More free ebooks

Did you know that Seth Godin has several ebooks available for free download? Okay, maybe your head isn’t stuck in the sand as much as mine, but I was excited to see these.

Remember, it’s important to keep a pulse on the business side of your art. Believe me, I do realize how hard that is to do when you’re doing what you love (and a lot of times we feed our own dreams for quite awhile before we ever start making money). This is what makes Seth’s words so valuable — it is a kick in the behind for those of us who just love sharing **freely** of what we do. Isn’t it about time our dreams start to support us?

Go get your downloads and get inspired to share your intellectual property in a way that supports you back!

Oh, just downloading the books won’t get you inspired — you do have to read them. (I might — I said, “might!” — be guilty of that myself.)

Living Freelance

Whether you are a completely self-supporting artist (lucky you!) or moonlight as an artist (hmm, guess where I fit!), we can use all the help we can get to keep us motivated and on track.

One of my personal favorite blogs is Walt Kania’s The Freelancery. Even better than the blog itself is this fabulous ebook Walt has put together of his most popular posts. This way, you can keep it simple and read the best of the best if you don’t have time for the whole blog. And the cherry on top: Walt is offering his ebook for free! So, I couldn’t just let that slip by unnoticed by the rest of the world who has yet to discover Walt. A big kudos shout-out to Walt with a big hug of gratitude for the free ebook. I’ve got my copy. Be sure to get yours.

Thank you again, Walt!

Find my art in Twin Falls

The newly remodeled Mail Room in Twin Falls has set up a space to show and sell artwork from local artists. It was hard to contain my excitement when Lebron emailed me to see if I was interested. He’d already seen my work at several local shows. Of course, I jumped on the chance. I couldn’t wait to get art down to his store. So, get on down to The Mail Room. check out all the artists he’s got in there, and show your support for him and the artists. With the holidays coming, it’s a great way to get a jump on your shopping.

So, if you’re out there doing art shows and getting your work in front of people, they will start to notice. Remember that it means you’re on the path you want to be on. Success is not one giant leap but a series of repeated, little steps.

Let’s Talk Bookkeeping – Expenses Part 4a

While we’re talking about expenses, let’s add something else you might not think about. This does round back to other blogs I’ve posted.

You must separate what is an expense from what is an investment at least in your mind. An expense is a cost for your immediate business, usually for maintaining the business. An investment is a cost you pay out now that you hope will return a greater reward in the future.

An investment might include purchasing more equipment or taking a class. While these are technically classified as expenses or fixed assets that will have depreciation expenses for bookkeeping purposes, you need to keep in mind that if you expect to receive a long-term payoff it’s an investment. An investment may also be as simple as putting your time and energy into your passion. Invest in skills you will always have. No one can take away skills you learn. Weigh the costs of an investment against the future potential and you might see your expenses diminishing for a greater reward.

Do you have adventure capital?

I took a seminar a couple days ago from Barbara Winter. She said something about business owners that I thought I’d pass along because I think it’s important for every artist to think about as well. Often when a company starts up, they gather venture capital to help fund it. But what about “adventure capital”? Adventure capital? What’s that?

Adventure capital is one’s willingness to have an adventure in their business. When you have adventure capital, you are more willing to experiment and try things out to see if they will fit. It maybe doing something you’ve never done before like travel to Las Vegas by yourself to take a class. Remember last year when I took the pottery class. I had no idea how it was going to turn out, but I would’ve never known if I hadn’t given it a shot. Adventure capital doesn’t have to take money either – it might be trying a new approach at shows or on Twitter.

So, go on today and inject some adventure capital into what you’re doing!

Let’s Talk Bookkeeping! Part 4 – Expenses

Let me ask you a couple questions and be honest with your answers: Do you like expenses? Do you like paying bills? Do you like spending money? Do you like going shopping? Do you like buying things?

Your answers may vary: yes to some, no to others. In the end, every question equals one thing: money coming out of your pocket and going into someone else’s.

Now, let’s just stop here for a moment. In the last bookkeeping blog, we talked about income being a validation that someone enjoyed your art enough to want to buy it. Realistically, this is an expense for them. It’s money out of their pocket that came into yours.

