Hobby to Business: Today is a Success If . . .

Hobby or Business?

If you make crafts and sell them, then the main difference to worry about is the difference that the IRS requires. Either way you can manage your accounting and keep track of your income and expenses the same way. The main difference is if the IRS says you have a hobby, then you report income, and you can subtract expenses, but you aren't allowed to report a loss. If the IRS says you have a business, then you are able to report a loss which will lower your taxes overall.

Check here for the official IRS classifications:
http://www.irs.gov/newsroom/article/0,,id=172833,00.html

IRS vs. Reality

Now that you know what the IRS thinks of you . . . (the IRS doesn't care what we think of them unfortunately,) how do you classify yourself? Almost all business big and small have two sets of books. One for the IRS and one for personal use. Even if you only count as a hobby for IRS purposes, you can still do everything else as a business.

The main difference in being a hobbyist or a business is how you present yourself. If you only want to make your crafts and maybe go to a craft show or two, or sell them to friends, then you probably don't want to go to the trouble of acting as a business.

To come across to your customers as a business, start creating a professional image for yourself. Building a website is a good start. It doesn't have to be anything super. Maybe just put together a blog that talks about your business and where people can buy your things.

Then order a set of business cards. I highly recommend Vista Print if you haven't noticed already! Then when you do your craft shows, make sure everyone who buys, and everyone who seems interested gets a business card. Voila! You have a business. From there, just take things a little bit at a time to include more advertising, nicer displays, and a phrase a certain salesman taught me to live by . . . Shameless Self Promotion.

Wednesday, January 28, 2009

Today is a Success If . . .

We all have high hopes that we'll sell more than ever before. We'll have a great event and walk away able to restock all of our inventory, pay some bills, put away some savings, and maybe have some left over for investing in additional advertising or something.

It's fine to have super great goals. You have to have dreams to ever be able to realize your dreams. And who knows? Maybe you will get your super great day that will solve all your problems. But probably not.

In addition to having your super great goals, have a minimally acceptable goal. Determine it ahead of time so you don't reach the small goal and then get disappointed when you don't meet the super great one. I usually determine my goal by taking the cost of signing up for the show, the number of days of the show, and the amount I need to order to replace the inventory that sold. Then I usually add in a bit more for profit. If the weather is bad, I allow myself to reduce that minimum. If I make a particular contact that is beneficial in another way, then I allow myself to count that as valuable so I can reduce my minimum goal. But I only find ways to reduce that minimum if I don't get there. If I exceed my minimum, then I have a realistic goal that I work to reach. That's my real goal, but I wait to hit minimum first before getting excited about the next level.

Goals are very important. Set them beforehand. Evaluate them afterwards. If you didn't reach what you wanted to, try to think of reasons why. Try to figure out what you need to do better next time to meet the goal. Keep in mind that it's not always you or your product. Sometimes it's the event. If you determine that it's the event, figure out why that particular event didn't work out for you. Try to figure out a way to determine ways to keep from choosing other events that would fall within the same standards that kept you from succeeding this time.

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Shameless Self Promotion

There's a rule when interviewing for a job that goes something like, "if you can say good things about yourself, then who else will?" Keep that same mentality for selling your products. After all, each customer is the same as a job interview. You want to be paid for your work. The only way the customer is going to place value on your work is if you place value on your work.

So how do you do this? Most important, be excited about your items!!! You put a lot of work into what you do. Because you love it. Make your customers excited through your excitement. If they put one item down, don't give up on getting a sale, put a different thing in front of them. Most people won't be rude to you. At the very least they'll humor you and look at what you're trying to show them. And it might end up being just the thing they were looking for once they've seen it close up.

When not actively selling, find any reason possible to bring up your business in other settings. This past year when I was handing out candy to trick or treaters, I handed out candles with business cards to the mommies. It may seem inappropriate at times when you're bringing up your business to the person you're sitting next to at the movies or church or the person standing behind you in the line at the grocery store. But get used to it! You aren't actively selling, you're just promoting. Big difference. People are usually open to the conversation.