Brecho Variedades

If you have a good network of twitter followers, facebook fans, or email list subcribers you can use them to research ideas. I did this recently using SurveyMonkey to create a simple survey asking people to rate some photos of my jewelry. SurveyMonkey's basic service is free and it's very simple to use. I created my survey then posted the link to it on twitter, my facebook fan page, and my blog.

Kaelin said...

I would like to know what the right ratio of start-up costs are for materials. I work in what has turned out to be a series of designs appealing to a rather high-end clientele, which entails a rather large materials bill. I have invested very heavily to start, and about once a year I manage to cover most of my previous expenses, but not enough to continue to restock materials such as gemstones, precious metals, and gift boxes with which to make more pieces....

My answer to this isn't entirely about supply costs. Yes, starting out you may need to invest in a lot of supplies that will take a while to earn enough to cover the cost. I think you should start small and not put supplies on credit cards when starting out, if your carrying those supplies as a balance they are costing you a lot more with interest. How much is totally dependent on how much time you can devote to your craft, what supplies are needed, and how much you can afford.

The real issue here sounds more like covering the cost of your supplies on an ongoing basis. If you are selling your work yet can't cover the cost of new supplies to restock then your prices are probably too low. You should be making enough to cover the cost of material, the cost of a replacement, and pay yourself a decent wage for your time.. I've covered pricing before in this post. If on the other hand you are pricing well and aren't selling enough to cover your costs then you may need to take a break from making new pieces and work on promoting yourself. You need to be selling enough to cover your costs and make a profit.

Make sure you are tracking all your sales and expenses somewhere, whether it's accounting software like Quickbooks, Excel/Open Office spreadsheets, or a ledger book. Doesn't matter so long as your keeping records. If you aren't tracking this stuff it can be far too easy to spend too much on supplies or spend the money elsewhere. Plus if you keep the books organized it makes taxes far easier and you and the IRS will be happier.

Avlor said...

How do you manage multiple income streams? (i.e. PayPal and Google checkout). Right now I treat my Paypal account like my checking account and everything is funneled through there. You've hinted at a main account you funnel to and have regular withdrawls from. Have you had issues with the time for Paypal or Google checkout?

Here's the way I have my accounts set up: Once or twice a week I'll transfer money from Paypal to two savings accounts. One is my business expense account and the other is a personal savings account, 1/3 goes to the business account and 2/3 goes to the personal account. Google checkout is set to send any money I make to the business account since it only allows being linked to 1 account.

So if this week I've made $300 that was paid via paypal, $100 goes to the business account and $200 to my personal account. Remember these are savings accounts so they also earn interest (though rates are very low right now).

I have a checking account for business expenses and I transfer money to it once a month. This account is ONLY used for business purchases and that makes my record keeping much easier.

Twice a month I have money automatically transferred from my personal savings account to my personal checking account. I consider this like my paycheck and it's what I use for my personal expenses, I resist the temptation to make extra transfers though as my business grows I give my "paycheck" (the one exception was is the holidays, if your sales tripled like mine did it's okay to give yourself a small bonus). I also have another $50 a month automatically transferred to another savings account that is an emergency fund. The purpose behind this system is to smooth out the variations that any handmade business has in sales and set aside money for business expenses, it's tempting to splurge during good months then you're left with things being very tight during slower months. This also solves the time problem, since everything is scheduled and I know how long the transfers take I know exactly when I'll be getting my money and if I'm uncertain I have online banking set up for all my accounts.

I'm able to keep track of my accounts and see the big picture using Mint.com which is a free personal finance service that lets you track how much you make and spend in an easy way. This is just for simple tracking, I use spreadsheets for keeping track of expenses and income for taxes and that is a whole other topic for another time.

If you have a question you can email me or leave a comment in the Q&A Request thread.

Still without a new laptop so starting with the shorter questions first.

 Hi there!

I follow your handmade business blog and saw you post about questions.  I would love it if you could pass on information about the confusing legal stuff regarding starting a handmade business.  Permits, clearances...who knows.  Also taxes this time of year.  Personally I am a freelancer trying to start a creative business and also living abroad...yup, pretty confusing when it comes to legal stuff!

Thanks!

linda

I'm not a lawyer nor do I have any legal training whatsoever so I'm not very comfortable answering questions like this. However I am a good google researcher and put together this list of websites, most of these are from government agencies or other well known sources so I'm comfortable with the reliability. For regulations in your community or county you need to visit or call the town/city hall if they don't have a website. These are all US resources since that's where I'm based and my area of knowledge, if you are in another country do some looking and you'll probably find your country's equivalent office online or a phone number to call.

• IRS Small Business and Self-Employed Tax Center
• US Consumer Product Safety Commission - Rules on product safety, labeling, etc.
• US Food and Drug Administration - Information for food producers
• US Patent and Trademark Office - Information on how to obtain a trademark or patent
• US Copyright Office - Information on copyright and infringement
• Creative Commons - A flexible system of copyright licenses gaining wide acceptance online.
• Small Business Administration
• SCORE Small business mentoring
• List of State Government Websites - Links to the official websites of each state and US territories

Just wanted to say I've received some great Q&A submissions and will be answering some next week. Also there was a problem with commenting that has now been fixed. So if you had a question and weren't able to leave a comment on the previous post you can now.

Sometimes it can be a little tough to know what to write about for this blog. So I'm throwing this thing open: Email me or post a question in the comments. I would like to start a semi-regular Question and Answer post. So come on all you readers, I know you're out there and must have questions so let me have it!