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Hi there.
Speaker:I see that you made it over to the new tips
Speaker:and talk portion of the podcast.
Speaker:These are bite-sized topics that I pull from community questions and
Speaker:things that I'm observing in the world of handmade small business.
Speaker:I have a conversation to talk about today that honestly,
Speaker:I have never,
Speaker:ever heard anyone discussing,
Speaker:and that is as a solo preneur.
Speaker:So a handmade business owner,
Speaker:you're the only one working in your business.
Speaker:How much money can you truly make when it's just you?
Speaker:I'm curious.
Speaker:Have you ever thought about this before?
Speaker:Have you ever figured out how much you could actually make,
Speaker:if it's just you all right,
Speaker:let's go ahead and dive into it.
Speaker:Understanding your number is really important for a couple of reasons.
Speaker:Well, lots of times when we go into business,
Speaker:we're like,
Speaker:you know,
Speaker:I want to make X amount of money,
Speaker:but how do you know if that's even possible,
Speaker:especially as a handmade product creator,
Speaker:because with each sale,
Speaker:you've just created more work for yourself.
Speaker:So by defining this number and being realistic about what you're
Speaker:able to do,
Speaker:it confirms that you can reach that revenue number in the
Speaker:first place,
Speaker:or it gives you the means or the areas where you
Speaker:see, you need to make some adjustments so that you could
Speaker:reach that income potential.
Speaker:So let's get right down to it.
Speaker:We're going to dive right into how you figure out what
Speaker:your number is.
Speaker:Three numbers you need.
Speaker:As you go in to determine what your potential is with
Speaker:your business as it's currently set up.
Speaker:Okay? So the first thing you need is what is your
Speaker:average sale price.
Speaker:If you only make one product,
Speaker:then that's really easy.
Speaker:You know what your product is,
Speaker:you know how much you're selling it for.
Speaker:The second number is how much time does it take to
Speaker:produce each product?
Speaker:And the third number is your monthly revenue target.
Speaker:You could look at this as income,
Speaker:but for purposes of clarity and ease right now,
Speaker:we're just going to look at top line revenue.
Speaker:The formula is the same.
Speaker:Whether you're looking at the income or the revenue,
Speaker:I'm going to give you the formula.
Speaker:And then I'm going to give you three different examples using
Speaker:specific products and pretty real time numbers.
Speaker:Okay? So here's the formula.
Speaker:Once you've got your information together,
Speaker:what you do is you're going to look at the revenue.
Speaker:So this is how much money you want to make a
Speaker:month. Let's say you want to make $2,500
Speaker:a month revenue.
Speaker:You divide that by the price of your product.
Speaker:Now, if you have multiple products,
Speaker:what's the average price.
Speaker:Someone buy.
Speaker:Usually only one.
Speaker:Do they buy one in another,
Speaker:add on what's approximately your average ticket price.
Speaker:And that gets you to how many pieces you're going to
Speaker:need to produce each month to make that top line Revenue.
Speaker:Then once you have that,
Speaker:you gonna model To apply that number of pieces with how
Speaker:long it takes you.
Speaker:So the time involved to make those pieces again,
Speaker:revenue divided by retail price equals the number of pieces you
Speaker:need to sell per month.
Speaker:And then your pieces that you need to sell per month
Speaker:multiplied by how long it takes you.
Speaker:Your production time to make each Piece gives you the number
Speaker:Of hours you would need to invest in your business to
Speaker:make that top line number.
Speaker:Let me give you three examples.
Speaker:Let's say you are knitter and your product that you sell
Speaker:most often.
Speaker:Let's say this is the only price Make is a knitted
Speaker:beanie. And yeah,
Speaker:You sell these knitted beanies for $30.
Speaker:So we're gonna take 2,500.
Speaker:This is the average we're going to talk about per month.
Speaker:Divide that by $30 Per beanie,
Speaker:that means You would need to make 83 beanies each month.
Speaker:We're saying you sell a hundred percent through,
Speaker:right? That's just the way we're going to run this number.
Speaker:You sell a hundred percent Of them.
Speaker:You would make $2,500.
Speaker:However, each one of these beanies takes three hours to make.
