Running a Lean Handmade Business
Businesses Have a Lot of Expenses, Bring Them Down
Running a craft business has certain unavoidable expenses, supplies, postage, taxes, etc. but there ae ways to reduce your expenses and run a lean efficient business. Here are some of the ways I reduce my business expenses.
Why I Run a Lean Business
I'm single and self-employed, this means I have no other income to fall back on when things are tight. My income varies widely from month to month depending on what people are buying. During the Christmas shopping season I make 2-3 times what I do in quieter times of the year, and occasionally I have a really bad month where I don't make much at all. Because of this I have to budget my money very carefully and cut down my expenses as much as I can.
This lens is all about sharing those things that have saved me money and kept me on track and profitable.
Make a Budget
and Plan for Emergencies
If you want to make a living from your business you are going to need to budget. Not just for your business but also for your personal life unless years of credit card debt sounds attractive.
There's a lot of advice out there on making and keeping to a budget, I'll provide a few links to some below. However when you are running a small business you also have to make sure to not just budget for expenses but also budget for slow months. I do this in two ways:
1: Regular savings account: I put most of my earnings directly into a savings account and then have automatic transfers to my checking account set up. This serves as a "paycheck" for me that is the same each time and prevents the urge to spend everything I make.
2: Emergency Fund Savings account: I have an automatic transfer to this savings account also set up so it grows each month. If I have an especially slow month or an emergency comes up (like medical bills or car repairs) I have that extra money but dipping into it is an absolute last resort.
Tracking your expenses is also very important. You can do this however you prefer, in a notebook, in a spreadsheet, using budgeting software, or with online tools. Personally I use Mint an online service that automatically tracks my data for me, it's very easy to use and for me it's become a daily habit to check it. It's completely free though the owners of Mint (Inuit, they also make Quickbooks) does run ads to support the software that suggests various financial products to you, I ignore them.
Online financial tracking service
- How to Make a Budget - Making a Budget Plan in Excel
How to Make a Budget - Steps to Making a Budget Using Excel. The key principal is that a budget is a plan, so to make a budget is really to make a plan for how to spend your money.
- How to build your first budget
- Create a Budget - How To Create a Budget
Creating a budget may not sound like the most exciting thing in the world to do but it is vital in keeping your financial house in order. Before you begin to create your budget it is important to realize that in order to be successful you have to pro
Financial Planning Books
Embrace Open Source Software
Open source software is basically software that anyone can edit the source code. Now unless you are a programmer that definition of open source is probably not very useful. What you probably want to know about open source is that it is A) free and B) often frequently updated by passionate developers.
Most commonly used software has an open source counterpart.
Microsoft Office alternative: Open Office
Photoshop alternative: GIMP
Adobe Illustrator alternative: Inkscape
Internet Explorer alternative: Mozilla FireFox
Outlook alternative: Thunderbird
Open Source Software may or may not fill your software needs, but it's worth taking a look at the alternatives before paying hundreds of dollars for software.
Open Source Software
- OpenOffice.org - The Free and Open Productivity Suite
OpenOffice.org: The Free, Open Source Office Suite
- GIMP - The GNU Image Manipulation Program
GIMP is the GNU Image Manipulation Program. It is a freely distributed piece of software for such tasks as photo retouching, image composition and image authoring. It works on many operating systems, in many languages.
- Inkscape. Draw Freely.
Inkscape is a Vector Graphics Editor, similar to Adobe Illustrator, that strives to be SVG Compliant, open source, responsive and extensible.
Useful Links on Marketing & Business
- Handmade Business Blog
Helping you sell the stuff you make.
- Handmade Marketing - You Can Sell More, Here's How.
HandmadeMarketing.org is a community devoted to sharing tips, strategies & ideas to help every Etsy shop sell more items.
- Marketing | Advice for Promoting your Craft Business and Handmade Goods
The Marketing department has information on marketing your business to consumers to gain additional views and sales.
- Handmadeology - The Science of Handmade
Handmadeology teaches the science behind selling handmade goods online.
