1/12 Running a handmade business is a labor of love, right? ❤️ But passion alone doesn't pay the bills! Let's talk about something every artisan needs to understand: overhead costs. What are they, and why should you care? #handmadebusiness #smallbusiness #overheadcosts
2/12 Simply put, overhead costs are the expenses that keep your business running behind the scenes. Think rent, utilities, internet – the stuff that's essential whether you sell one item or one hundred.
3/12 Unlike direct costs (like yarn or clay), overhead can be tricky to track. But ignoring them? That's a recipe for underpriced products and a struggling business. Imagine selling jewelry, thinking you're profitable, then realizing you BARELY broke even after rent and website fees 😬
4/12 So, what kind of overhead costs are we talking about? They can be fixed, variable, or somewhere in between. Here are a few examples specific to handmade businesses:
5/12 * Rent/Mortgage: (Workspace) - Probably a big one.
- Utilities: (Elec, Gas, Water) - Can fluctuate, esp. if you're firing up the kiln all winter!
- Internet/Phone: Essential for online sales & chatting with customers.
- Software: (Website hosting, email marketing)
6/12 * Marketing/Advertising: Photoshoots, craft fair booths, social media ads - gotta budget for these!
- Insurance: (Liability, Property) - Non-negotiable.
- Office Supplies: (Packaging, printer ink) - Adds up FAST!
- Education/Training: Workshops to level up your skills.
7/12 * Depreciation: (Equipment) - Your pottery wheel won't last forever!
- Salaries/Wages: (If you have help!)
8/12 Okay, so how do you manage all this and maybe even reduce those costs? Here are a few ideas:
9/12 * Track EVERYTHING: Spreadsheet, accounting software, notebook – whatever works! More data = better decisions.
- Negotiate with Suppliers: Doesn't hurt to ask for a discount!
- Bundle Services: Insurance, internet – sometimes you can save $$.
- Reduce Energy Consumption: Turn off those lights!
10/12 * Optimize Your Workspace: Can you reorganize to avoid needing a bigger (more expensive) studio?
- Shop Around for Insurance: Get multiple quotes!
- DIY Where Possible: Marketing materials? Social media?
- Analyze Your Spending: Regularly review expenses!
11/12 * Set a Budget and Stick to It!
- Consider Co-working/Shared Studio: Especially when starting out, this can slash rent/utility costs.
12/12 Feeling overwhelmed? Tools like TrueCraft can help! It helps you automatically track material costs AND those often-overlooked overhead expenses, giving you a true picture of your profitability. Check it out and see how it can help your handmade biz!