Speaker:Which means when you run the equation,
Speaker:it would take 249 hours to make your 83 beanies to
Speaker:make $2,500.
Speaker:That's A little over 62 hours a week production time to
Speaker:make $2,500
Speaker:A month.
Speaker:Now I think we can all See,
Speaker:like that is going to be difficult.
Speaker:We're not talking about other business activities.
Speaker:We're just talking flat out production time.
Speaker:So if you run numbers and you find you're in a
Speaker:situation like this,
Speaker:where it's just completely unrealistic,
Speaker:that you would be able to put in production time like
Speaker:that. Don't despair.
Speaker:It's a good thing to know,
Speaker:because then what you can do is add more products into
Speaker:your product Flying.
Speaker:So some of the purchases are going to be higher priced
Speaker:items, which means it would be Bring up your whole overall
Speaker:average price,
Speaker:which consequently,
Speaker:if you walk this through means you need to produce less
Speaker:To make the 2,500
Speaker:To make it more realistic.
Speaker:Okay. Let me give you my second example.
Speaker:So that was the first example with the knitted beanie second
Speaker:example, let's say you do wooden signs.
Speaker:Maybe you paint them.
Speaker:Maybe they're engraved again.
Speaker:I'm going to use the 2,500
Speaker:as your monthly revenue target.
Speaker:You sell your signs for $20,
Speaker:2,500 divided by $20 gives you 125 each month that you
Speaker:would need to sell.
Speaker:Each one takes an hour to make.
Speaker:So that's 125 hours of production time each month,
Speaker:which breaks down to again a little over now,
Speaker:31 hours a week.
Speaker:That's a lot,
Speaker:that's almost a full-time job too.
Speaker:Right? So something to consider,
Speaker:as you're looking at what is actually feasible,
Speaker:what could you actually really produce to make that goal of
Speaker:the 2,500
Speaker:in this case,
Speaker:maybe you can get your production time down by batching so
Speaker:you can produce more.
Speaker:Maybe you can get it so that one of your wooden
Speaker:signs doesn't take an hour,
Speaker:but it only takes 40 minutes.
Speaker:Maybe you raise your prices,
Speaker:things like that,
Speaker:okay. To affect the numbers so that you can bring in
Speaker:the revenue that you're trying to reach.
Speaker:Third example is let's say you make soap.
Speaker:We're sticking with a 2,500
Speaker:top line revenue that you're trying to make a month.
Speaker:You sell your bars for seven 50,
Speaker:a bar running the math you would need to make and
Speaker:sell 335 bars each month.
Speaker:But you can make 20 bars at a time and we'll
Speaker:call that a batch.
Speaker:And so if you divide the batches into the 335 bars
Speaker:for the month,
Speaker:that 16 call it almost 17.
Speaker:Batches takes three hours to make a batch that equates to
Speaker:50 hours a month,
Speaker:which only equates to 12 and a half hours a week.
Speaker:Now that feels really reasonable production time,
Speaker:12 and a half hours a week to make $2,500
Speaker:a month.
Speaker:So this is the formula that you would use to figure
Speaker:out if the revenue that you want to make within your
Speaker:business is realistic with you being the only person doing the
Speaker:production. This number is really important because as we start out
Speaker:in our business,
Speaker:yes, it's easy to start your business.
Speaker:You make something people want to buy it.
Speaker:So you get started.
Speaker:You get your pricing in line,
Speaker:but what about the production time?
Speaker:Is it realistic to meet your revenue goal?
Speaker:Here is the way for you to figure out if it's
Speaker:achievable based on the time.
Speaker:But if you're seeing that,
Speaker:it's not,
Speaker:don't worry,
Speaker:Don't stress out because there are different ways that you can
Speaker:affect the numbers so that it is realistic.
Speaker:Again, the formula,
Speaker:just to summarize it one more time is you take your
Speaker:overall revenue that you want to make in a month.
Speaker:For these examples,
Speaker:I've used $2,500.
Speaker:You divide it by the average retail price of your order.
Speaker:If you make only one product,
Speaker:then that's how much you sell that one.
Speaker:Product four.
Speaker:If you sell multiple products,
Speaker:it's the average ticket price across all of your product ranges.
