Sunday, January 11, 2009

P.P's "No Freak Approach" to 'Crafting For Profit': Stage 2 - GETTING ORGANIZED Step 1 : Your Money


Getting your Creative Business off the ground isn't all that intuitive. I am starting off this year by writing a series of posts with information that has helped me - and continues to help me - navigate through this adventure of selling my handmade wares. I, by no means, have all the answers, or consider myself an expert, but I do spend a great deal of time making sure that I run and cultivate my business in a well-thought out way. PLEASE feel free to comment with more information and links to resources. On to Stage 2: GETTING ORGANIZED!

Now that you have your Business Plan written and you have given yourself the opportunity to think carefully about your goals and how to achieve them, it's time to figure out the "what's next?"

First, GET ORGANIZED with your Money

~ BANK ACCOUNT ~ There is really no reason not to open up a separate business account at your local bank. Typically, there is a small monthly fee for having a business account and some banks require you to keep a minimum balance - though, if you have your personal checking account at the same bank, they sometimes waive those fees.

I do not write checks very often through my personal account since most of my bills are paid through online banking, but I have found that I write far more checks with my business account to pay for things like deposits on booths at fairs. Having a separate business account allows you to have your name on your account and a DBA ("Doing Business As") with your business's name. This also allows individuals who write you checks for your products at home shows, for instance, write the check in your name, or your business's name and when it's time to deposit, you get no hassles at the bank!

Most banks offer a business credit card with the account - an excellent way to track funds - but a quick way to get into a whole lot of financial trouble quickly. Be careful.

The business account should be viewable online and you can pay your bills online, just like with your personal account. I have my business account separate from my personal account, but since they are with the same bank, I can view everything at the same time. Makes paying recurring bills a lot easier!

~ EXPENSES ~ Get a simple shoebox, or file folder, or if you're really fancy, a receipt scanner and keep every single receipt and invoice of purchases you make for your business. Use Excel, or a spreadsheet program, and record each expense. I, personally, have a separate column for the date of purchase, the company I purchased from, a short description of what I purchased, and the amount. At the end of the year, I can break up the costs per company to see if I need to find a different supplier, or that I spent way more on shipping than I thought and need to adjust my prices. Spreadsheets are great because you can click one button and get a total sum, each entry is numbered and you can create multiple tabs of multiple worksheets in one spreadsheet workbook. It's easily backed up and easily emailed to your accountant come tax time (if you are lucky enough to have one), and easily searchable. Do not forget to include fees (such as Paypal fees) and shipping service fees (i.e. Endicia, Stamps.com), or forgettable items like your cell phone/business phone and mileage.

~ INCOME ~ In the same spreadsheet workbook, create another tab for your income. Make sure to make note of where the income is coming from, i.e. specific online venues, craft/art fairs, trunk shows, home shows, wholesale locales, etc. Be as detailed as possible because this is the information you are going to evaluate at year's end to see if spending time and energy in certain venues is even worth it. ETSY has a great downloadable CSV file that you can copy and paste into your own worksheet with handy info on each transaction (date, customer, transaction ID, cost of item, shipping of time). I keep a separate Income Workbook for each year with a worksheet for each month of the year. It allows me to click through each month and see how I compared to the month prior. I would love a program that did all of this for me in pretty graphs, but haven't found one that suits my needs as of yet - if you know of one SHARE!!!

Keeping track of your money seems like a no-brainer. However, when I started, I believed that since I had such a tiny, little business, tracking every little thing was a waste of time. But you cannot necessarily predict where you will be even a short month from now. A passing mention in a high traffic blog, or a celebrity purchasing one of your pieces, being in the right place at the right time, can lead to a lot of sales and a lot of changes in your business and mindset. Start now while you can manage it all. It will be one less thing to worry about when you travel down that road to greatness!

Free/Open Source Software for your Small Business
There can be so many start-up costs associated with your handmade business. Here's some free software to help you manage it all.
Open Office
OpenOffice.org: The Free, Open Source Office Suite
Free Personal Finance Software, Online Money Management, Budget Planner and Financial Planning - Mint.com
Free Personal Finance Software, Online Money Management, Budget Planner and Financial Planning - Mint.com - Free personal finance software to assist you to manage your money, financial planning, and budget planning tools. Achieve your financial goals with Mint. (P.P. Note: I LOOOOVVVEEE Mint.com!! I cannot say enough good things about this softwares!!!)
QuickBooks Simple Start 2008
Easy-to-use free small business accounting software to manage your business better.
Free Accounting Software | GnuCash
GnuCash is personal and small-business financial-accounting software, freely licensed under the GNU GPL and available for GNU/Linux, BSD, Solaris, Mac OS X and Microsoft Windows. Designed to be easy to use, yet powerful and flexible, GnuCash allows you to track bank accounts, stocks, income and expenses. As quick and intuitive to use as a checkbook register, it is based on professional accounting principles to ensure balanced books and accurate reports.


~~ Stay tuned for P.P's "No Freak Approach" to 'Crafting for Profit' : Stage 2: GETTING ORGANIZED: Step 2 Where to Sell and Pricing your Wares? Coming soon!!! ~~

1 comment:

Sally said...

Thanks again Ana - great advise for the newbie.