Inktober #4

Here are the 4th week of Inktober drawings. See the others here: Week 1, Week 2, Week 3.

Prompt #18 was “Bottle.”

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Several years ago, I went to the park and sat alone in my car. My boys were off visiting their father. I was lonely and couldn’t stay at the quiet house any more. So I sat at the park and watched the clouds drift by. And cried. Okay, I’m going to admit it now, I cried. Hard. Long and hard.

Something encouraged me to open my eyes and look toward the sky. I did, and there was this cloud floating along that looked like this twisted genie lamp. I grabbed my sketchbook and drew it out. Then I did another, and another. I went home and continued drawing these all weekend long. It’s not like I was filling pages, but whenever I felt the mood to let my hands draw some elegant curves. 

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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.”

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.

Do what you love: Part 3 – Products and niches

Raise your hand if you have too much stuff in your house. Did you raise yours? I raised mine. Twice!

Most of us in America are very fortunate souls, even if we don’t always feel like it. But do we ever care where these products that we buy come from? Rarely. Only if we later find out that it was, for example, made in China and contains lead paint.

Outsourcing is a hot buzzword. Every day I get an article from someone about how to outsource and why I should do it. Let me tell you, it’s a thought that scares me. But that’s just between you and me, okay?

Come closer and I’ll tell you why. I don’t want to be overheard.

First, we start by outsourcing products to be made by someone else. Then we start outsourcing services. Have you ever heard of a company outsourcing their tech support to another country? Have you ever called for help and gotten someone in India? Never happened, right? Unfortunately, these will never go away. As I stated in the first post, sometimes we need to let someone else handle things so we can invest in our own time. It’s not always bad, but consider this:

What happens to the people left behind after a company outsources it’s products and services? Those people no longer have jobs. If they don’t have a job, they don’t have the money to buy products and services. The people in the countries where the jobs have been outsourced to now have the money.

Do you see why this scares me?

Every time a company outsources because it’s cheaper, it hurts the economy. We’re digging our own hole and we haven’t stopped.

Too serious for you? Come jump down the rabbit hole further with me. I’m just getting warmed up.

I’m not the only one who’s seen this trend but their response scares me even more. The typical reply is that as a country America is moving away from being a product-making and service-providing economy. Those “left-brained” tasks can be done by other countries more cheaply. So we are becoming a “right-brained” society and it’s our job to find niche markets and ideas for others to make.

First, like people in other countries can’t have ideas? Please! Not to mention that ideas have no value until they can be realized. Aren’t you glad that some of your dreams are just dreams and didn’t become reality while you were having them?

Second, I don’t want my plumber coming over and only working on my kitchen sink because that’s his niche. Or an electrician that will only work on outlets that service lamps. Do you see what niches carried to the extreme become? That’s not to say that niches can’t be a good thing. Through Dan Miller, I’ve heard of a physical therapist who only works with people from the knee down. He provides necessary help to people.

Artists are people who also need to find a niche. Surprised to hear me say that?

It’s not that surprising I hope.

Artists are the gauge by which society is viewed and recorded. Would we have any idea what ancient Egyptian society was like if it were not for the artists of that time period?

Artists are the voice for what’s good and bad in our world. The May 2009 cover of Art in America had several little Oriental girls sleeping underneath a bright pink comforter. It’s a beautiful picture, until you see the automatic riffles on top of the comforter. This photograph isn’t something I want hanging in my living room, but it carried such a voice that I’ve been unable to forget about it. It’s a thought provoking piece that is meant to make the viewer stop and reassess.

Back in Part 1, I mentioned the guy changing my car battery. He provided me with a product (the battery) and a service (installing the battery). Art is like that too and artists need to realize this. Not only is the artwork a product, but we’re providing a service as well – whether it be shipping a piece and the time involved to make sure it gets to the destination safely, to taking abstract thoughts and putting them into our craft, to hanging our works for shows, right down to actually making it. 80% of the population wants to write a book. Those that do (which is a much smaller percentage) are providing a service to the reader. Without the written book, there would be no product.

Well that’s just labor, you might say.

A tax preparer delivers a tax return. Do you think they think of the work that goes into preparing the tax return as labor? No, they realize they are providing a service to their client. Labor is what you do when you work at something. Service is what you do when you put your knowledge and expertise into a product. Hopefully, you enjoy making that product, otherwise, why have you become good at something you don’t love?

An artist should start painting from the heart, whatever they desire to paint. A potter should start making whatever the clay wants to be. A writer should just write that first draft to get it out. But eventually, there comes a time when craft has to come in. The painter should gain more control over what’s being painted. A potter should be able to shape the clay at will. A writer has to learn to edit the words and make the story better. This is the knowledge and expertise.

Our economy won’t improve until we start realizing that products come with service as well and we need to pay for that sometimes build-in service. We can’t just be looking around for the cheapest price anymore. We have to see what others are putting in. Like the service I get from the office supply store I mentioned in the last post. If a store isn’t treating you as you’d like to be treated, why are you still shopping there? Yes, the store might be more expensive down the street, but if they are treating you better, isn’t that worth it? Why tolerate to save a couple bucks?

Would you want someone else buying another painting, or buying another vase, or buying another book not because they like the other product better but because it’s cheaper?!!! No, you wouldn’t.

Find the service in the product you provide and you’ll start seeing more of their worth.

Find people who love what they do to help you with things outside your knowledge base and you’ll help the world.

Find the value in the products and services you buy and you’ll open yourself up to the abundance of the universe.