8. Not having an overview of your handmade business
Running a handmade business is not an intuitive process. Not like an artist's drive to create. Although it may come naturally to those who have a mind for business, for most it's a process of trial and error and learning from ones mistakes.
In order to fast track your business and not set yourself back with costly mistakes, there are a few key issues to avoid. The first being, operating your business without a plan. Most of us are guilty of riding by the seat of our pants when it comes to scrambling for cash. It takes time to grow a business and that means there will be times when cash flow is low or even non existent.
The focus then becomes on the now and planning for future growth gets bumped by immediate necessity. Even, and especially when times are tough, you need to be implementing strategies for future growth or you will continually find yourself in the desperation of now.
The main areas to focus on for your business growth are short and long-term goals, task scheduling, production planning and promotional planning. Without a business overview you risk overspending on a collection that may never see the light of day. By that I mean you cannot reasonably estimate business expenses without implementing sound production and promotional strategies.
For example, if you are selling handmade jewelry there can be temptation to set no limits on material purchasing. Creative people are frequently compelled by the drive to create and often don't develop a habit of monitoring spending. Overspending in order to make every fabulous design idea come to fruition, with no spending cap, will inevitably lead to profit loss.
It can be hard to tighten the purse strings when one is inspired to create. This is where your business self has to step in and make some decisions. How much do you want to create this year? How about this season? What is your budget for that? Set limits on your spending and implement a promotional calendar to create revenue.
If you know that you will be participating in three upcoming shows and you will be approaching five stores a month regarding wholesale, then it makes sense to curtail spending to meet those specific goals. Your budget can be adjusted as you meet those goals, but spending without a plan will likely lead to more money going out than revenue earned.
Keep a detailed business overview of where you are financially, when you will be producing your products, how much you will produce and how, and when, you will promote your work. Having a clear overview at all times will mean that you can balance spending with your earnings.
One of the best ways to stay on top of spending/production is to implement an inventory control system into your business early in the game. I highly recommend Craftmaker Pro for keeping track of suppliers, supply costs, finished inventory and raw material inventory. Doing this early will keep you on top of your supply needs and tell you when it's time to produce more finished product.
Planning a new design? Once your raw material costs are entered in Craftmaker Pro you can easily calculate and set your wholesale and retail prices. Stay on top of your business spending, production and promotion and you will have a solid foundation on which to keep building.