Have you ever been curious about how much other people make from their jobs?
I know I have, and the first place I look at is GlassDoor.com where employees of specific companies share reviews for the businesses they work for.
But more interestingly, they also share their annual income.
This is great data for job seekers and college students picking a major.
Unfortunately, this kind of data for handmade businesses is not readily available for public viewing.
This is one of the few reasons why I do an annual income report for my handmade business every year.
One, to educate other creatives who are interested in taking their business to a more serious level.
Two, I believe in transparency and that you should follow a mentor or teacher that not only talks the talk, but walks the walk.
Three, because this is a good excuse for me to do a year review and analyze what went wrong or right so I can make plans for the new year.
Are you ready to take a peek behind my business?
Here's a snapshot view of how the year went:
Just like the last two years, I made six figure sales.
But unlike last year, I did not break six figure expenses! Yay!
A question I get asked sometimes is, “Do you spend more as your business grows?”[clickToTweet tweet=”Handmade business question: Do you spend more as your business grows? #etsyshop Find the answer here: ” quote=”Handmade business question: Do you spend more as your business grows?”]
It would be great if your expenses are 50% of your sales. That's a good starting benchmark.
I have a 56/44 split: 56% of revenue was expenses, and 44% was profit.
But as your business grows, you'll start to spend more money on systems and hiring help to keep up with sales.
You cannot be everywhere at once, doing everything.
That is simply the nature of scaling up and growing your business.
It also takes money to make more money.
I'll explain more in a bit, but a big chunk of expenses was taken out in the last two months of 2016 to help set up the building blocks for Creative Hive's growth plan.
2015 vs 2016 At A Glance
Although 2015 was a profitable year, I made a much smaller income then compared to 2016.
In the 2015 annual income report, you'll see that I spent a lot of money experimenting:
- I hired a professional PR agency
- I exhibited at two trade shows
- I redesigned my website and moved over to Shopify
2016 was almost the opposite.
2016 was the year I wanted to scale back and be smarter and more strategic about how I would scale up again.
Basically, I went back to the drawing board and looked at what didn't work in 2015 and what I could do better in the next year.
For one, I stopped pursuing wholesale almost all together.
I was working with a wholesale sales rep for a few years.
He made me lots of money in the first two years of working together.
But he started expanding his team to include people who didn't have the same sales “touch” as he did, and implemented a lot of new systems that cost me more money (like additional showroom fees and point of sale ordering systems that cost hundreds of dollars per month!)
He also started taking on newer and cooler lines that were more fresh in the market.
As a result, he hardly drove any sales to Tiny Hands in 2016.
We eventually went separate ways because he cost more money than he was making me.
In 2016, I focused on getting Tiny Hands even more automated for sales and marketing so I could free up time to build Creative Hive and serve my clients and students.
The first eight months was doing a lot of behind-the-scenes work building up my membership program, A Sale A Day Business System so overall sales were at relatively lower levels.
Where things start taking off and the fruits of my labor start to show is in September through December.
Building Systems For Sales Takes Time
PR and publicity is my favorite way to grow a business.
It's fast and doesn't require a lot of your time to do, if you do it right!
That was how I built both Tiny Hands and Creative Hive at the beginning.
However, in 2016, I did not actively pursue PR opportunities.
I had enough SEO traction, brand awareness and existing audiences I could tap into like my social media followers and email subscribers.
I wanted to create more reliable recurring income and sales that I was sure I would make month after month.
I was nervous when Tiny Hands wasn't scheduled to be featured in any prominent magazine or blog during the holiday season.
But it was a great test to see how my shop would fare with just me pushing marketing and not have any outside help.
The pie chart below will show you my different streams of income.
I consolidate both Creative Hive and Tiny Hands because the former operates as a DBA under the Tiny Hands LLC.
In case you're curious, Tiny Hands' numbers broke down specifically to:
- $97,180 in sales
- $53,715 in expenses (55% of sales)
- $43,465 in profit (45% of sales)
And Creative Hive:
- $54,477 in sales
- $31,506 in expenses (57% of sales)
- $22,971 in profit (43% of sales)
If Something Stops Working, Try A Different Approach
One major change was my Tiny Hands Necklace of the Month Club, a subscription product that sends customers one new and exclusive (not available for purchase in my shop) necklace design every two months.
By July 2016, I had been running it for two years.
While I made a steady monthly income from my Club, I kept losing customers and not enough people were signing up for it to make up for the lost subscribers.
Because the Club is a surprise necklace, no one knew what they were getting in the mail.
I kept getting push back from several customers every month about how they didn't like my designs.
That definitely hurt because I felt particularly proud of them!
But it was good feedback nonetheless and it was what ultimately helped me shape the new Necklace of the Month Club.
I cancelled $1,500 worth of recurring revenue and emailed my subscribers to tell them I was retiring the old Club and starting a new one.
Through customer feedback, I realized I was completely wrong about WHY people joined my Club and that cost me sales.
I thought it was a product that my top repeat customers would buy into because they would receive new and exclusive designs through the Club.
I figured that they already had virtually every design in my shop. The Club would be a place for them to collect NEW designs that only they had access to.
