Intro & Overview of Bookkeeping
I'm so excited to be here you guys excited to be here? Yes let me tell you why I am so excited we're going to flip a switch today, it's one of those like comically large steel switches on a wall like you see in the movies like on a mad scientist laboratory and it is a big sign on it and it's his money right um because money has the power to make us make a lot of decisions that we may or may not want to make it has the power to uh make us decide how we spend our time uh what things we make and sometimes even how we feel about ourselves um have any of you guys ever like made a decision based on what number was in your bank account like maybe yeah uh maybe yeah you two uh probably everyone at this point has made some decision or another based on the number that they saw when they know signed into their bank account um maybe was a little too low. And so uh if you're a crafter or you're another creative professional, you made something that was, um a little trendier than you normally do so ...
that you make sure that you're getting those sales at that time really bump up that balance um but I didn't feel necessarily very authentic to what you wanted to be doing or maybe you looked and it was surprisingly high, so you were like, oh, I'm gonna treat myself and you went out and you bought something and maybe felt a little bit guilty about it afterwards anybody had, like similar experiences to that? Yeah, every day while you check your bank account often I feel terribly guilty about everything, so what we're going to do is we're gonna turn that on its head, right? Because here's, the thing your bank account is not the boss of you, you are the boss, right? You on your creative business, you run it. So you get to say what number you want to see in that bank account, not the other way around, and you're going to make that money into a tool to get you the things that you want out of your business and out of your life. Um, we're going to analyze it, we're going to look at it and it's going to show us the roadmap for how to get teo where you want to be with your business so that you can spend your time on the things that you want to so that you can make the things that you want. Teo um when I started my first creative business ten more than ten years ago now it was kind of by accident um I think a lot of crafters have a similar story where you know you do it as a hobby and then people come over and they're like oh my god, I love that can you make me one for my aunt or my sister or my boyfriend or whatever um and so you dio and before you know it you're selling things but you haven't got anything in place right? You haven't said a business plan you haven't maybe opened a bank account maybe you're not licensed yet you're like great I'm making things and people want to buy them so I'm getting paid this is awesome um and at the time when I started I had a full time job because I was doing this as a hobby and so it didn't really matter to me how much I was making it was all kind of bonus right? Like all right, cool I can use this to buy more craft materials or I can treat myself to something else because I've got this extra income um but at some point I decided, you know, I really like doing this and I would like to make this a business this is how I would like to spend my time and make my money and then it did become important how much I was making um and then I thought and maybe I don't know some of you guys have a similar experience well if I'm making this much money just doing it on the side imagine how successful I could be if this was what I was doing all the time um I thought you know surely if I'm actually putting all the time in the effort into the business my returns will be a huge right and I'm going to show you several equations today not a single one of them is uh hours sewing equals profit right that is not uh an equal relationship time does not equal money in that way so when I got rolling I was doing a lot a lot a lot of work sewing all the time and I was making things like can you hand me that hand please very appropriate for me to have this oh thank you thank you uh this was one of my very first products I was sewing plush and among other things I made this little plush ham and this was the thing that people came over and said oh my god can you make me one for my cousin and my girlfriend um and it took forever to make one of these I mean this is all like hand embroidered here and then this got sewn on a sewing machine and then this one time my hand in whatever um and so when I would do like a craft fair or something like that you know I would have to sew tons of these things and they took forever and I got to my very first holiday craft fair and I think I sold out like halfway through the first day um and I was just sitting there at this table with one of those old clamped but machines but making machines just like cranking out buttons because that was all I could make at the times couldn't bring my sewing machine to the craft fair and so uh when I got home I thought this is great these air selling so wonderful um I'm gonna be rich I'm going to make millions of didn't no, I didn't say that I was like this is gonna be great I can totally make a full living out of this um and then at the end of the year I would go back and I would look and realized like I've been spending hours and hours and hours slaving away and I don't really have anything to show for it how is it that I'm selling out of product all the time and still not making any money really? Um obviously that's not a sustainable business so I was like, all right, I gotta step back figure out what's happening here and I took my first book keeping class and it was a revelation revelle e it was the single best thing I ever did for my business the best thing um all of a sudden I knew exactly what I was spending, how much I was making, what things were profitable, what things weren't and where to make changes in my business and I was able to sort of take those reins back and put the money where it should be in tiny little spreadsheet boxes no um in my bank account in my pocket doing, you know, going to work for me making, uh, the life in the business that I wanted to have and that's what I want for you guys too. Um just just imagine for a moment that it's the holiday season it's late october early november and you're spending time with your family and your