Recession Proofing Your Craft Business

courtesy of Tiswas0.1

The beginning of a new year is always a slow time in the retail world, and this is true of handmade businesses as well. Often, we spend January and February making new stock, trying out new designs, and planning our show schedules for the busy seasons. It may take some of us a few months before we really see the impact the recession is having on our business. Yet, we need to be aware now so that we can act on recession proofing our business.

1) Marketing is more important now than ever. People are spending their money carefully. you must stay in the public eye even during your 'downtime'. In fact, this a great time to try out new marketing opportunities since you probably have more time on your hands.

2) Offer value added services. Do you offer gift wrapping? Throw in a simple handmade card for free with gift orders. If you sell aprons, maybe you could include a short recipe book you print on your computer with every order. Study your product and see what you can do to add value and make it stand out from the competition.

3)Review your sales pitch. You must focus on making your item a need rather than a want. Leave out words and phrases such as 'splurge' or 'treat yourself'. Most people are not focusing on themselves right now. Bath and body products are a prime example of items usually marketed as a splurge, when they actually do address a need. By focusing on the value and advantages that a handmade bar of soap offers while also addressing the need to be clean, people will not feel guilty purchasing your product.

5)Customer service is paramount. The big guys are already improving their customer service, are you? Make sure your customers know you are available to answer their questions and handle any problems they may have. Send a thank you note with every online purchase and include a card with contact information with every in person transaction. While customers love to meet artisans, they are also impressed by your professionalism. Maintain that professionalism in every aspect of your business.

6)Diversify your income. As a self employed artist, you don't have to worry about being laid off during a recession, but you do need to make sure you can pay your bills. You have many skills, and owning your own business makes you an expert in many peoples eyes. Find other ways to profit from your knowledge and product. You can teach classes on your craft in person, or sell tutorials and ebooks online. Content sites such as Associated Content and Ehow are a great place to share your knowledge while building up residual income. You can also focus articles or classes on small business topics. Find out of the box ways to both market your products and build alternate streams of income and you will have the ultimate recipe for success.

Recessions can be a nerve wracking time. Yet it is known that businesses that survive a recession will usually come out stronger and more profitable in the end.

Planning for love AND money

Vintage Typewriter Key Charm by KeysAndMemories

Last week we covered the first section of your business plan, the overview. This week we will tackle the financial section. Put simply, this is where we cover how you are going to fund your business, your businesses expected debt load, your businesses expected profitability, and will do the all important break even analysis- aka when your business starts making instead of costing money.

I have said this before, but it bears repeating- it takes the average business 2-3 years to become profitable, and most businesses fold in the first year. Why? There are many reasons, but the largest by far is they did not have a sound financial plan going in and went broke. After completing this section you will have taken a very large step to insuring your business does not meet this fate.

Once again, we are going worksheet style. Following the worksheet are some tried and true methods to fund your business without seeking out a loan. You may want to have a calculator handy, there is some minor math in this part. (If you do want a business loan, please contact the SBA or your local SCORE chapter for more information on business plans for that purpose).



1) What equipment do you need or foresee you will need/need to replace within the next six months years. Start up supplies go here as well. Once again, place an approximate dollar amount by each item.

2) Any other overhead you need to start- licenses, membership fee's, studio rental, etc. Place the what and the dollar amount here.

3) What equipment do you currently own? Include craft specific equipment as well as office equipment such as computer, postage scale, etc. Place an approximate dollar value by each piece of equipment.

4) Do you currently have cash (not credit or loans) set aside for your business? How much?

Ok, now add 1 and 2 together. This number is your start-up debt. Now add up 3 & 4. This is your capital.

Now we are going to figure out your fixed cost and variable costs. A fixed cost is anything that is the same no matter how much you sell. Your start-up debt above is your fixed cost for your first year of business. We are going to do a three year break even analysis, so you will need to list your yearly fixed costs for the following two years as well- yearly rent, insurance, license renewals, etc.

Fixed costs
first year-(startup debt- capitol)
Total- $
second year- (itemize and dollar amount)
Total- $
Third year- (itemize and dollar amount)
Total- $

Variable costs are recurring costs that are absorbed each time you sell something. This is your labor cost (the hourly wage which you pay yourself), supplies, advertising, online listing/selling fee's, booth rental, etc.

