The Lean Mean Crafting Machine

Keeping diligent and detailed accounting is one of the best and smartest things you can do for your small business. This is something I learned the hard way, but it's 100% true and could even save your business.

When I first started Damselle, I knew I would need to keep records and file my taxes properly and do some math blah blah..... but I'm the artistic type. I knew from doing some rough figures that my profit should be about 75% of my total sales and shoot... My work is so fabulous and I'm so determined......of course it's going to be great!

So I took that ball and ran with it. And didn't look back for a couple months. I knew it was going to be tough going at first anyways. My husband was pushing me to start making spreadsheets with detailed information, but... I'm the artistic type. Math is not fun for me. Yes, I'm totally capable and I understand the numbers once I bother to look at them... but looking at them might show me that everything was going horribly wrong and my business was not viable after all.

So finally, after cleaning every wooden molding in the house, polishing the record player, and searching for every other thinly veiled distraction from my task, I sat down and spent many hours looking up the information and creating the spreadsheets. The first thing I noticed was that once I entered in all my expenses...jewelry supplies, shipping, site fees, advertising, office supplies... I was actually making about 50% profit and not 75%. That is a pretty big difference and was completely disheartening. I would need to be doing much higher volume for those numbers to be acceptable.

Then I started looking harder. I noticed fairly quickly that I was spending too much money on supplies compared to what I was using up. Granted, I wanted to have some stockpiled for holidays etc. but looking at my supply, I was a veritable dragon sitting on a horde. I also noticed that the amount I was spending on advertising was too high compared to how much money I was bringing in. The ads were effective, but increasing the spending on said ads hadn't really increased sales as much as I had anticipated. There. I had my first action plan right in front of me.

You can't make good business decisions if you don't really know what's going on. I try to do my accounting once a week to every two weeks at the minimum to give my self a little business meeting, see where I'm at, what needs attention... can I buy those new beads I wanted to try this week or am I cutting it too close? How are my shipping costs? Am I losing money on wrapping and tape? Do I need to tweak my pricing? Are my custom orders priced well? How can I lower the cost of shipping and office supplies?