, satisfying business*. No matter what you need, you have no more (or less) right to be paid fairly, and no more (or less) responsibility to make that happen.
There are differences – where you are on the Spectrum of Money Needs will impact what you struggle with. Makers who don't feel a pressing “need” for the money often feel weird about charging for their work, or making decisions based on the numbers. Makers who desperately need the money so that they can continue to eat often feel overwhelmed and frustrated. They want to know exactly what to do to make it all work out. (Triple the stress if you have other people counting on you to feed them as well.)

You see, your hesitations and fears are normal. You are not alone. You are not more or less deserving than the crafter next to you.

No matter where you are in this spectrum – you deserve to be paid.

Your work is worth the effort. Your gifts are worth the work you'll do to find the profitability. Only by truly believing this, and taking on the responsibility for your own business, will you find your way to what you want. (And remember – you get to define success for yourself.)
While you're at it, while you're working on believing in your own worth, take a moment to accept the worth of everyone else. Let's stop debating who has a “real” business and let's stop trying to figure out who is making “real” money. You just don't know. You don't know how hard anyone else works or their own issues with self-worth. You don't know, so stop using it as a yardstick (or excuse) for your own goals.

If you're ready to get real about your own numbers + take responsibility for making money, check out Pay Yourself – it's now a self-paced e-course and for this week only it's on sale – $20 off. If you're ready to value your work and get paid, this class will help you find the profitability and improve on it.

*Don't care about making money on your craft? That's ok! Check out: Is it a business or a hobby?

Instead of comparing, explore

“I'm just not doing enough. I thought it would have already happened. I might be missing *something* because everyone else is doing so much better, faster.”

I hear this all the time, from Captains, clients, friends…and inside my own head.

If you read some blogs, it seems that everyone is always killing it. That they're making a lot, selling a lot, and generally rolling around in piles of money, while working on a beach.

Apparently, everyone in the world is measuring the success of their business in figures. And they're all large. And successful.
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Perhaps I'm especially sensitive to this because in the last year of teaching Pay Yourself (a class about calculating profit) to a variety of artists + makers, I had the chance to dig into real numbers from real people.
And in every instance, the things that were not profitable were the things they didn't really want to do. They were only doing them because someone else did. Or someone “successful” said to.

So I've got this unique perspective. I see the loud claims of showy success and I see the real insides of some amazing creatives. I see what really works and what is supposed to work and doesn't.

But when you can't see the insides – when you're just you, working away at making your dream real – all these “success stories” can wear you out, discourage you, or worst of all – kick off a new round of the comparison game, where you start measuring your success by everyone else's.

No matter how many times you tell yourself to ignore it, it can be discouraging. You forget that gross income (or, the money you take in) is not the same as net profit (the money you get to keep after paying all your expenses)…and most people are talking about their gross income. You can think that every month is a big blockbuster month for everyone and that no one else has slim (and fat) months.

(They do, they really do. In a recent Starship chat every single member present spoke up to encourage another and said: Yep, I've been there.)

All of this confusion about what's real + the non-stop comparison game going on in your head is why you won't hear me talking about “how to make six figures.” I'd rather help you explore where your profitability already is. I'd rather you set a doable goal for the next three months and work towards that. I'd rather you explore what you want, so you can pursue it wholeheartedly. I'd rather connect you with other explorers who are real and encouraging and honest.

Because THAT is the real secret to how you get to those huge numbers – you slowly build to them step by step, by expanding on what's working and sustainably growing your capacity and your audience.

That's how you get the small successes that lead to the bigger picture.

It's not a sexy message, I know. But it's real and true and encouraging and full of so much HOPE. Your tomorrow can be different. If can be what you want, but you have to make it so*.

*A Captain Picard nod for my fellow geeks

Tomorrow I open Pay Yourself.

In it, we'll work with your real numbers to determine where the profitability is (and isn't) so you can laser-focus on the aspects of your business that support sustainable growth. It's not sexy, but it's gentle and encouraging and you only have to do math on ONE day. Registration opens tomorrow + it closes in just over a week, on February 21st. This is the last time I'll be holding it live online with a community of fellow explorers.

If you'd like to get real about your money, the downloadable class is available any time, right here!

If you'd like a sneak peek at how we'll talk about budgeting as a tool for earning more inside Pay Yourself, you can read my post here on OhMyHandmade.

The first step towards a profitable business

First Steps toward 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 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 for my Dad's birthday party. {This was the year both parents turned 50. It was a big deal. But don't mention it to them!} 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 30-year-old married French major who likes to eat at Plant at least once a month, 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 4 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 new “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. And 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.

The class is Pay Yourself, and you can register for it here.

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

Once you know your numbers, it's time to Pay Yourself.

Got a question? Ask me!
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