Variable costs
(itemize each costs with a dollar amount example:
Labor- $20 hour
Listing fee- .20
then break it down to the amount of variable cost that affect each item you sell)

If you already have a pricing formula, write it down here. If not, you need to come up with one before we go any further. There are plenty of formula's out there for artists on the web, or you can use this simple one:
supplies + hourly wage x 2= price
if you pay yourself $20 an hour and the item takes 15 minutes to make and $1 in supplies, your formula would like this:
1+5x2= $12
Another option is to do variable costs+hourly wage+supplies x 2= price. Pricing can be the most complicated thing to figure out. You will most likely change your pricing strategy after writing this plan, and that is fine. You will just update your plan once you do.

Now pull out a separate sheet of paper, it is time for the last part of this section! We are going to do our break even analysis. Once this is done you will have a good idea of when to expect to begin making profit from your business.Leather Checkbook Cover by LnJARTSnCRAFTS

At the top of the paper write:
Capital year 1 Fixed costs variable costs Average item price
$ $ $ $

Now the formula to figure your break even point: subtract your variable costs from your average item price. Now take that number and divide your year one fixed costs by it:
Break even Point = Fixed Costs/(Unit Selling Price - Variable Costs)

This number is how may items you need to sell to break even. If you do not achieve this your first year, you will then go back and redo it adding your second year fixed costs to the remainder of year one's costs, and so on up until year three.

How does knowing your break even point help you? First, you know exactly how profitable your business is at any given moment. This is a good thing, as it helps you plan accordingly. Second, if you wish, you can start paying yourself from the first item you sell if you wish with out guilt. And third, you can avoid many of the common pitfalls of overspending and the cycle of debt many businesses fall into.


Time for the good part! Some ways to fund your business:
1) Re invest your hourly wage into your business.
2) Work a part time job to support you or your business until it gains profitability.
3) Work full time while building your business part time.
4) Research local opportunities for funding. Some local organizations have special accounts for small business owners where they match funds you deposit in them. Contact your local SBA chapter to see if any exist in your area.
5) Research grants you may qualify for. A good online resources:
http://search.business.gov/startLoans.html
6) The multiple streams of income method (the way my husband and I did it):
Freelance for another company for the steady check
work small odd jobs
write for in your area of expertise, this doubles as marketing that you get paid for.
scale back- don't eat out, hoard every penny mentality
7) Deliver the weekly free paper in your town. This is usually good for a couple hundred dollars a month, only takes a couple hours a week, and doesn't interfere with a day job or building your business.
8) Ask for start up capitol for Christmas, birthdays, etc, then set up a separate account for your business so you don't touch it for personal use.
9) Sell something. Do you really need two cars? Three t.v.'s? That hideous lamp aunt Martha gave you that is worth $150?
10) Set aside a certain amount from your current jobs paycheck into your business account. Treat it as a bill that must be paid.

Under no circumstances use credit cards to fund your business! That rarely has a happy ending!

Next week we'll cover the marketing plan, I promise it will be much easier than this workshop is!

The Noodle shops of Edo

Yakisoba by GoBuggy

Whenever I start to think that business and creativity do not go hand in hand, I remind myself of the noodle shops of old Tokyo, then known as Edo, in the 17th century. Japan was still in the midst of it's feudal time then, and Edo was the rising star. The Tokugawa shogunate had pretty much left the people powerless, enforcing strict social status and stripping much of the power from even the upper classes- the samurai and daimyo. Yet, art flourished, as did education and the culinary arts.

You would think living in a time with no individual rights where an actor could be killed on sight for no reason with no consequences would be bleak for the creative individual. Yet, the noodle shops flourished. What does a noodle shop have to do with being an artist trying to run a business today, you ask? Put simply, as an artist you are selling something that no one needs but they definitely want in a world where many others are trying to do the same thing. There were more than 3,700 noodle shops in Japan during this period. More than 80% of the population lived in poverty during this time, yet still thousands of noodle shops thrived.

How could this work?

Workers were coming from all over the countryside to earn a days wages in the busy urban centers. Some creative and enterprising soul figured theses people would be hungry, but wouldn't have much to spend. He made up a batch of soba noodles and soon had his first customer. People were able to eat cheaply, and soon other shop owners began to notice. What started as one shop turned into many with many people scrambling to get their piece of the action. The upper classes also were not immune to this noodle phenomenon. They too could grab a quick bite for little cash, and they were soon smitten with the idea.

With that many noodle shops, the average owner had to work hard to stand out from the crowd. First they began by specializing. This shop sold only soba noodles, and that one sold only udon. Once there were many shops specializing in the same thing, it was time to move on to more drastic measures. The proprietors began wearing outlandishly decorated kimono's and hawked their wares more vigorously. Some turned their shops into upscale restaurants, further specializing, while others focused more on quick service and a meal to go- fast food if you will.