But as the years went by, I noticed that the people who were signing up for the Club were customers who had never bought from me before.
And they had certain expectations.
“This month's necklace doesn't look as detailed as your other work from your shop.”
“This month's necklace looks more kiddie than your other designs.”
Listen To Your Customers And Give Them What They Want
People weren't telling me exactly what they wanted, but I could read between the lines.
Customers who bought the Necklace of the Month Club were first time customers who were overwhelmed by all the options I have in my shop.
They wanted ME to pick their necklaces for them, but not deviate from existing shop designs that they loved.
Just like how you ask the server at a restaurant, “which is your favorite dessert?” and you get a recommendation that's better than a wild guess!
If you can't decide, let someone else decide for you.
Once I had a better understanding of WHY people joined my Club, I was able to redesign it to appeal better to my customers.
I closed the old Club and three months later in October, relaunched in time for the holidays.
The new Club shows customers a monthly schedule of what they would get.
Month 1 is cupcake month, and they would receive a random cupcake from the four that were listed.
Month 2 is cookie month.
Month 3 is donut month.
And so on.
This way, people would still get a surprise in the mail, but it's a surprise that's a lot more palatable.
This new system saves me so much time and money because I don't have to create new designs. This process alone can take me up to two weeks for just one new design!
Since launching, I've already doubled my sales from the old Club and I get new Club customers almost every day.
Going back to the WHY and making this change alone will help make me at least $36,000 in 2017.
I gave people what they want and everyone is happy, including my bank account! :)
When life gives you lemons, make lemonade.[clickToTweet tweet=”2016 Income Report for a Handmade Business: If something stops working, try a different approach.” quote=”If something stops working, try a different approach.”]
The Magic Bullet For Making More Sales
In September, I also started playing around more with Facebook ads for Tiny Hands.
I was searching for a way to market my business that was hands-off and fast.
After a lot of testing, I found a system that makes me $60 sales for every $15 I spent on ads.
In the last 30 days, I spent $959 to make $4,284 in sales through Facebook ads alone.
I spent zero effort in marketing to make those sales.
No giveaways, no discount codes, no email lists, no Instagram posts.
What I love about Facebook ads is you can put in $1 and make back $4 (or more!)
No other form of marketing I've found can be that cut and dry, automated and effective.
My students who are using Facebook ads have experienced similar successes.
Tanith from Monster Kitty Society started running ads to her new store and made $700 in sales from spending $120 in ads.
Samara from Sonata Elise spent $17 and made $150 in sales with Facebook ads.
I teach how you can use this Facebook ads system in the A Sale A Day Business System.
Building Up A Business For Scaling
I spent 50% of my expenses in the last four months of the year.
You'll see that my biggest expenses are hiring help and advertising (ads and any other marketing costs).
Most of those expenditures went towards Creative Hive and building the A Sale A Day Business System.
I had a lot of custom development work done on my WordPress site.
I worked with a professional graphic designer to create beautiful promotional images for my upcoming podcast, A Sale A Day Business System and Facebook group.
I hired my coach again to help me with my next phase of scaling up.
I hired a new team of six, including a copywriter, landing page designer and online business manager, to build up new systems and funnels for expanding Creative Hive.
I hired a developer to migrate membership software (anyone who's done this before knows how much of a pain this is!)
I spent a thousands of dollars on ads to grow my email list and make sales.
A lot of the money spent this year is money spent upfront for a much, much bigger payout in the next few years and I'm confident and very excited about what's to come.
2017 Projected Revenue
Assuming zero growth (which is very conservative and unrealistic), I anticipate my sales to grow to $275,000 in 2017.
But since I've spent so much money on setting up the building blocks for growth, my real income projection accounting for growth is a third of a million dollars, if not more.
That's more money than I have ever made in a year and I'm excited to welcome it in 2017.
Highlights Of The Year
In 2015, I tried to grow too quickly and as a result, my income took a hit. That taught me a great lesson.
Sometimes you need to scale back and fine tune certain things before you can scale up again.
For Black Friday 2016, I did my ladder discount sale again and made almost $10,000 in 24 hours!
I'm a huge fan of delegating work, hiring help and outsourcing, but I wasn't always like that.
I want things done a certain way and can be a perfectionist (aren't all of us creatives like this?)
Letting go of control and training your new assistants and contractors is time consuming.
But it's SO worth it when it frees up your time to do what only you can do or what you're really good at doing.[clickToTweet tweet=”Income Report: You have your zone of genius. Allow other people to help you with other parts of your biz” quote=”You have your own zone of genius. Allow other people to help you with parts of your business that you're not good or enjoy doing.”]
The first step is admitting that you need help and can't do it all alone.
You could hire a coach or mentor, or a graphic designer or photographer to get new product photos done.
It could be signing up for Shopify (that's my affiliate link where you get a 10% off any Shopify plan for a year) instead of DIY-ing your shop on WordPress.
Or signing up for an automatic scheduling app to help you with social media.
I experienced many failed projects in 2016, but none that I regretted.
Without having put something out there in the world, I never would have gotten the feedback that I now know to make my business even better this year.
So don't wait for perfection.
Take that first step, even if you don't feel ready!