And how far can you really reduce expenses in your handmade business?
A few weeks ago, a member of Artists & Profit Makers shared her expenses and profit margin inside the forums and asked if anyone in the group had any ideas for further reducing her expenses.
What followed was one of the most frank and eye-opening discussions I’ve ever seen inside the A&PM forums. (And there are plenty of good conversations in there, to be sure.) One by one, as members shared their own monthly expenses, a pattern started to emerge.
Every member who was running (or aspiring to run) their business full time was spending a minimum of $1500 to $2000 (US) a month on their businesses.
Or, to put it another way, it costs around $20k a year to run a full-time business as an artist or maker.
There are a few things to note here. These numbers don’t include what the artists and makers in the group are paying themselves. This is simply all the other costs in their business – web fees, transaction fees, marketing, promotion, packaging, materials, equipment, etc.
And of course, this is merely anecdotal based on a handful of A&PM members. Everyone’s business is different. (My business expenses are much higher, usually to the tune of $5k or $6k a month, and I’m guessing there are some full-time businesses who are impressively managing to spend less.)
But what was interesting was that these numbers seemed to hold true whether or not someone was profitable in their business. (Because you don’t need to have a profitable business to join Artists & Profit Makers, you just need to have profitability as a goal.)
As the conversation rolled on, it because pretty clear. It costs about $20k a year ($1500 – $2000 US a month) at minimum for most people to run a full-time business as an artist or maker.
Now, why am I telling you this?
First, the general consensus inside A&PM is this is the conversation they wished more people were having and the kind of information they wished more people would share. The member who started the thread asked the question because she had no idea if she was under or overspending in her business.
But beyond that, I want to help you set reasonable expectations. If your goal is to build a business that pays you $50k a year, you can’t get there by bringing in $50k in revenue. You’re going to need to make at least $70k in sales (or likely a little more, once you factor in taxes as well) in order to take home $50k for yourself.
It also shows that trying to reduce expenses in your business only gets you so far.
While I don’t believe outright that “you’ve got to spend money to make money” (a better phrase would be “you’ve got to spend money strategically to make money”) there are very real costs associated with running a business – especially as artists and makers who produce and sell physical products. (Even if the bulk of your revenue as an artist or maker comes from teaching, you’ve still got to buy materials and supplies to make samples and demonstrate your processes.)
I think it’s helpful to get a sense of those costs upfront because there are times when a reluctance to spend could very well be holding your business back. Again, I don’t think you need to spend with reckless abandon. But if you think shelling out $29 a month for Shopify is too much, you probably aren’t in a financial position to build a full-time business as an artist or maker.
And actually, that’s ok.
I think there’s too much rhetoric online these days about how easy and inexpensive it is to start selling your art or handmade products online. And to some extent, that’s true. It is much cheaper and easier to get started than ever before.
But the reality also is that running a business takes money. And not a little money. Something to the tune of $20k US a year is a reasonable expectation. And if your goal is to build a full-time business from your art or craft, it’s helpful to know that upfront.
You might be able to cut that number a little by being strategic (or frugal), but at the end of the day, you’re unlikely to bring it much lower than that. Knowing that helps you set realistic goals for what you need to bring in to make a full-time living so that instead of focusing on cutting corners here or there, you can put your energy into what really matters – increasing revenue by selling more.
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Don’t worry, I’m not going to end this post by telling you that if you were serious about your business, you’d invest in Artists and Profit Makers. Because that’s not how I roll. I know that it’s not the right fit for everyone at every time. But what I will say is that if you’re craving these kinds of very real conversations about running your business, you’ll get that in spades in A&PM. (Not to mention access to heaps of trainings and personal feedback from me in the forums and on the Q&A calls.) Honestly, the best way to know if A&PM is right for you is to try it and see. Click here to join now!
