From Rags to Rich....in Experience?
Going into the third year of the business is a good time to reflect and do some serious number crunching. To be honest things have been tough. During the down season of January through March I found myself struggling to pay rent, make insurance payments, buy groceries. I thought by this time my small business would be supporting me, the loan paid off and I would be swimming in black ink in my bank account like the modern digital version of Scrooge McDuck. Or at least have enough funds to pay for upcoming craft fairs, festivals and raw materials to prepare for my third and best year yet.
Here’s where I went wrong:
1. I got a $5000 business micro loan that was just not enough. I put orders of dried bulk herbs, cocoa butter, essential oils, a Vitamix, 600 cases of glass mason jars… all on my high interest credit card. Which meant all the money I was making at festivals was covering interest payments and trying not to bounce cheques.
2. I was too ambitious in my festival tour. I thought it would be fun and successful to book every weekend of the summer with a different festival around B.C. I didn’t consider the cost of travel and festival life- financially, physically and emotionally.
3. I quit all my part time jobs right away with the thought of, “I’m an entrepreneur now. I only work for myself!” So it meant my business had to cover all my personal costs of rent, food, car payments.
4. Sales were lower than expected. I had no clue how much I would sell the first year, but overshot with naive optimism. I looked back at my original business plan’s cash flow and rolled my eyes at my outrageous projected sales. With these calculations I should be out of debt by September… Festivals are fun and exhilarating, but people are there for the music- and stumble into the vendor village usually without a wallet.
5. I didn’t plan ahead for Christmas fairs. The good ones are booked eight or nine months in advance! In this business you’re always thinking a season ahead.
Those are the blatant mistakes I made in the first year (I’ve probably missed a few) that caused me to be suffocating at the brink of credit card implosion for two years.
I’ve tried breathing through money stress, visualizing myself as a magnet for
hundred dollar bills, changing my relationship with money from hating it to sending it tender love.
Here are the things I hope will make a shift in my paycheque to PayPal-order existence:
1. I have a solid part time job two days a week for good pay, where I don’t take any to do lists or stress home with me at the end of the day.
2. I have focused my attention on expanding the handmade craft fairs versus music festivals, mainly in Sidney, Nanaimo, Salt Spring and Vancouver. I’ll only take two weeks off from my part time job to go to my two favourite festivals (Artswells and Robson Valley).
3. I’ve applied for Transition Salt Spring Enterprise Coop for a small interest loan to cover my high interest evil credit card. This entailed crafting a very detailed, realistic business plan and cash flow for 2017, where I’ll pay off the loan in 24 months.
4. I'm going to raise the price (slightly) of my products to include PST. I realized that I was paying 83 cents PST for every unit and I hadn’t incorporated it into my cost of goods.
5. Soap Making Workshops will be a monthly occurrence that I’ll incorporate into my craft fair tour to make extra cash doing something I love and to spread the soap makin’ love.
Any tips or tricks, feedback, similar small business success (or failure) stories? Leave a comment below or email me! And as always, if you'd like to order online to keep this boat a float you can do it here.