How much money in inventory do you have sitting in your studio right now?
How much profit did you make from your last craft show or wholesale order?
How about this one? How much does your newest product cost you to make?
If you don’t know those numbers off the top of your head, do you know where or how to find them?
Hopefully I didn’t just give you a panic attack when I started asking about dollars and cents in your business! Knowing Your Numbers is one of the biggest things you should have a handle on if you expect to lead a sustainable or career-level handmade business.
Your numbers include everything from your financials (including profit and loss statements) to how much inventory you have on hand (or might need for an upcoming season or show), and how well your products are priced, right down to what it costs to make them, what you’re paying yourself, and what profit you’re putting back into your business.
I get it, numbers can be scary. There’s math involved. It’s easier to guess. To feel. It’s even easier to just turn away and pretend they don’t exist. But knowing your numbers is critical if you want your business to thrive. And knowing your numbers is only one step further than guessing or feeling. Your guessing is informed by what you’re experiencing—subconscious tallies of what’s sold and what hasn’t, or a visual accounting for product on hand. What you’re feeling is an emotional representation of what your brain is trying to understand but can’t fully grasp. But your emotions can trick you—the numbers don’t lie.
Your numbers are your business’ vital signs that allow you to measure the overall health of how you’re doing. They give you historical data and can show you trends before you really start to feel them. They help you make decisions before it’s too late.
Your numbers help you understand how your products are doing in the market. Is your macrame wall hanging selling like hotcakes at design-y shows? Are your wholesalers on the East Coast reordering your pineapple prints faster than those on the West Coast? Is your poop emoji keychain not flying off the shelves at $23 like you thought it would? Numbers give you an unbiased look at what products are worth focusing on and what need to be refactored or tweaked.
Knowing your numbers on a broader scale help you understand when and where you should invest in your business. A laser cutter may seem cutting edge and like it will solve all your production problems, but if you haven’t crunched the numbers to calculate your return on investment, you might be making a major financial decision that won’t pay off for at least a few years (and you may not be able to float the purchase price that long). Knowing your numbers can also help you make the leap into hiring help—whether they’re contractors or your first employees—so long as you’ve built the labor cost into your product’s prices.
And knowing your numbers takes the guesswork out of your business. You don’t need to speculate that the rooibos tea-scented candle is a hit among South Africans—you have the sales numbers to back it up. You can look back and year over year growth, compare months, and plot out your progress toward your goals.
Your numbers are powerful, but they don’t have to be scary. Time invested in understanding your pricing, your inventory, and your finances is time invested in setting a firm foundation for your business to grow into sustainability and beyond.
Your numbers are powerful, because knowing them will give you confidence to make short- and long-term decisions. You won’t have to react to things all the time—you can be proactive instead.
Your numbers are powerful, and your numbers are empowering.
Tina Rodas is the creator of Hi Tree. She makes adorable textiles and handmade toys using sustainable materials, and does all design and production herself out of her magical mountain home in the city of Los Angeles.
Hi Tree was created quite by accident in 2008 while Tina was a stay-at-home mom looking for a way to use her creative abilities. During that time she would stay up late testing the limits of her sewing machine and experimenting with fabrics until she came up with the first of her tree designs, the Cypress Tree.
When she's not working she loves to treasure hunt at the thrift store, work on fun projects with her daughter Hazel and spend time with those dearest to her. She's also very happy to have managed to make a business doing what she loves most—creating.
Follow Tina on Instagram!
Staring at an Excel Spreadsheet may not be your cup of tea, and I can't blame you. I find Excel sheets to be ridiculously boring and bland, which can turn the creative brain right off. Here are a few resources that you might find useful for your maker business:
- Numbers for Mac – This native software for Mac users has a much more user-friendly appeal to its Microsoft sibling and comes with some handy templates and themes.
- Craftybase – inventory and financial tracking specifically designed for handmade businesses.
- Airtable – Web-based databases and spreadsheets with all kinds of bells and whistles for the more creatively inclined. Cross-reference without code, create forms, kanban, and calendar views, and so much more. A lot of what we do at Academy of Handmade is mapped out in Airtable. Check it out!
Looking to dig into your numbers for the holidays? Our self-study Holiday Game Plan will help you know your numbers and be the boss of the holidays.