There are still thousands of noodle shops in Tokyo flourishing today. All because the first noodle shop owners of Edo knew that to succeed you must be creative, and to be a creative success you must understand your business. When you think that it is impossible to balance your art and your business pay attention to the key elements here- have you specialized? Have you created a perceived need? Do you stand out from the crowd? Do you have items available that appeal to more than one economic strata? Tell me, what color is your kimono?

In short- Are you a noodle shop in old Edo?

Planning your business- Who are you?

I introduced the idea of a business plan for your hand crafted business here. Today, we are gong to start writing one. The first section in every business plan, whether for personal use or to attempt to get funding from outside sources is the business overview. For our purposes, we will be writing a short version of a real overview. This plan is not for the purpose of seeking loans or anything like that, it is to keep you and your business on the right the track. It is for your personal use, but if down the road you wish to write a full plan you will already have the basic frame work.

The first element of the overview is a description of your business. Answer the questions below to begin formulating your own overview.Plans for GLOBAL DOMINATION Artists sketch book by Champignon

1)What is the business? Jewelry, clothing, bath and beauty? Get detailed here. What kind of jewelry? Kids clothing, skirts, high fashion? Just soap, or lotions too?

2) Who's your demographic? Men, women, parents, students, retired people? What is their age range? Income level? Study your competition to get an idea of who you should be marketing to.

3) Who is your main competition? We're not looking for specific names here. If you make soap do you see other artisan soap makers as your main competition, or do you see specialty soaps from the department store counter as your competitors? Think of your demographic. You can have more than one source of competition.

4) Do you have any employees? Is it just you, or do you have a spouse helping out? Mention a little about yourself and your qualifications. This will help you see yourself as a true business person and not just someone who sells stuff.

5)Do you need insurance? Do you have it? What about licenses or permits? List them here.

6) Why are you opening this business? As a part time job? Full time career? To make a profit or to donate proceeds to a non profit? To grow your business into a huge company or to stay a small operation? Be truthful here. You can always change it later as your business and your dreams evolve.


Now take everything you wrote above and arrange it into coherent sentences. You don't want to be trying to decipher your shorthand and run on sentences six months from now! If you want, you can type it up and print it out on nice paper, or you can make a back-up and just keep a digital file. Just keep it somewhere safe, because before this series is done, I will give you some more tips on how to use it for years to come.

Next week we'll go over the second section, The financial information. We'll also cover some ideas on creative debt free funding!

You gotta have a plan, man!

One thing that always makes me shake my head in disbelief is the sheer amount of businesses operating without a plan. A lot of artists shy away from the business side of selling their crafts. I am really not sure why. There are very few things more creative than sitting down and dreaming about tomorrow. That is really what your plan is, your dreams and visions of the future put down in writing. A plan, like an ever evolving work of art, is fluid, always changing and growing into something better and more beautiful.

Right Brain Business Plan e-book by artizencoaching

The first and perhaps most important plan you will make is your business plan. I have adapted the standard plan to fit into the artist niche. Most likely you will not be using your plan to attain outside funding (though if you are, a standard plan like the ones found here will help), but more as a personal road map to keep your business on track. Many people think a plan will limit their business,that by just taking things as they come they leave the door open to all possibilities. In truth, not having a plan limits your business more. There are many opportunities you will never discover if you don't actively seek them out. There are also many opportunities that will fall in your lap that you may be unable to take advantage of without a plan.

A business plan consists of four parts. The first part is a basic overview of your business. This is where you stand now in terms of marketing, competition, and focus. I like to read over this part and update it quarterly after I do my taxes. The second part is the financial side of things. In a traditional plan this usually focuses on loans and outside financing. Most artists are self financed, so for our purposes this is a bit more personal. We are our businesses, it is not a separate entity from ourselves. This is one of the most vital parts of our plan as it will allow us to operate in the green and avoid costly mistakes. The third part of the plan is your marketing plan. This is exactly what it sounds like, your map to marketing. The fourth and final part is the projections section. This is your long term goals, ranging from 1-5 years. Using the other elements of the plan, you will be able to make realistic goals and have the framework in place for achieving them.

About once a year you will sit down and revise your entire plan. This is a great way to see how much you have achieved over the preceding twelve months. You will most likely have to adjust your future projections, moving some things around, adding things, and even deleting things. I personally find planning a chore yet very exciting. When I hold it in my hands still warm from the printer I can't help but feel like I hold the world in my hands. A little silly? Maybe. Yet it is true. With my plan their is nothing I can't do. Economic downturn? Planned for that. My best show is canceled? That's okay, I have a plan for that too. Sleepless nights? Nope, because I have nothing to worry about as long as I have my plan. Giant boom in business? You betcha, and I know exactly how to handle it, thanks to my plan.