Realize and become comfortable with the fact that your expenses are another person’s income. It’s the flow of abundance. When I make a sale, I know that someone is spending their money with me in good faith. Faith that I will pay my bills and stay in operation as an artist (which increases the value of their art as I build my successes). I’ve heard people grumble about paying their bills, paying their taxes, buying gas, buying groceries, and everything is getting more expensive. I’m sure you have too.

Now take a moment to flip it and think about who’s getting the income. The electric company gets paid so they can keep giving me power — without which I have no light from my natural light bulb or electricity for my computer. I pay my taxes so the firefighters can come to my house when something tries to catch on fire or so the road department can maintain the roads I need to use to get to and from my shows safely (not to mention the gas that goes in my car for these shows). I eat the groceries I buy from the store and they use the money to get more product in and pay their employees (who then have money to buy my art) and this keeps me from having to grow my all own food which would take time away from my art. And yes, if nothing else this last recession should have proven to you that the economy seeks balance and when it doesn’t do it naturally then bottoms fall out of markets until an equilibrium is reached.

Do you see what all these have in common? In some way, I as a person also benefit from paying my bills, usually both before and after paying the expense. It is the nature of income and expenses. So, I say it again: your income is someone else’s expense and your expense is someone else’s income. Love the flow.

Website costs, eBay/Paypal/Etsy/etc. fees, supplies, postage, envelopes, reference material and books, education costs, jury fees, booth costs, lodging, meals, travel — these are all examples of expenses.

Now the trick it to make sure that your income is always more than your expenses. It may take careful budgeting to do this since artists don’t usually have an even flow of income. But then again, a lot of businesses don’t have equal months. That’s why we have “Black Friday” – the day when retail businesses usually get out of the red because everyone does holiday shopping. Can you imagine having to support your business for ten and a half months before having one and a half where you actually make money? But, if your business is heavy in expenses in months where you don’t have the income to cover it, you may have to personally invest in your business. Let’s face it, every artist starting out will have to make a personal investment. It’s the nature of the business. Unless you can get “love money” — money from friends and family — you’re “hobby” isn’t going to get a business loan. If you do art shows, jury fees and booth fees aren’t going to be collected after they see how you do at the show. Nope, those are collected before the show. Brushes, printer paper, cleaning supplies, chisels, knives, pencils, pens, etc. are all expenses that need to be purchased so you can create your art.

Even after all your initial investment costs, you’ll have regular costs that will be maintained – websites to renew, brushes to replace, etc. These make it easy to budget. But they are still expenses. Hopefully, now that you understand the true nature of expenses, you won’t see expenses as a pure evil, but rather to see the cycle and have more understanding of the quote, “It takes money to make money.”

Important Marketing Lessons

Yesterday I was out at the bookstore combing for new information. I happened across a book titled Marketing Lessons from the Grateful Dead.

None of these are new insights, but here’s what I felt were the most important:

Lesson 1: Don’t follow anyone else’s path

Everyone wants a map to show them the way to success. Guess what? There is no map. Everyone is different. We all have our own experiences and know different people. Because of this, what path has worked for one person won’t work for another. There might be similarities, but no two will ever be the same.

My friend gave me a great quote that also relates to this: If you don’t like the path your on, start paving another.

Make your own way!  No one ever said it would be easy. If it were easy, everyone would do it. Everyone would be following you. And no one would ever have the success you have because you’ve scaled the wall with your own work. So don’t wait for anyone else to make your way for you. Let your passion drive you forward and give you the courage to do whatever it takes to succeed.

What are you 3 times better at than anyone else? Dan Miller frequently says that you only have to be 10% better than your competition to be successful at it. It’s what makes you different. This book also asks what you are 3 times worse at than your competition. As the book states, if you answer “nothing” to these questions, you’re not working hard enough (or as I thought when I read it, you’re not truthfully evaluating yourself).

Lesson 2: Be yourself.

This flows back to the first lesson. If you’re making your own path and you’ve done an honest evaluation of your strengths and weaknesses, you can’t help but to be yourself.  It comes naturally.

