Do you keep or maintain a budget for your business? If not, you really should! It is a bit of an eye opener but even better it gives you freedom! Freedom to not feel guilty, freedom to spend and freedom to make decisions when necessary!
I used to be so bad at this and mainly because it stressed me out at the thought. Over the last few years, I made some huge strides in the whole accounting/budgeting aspects of my business and let me tell you, it has honestly relieved SO MUCH STRESS!
First thing I did was hire an accountant to help me keep my books straight, handle my business stuff like taxes, quarterly payments, etc. This alone is worth every penny! I mean having someone who knows how to do all that and do it for me… priceless! By the way if you need a good accountant, look up Open Roads Bookkeeping and tell Angelica I sent you! (www.openroadsbookkeeping.com) She will set you up with a free consultation to discuss your needs and how she can help you, at least do that much!
Another thing I finally did is I sat down and put all the things I sell onto a spreadsheet. I compared my cost to what I charged and how much I made. There are a few things you want to consider:
- The cost of the item, this should be straight forward, basically this is whatever it costs you to buy the item before you sell it. Be sure to include shipping costs as well! Don’t leave anything out.
- Additional expenses, these can be things like cost to ship to a customer, cost of marketing, think of anything you will drop in the package whether its business cards, postcards, stickers on the package, packaging itself, extra goodies you want to toss in. Come up with a realistic number whether its $5 a package or $10 it needs to be included in this process.
- Your time, think about how much time you will spend taking a picture of the item, listing the item for sale, packaging it up and taking it to the post office. Your time is valuable and worth something. So don’t forget this.
- Add those 1-3 together, this is your total cost for the item. Next you will want to figure out how much you want to charge. Typically, at this point you should double it. I know there are cases this is hard. So, what I did is I priced where I thought was fair and then added another row of ‘goal’ pricing, so I knew what I needed to work toward.
- Once you’ve done that you want one more number and that is your profits. It’s always good to see what products make you and know where your higher profit items are.
Now that you have done that lets go back to number 2 where you added in that extra cost for goods… This is where it gets fun. If you know you have $5 to put towards marketing on each package, do you know how much you could include for $5 an item? OMG, business cards could be as cheap as .08 a card! Add in a 4x6 card at .14 a card, we are only at .22! You still have 4.78 you could spend on each package, think of a magnet that will go on their fridge, advertising your business daily, perhaps a pen or even something more fun like a key chain, or mini goodies like Chap stick, small bottle of lotion, notepad. Think about how much that might improve things if you can always send extra stuff in your packages! It will leave a mark!
To help I have listed out the cost per item on the listings in my shop so you can see how much it is per item along with the total price. This will make your budgeting process easier! Plan for it and go for it!