Over the next couple of weeks we will be exploring the above four sections. We will cover what to put in each section, why it is important, how you can use it to your benefit, and a sample plan so you can see what one looks like. We will also cover how to finance your business without going in the hole. If there are any questions, ask them in the comments and I will do my best to answer them.

may your business prosper!

T'is the season...

For holiday shows and bazaars! Every October like clockwork the signs start appearing on street corners- "School craft show this way", "Holiday Arts & Crafts next left". If you are like me, you follow these signs. My reasons are twofold. 1- to meet and support other artists, and 2- to see if future shows would fit my items.

The holiday shows are some of the best in my opinion for the craft show newbie. They are usually annual events that have been going on for several years so traffic isn't a problem. Many of them are put on by schools or churches which usually means low entry fee's and guaranteed traffic from school supporters. Another benefit of the holiday shows are that they are usually inside, so no tent is required and weather isn't an issue.

Holiday shows easily make up at least 40% of my annual income, more some years. In comparison, the other big show season, spring, only makes up about 15%. Even though I am working to expand my business into the online and wholesale marketplace so I won't be so dependent on shows, I don't see myself giving them up in the near future. I enjoy them to much! There is just nothing like meeting your customers face to face as well as other artists.

Vendor apron by Threadfed

So, without further ado, I bring you my list of must haves for the holiday show season!

1) Plenty of items. Bring twice what you think you will need.

2) Tables and chairs, if not provided.

3) Table cloth and displays. Make sure the cloth is long enough to reach the floor so you can hide all your extra stock under it!

4) Promo items. Business cards, promo packs, fliers, wholesale information. And don't forget to hand them out!

5) Money apron or cash box. I personally prefer an apron.

6) Packaging materials. Bags, boxes, tissue paper, etc.

7) A guest book and pens to keep track of your new customers and start your mailing list.

8) A mirror if you sell wearable items.

9) Extra price tags.

10) Inventory list and receipt pad.

11) Credit card gear if you accept them.

12) A lunch, plenty of water, and any meds you may need. I always bring Tylenol because strong scents give me headaches, that way I am prepared if my booth is near someone who sells scented items.

13) Calculator, pens, tape, scissors, needle and thread, paper towels, camera and any other odds and ends you may need.

This list isn't all inclusive by any means, but it is a good basic list to get you started. Good luck in all your endeavors!

Quitting your day job- Part III

If you read Part II, you should now you should be getting your financial plan in order for that long awaited day that you strike out on your own. I am going to take a break here to talk about confidence and shyness. If you are shy or suffer from a lack of confidence, start working on overcoming these fears now. Most businesses I have seen fail is because the owners suffered from shyness in one form or another.

Selling is marketing. Accept this. You will have to talk to others and you will have to convince them you know what you are talking about. Realize this now, take a deep breath, and don't give up. Start by facing your fears. Grab a sheet of paper and write down the three worst things that could happen if you called a potential customer to offer them your wares. Done? I am willing to bet that they all boil down to one word- no. No, I'm not interested. No, they aren't are style. No, they aren't the quality we prefer. No, no, no.

Yet notice, they are not saying, No, you're not good enough. All a no means is this is not the right customer, at this time. Each no brings you closer to a yes. Each no gives you hints on how to make it better next time. Each no means you were brave enough to put yourself in the position to train for those future yeses. How can something that holds so much promise be bad? (Ok, no one likes a no. Not to sound like a Pollyanna, but everything above is still true.) In our heads, the word 'no' becomes a monster. It makes nervousness at approaching a shop turn into a fate worse than death. Once you break down this irrational fear, and remember 'no' is the worst that awaits you, it becomes much easier.

Next, take power over 'no'. If someone says no, ask them if they can recommend another venue for your wares. If they say 'no' and are rude, go ahead and mumble epithets about their questionable parentage- to yourself once you are home and no one can hear. Then, call another shop, apply to another show, keep trying. Don't give your fear the time it needs to grow.Stores need artist like you or they have nothing to sell. Each time you visit a new shop to offer them your items you are doing them a favor, not the other way around.