Save on Shipping
I see a lot of people using Priority Mail to ship because the USPS gives away the boxes for free. This I think is a big mistake for certain types of shipping. While I do sometimes ship Priority for large heavy items for small light items like my jewelry First Class will get there cheaper and generally just as fast. FedEx and UPS are generally both more expensive than USPS for lighter weight packages though it seems to even out a bit for packages over 10 lbs so you should shop around to make sure. I can't get UPS or FedEx pickup at my home and I don't live near enough to a location to bring them in, so that should be something else to consider when choosing your shipping method.
"If it fits it ships" is definitely a good deal if you have a heavy item. If it can fit in a flat rate box and is under 70lbs it will be cheaper and arrive faster if you ship Priority.
Other Ways to Save on Shipping
There are two other easy ways to save on shipping items.
1) Print postage online. For about $25 you can get a scale and print postage without having to go to the post office.
There are several ways to do this. You can use Click and Ship from the USPS website which lets you print postage for Priority Mail. To print First Class and Parcel postage as well as Priority Mail you can use Paypal, Etsy, or many other online marketplaces.
If you need more flexibility and are shipping a high enough volume of packages for it to be worthwhile you can use a service like Endicia which also has tools for international shipping and discounted insurance and delivery confirmation. For me this wouldn't save any money, but if you ship internationally a lot or sell more expensive items that need insurance this might be a good option.
2) Buy shipping supplies in bulk, and shop around.
I buy small shipping boxes for my jewelry in bulk, usually 200+ boxes at a time, and they average only $0.38 a piece, compare this to buying at an office supply store where boxes will cost you closer to $1 a box or more in the store. The internet is really amazing for buying items you need in bulk, I also buy cute little organza gift bags for my jewelry that give them a little special touch but because I buy dozens at a time they also cost very little.
Packing tape is something else I use a lot of and I found a great deal on Amazon. I can get 6 rolls for about $15 and free shipping if I use Amazon's "Subcribe and Save" option. This option lets me have tape delivered ever few months automatically which also saves me time.
- USPS - Print Shipping Labels
Click and ship
- Paypal Print Shipping Label
You must have a paypal account and be logged in to use this link. It takes you straight to a blank shipping form. Use this for orders you receive paid for by methods other than paypal. For orders paid through paypal you'll see a button next to the p
Print your internet postage with Endicia. Save time and money. No contracts required. Free 30-days trials.
Uline stocks over 20,000 shipping boxes, packing materials and mailing supplies. Same day shipping for cardboard shipping boxes, plastic bags, janitorial, retail and shipping supplies.
- Nashville Wraps
Eco-friendly retail packaging, food packaging, and basket supplies Including wholesale paper bags, plastic bags, gift wrap, gift boxes, tissue paper and ribbon.
Amazon's "Subscribe and Save" option lets you get free shipping plus 15% off on items you need regularly like packing tape, printing paper, etc. Just set up the frequency you want the item delivered (e.g. every 3 months) and it will be automatically ordered and sent to you, if things change and you need it more or less often you can edit your subscriptions.
Get a Laser Printer
Laser printers are more expensive than your standard ink jet printer but in the long run they save you money. If you don't need to print color from your home office you can save more money by getting a monochrome laser printer that only does black and white printing. I never use my printer for color printing, I do have business materials printed in color like my business cards but it's far cheaper to have those printed for me than to print them at home.
Laser Printer Cost:
Laser Printer: $120 including toner cartridge for 700 pages
Toner Cartridge: $30 estimated 1,200 pages
Cost per page: approximately 7.9 cents per page to print 1,900 pages (printer plus one replacement toner)
Inkjet Printer Costs:
Printer: $70 including ink for 100 pages
Ink cartridge: $15 for 200 pages (ink bought directly from manufacturer, retail often much higher)
Cost per page: approximately 10.8 cents per page to print 1.900 pages
Assuming you print 1,900 pages in a year, you would be saving $55 in the first year of owning a laser printer.