friends you're not worrying about having enough inventory for black friday um you're actually getting to enjoy the time and not freaking out about having enough stuff to sell wouldn't that be lovely? Or what about if, uh you could look at let's, say, your website and it's been needing an upgrade for a little while you've been d I y ing it along with everything else right? Because we do everything ourselves as crafters like we are d I y uh but maybe you're not super great at the d I y web design and you really wanted someone else to take that over imagine being able to just look at your computer screen or a piece of paper and say I can afford this next month here's the budget I have for it, and here the returns I can expect to get on that investment down the line didn't have to wonder, do not have to worry. Can I pay for this? Will this actually do my business any good to be able to make confident decisions, to go to bed at night? Sleep well, knowing my business is going in the direction that I wanted to? I know exactly where it is. I know exactly what steps I'm going to take to make it the business that I've always dreamed and then tohave the lifestyle that you want, right? Because this crafters, especially when we're doing it professionally, we work so hard, you know, nights and weekends, and, um, I don't know about you, but I'm not in my twenties anymore. And, uh, even though the makeup artist was fabulous, thank you, um and I don't want to do that forever, right? I mean, I want to be able to live my life spent time with my family, I want to be able to take vacations, to have weekends, um, and to not worry about the money to be able to say for things like retirement, buying a house, my kid's college, all that great stuff, so, uh, that's what I'm hoping for all of you today I'm hoping uh that at the end of the next two days and then uh also the third day if you're taking the etc class specifically that you will come away with this feeling really great and being confident and knowing that the decisions you're making are your decisions you're in charge of your business you're in charge of your money and you get to decide what it does for you and where it goes how's that sound sounded everybody uh and now I want to introduce some of the members of our studio audience so I would love it if you would tell everyone your name uh what your businesses and maybe one challenge that you've had with bookkeeping that you're hoping to solve today tell you so I'm zai um an owner of electricity lll and I'm just getting started with my own hand crafted metal furniture business wow, I'm a welder and metal worker yes, I love a woman with power favorite on dh my challenges book keeping is that I'm just getting started I've been saving receipts um I'm a pretty quantitative person but I don't really know the basics of bookkeeping and so I'm eager to get that data so I can make better informed decisions but yeah, this is exactly what I need right now awesome I'm so excited to have you here happy thank you all right, I'm amanda and I'm the owner of heart crafted co and, um, we dio would signs hand lettered would signs, and I started about, I guess, nine months ago, and I'm kind of at the same point is I, um, I'm like, starting january first, and I want to do it right this year, and I've been saving received an envelope, but I'm not sure what to do with them, so I guess I want to get on track. Great. Well, you're in the right place, and this is a great time of year to do it right? Because the years just wrapped up yet, and you've got until april fifteenth to get everything ready for the tax man. All right, hi, my name is jackie o, and I have a boutique in textile business is called ruth almost jimbo, and I think I'm pretty much in the same boat is these ladies like, I kind of keep my receipts in, like an envelope, and now my business is starting like diversify and people are asking me for help with styling and other things, and I just don't like I have a lot of receipts and I know that I make money, but I'm not sure how much money I spend, so it's just kind of ah. Confused mess so I want to get my book keeping down so that I understand it even if eventually like I might outsource it out, but I still want to understand the basics of it that's a really great point the point of today is to not turn you guys into professional accountants, right? Um the point of today is to get you tohave a handle on those things so that if and when you do, I mean, you could do your books forever on your own if you'd like tio but it's perfectly fine and even encouraged when you get big enough to hire someone to do the bookkeeping for you and absolutely you want to know that they're doing it right even if all you do is just plug in teo symbol keeping software that maybe hooks up automatically to your bank accounts or to your etsy store, you want to know what it's doing and make sure that it's doing the right things right? Putting things in the right boxes um showing you the reports that you actually want and capturing everything accurately. So that's awesome that's great! We're already getting some great feedback online as well, and a lot of chat rooms are saying they're actually hippie crafters and they keep all their receipts stuffed at the bottom of their bag so so many ways to attempt to solve that problem in this particular course I didn't know that the definition of a craft was that you kept the receipts all the way at the bottom of your bag something else in mind but but okay, I think is that there's a new one? We got some great feedback from for you actually from cathy holden was saying let yale or oven l lauren is fabulous I'm so glad that creative life of founder she put on an event years ago conference for creative entrepreneurs I said nearest and it was lauren who who's who of creativity and was the best conference I've ever attended so really no pressure lauren delivery today but your fan clubs out there so thank you for that kathy and we'd love to hear hear more from you as well and also like to hear what your challenges are with bookkeeping I should just stress that lauren is not here to talk about anything specific relating to tax or anything that may relate specifically to your set she's not here to give financial advice she's here to tell you how to organize your bookkeeping that's right? And we do have an international audience even though I will talk about a couple of