Finally, get yourself a cheerleader. Join or start a networking group. If you are shy, steer clear of the hardcore business groups. Start small with a few like minded people that you have more than just business in common with. Meetup.com is a great place to find a group, or you can start your own for a small monthly fee. Also, friends and family members can be your cheerleader. Just avoid the ones who feed into your fears ("that's just awful! I don't know how you put yourself through that!"), throw you pity parties ("you poor thing. Go ahead and cry. <>"), or do the wiser person dance ("I knew this would happen, maybe you shouldn't put yourself out there like that"). The cheerleader you need has to be able to get you fired up when you want to quit. ("You're going to let that snooty gallery lady get you down? I'll drive you to that other gallery across town tomorrow, we'll show her!") They tell you when you're awesome and they tell you when you're not so great- then they help you brainstorm ways to make it great. If you throw a home party, they are there to speak up when you freeze up or at least give you a well placed kick to the shin to get your mouth moving. If you don't have that cheerleader now, be your own cheerleader. You'll find one eventually.

In Part IV on Tuesday, we will tackle business plans!
Part I
Part II

Going full time- Part II

If you read Part I, you now know what I think the most important things to make the move to full time artist are. The first thing you need to do to start preparing for this is to get all your financial ducks in a row. For those of us who have a tendency to stick our heads in the sand when it comes to money, this can be a painful and eye opening experience. If you are serious in your goals though, it is a necessity.

First, find out where you stand. What is the bare MINIMUM you need to get by a month, how much debt are you carrying, and do you have any residual income (investment payments, child support, trust)? Next, make a plan to start paying on that debt. You want very little debt when you jump to self employment. We are lucky in that we have very little debt, just an $80 student loan payment that has a few years left on it. If you carry a lot of debt, and especially if you are having trouble making payments, get yourself to credit counseling ASAP, unless you really want to work that day job for the next twenty years... By doing this step right away, you can set a realistic goal of when you can expect to quit your day job. It is a lot easier to part with a paycheck to old debt if you have a goal to work towards.

Now you should have a tentative quit date. I made a point of writing minimum in caps up there. Often I hear people say they won't quit their day job until they are making the same or more working for themselves. Unless you are one of the lucky few, that just isn't going to happen until you are able to pour all your energy into your business for at least a year, probably more. If you are lucky enough to have a supportive partner who has an income, get them on board with your plan to quit now! If not, start living the frugal life and socking away every cent you can. Ideally, you should have enough saved to last you 6 months to a year, but rarely is anything ideal. Save what you can, know what you need to sell to make your minimum expenses, and make a plan to to sell that much. Also, put in place a back up plan.

Your back up plan is your get out of jail free card. It can be a partners income, selling off aunt Matilda's heirloom china, a hefty savings account, or taking a job. What, you say? Quit your soul sucking job just to take another one, I thought you were going to tell me how to quit! No, when I say take a job I mean take a job like the one you had as a teenager. You know, something that a poorly trained monkey can do and the only hiring requirement is a pulse, the one where you will never be emotionally invested enough in to try and climb the ladder and where you don't really have to think. A paper route is a good example, and is in fact our back-up plan. We know that a paper route only takes a couple of hours a day, there is always openings, and it pays enough to cover our minimum monthly requirements.

Realize some expenses will go up while others go down once you quit. You probably won't need day care, to commute, or to eat lunch out every day once you quit. On the other hand, you may need to find and pay for your own insurances now. The best advice I have here is to shop around. Research professional organizations in your field and check out their membership dues and if they have group insurance rates. Insurance goes into the minimum needed a month category because if you ain't healthy, you ain't working or earning at your maximum.

Finally, remember that money is the number one reason for divorce, and that worrying about it can lead to depression and health problems. If you are not someone that is comfortable taking risks, it does not mean you can't start your own business. All it means is you need to save more and cut down your expenses more. You can never eliminate all the risks, but you can minimize them quite a bit. Just make sure you keep the plan realistic. Don't try and save up ten years of expenses or over plan for highly unlikely emergencies (do you really need to worry about tsunami's is you live in Arizona?). On the other hand, don't convince yourself that your family won't mind eating ramen noodles for months on end either while you blissfully create away. Keep it realistic, and you'll be fine.

*Part III in the series, Plan It, will cover writing a business plan and ways to get money to start your business.

My new Jewelry Party flyer!

I just thought I would post this, feel free to borrow from it (just not my images of course :)!
Click to enlarge. I blocked out my personal information on this one, you know, internet safety!



And above, my new card design. A lot more fun than my old one!

Stop working for the man!-Part I

This is a first in a series of articles on how to move your craft business to full time. Today mainly want to talk about what you need to do this. In future articles, we will tackle everything you need to prepare for and succeed in this profession!

