Make Money From Home with Crafts
Finding the money. You need to make sure you are making money with a Home Craft Business. If you are not making money, then it is a hobby not a business. You have heard the saying.. "no job is finished until the paperwork is done".. this statement is very true, when it comes to running a craft business, or any business,!
You need to wear all the hats, if you want this to be profitable. But many crafters don't, and really this is not just crafters, but many home business owners. They get so excited about the actual business products, creating them and selling them, that they don't take into consideration enough of the expenses part.
Have you ever got to the end of the year, and wondered where all the money was? You spent a year doing craft shows, and sold lots of inventory, but also had to purchase lots if supplies and rent craft space, and entrance fees for craft fairs, insurance and display units and more. You also had to drive the 2 hours to that one craft show, and stay out overnight. Did you take any of these expenses into consideration when pricing your products?Credit: morguefile.com
The accounting or paperwork shows the TRUE picture of your business, which many crafters don't want to see. They just see the cash at the end of a show, and think they made a lot of money.
My friend, I have done craft shows with, is just like that. I actually refused to go in some craft shows with her, because of the income and expense statement I worked out after that particular show the year before, and it was not worth the drive. She didn't look at it that way. It was like she didn't want to count the gas or time or expense for this show, to her the cash in the drawer was the prize.. She would say things like "I have a gas card" or "the household can cover that" I love to sell crafts too, but I could make the same money closer to home. No meals out, and the gas was minimal..
So, as a business owner, you have to look at all costs associated with your business. She had "blinders on" because she loved doing craft shows far away, she didn't want to hear about the "income and expenses". But come the end of the year, the money was not there for her, and now she had household bills that were higher because her craft expenses were in there.
Unless you are counting the craft show circuit as a holiday, then you have to look at whether the trip is worth it or not. You need to research the type of crowds they get, and decide whether it is worth your whole weekend, when you could do 2 shows closer to home. The paperwork helps you make these decisions. At the end of each show, I would add up the costs versus the sales and any other expenses. I know it is great to see the cash in hand, but how much cash went out the door months before you got there?..
If you want to go to a non profitable show because it is fun, then that is different, but I could not convince her, that it was not a good business move. She needed to make money with this business. Finally after some convincing, she sat down and really looked at her figures, and realized that craft shows were not profitable for her. She has done much better selling her jackets and quilts online, and is now doing well.
It was only because she sat down and looked at the paperwork that she made the changes in her business to become profitable and started making money quickly.
I know you would rather craft and create all day, but you need to keep track of your income and expenses, not only for the tax man at the end of the year, but also for you. You need to make sure you are not running around in circles, working very hard, and not making any money, you want to find the money, and keep the money in your pocket!Credit: morguefile.com
As a bookkeeper for my day job, and owner of a craft business, I know how important it is to have a simple system for keeping track of these records. You need something very simple that you will get into the habit of doing everyday. Stuffing receipts in your glove box, or better yet the dashboard!, or leaving them in the bags.. or stuffed in the bottom of your purse, is NOT a good way to store receipts!.. Your car should not be your office!
For example, when I purchase supplies or something for my business, I have an envelope in my purse where I stick the receipts for business, and then empty the envelope into a IN basket right beside my computer at the end of the day or as soon as I get home. This works for me, but you can come up with your own simple way. My husband, always puts his business receipts in his left hand pocket of his jeans after making any purchases, separate from his wallet, and then empties his pocket at the end of the day into the IN basket for his business. This has become a habit. That is the trick right there. Form simple habits, and you will be able to stay on top of the money and the paperwork
But really, if you could, it would be a great asset to your business to be set up on computer. You can generate a lot of quick reports to see where you stand in your business, as long as the computer is up to date with all your invoices and receipts.
If you do all the book keeping, yourself, and on a regular basis, not only will you sail through tax time, but you can continuously see your results on these programs, as they will print out profit and loss statements, and you can see where you are spending too much, or not charging enough.
By keeping a close eye on your income and expenses, you can decide whether a particular craft is worthwhile, or whether you need to adjust your formula for pricing, or make something totally different.
Many crafters I know, price their work according to competition. While it is good to be competitive, you need to make money, and unless you can get your supplies for a rock bottom price, you may have to consider creating something else, and start making money.
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