At quarter end I do some financial calculations and analysis for my company and this year I’ve been sharing the results here on my blog (see the 1st quarter report and the 2nd quarter report). I do my bookkeeping weekly, on Friday mornings, and you can read more about that process here. Although I can see week by week my general progress, I’ve found it really helpful for big picture planning to do a deeper analysis four times a year. So here we go!
Abby Glassenberg Design Gross Revenue for the 3rd Quarter
In the 3rd quarter of 2014 my business grossed $11,233. Here’s a breakdown of where the money came from:
Pattern sales are my largest source of income at 50%. Actually, those are my direct-to-consumer PDF patterns, but I also license patterns to Simplicity and the royalties you see on the graph are almost all from Simplicity. Taken together, patterns make up 73% of my revenue.
There was one major shift this quarter that I’m excited about. My online shop that lives right here on my blog out performed my Etsy shop! I earned $4,046.70 from my own shop and $3,370 from my Etsy shop, saving me a total of $141.63 in Etsy transaction fees. I love Etsy and plan to stay there, but it’s an expensive way to do business online. In the 2nd quarter I paid Etsy $245 in transaction fees, but this shift brought my bill down to just $185 this quarter.
I’m really happy that my gross revenue is back up after a low 2nd quarter. (Just to review, my revenue was $11,789 in the first quarter, and $7,705 in the 2nd quarter). At the end of last quarter I really hesitated to even post my revenue because I was embarrassed about it, but you know what? Posting it made me work harder so I’m glad I did. I’m back on track.
Let’s talk about books for a second. A month ago I got a notice from Interweave saying that my first book, The Artful Bird, will be going out of print. I’m sad, but that’s how this stuff works. I received what will probably be a final royalty payment from that book for $489.50 this quarter. The book was released in 2011 and I’ve made over $20,000 from it, which is amazing. I’m working to get the ebook rights so that I can sell it myself and it’s looking like it will happen so that’s terrific, too.
I also got a royalty statement from Lark Crafts for my second book, Stuffed Animals. When I signed the contract I took a $7,000 advance on that book, plus a $1,000 one-time payment for taking the step-by-step photos. Even though it went into a second printing almost immediately and was named an Amazon Best Book of the Year, after a year and a half on the market I have yet to make up the advance. I earn about $1.20 on each book. I’d need to earn another $1,083.64 worth of books, $1.20 at a time, before I’ll get any royalties and given that I only sold $699.44 in the first half of this year it’s looking grim. I’m making peace with the fact that I will never earn more from that book than what I’ve already gotten. I’m incredibly proud of it and I know it’s a great book. I stand by it no matter what it earns, but the lesson here is that books don’t sell without marketing. Interweave does great marketing and it makes a difference for their authors.
Time to take a look at the breakdown of sales by pattern:
At the end of last quarter I remarked how my baby patterns, specifically the Lovey Dovey, continually sell well and I set a goal to design more patterns people could make a baby gifts. So I began this quarter by making a third set of Lovey Dovies and take a look at what happened! The new Lovey Dovey pattern earned $900.20, far out performing any other pattern. It was so worth it.
This information is incredibly valuable to me and helps to guide my decisions. I was recently offered the opportunity to teach a softie design class on CreativeLive. I was excited about it and proposed a class centered around baby patterns. When they came back and said they’d prefer to do the Duck, Jeremy Giraffe, and Pepper the Penguin, I decided against it. CreativeLive has a very generous royalty split of 50%/50% (for each class sold, they take 50% and the instructor gets 50%), but the classes are on the expensive side at $59-$79 and I just didn’t feel confident that enough people would buy a class at that price for non-baby focused patterns. I couldn’t justify the months of preparation it would take for me to create a class that I wasn’t confident would sell. I’d rather wait until a different opportunity arises.
One final note about the breakdown of sales by pattern. I have a lot of patterns at this point (more than 40). While I love to design new things all the time (fun!) I think it’s just as profitable to go back and revive older patterns by showing them made up in new fabrics, creating variations, doing sew-alongs, and adding video content to support them. These enhancements take less time, are still really interesting, and help me build on what I already have. Marketing! Poor Pip the Pig. He’s awesome and only one person bought the pattern this quarter. Me and that pig need to have a marketing meeting.
Abby Glassenberg Design Expenses for the 3rd Quarter
I managed to keep my expenses down this quarter, mostly because I’m done paying off my new website. Yay!
Total expenses for this quarter were $2,043.74. Let’s look at the breakdown of where that money went:
I spent the largest portion on goods for resale. These are the eyes, rattles, squeakers, hemostats and other specialty supplies I sell in my shops. I spent $478.61 buying things to re-sell, but earned $1,308.47 on those items for a net earnings of $829.86 so it was worth it, but it’s something I have to be careful about. You can feel like you’re making money selling supplies when you really aren’t if you don’t examine the numbers carefully.
As always, online services make up a good portion of my expenses. Running an online business is not free. This category includes MailChimp and this quarter I’ve worked hard to make MailChimp worth the $50/month fee. In June I “cleaned my list” (following these instructions) deleting subscribers who hadn’t opened an email in the last three months. This brought my subscriber number down low enough that I can comfortably stay below 5,000 subscribers and not go above the $50/month threshold (I have 3,450 subscribers right now). If you think about it, you’re paying for every subscriber so better to weed out those who aren’t interested than to feed your ego with a higher subscriber number, right?
I started offering new patterns to my subscribers for a $2 discount the week of the release. This strategy was really effective. For example, I sold 44 of the new Lovey Dovey in the first two days. Also effective was sending a reminder email two days before the sale ended. I sold another 26 Lovey Dovies on the reminder email day. Sending twice in a week is a risk because some people will get annoyed at the frequency so it’s not something I want to do often, but it’s very effective and well worth it from time to time. Also note that I worked really hard to make my newsletter packed full of interesting content to grow my subscriber base, to increase my open rate, and to develop positive relationships with my subscribers (read more about my newsletter here).
I’d like to give a small cheer for the 3% of my expenses that went to art supplies. I spent a total of $50.31 over the last three months on fabric, stuffing, and notions. Restraint wins! Just by way of translation, “CC Fees” are credit card processing fees on both Stripe and Etsy Direct Checkout.
Abby Glassenberg Design Net Income for the 3rd Quarter
Let’s do some math!
$9,189.26 net income
This was my highest quarter for net earnings this year. (1st quarter’s net earnings were $5,070 and 2nd quarter’s were $2,441). A business should grow and mine is growing, even if sometimes it feels slow and there are setbacks.
When I left the traditional workforce a decade ago I was a public school teacher earning $48,000. I had a master’s degree and six years in the field. Growth potential existed, but it was a slow stair step that I had no control over and I was never going to really earn a lot, plus I had to work outside of my home which wasn’t what I wanted once I had children. An awesome thing about being an entrepreneur is the control I have over what happens with my company. I love that! Nearly two years ago when I incorporated my business one of my biggest goals was to eventually replace my old income while still being at home with my three young kids. I’m hoping it’ll happen next year or the year after.
Thank you for all of your support, both by buying patterns, ebooks, books, and supplies, but also by just reading and asking questions and saying hello and spreading the word. Truly, thank you.
Time to tackle final three months of 2014. Bring it on!