If you don't think you have these qualities, don't give up. If you are even thinking of working for yourself seriously, you have enough of them to learn the rest. Think of this as a guideline of what you need to work on to move up to the next level.

1. Drive and perseverance . You must have the drive to succeed and the perseverance to keep trying when everything seems stacked against you.

2. Ability to avoid procrastination. We all procrastinate. For artists, it's easy to put off the things we don't like to do, such as the bookkeeping. Remember, if you can avoid procrastination now, the sooner you will be able to get your income up so you can afford to outsource the things you hate to do.

3. Outgoing. You must be able to greet the public in show settings or approach potential wholesale buyers. There are many ways to foster this that I will cover in upcoming articles.

4. Organization. Very few of us are born organized. This is a learned skill that everyone is capable of.

5. Courage. You will be working harder than you have ever worked when you were an employee instead of a business owner. The good news is, you make most of the rules.

6. Willingness to make sacrifices. This covers everything from giving up eating out to giving in on design decisions to please a customer.

7. A support network. You will be putting in long hours often by yourself. There is no water cooler to joke with coworkers around when a day goes from bad to worse. Make sure you have a support network in place, we'll cover this in more depth later.

8. Risk taker. There are risks in any business. The trick here is to prepare for and minimize every risk then don't look back.

9. Financially prepared. If you are three months behind on your mortgage, it may be wise to hold off taking the leap to full time self employment. Don't give up, think of it as the planning stage, then actually get a plan in place.


10. Confidence. This can be faked, but until you actually feel it, you will not be living up to your full potential. Confidence comes from the knowledge you are doing the right thing and the right moment, and educating yourself will help give you the confidence you need. I'll cover this more in later articles.

With these ten things you have the foundation you need to get ready to take that leap into full time self employment. I hope you continue reading in the coming months the rest of this series and it helps you take the leap as well.

Start off on the right foot

If you you dream of successfully running your business, especially if you want it to become your sole source of income, you need to start it off right. Many people balk at the legalities of owning a business- licenses, taxes, and everything else that keeps you legal. You may be able to avoid these things for awhile, but if you want to succeed you must attend to these things. Below is a list of links to help you sort through what you need to so.

Business license- In the state of Washington it is fairly simple. You fill out the master application, which you can do online, pay a small fee, and you get your state tax license and trade name registration. This differs by state though, but the SBA (small business association) has a handy list for each state here. The only state missing from their list is New Mexico, so here is the link to their license information. the above link will take you to the information and filing instructions for your state. You may also need to register with your city or county. You can visit their websites for information, or pull out the government pages of you phone book and call your city and county clerk. Many times, cities and counties have discounted licenses for small home businesses and micro-enterprises, so even if they have the information on their website, you can save a lot of money by talking to a real person. This is going to cost some money, but it is worth it. For both my state and city license I paid $40, which isn't bad at all.

It is also important to register your trade name before branding yourself. It sucks if you have to change your name after having 200 business cards printed. You can register it on the state level usually when you file for your license. If not, just do a search of "trade name registration ". There is usually a small fee associated with it, in Washington it is $5. To register your trade name on a national level, you will have to apply for a trademark, which you can find more information on here.

Taxes- When you receive your business license, you will begin collecting sales tax. You will get an information packet from the state on when to pay your taxes as well as how much to charge your customers or taxes. I pay my taxes quarterly. You only apply sales tax to customers that reside or purchase from within your home state. The easiest way to always have the money when taxes are due is to deposit them into a separate account just for taxes. That way, you also earn interest on the money until it is time to turn over the states share. You will also pay taxes on your income. Here is a handy calculator to help you plan for these taxes. This will give you an idea of what to expect so you can plan accordingly and save money for it throughout the year as opposed to having to come up with a huge amount all at once.

Sites to answer all your questions-
Small Business Association (sba)- everything you need to start your business.

SCORE- this is an association of retired business people that supply low and no cost classes, help, and mentoring for your small business.

IRS small business center- your one stop for all the information on small business taxes and more.

Also, search your city for more resources. In Spokane we have SNAP, which is a community organization that offers free classes on starting your business, help with writing a business plan and securing funding for your business, as well as a business savings account where they offer you $2 for ever $1 you deposit in it. Your community may have something similar and it is worth looking into.

Terms of Engagement- Wholesaling part III

This is the final installment on wholesaling. You can read part I here and part II here. This time we are going to cover terms and invoicing.

