Arts and Crafts Business
Budgeting Advice for New Craft Businesses
By Eileen Bergen
Budgeting Advice for New Craft Businesses
BY: Eileen Bergen
www.theartfulcrafter.com
Every crafter or, for that matter, every business person must
learn to control spending from the very onset of the venture.
As a matter of fact, you should not even be in business unless
you have drawn up at least a simple business plan and budget.
Your budget should be grounded in reality and subject to change
as ircumstances require. In other words, if you income came
in 20% below your projections, expenses will have to be cut
to make up for the hopefully temporary shortfall.
One serious mistake a small business person makes in a situation
like this is to assume that she will make up the income shortfall
and continue the spending side of the budget without any adjustments.
Most small businesses are undercapitalized to begin with,
so it really pays to be conservative. I have always tried
to make sure that a craft is making enough money to pay for
itself before stocking up on more supplies or new equipment.
I try to get a substantial down payment if an order would
require that I increase my raw material inventory. Everything
that I do must be self-supporting.
Do some research if you plan to add a new type of craft to
sell. Try to determine if there is a market and if it looks
profitable. Again be conservative in your assumptions and
start out slowly.
Of course, not everything works as planned. On several occasions,
a craft I thought would sell well didn’t. But because I didn’t
go too far out on a limb buying inventory, the loss was always
minimal. If you’re lucky you can even recycle the materials
into some other project.
As time passes, you will learn what works and what doesn’t.
As you gain this knowledge, you should be making adjustments
to your budget to reflect reality.
This is made much easier by careful record keeping. You can
use a simple spreadsheet or a small business software package.
You can even use paper and pencil if you can’t afford the
software.
If you track the cost of your materials, the costs of marketing
your products and the actual income you receive, you will
know if your budget is on track, if you can afford the new
tool you want or if you should stock up on more inventory.
You will also be able to decide if you should branch out or
change direction.
The bottom line is that you cannot afford to throw money at
your business. You must try to work around obstacles in a
cost efficient manner. While your budget may reflect a short
period of losses at the very beginning, losses cannot be allowed
to go on unchecked.
Careful, consistent tracking and a dynamic budget, one that
reflects reality, should be major tools that you use constantly
in your decision making processes.
If you use them, you should be able to avoid the fate most
smallbusinesses face today - failure.
For more articles on the business of crafting and how to get
started selling your crafts, please visit The
Artful Crafter - Your Craft Business Guide.
BY: Eileen Bergen
The Artful Crafter
www.theartfulcrafter.com
About the Author
Ms Bergen has had a varied career, first as a special education teacher and then, after geting a MBA degree, as a vice president for a major insurance company. For the last eight years, she has been making and selling crafts.