We live in a day and age where anyone can find information about you pretty quickly with a simple Internet search. What will they find? Make sure that what they find is what you want them to see and the easiest way to do that is to be yourself. Be transparent. Show your passions for what you do. Follow your own story.

Lesson 3: Experiment

Try things out. How will you know if a marketing idea will work out or not if you don’t try it out? How will you know if you’ll sell more art or not by using Twitter if you don’t come up with a marketing plan involving Twitter and do it? How will you know if you can sell on eBay if you don’t give it an honest effort? I’ve been following a conversation on LinkedIn recently about whether or not to put prices on a website and there have been good arguments on both sides of the issue. But it all comes back to what will work for you.

Again, this goes back to forging a path. Twitter, eBay, website, gallery sales, etc. You will never know what works for you until you try the option and evaluate it.

Lesson 4: Create exclusive programs for your most loyal followers

If you’ve been selling art for awhile, you know that people quickly fall into one of three categories — people who don’t care what you do, people who like one piece and want to have it, and people who love everything you do. Should these people be treated equally? I say, “no.” I could waste my breath trying to convince someone who doesn’t like my art as to why they should change their mind. Lost cause. Move on. Remember the old selling adage of “Some will, some won’t. Next!” Go on to the next person who shows an interest in owning one of your pieces. These people you can nurture into becoming true fans. Of course, the true fans are the people who love everything you do. These people should be your friends. You should treat them differently. They are you A-list. What can you do to let them know they are special? This can’t be an act. You can’t be faking your appreciation just to make sales. So, I’ll say it again, these people should be your friends. Treat them as such even if you don’t know them that well. They trust you. They want to know you. Go back to the lesson of being yourself, then treat your A-list in a way that is uniquely you.

Lesson 5: Keep track

I’ve heard that Seth Godin has recently started telling his Twitter followers to not keep track of their numbers — that the amount of followers is irrelevant to how the followers should be treated. I disagree. Or, maybe it just doesn’t matter when you have more followers than you can manage anyway, when you already have a stable tribe that will support you no matter what. But if you are not yet at that level of success, you’ve got to keep track of how you’re doing. How else will you know if your experiments are working or not. You can’t manage your numbers and evaluate what you need to be doing differently if you can’t measure them.

Make a simple spreadsheet that keeps track of your numbers for your blog, Twitter, Facebook, LinkedIn, and where ever else you are involved in a social network. Record your new numbers monthly. What is your growth? Is something not working — can it be cut now or should you wait to unplug it just to make sure it won’t work soon? You can’t do everything, so you’ve got to know what you do well to know what else to release. Set a goal for your growth too, say like 5% per month, so you focus on creating this growth.  Measure it, manage it, set your new goals, and get to work. There, that’s your map. The only one you get and the only one you need.

Lesson 6: Do what you love

How many times have I already stated this on my blog? Do what you love. If it’s not your passion, if it doesn’t fill your every breath with excitement, why are you doing it? While making more money might make your life easier (at least in the short run), it doesn’t mean that it will increase your happiness. Happiness is an inside job. It comes from, guess what, being yourself. Only you can make yourself happy. That’s why it’s so important to do what you love. If you add that to a plan, you can make money. Once again, no one ever said it was easy. Or maybe it really is that easy. Many books have been written about how your perceptions create your reality. So if you believe it can be easy to create your own success doing what you love, it is. My drawing teacher always said, “Nothing is harder than anything else. Some things just take more time.” Can you become a doctor? Yes, just go to medical school and do well in your classes until you graduate. Can you become a writer? Yes, just sit down for as many days as it takes you to write and edit a book. Can you become a successful artist? Yes, just keep learning your craft and working your marketing plan and measuring the numbers until you are at your own level of defined success. But rooted at the heart of all these is the belief that you can do it combined with the passion that makes you love to proceed with the work it takes to get there.