You already have figured out your terms if you worked through the first parts of this series. Your terms cover your discount, minimum orders, payment methods and when due, shipping methods and charges, and any other information you find pertinent. They are written out in detail, and once signed by you and the company it will constitute a written contract. Here is a sample term using our imaginary widget company.

Wholesale terms and conditions
Widgets & Things Custom Doodads

Wholesale terms are extended to qualifying dealers at Widget & Things Custom Doodads sole discretion. Terms and conditions are subject to change.

Dealer Application
To establish yourself as dealer for Widget & Things Custom Doodads mail or email a signed copy of these terms along with a copy of your resale license and three (3) business references.

Minimums
Initial order- Minimum order of $200 excluding shipping.
Reorders- No minimum requirements for reorders/restock. For orders under $50 a small order handling fee of $5 applies.

Payment
Prepayment by credit card only. You may place a credit card on file to expedite reorders.

Wholesale Discounts
Discount is applied to suggested retail price. There is a 50% discount on Doodads and a 30% discount on Widgets.

Shipping and Handling
You pay actual shipping cost plus a $5 handling fee on small orders below $25 before shipping. There is no handling fees on orders above $25.

Shipping Methods
For US locations we ship via USPS Priority mail including insurance. For International orders we ship USPS international priority. For shipping times, please refer to the attached production schedule.

Additional Terms
We reserve the right to terminate this agreement at any time before payment is received. All Widgets & Doodads will be branded with the Widgets & Things Custom Doodads logo. At the time of your order we will confirm our current production schedule. It is your responsibility to confirm there have been no changes to the production schedule prior to any reorders.


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As you can see, the terms are simple and straight forward. Yours won't look exactly like this, but this is a good model to build yours from.

Invoicing is the final piece in the puzzle. If you process all your wholesale orders through Etsy, this step is more or less skipped when you post the reserved listing and you can print the receipt from Etsy to include in your order. If you will be invoicing outside of Etsy, I'll briefly cover the information your invoice will contain.

• Invoice number (This will help both you and the dealer keep track of your paperwork)
• Your name, address and phone number
• Date
• Name and address of the retail buyer
• Shipping address if different
• How the item is shipped
• The quantity sold
• A description of the item
• The price per item
• Price for the total quantity sold of a particular item
• Subtotal for all items listed
• Shipping charges
• The total amount due
• Buyer's signature
• Any disclaimers regarding returns or damaged goods

You will keep a copy of this invoice as well as giving a copy to the dealer who purchased the goods. If the buyer is out of your area, you may not require they sign the invoice, but you will keep their signature on file on the terms paperwork.

I hope this has simplified wholesaling enough to encourage you to try it as well. This is a wonderful way to make your small business sustainable for the long term. If you have any questions or comments, I would love to hear them!

How to wholesale- Moving on up (your prices, that is)

If you read Monthly Jolt yesterday, you are aware that one of my goals for this month is to begin wholesaling. Even if you aren't planning to wholesale, or actively seek accounts, you should still have a plan in case you are approached. I've been doing quite a bit of research, and I want to share it with you! Today we will tackle pricing. This is difficult for many of us, we have trouble charging what we are worth. Even if you never plan to wholesale, this exercise can still be worth it to make sure you are charging what your product is worth.

If you are already selling directly to customer, you need to check your retail pricing. Wholesale prices are normally 50% of what you are currently charging retail. There are many pricing formula's out there, one of the most popular being material cost x 2 + profit. I personally figure my overhead to make the product- this includes materials, supplies, and business cost- plus my hourly wage plus my profit markup. An example if I made widgets- (these numbers are completely made up).
It takes $2.00 in supplies and materials to make a single widget.
To run my widget machine cost $1 in electricity an hour, or .05 per widget
Fee's for listing or selling my widgets are $1
I pay myself $10 an hour and I can make 20 widgets in an hour. Prepping them takes another 20 minutes each. So I spend 23 minutes per widget. So labor cost is $3.83 per widget.
I add on a 10% markup, or .68, for profit.
2+.05+1+3.83+.68=7.56
So then I round up to $8 to keep it simple. Now if I am going to wholesale, that is $4 a widget. My overhead is 3.05, so I would only be making .95 a widget. This looks bad, but if widgets are something that are bought in bulk, such as beads, you can put a minimum order on your terms, which can be either a minimum piece or minimum dollar amount. I this still isn't a number you are willing to work for, you need to adjust your hourly wage or profit markup. The trick here is not to mark up something so much that it will not sell. This usually isn't a problem because many artists under price themselves.
Also, the difference between product markup and hourly wage is this- you are paid your hourly wage. This is the amount you will put into your personal account to pay your bills or buy some ice cream. Your markup goes back into your business. If you have a surplus of markup at the end of a quarter or a year, then you can pay yourself a bonus if you so wish.


