Do you ever wonder how much money other handmade or creative business owners make?
This has always been a socially taboo subject, but I think we're all a little bit curious, right?
Income reports have been trending in the blogging world in the last few years but few handmade businesses are doing it.
I created an income report for 2014, where I showed a revenue of $200,914 and with $107,157 profit. It was an amazing year.
What you can learn from my successes and failures is educational and you could help you make better decisions in your own business for 2016.
Without further ado, here's how my year went down:
I made six figure sales this year again, which sounds great.
Unfortunately, I also racked up six figure expenses.
2014 vs 2015 at a glance
Some of the big things that helped generate that amount of sales was social media and getting tons of press.
I also brought home a lot more money (profit) because I was running a leaner machine.
As in, I was not outsourcing as much and still did a lot of things on my own.
2015 on the other hand was another great year for sales.
But I approached 2015 with a more curious outlook and made a push to try new things I hadn't already done for the business.
It was a big year for experiments!
Profit vs. Revenue
There is an argument to be had about whether you should be focusing on profit or revenue.
My answer is both.
Profit is the money you pay yourself with, which you then pay for bills, personal expenses and savings. You need a healthy profit to live and keep running your business, otherwise it will slowly eat up all your money and leave you with nothing.
But you can't focus on profit alone by cutting down on expenses.
And without revenue, you can't even think about making a profit.
Both are important.
I'm thankful to be making $37,000 in income in 2015, even though it doesn't sound like a lot compared to the sales I made. It's not close to what I made last year, but it's still well above the median wage of an American, which is $27,000 (according to the US Census).
I took at least seven weeks off for tons of traveling this year.
I went to CraftCation business + makers conference in California, San Francisco to teach at Creative Live, Las Vegas for the food, Florida, Jamaica and Haiti on a cruise (the best vacation ever!) and New York and Atlanta for trade shows.
Do more of what works
The correct answer is normally the simplest one.
That's why it's important to track what or who is referring you sales.
This blog, Creative Hive Co. was in its first year of business.
I was pleasantly surprised to see that it was already making a part time income.
I'm excited to do more work with you, my clients and students.
I'll be creating new programs, ebooks and courses to share what I know about making a living with your handmade business and help you make a consistent income.
Social media and PR was my winning combination in 2014 for the jewelry business.
I'll be going back to that and finding ways to scale up or convert more fans into customers.
Breaking the handmade production ceiling
In my second year going full time in 2012, I started hiring a team of production assistants.
These are people who help me make the jewelry, from start to finish.
I've seen a few people come and go but eventually found my two best assistants that I love and am happy to call friends.
You'll see later that 32.44% of my expenses was in paying my assistants (and more).
Save for a few designs that only I know how to make, my assistants take care of the majority of all production and shipping, freeing up my time to pursue sales generating activities and running my second business (this consulting one that you're on).
Cut out the fat
I made three major investments this year that unfortunately didn't pan out as well as I'd hoped:
- Two trade shows
- Website redesign + eventual transition to Shopify
- Professional PR agency
These would have cut down my expenses by $30,000 and made revenue and expenses a 50/50 even split (similar to 2014), for a $77,000 profit.
In 2014, I had a super strong hold on all of my social media.
I had tons of press and features for my business.
I felt like I had done it all and was looking for the next thing to try that could potentially bring my business to new levels.
I did the National Stationery Show and the Altanta Gift Show back to back.
They were both my first trade shows and they're huge investments.
While I don't regret attending these shows, I don't think I will be doing them again.
Some artists can make an immediate profit after attending a trade show, but most people will tell you that it takes time to make back your money.
It's hard to calculate the return on investment because the sales are so hard to track.
A sale can come from a relationship you made at a trade show two years ago.
Or a store makes a small order at the trade show to try it out. She loves your product and decides to make a huge order with you six months later.
Ultimately, as a small business owner where cashflow is so important, I wanted to see a profit right away. Otherwise, it wouldn't be worth it for me to do trade shows yet.
When you're calculating profit, you need to account for the materials and labor cost to make the product, not just the trade show fees, traveling expenses and time spent manning your booth.
Unfortunately I didn't break even for either show, but I did end up having over 40 new stores!
Credit cards are not for me
I paid for parts of the trade shows with a credit card, which took me six months to pay off.
This was also my first time using credit cards for my business. While it's nice to have more opportunities with a line of credit, I hated that I had a false sense of security with money.
Now that I've cleared out the debt, I don't intend to use the credit card again.
Choose your shopping cart wisely
2015 wasn't too great on the technology side. After a fantastic year in 2014, I invested in redesigning my website and making it mobile friendly.
I was using Prestashop at the time (and had been for many years), which is an open source, self-hosted and free ecommerce platform. I like it because it's easily customizable, you have 100% control over your website and it has tons of addons you can install if you need additional features. Plus, it's free to use, so I wasn't paying a monthly fee.
All through the year I experienced technical issue after issue, including a fiasco where my shopping cart wasn't charging my customers for orders made with a credit card for two months. I had already shipped their orders to them… and they essentially received free product (and I paid for shipping). I was able to recoup most of that money back – there are still good people in this world :)
I got hit by malware twice which took my website out of commission for five days straight each time, causing me to lose traffic and credibility.
I didn't have the foresight to see that Prestashop (and my host, Bluehost) would cause so many problems for my business. Otherwise I wouldn't have planned to do the website redesign.
The redesign only lasted for a few months before I took my shop over to Shopify, which I absolutely love!
Professional marketing services cannot guarantee you results
Last year I signed a contract to work with my dream PR agency so I didn't have to do it myself. I thought a professional would get better results.
From the early days of my business, they had been on my radar. They worked with clients I admired and frequently got them in all the top national print magazines.
PR (or marketing in general) is a tricky thing to outsource because of the lead times that most magazines work with. If you pitched your products in January, you won't see the feature until June/July. And just like with your customers, magazine editors can take time to grow to like your brand.
I signed the contract anyway, even though I wasn't sure it would work for me. But you never try, you never know. I took a leap of faith.
A year goes by and $12,000 later, they produced ZERO results.
I am all for outsourcing and delegating tasks that you don't have time for or you're not skilled at.
But sometimes DIY works best for your business.
Running two businesses
I run both my handmade jewelry business and this consulting one.
It's a lot of hard work, but I actually love starting businesses and marketing them!
I spent a good deal of time building up the foundational blocks for Creative Hive Co.
I'm confident it'll be turning into a real business that brings in a full time income without the full time hours this year.
I'm already looking into starting a third business using a dropshipping model, so I don't have to worry about production.
Highlights of the year
I went to CraftCation and met amazing friends, Kimberly of Lacelit and Robin and Alvin of Scotch and Cream, to name a few. I was still buzzing with enthusiasm and motivation weeks after the conference. I'll be going again.
I made a huge goal happen and taught four live handmade marketing workshops at Creative Live in San Francisco.
I moved over to Shopify, which I absolutely love! It's super speedy, support is great and everything works well.
We love to cook and spend a lot of time in the kitchen. However, it was a part of our home that we felt was lacking. We upgraded our kitchen with new paint, cabinets, flooring, countertops and appliances.
We went on a cruise for the first time. We rode horses in the ocean in Jamaica, went snorkeling and rode jet skis in Haiti. It was an awesome experience and we can't wait to book our next cruise vacation!
We went to Vegas where we'd heard so many fun things about the food. It was a fun trip and the buffets are a real treat!
Even though I made far less this year, it's still a healthy income. I guess you could balance that out with all the new experiences we had with traveling.
I don't regret anything I did in 2015. It was all an amazing learning experience that will help me make better decisions in the future.