You’ll always know the next step you need to take unless you start looking for the magic pill or the trick that will jump you immediately to success. We’ve all heard stories about people that come into a windfall of money either by inheritance or winning the lottery and then are broke (or dead) within five years. They aren’t prepared for their sudden wealth. You’ve got to build up, to prepare for success. The pinnacle of a pyramid does no good without its foundation. No one becomes a doctor by just taking the last year of medical school classes. There is no quick road to success and that’s why it’s important you follow your passion to sustain you through growing your success.

The book closes with a quote from Walt Disney — “All dreams can come true, if we have the courage to pursue them.”  What are you going do now?

Let’s Talk Bookkeeping! Part 4 – Income

Isn’t this the part we all love?

Who doesn’t like to see money come in? For artists, it’s a validation that someone else enjoys our creation enough to want to own it, enough to want to pay us for the work we did.

Artists have many ways to make money. There are the obvious product sales, but artists can also teach others or speak to a group. We can license our art (or at least put it on other products to see if it’s well received and has potential of further licensing). We can write ebooks about art which in turn can bring income. Having multiple streams of income is smart for any business. I won’t expand on that here and now because there are many better books and articles referencing how to build multiple streams and residual income.

While you may use different classifications to keep track of how you receive the money (product sales, print sales, book sales, etc.), it’s very important to make sure you’re recording all of your income.

The biggest and hardest fact to remember is that this is not your money. This is your business’ money. Aw, you didn’t really want to hear that, did you? But this is why it’s vital that you have a business checking account separate from your business. That way when you do make a transfer or write a check to yourself, it becomes a more conscious decision that you are taking money out of your business. It’s a nice way to feel the abundance, that you’ve been successful. Even if it’s only $20 so you can go see a well-earned movie without hurting your personal budget.

This decision will also remind you that your business has other things to pay. We’ll talk about expenses in the next bookkeeping post.

Let’s Talk Bookkeeping! Part 3 – Equity

Back in my overview post, I gave some formulas to remember. The important one right now is the one that says Assets = Liabilities + Equity.

Equity in its simplest terms is the difference between the assets and the liabilities. To expand on it, this is to say that if a business sold all its assets, then paid off the money it owed (liabilities), the money left over would be the equity. Of course, it does get more complicated, but we’re only looking for a basic understanding here, so this definition works for our purpose.

Now, there can be a negative equity situation where the money you owe is more than your assets. As artists, we could fall into this very easily unfortunately. Let’s take an example.

Shane is a painter and he’s bought $800 worth of canvases on a credit card. He didn’t have the money to pay it off and has just been making monthly minimum payments so now his balance is at $875. Then he decides to quit painting because he just isn’t making money and would be better off going back to school to be a dentist. He now has some canvases painted on, but other are blank and wrapped. He gives away the painted canvases to a friend, but decides to sell the unused ones on eBay. Those go for rock bottom prices and after shipping costs he’s only managed to make $475. This means he personally still owes $400 ($875 – $475).

This illustrates why it’s so necessary to keep an eye on the accounts on the balance sheet (assets, liabilities, and equity) and not just on if you’re making a profit (income and expenses). I said in Part 2 about liabilities to keep the money you owe to people as low as possible. Hopefully, now that we’ve looked at the equity side of it, you understand how you become liable for making up the difference between what you owe and what you could sell your assets for if you absolutely had to.

The equity section is also how sole proprietors put money in and take money out of their business.

When you set up your art as a business and you’re initially setting up your chart of accounts, any assets and/or inventory you already have need to be “journaled” in. I’m assuming you already have assets, inventory, and supplies when you decide to start your art business because for so many of us it starts as a hobby first and grows from there – sometimes unexpectedly. So if you have an air compressor you paid $100 for when you were doing art as a hobby, then you’ll set up a fixed asset for your compressor of $100 and in the equity section you’ll have an account called something like “Owner investments – equipment” for $100. Of course, there’s still depreciation on the compressor depending how long you’ve had it, but really, that’s a detail best left for your accountant. Just get the basics set up and go from there.

If you need to put cash into your bank account to pay for a prepaid expense like booth fees, you’ll deposit the money and make a credit entry to an account like “Owner investments – cash.”

