It’s nearing the end of the year, time to review how your business did compared to how you wanted it to do.
Why would you do this? Because knowing how you did will give you the knowledge and power to direct how next year is going to go. Here are the areas you should review:
- Sales – how many items did you sell. Are there certain items which sold better than others? Why? Is it the price point? The type of item? Do you need to do something to get the other items to sell better? Marketing? Or is it time to eliminate creating them?
- Revenue – How much money did you business earn. This is the total amount you brought in, before you reduce it by merchant fees or inventory costs?
- What were your costs? Put them into categories, much like you might for your tax return. How much did it cost to create your items? How much were your online costs (website, hosting, Etsy fees, etc)? How much was your rent? How much were your event costs (entry fee, travel, food)?
- How much time did you spend on your business? You did track this didn’t you? Do you average 40 hours? 10 hours? 5 hours?
- Customers – how many are unique each year? How many are repeat customers? Do you track this?
Knowing all of the above – how did it compare with what you thought? Did you do the quick math and figure out how much you made by taking line 3 from line 2? Did you like what you saw?
If you really want to have some fun, take what you have about and divide it by the number of hours you are working? Yikes. Nothing like seeing what you are earning on an hourly basis. Not just the hours selling at an art fair, but the hours it takes to create, setup your website, ship items to customers. If something in this number doesn’t sound good to you, is there a way to change it?
Or did you take a look at this and decide you are making a really good hourly wage?
If so, congratulations! If not, then dig a little into why things were different from your expectations? Did something unexpected happen at a show? Bad weather? Did the cost of creating your art increase?
This isn’t a time for excuses, this is a time to honestly look at the numbers. All businesses do some type of review at the end of the year. It lets you know you are heading in the correct direction or if you need to course correct.
Maybe you saw you were spending too much of your time on administrative tasks you could pay someone else to do for you? Maybe you see your online store isn’t making money? Is there a way to make it more profitable? Or does your online presence send people to your physical presence at art shows?
Dig a little into the numbers you are seeing and then spend some time at the end of this year and into the new year to see what you can do. Knowing a business does not take off overnight, do you see momentum building in your sales or do you see one area in your business you should focus on? Did you find your creative business is making enough money you can stop your full-time job. Or maybe you see you might want to take on a part-time or full-time job so you can take some of the stress off from your creative business.
There will be no one right or wrong answer to what you see. Just use this as one tool in moving your business in the direction you want it to go.
You also now see you have learned something about your business, maybe you will see how important it is to look at the numbers on a quarterly basis or after each show you complete.
And now that you have done a year-end review, you have your accounts in order for taxes!
Here are two different examples of how to complete an annual review. Chris Guillebeau and Marie Forleo both have different approaches. Find a which way works best for you and complete your review, so you can have the best start to 2019.