Now, if after this, you decide that there is no way you can afford to wholesale your widgets, don't despair. Not all items fall under that pricing formula. Demand can change your markup. Let's say you also make doodads. They only cost .40 in overhead to make, you can make 100 an hour for .60 hourly wage, but they sell for $10 each. My math may be failing me here, but that is %900 markup! That means at a wholesale price of $5 you are profiting $4.60. You can at this point decide to only wholesale doodads, or to wholesale both with the plan being to make up for any loss on the widgets with the doodads.

The point I am making is that you need to find a pricing formula that works for you, and if you are planning to wholesale at any point, that formula will need to take account of that from the gt go.

Next time we will tackle production plans and payment, followed by the final installment- terms and invoicing.

Organization- Or how to have your cake and eat it, too

Every time I visit the Etsy forums, or any small business forum for that matter, I see the same question being rephrased over and over again- How does everyone do it? There needs to be more hours in the day!

I don't claim to have all the answers, but I do know what does and doesn't work for me. I have been managing my home and my husbands graphic design for several years now, and I am using the tricks I learned to now add more to my plate, my own craft business.

1)You are not going to get everything done this week, this month, or even this year.

Realize this as soon as possible. A business is an ever evolving entity. For as long as you own your business you are never 'done'. A better tactic is to decide what you will get done, and don't think about all those things you are not getting done. A little bit of zen here- live in this moment. Only this moment exists. If you spend too much time worrying about the next moment, you will lose this one forever.

2)That brings us to our second point- goals. Goals are fluid as well, and never carved in stone.

Set aside some time this weekend to write down your goals. Plan your goals for this month, this year, the next five years, the next ten years. Review your goals often, and make notes of what you are doing to achieve them.

3) Do the right thing, at the right moment.

This is one that many people miss. It comes down to what your priorities are, and what they should be. Would you spend thousands of dollars on a TV commercial for your restaurant if you didn't have a name yet? Of course not! If you have no products in your store, get out of the forums, don't worry about advertising- go create or post items! If your photo's look like crap, don't make business cards, start researching photography tricks and retake the photo's !
I will admit, this is the one I break the most. When everything is going wrong, it is easy to push aside what you should be doing and do what you want to do or what is easy to do. To fight that urge, read on...

4)This is now your job, act like it.

It is a wonderful thing to work for yourself. You may think you no longer have a boss. I hate to burst your bubble, but that just isn't true. You now work for every existing and potential customer you may have. Don't offer more than you can give. Don't say you can ship daily if you can't. Instead say you ship within two business days. Then you only have to worry about shipping twice a week. Beware the TV, the social calls from friends, and your own family. If you need to work, then work. Set yourself up to succeed by letting everyone, including yourself, know that this is a job and you are working.

5)Punching the clock.

There are only so many hours in a day, and no amount of wishful thinking is going to change that. Make the most of your hours. Sure it's pretty awesome that you never have to miss little Timmy's piano recital or a night out with the girls again, but you still have work to do. Working out a schedule is different for everyone, so I'll share mine as an example.

On Sunday evening, after the kids are in bed, I sit down and write out all my Morning Coffee entries for the next five days. When I wake up Monday morning, after I get some caffeine but before I get ready for the day , I review that days morning coffee and hit publish post. Then I mosey on over to my email and handle anything I need to do there. After that, I open up a folder under my bookmarks titled "ongoing marketing". This is where all the links for any social networking sites or ads I have to keep updated reside. I update each as needed then spend a few minutes in the Etsy forums (I consider this more play time than work time, maybe because I enjoy it). The rest of the day is dedicated to getting my goals done. There is no time limit, so if I want to do something other than work I can, but I still have to get the goal done before bedtime. Some days it may take 12 hours, other days 5. If I find myself failing to get things done for several days, I revise my Morning Coffee plan and take a day or two to catch up instead of adding old goals onto new ones. To avoid procrastination, catching up can take no longer than two days.

6)Take time off!

This is the final and most important one in my mind. No one can last long working 24/7. Unless I have a show, I don't work weekends, bank holidays, or vacations. Sure, I check my email, pop into the forums, or post an item or two. I do not goal for it though, so if I don't do it I won't sweat it. It is vital to schedule time off to avoid burnout. Having time to devote to yourself or others also puts to rest any fears your friends or family may have that your business is going to make you avoid them.

Good luck to all of you, and may your business be exactly want you want it to be!