Now to get the money out. Let’s say you worked really hard at a show and sold $1000 of product (and as an additional piece of information, you had $350 in expenses for the show). You need $200 to pay some of your personal bills (or maybe you’ve been looking at a new pair of shoes and decide to reward yourself for reaching your show goal). So, how do you pull that $200 out of your business. Since it’s a personal item, you can’t just expense it. Instead, you write yourself a check for $200 (the credit side of your entry) and debit $200 to Owner Draws. When the end of the month comes and you’re reviewing your financials, you see that your income is $1000 and your expenses are $350, leaving a net profit of $650. If you’d expensed your $200 withdrawal, your expenses would be overstated at $550, making your net profit appear to be $450.

It seems like a lot of numbers and may be overwhelming. Just remember that this is important for two reasons. First, and the one that seems the most boring, is when you’re doing your tax return. You’re income and expenses aren’t correct and so your return won’t be correct. The second reason it matters is for your own peace of mind. Does it sound better to think that you made $650 profit or $450? Chances are that if you don’t realize you’re making money, you’re going to wonder why you’re staying in the art business. I personally feel this is exactly the reason why so many frustrated artists decide to stop or get depressed– they aren’t getting an true picture.

I know I feel a lot better when I reflect on my financial statements and see that I grossed $1000, netted $650, and was able to withdraw $200 for myself. It’s an empowering feeling. But if you’re expensing your draws, the financial statements are going to tell you that you grossed $1000 but only netted $450 which looks like your expenses are eating up more than 50% of the money you’re making.

Yes, overall the reality is that you have $450 in your bank account to spend on your business or withdraw for later personal use, but it’s the story that your financials tell. Only when the story is full and complete can you get an accurate picture of your art business.

Let’s Talk Bookkeeping! Part 2 – Liabilities

Okay, break over. Time to get back to bookkeeping basics.

After assets comes liabilities. Those are money that you owe to people. Most artists bootstrap their businesses and aren’t going to have a whole lot in the way of liabilities because we usually pay for things as we go, whether it’s show fees or bills for supplies.

If you have payroll, then taxes you take out of employees’ checks is a liability because it’s money due to the government. However, most artists who have people helping them (like for mailing of packages, virtual assistance — wouldn’t that be nice! — or assistances who help set up and take down at shows) probably hire these people as contract labor and issue a 1099 if necessary rather than dealing with payroll issues. A word of warning: there’s a rather scary situation coming down the pike regarding 1099′s if Congress doesn’t repeal it. Right now, I’m sitting in the camp of hoping for a fix rather than even imaging the complexities of what’s coming. Yes, it’s scared me into denial. If you want more information, check out this article from CNN. After all, do you buy more than $600/year in supplies? I’ve seen booth fees this high too. Wow!

Another case where you might have a liability is for unearned revenue — this would be a commission that you haven’t finished yet. Until the product is delivered, you haven’t earned the commission money. It’s a liability.

Sales tax you’ve collected is also a liability. A lot of artists that I talk to at shows don’t have a sales tax number, but I’ve found that it really is easier to have one. Be sure you understand the sales tax laws of your state, even if you don’t have your own permit number, and this also includes how the state handles Internet sales. Another warning: it is only a matter of time before all Internet sales are taxed. Personally, I think there should be a federal Internet tax. The way I have my books set up, I set up, I know what states my customers are from so it’d be easy to report how many dollars of product was purchased by customers in each state. Of course, I know that it’ll never be that simple.

If you’ve set up a credit card for your art business, charges to the credit card are a liability. I’ve mentioned QuickBooks financial software before so I’ll add here that I really like their way of entering credit card charges and reconciling statements. When I first started using QuickBooks, I didn’t use this feature, but I have figured it out (not that it was hard) and I can’t imagine doing it any other way now.

A mortgage on a studio might be another example of a liability, but not a typical one for most artists.

Keep an eye on your liabilities to make sure they stay as low as possible. While they are necessary (like with sales tax because that shows you are making sales!), it’s easy to get yourself in trouble. Liabilities show instantly how much debt you’re in. Unlike an expense which is a debt that’s already been paid for, this is money you really have. Don’t go there if you don’t have to.