Throughout 2014 I’ve shared my income here each quarter(1st, 2nd, 3rd), along with some financial analysis. My goal was to talk openly about money and the work involved in growing a creative business online.
This experiment was inspired by one of my favorite blogs, Pinch of Yum. Owners Bjork and Lindsay Ostrum share their income and traffic monthly and I’ve learned a tremendous amount from their generosity (I interviewed Bjork for an early episode of the podcast). Each month I would read their report and say, “Someone in the craft community should do this.” At the start of 2014 I decided that someone could be me.
I have to say that it’s been a terrific exercise – at times terrifying, but also very freeing. I know there are designers who make a lot more money than I do. It was scary to show them what I was earning. I worried about appearing too profit driven and making customers feel like my heart was in the wrong place. I’m glad I persevered. I’ve gotten dozens of emails from women who’ve said that these income reports were the thing that convinced them to start a creative business and that’s amazing.
Okay, my books are open again. Let’s take a look.
In the 4th quarter of 2014 (October – December) my gross revenue was $9456.90. That’s down a bit from the $11,233 grossed in the 3rd quarter, but it’s actually really good news. To see why take a look at this graph:
Almost all of my income this quarter came from the things I’m directly in control of: patterns, ebooks, and resale goods. Those things made up 93% of my income, for a total of $8793, (up significantly from $8084 last quarter). The reason my total revenue was higher last quarter was because I received several royalty checks, but here’s the thing about royalties: they’re very hard to control. I can’t predict how much I’ll get, if any, in a given quarter. The sales of patterns, ebooks, and resale goods on the other hand are under my control. Their increase this quarter is a direct result of my marketing efforts.
Let’s look at the sources of the pattern sales:
My WooCommerce shop (that’s the one that’s here on my blog) outearned my Etsy shop for the second quarter in a row. I earned $4,696 from my WooCommerce shop (up from $4047 last quarter) and $3,329 from my Etsy shop. This is again good news. First, WooCommerce is a free WordPress plugin whereas Etsy cost me $210 in fees this quarter. And second, the WooCommerce sales are a direct result of my efforts in blogging three times a week and sending out a weekly newsletter to 5,000+ subscribers. Etsy search and Etsy’s policies are out of my control, but WooCommerce? That’s all me.
Now, let’s look at expenses. My total expenses for the 4th quarter were $2,922.
Running an online business isn’t free. I think sometimes people don’t realize how expensive it really is. I spent $651 on online services this quarter (including website hosting and MailChimp). The bigger your site and your following grows the more you pay.
I realized that I haven’t talked about traffic in these reports, but I think now that I should have. My blog gets about 110,000 pageviews each month, a number that’s doubled over the past two years.
When looking at my expense graph you’ll see that the “Other” category looks rather large. That’s because I bought plane tickets for $445 to fly to California for Craftcation in March. As a speaker at the conference my admission fee and room charge are waived, but I still have to pay for travel expenses.
I do want to highlight one other expense. I spent $34 on art supplies (fabric, thread, embroidery floss, stuffing, etc.) this quarter. It’s a tiny expense (only 1% of the total). When a fabric company offers to give me materials in exchange for a blog post, this percentage has allowed me to see that fabric isn’t really an expense that I need help covering.
Okay, time to do some math.
$9456.90 in gross revenue
-$2922.00 in expenses
$6534.90 net revenue for the 4th quarter.
This year I worked about 25 hours a week while being a stay-at-home mom of a 10-year-old, 8-year-old, and 4-year-old. This means I spend almost every moment that I have to myself working (eking out 25 hours a week of time to myself is a big challenge and means I work at night and on the weekends). I run 5K four mornings a week which takes an hour out of my workdays. I could work during that time, but running makes me feel good.
The business is growing and I love every aspect of what I do which isn’t something I can say about any other job I’ve ever had.
Let’s wrap up 2014 financially, too, while we’re at it. To do that, though, I think we need to look back a little bit first and think about growth:
In 2012 my gross revenue for the year was $2,689.
In 2013 my gross revenue for the year was $25,243.26.
In 2014 my gross revenue for the year was $40,499.
How did this happen? What changed in those years? The most succinct answer is that I changed. I got serious.
I incorporated my business. I opened a bank account. I started doing weekly bookkeeping and using a calendar to plan the year. I started a newsletter. I paid a designer to make me a robust website. I wrote three blog posts a week without fail. I made 39 episodes of a podcast. I created a newsletter subscriber base and sent out a newsletter every single week. I made new patterns, wrote ebooks, and figured out what products to sell. I was on Twitter, Instagram and Facebook every day. Essentially what changed is that I decided to work on the business in a focused, dedicated way and the result is that now I actually have a business.
Here’s the breakdown of revenue:
My business as it stands now is a sewing pattern business (52% PDF patterns + 13% licensed patterns = 65% of my revenue). My business-to-business ebooks are pulling their weight for sure, though. There’s only two of them (versus 40+ PDF sewing patterns), but they make up 15% of my income. This is an area of future growth for me.
Before I show you my expenses for 2014 I need to do some explaining. This year, for the first time, I paid myself. A decade ago when I left the traditional workforce (teaching middle school) to raise our three children I left a paycheck behind. This is the first time since then that I’ve gotten paid. I took a $12,000 salary this year and paid FICA (Social Security and Medicare taxes) for the first time in 10 years.
Paying me was my business’ most significant expense (categorized as Corporate Expense below). Freelancers was high because I paid $7,000 for branding and a website earlier this year.
Let’s do the math:
$40,499 in gross revenue
– $30,108 in expenses
$10,391 net revenue
That money stays with the business.
And it leads me to the next stage. Over the past two years and after reading a recent Jeff Lerner review, I’ve felt like I needed to prove that I could turn this sewing thing into a profitable business. I needed to prove that I could stick to it and make it real. In order to do that I saved every single penny. Often I did things on the cheap because I didn’t want to invest in something that might not pan out.
Now I feel that the point is made. Yes, this is a real business. Yes, I’m here to stay. I love this.
In 2015 it’s time to take that $10,391 and reinvest in order to strengthen what I’ve built and expand it. I’m ready to pay an expert to do the things that I need help with like graphic design and photography for my patterns. I’m ready to travel to trade shows and conferences and meet people in the industry face to face. I’m ready to make this into a career rather than just a job.