things that are specific to the us we want to keep it really broad um so let's try and keep questions uh that air useful to as many people as possible because we're all here to learn um and I don't know what the tax code is in indiana so there's that uh canada in the room we go and stammer online as well today but we have contractual international audience welcome to everybody. Welcome canada welcome amsterdam happy to have you I wanted to show you one of the early drafts of my website after people started saying can you make something for my so and so my husband said, you know you should just put up a website and just sell the stuff online it's okay, give that a shot um and I pulled in these prices out of just total thin air right um and I I would love to hear uh from you guys what was one of the first things you ever sold and how much did you sell it for on like, how how did you come up with that price is, um and maybe we can if anybody online uh also wants to chime in with this if you have a good story about one of the first things you sold, how much you sold it for and why you price that that way um I would love to hear it so uh and any of you guys want to share an example of that? Why at least know for me I kind of looked at the cost of like my materials uh huh. And then I was like like I don't know what the market will bear and then I kind of like at it like a little bit more to it and was like on dh then somebody bought it and I was like, holy crap like okay, like they'll pay that much for it and then like so it was just truly, like just trial and error like, I know this is, like at least material material wise this is how much it cost me and then I would just mark it up some and then see if somebody with poppy it okay? Yeah, did you consider in that at all? Like how much you would be taking home at the end? It wasn't more like this is what I think people will pay or this is what I need to make in order to be profitable initially, it was just how much I think people will pay, okay? Yes, and it was truly like and each time it was like when somebody bought it, it was like you'd be like, oh, yeah, somebody paid that much for it like let's try to bump it up a little bit more and see if that works yeah, right like everybody at least in my world, at least in the sort of craft and creative world um we're really a sort of nervous at first, right? This stuff is very close to your heart, you know? You put a lot of yourself into the things that you make, and so you want people to buy it because buying it is approval, right? It's validating what we dio um so you put it out there and put it on, I think, well, you know, you don't wanna price is too low because it's it's, you know, it's not a cheap product, this is handmade, this isnot wal mart uh, but at the same time, you don't want people to be, like, it's not worth that. I don't think so, and we'll talk a lot more about pricing, and we'll look at some formulas and all kinds of ways, tio, you know, tweak pricing, but I just wanted to start with this, um, because I think it's interesting how arbitrary it often is, we just kind of guess kind of have a feeling based on what else is out there, um echoed in the chat rooms. You're right, you're right, lauren let natalie the crafty truck tribe says I sold a piece of jewelry, so I just multiplied it by three times the cost of materials and lots of other people said that two years they just they whatever it is they took the cost of materials and multiplied it and other people are saying they just took what seemed to be what other people were charging and try to match it yeah there's no science to it all it sounds like a lot of people are mentioning materials as their basis right? I took the cost of materials I tripled it I took the cost of materials uh and I did whatever equation to it um but nobody ever mentions their time right that's the thing um so here's the price for this ham thirty four ninety nine um and I got all these things down the side here you've got the price of the button how much the fleece cost the embroidery floss the stuffing in the thread ah, and then I used to package these in just the most insane way possible. I mean, I thought it was a good idea at the time uh I went really literal with this whole idea and when I would send one of these to someone um it would come in an aluminum tray um and it had hand cut felt leaves arranged around it and then the whole thing was wrapped in plastic wrap that had a deli sticker on top um I mean, it was really wild uh but it took forever and it required all of these extra materials and it's just I mean nobody asked for it nobody knew it was coming to them that way so maybe was a little bit delightful when they got it but that's super necessary we'll talk more about that later to um and then I have all this time that I spent tracing the pattern cutting embroidery um you know, pinning, sewing terming stuffing turning uh and this doesn't even include by the way, the time that I spent cutting out those felt leaves and wrapping it up and shipping it and sending it in the whole nine yards um so I had the materials cost three dollars and forty five cents packaging a buck seventy five and it took me four hours to make this stuff um let me see anything wrong with this picture ignoring even just the materials for a second um the labor making like nine dollars an hour yeah, even if you don't consider the materials um it's on ly nine dollars an hour I actually did the equation and with the materials it works out to seven dollars and forty five cents. Um, which is just what is it twenty cents higher than the national minimum wage? Um and the worst part about that is that that minimum wage I don't get to take that home and spend that on my rent and my food and my clothing because I still have to pay for my business, I still have to pay for my web posting. I still have to pay for the electricity. I still have to pay for my business cards in my crafty booth, and, uh, you know, craft, booth, fee and all of that other stuff. S at the end of the day what I may be taking home, and I figure this out with closer to two dollars an hour. Um, but if I hadn't done all of this out, I wouldn't know. I might just think, well, okay, it cost me about five bucks and material, so I'm getting thirty bucks in profit, right? That's, great. Thirty bucks of profit on each one of these hands except it's, not that's. Totally not what it is.