Speaker:That gives you how many pieces you need to make each
Speaker:month. Then you multiply those pieces by the number of hours
Speaker:it takes to produce those pieces.
Speaker:And that gives you the total hours that you would need
Speaker:to be working each month,
Speaker:calculate it down into the week to achieve the $2,500
Speaker:in top line revenue.
Speaker:Now, of course,
Speaker:how much time you have to devote to your business each
Speaker:week depends on,
Speaker:you know,
Speaker:are you also working a nine to five?
Speaker:You're in a full-time job?
Speaker:Do you have children's activities that you are managing through?
Speaker:And obviously as a priority only,
Speaker:you know how much time you can actually devote,
Speaker:but this gives you a realistic view.
Speaker:As I've said,
Speaker:then once,
Speaker:you know,
Speaker:if what you're trying to do is realistic,
Speaker:then there's opportunities to tweak.
Speaker:This helps you figure out if you should increase your prices
Speaker:on existing items.
Speaker:If you should add some higher priced items to the mix.
Speaker:And if you should include some other items that don't take
Speaker:any production time at all,
Speaker:if you make an upscale product,
Speaker:let's say you make beautiful.
Speaker:Hand-woven shawls.
Speaker:You sell them for,
Speaker:let's say $200 a shawl.
Speaker:You won't have to make as many to reach your monthly
Speaker:revenue. This also really helps because it gives you a feel
Speaker:for at what point along the way you need to get
Speaker:help producing your product.
Speaker:Of course,
Speaker:isn't the only thing that you do.
Speaker:You have to market it.
Speaker:There is bookkeeping to do.
Speaker:There is shipping to do.
Speaker:You're going to go out to craft shows.
Speaker:Maybe you're going to be networking.
Speaker:So production.
Speaker:If I really were to give it a percentage of your
Speaker:overall time into your business would be,
Speaker:I'm going to say about 60%.
Speaker:The rest of that is promotion.
Speaker:And all the other things that go with the business.
Speaker:This is not a number that I would want you to
Speaker:be afraid of at all.
Speaker:This is a number that will ground you in reality,
Speaker:that if you are starting this business and you're going to
Speaker:be relying on this income,
Speaker:that will be coming in each month,
Speaker:that it's something that's going to be realistic.
Speaker:I am sure that this discussion is going to bring up
Speaker:some question,
Speaker:some conversation.
Speaker:And I don't know,
Speaker:some of you might,
Speaker:when you run your numbers,
Speaker:be like,
Speaker:Oh my gosh,
Speaker:you know,
Speaker:what am I doing?
Speaker:How do I fix this?
Speaker:I need to adjust some things.
Speaker:We can have those conversations over in the breeze.
Speaker:If you aren't familiar with the breeze gift biz breeze,
Speaker:it's my private Facebook group for all handmade creators.
Speaker:And I take Q and a sessions.
Speaker:Each Thursday mornings,
Speaker:you can ask your specific question.
Speaker:It's almost pretty much free coaching and you'll get input from
Speaker:other people who are in breeze as well.
Speaker:So we can carry on this conversation there.
Speaker:But I wanted to get this out to you for everybody
Speaker:to start really thinking about the reality of what you're in
Speaker:business for and the money that you're trying to make and
Speaker:compare that against production time,
Speaker:how you're pricing your products time in,
Speaker:in terms of balancing it into your life.
Speaker:Because remember the reason we've started,
Speaker:this is love of making your product and sharing it with
Speaker:the world,
Speaker:of course,
Speaker:but being able to have flexibility in your life,
Speaker:the flexibility that your time throughout your day brings as well
Speaker:as what the income brings.
Speaker:I know this is a little bit of a heavier topic.
Speaker:We need to face reality.
Speaker:We can't live in a dream world.
Speaker:If we want real results,
Speaker:you live in a dream world.
Speaker:You get dream Results.
Speaker:You live in a world of reality and we get real
Speaker:results. That's a wrap.
Speaker:I bet get to the point kind of girl.
Speaker:And this is what you can expect from these quick midweek
Speaker:sessions. Now it's your turn go out and fulfill that dream
Speaker:of yours.
Speaker:Share your handmade products with us.
Speaker:We want them,
