Crafting a Business
By Jenny Hart
The Money: You Gotta Keep ‘Em Separated!
Oh yes, you better believe it. While everyone has been pacing nervously in circles over the economy, I am still gonna tell you to keep a sharp eye on your company’s finances. You do still have a company, don’t you? Even just a little somethin’ somethin’ on the side? I bet you do. Now is the best time to buckle down and see what makes your little business tick. Even if you need to take a hiatus to figure it out and re-stabilize, do so (no need to prematurely announce a shuttering of your doors). Let’s look at your finances.
First of all, you keep your monies neatly organized and accounted for, right? You never “cross the financial streams,” so to speak, between what you spend on yourself and what covers costs the company has to bear, right? Right? Oh dear. You realize that to do it any other way is a great way to run your business into the ground faster than you can say “expense it.”
Cash flow is the lifeblood of your business. If you don’t know what’s pumping in and out of your bank account — and why and how much — then you don’t know anything about your business. You can’t tell how it’s doing, and I bet you don’t sleep so well at night, not knowing. When you know, you can sleep (or at least, best figure out how to straighten it out).
Let’s talk to a successful and stable business, Art Star in Philadelphia. Owned and operated by Megan Brewster and Erin Waxman, Art Star is a boutique and gallery that features the work of independent artists, designers, and crafters. They also host the Art Star Craft Bazaar, which recently took place on May 30–31.
I had a solo show at Art Star a few years ago, and while I was there Erin was showing me her charmingly arcane, but practical, method for going through the gallery’s receipts each day. As I sat down to write this column, I wondered if she still used this accounting method today, or if they’d moved on as business grew. So, let’s talk to a couple of women who have been doing it all by themselves and making it work.
What is the main focus of your business?
Our space is divided between the gallery and boutique. The gallery rotates every six weeks with a new artist, and our main focus in the boutique is to carry handmade work by artists, but we also work with a few artists to develop limited edition products — for example, prints, glasses, mugs, etc.
How do you keep your books, and how did you learn to keep books? Or, do you have someone else do them for you?
We keep the books ourselves. We thought about hiring someone to save us some time, but haven’t gotten around to that yet. We tried using QuickBooks when we first opened, but I found it more trouble than just making an excel document. We also bought the cheapest version, so that may have been why it didn’t quite work for us. Shortly after we first opened, a friend showed me some basics, but most of it seems like common sense to me — keep track of what goes in and out.
Do you have your own system? Why does it work for you?
Yes, I have a few Excel documents to break things down. I keep a daily ledger of what we take in and what goes out, and then I also like to have comparisons from month to month and year to year.
What doesn’t work about it?
We have an archaic way of keeping track of all our inventory. Each artist has a specific code for easy organizing and payments, but it’s all handwritten and kept in large book keepers. It was fine when we first opened 4 years ago and only had a handful of artists, but now that we have 50+, we need to update it. This year we plan to get a POS system that will keep the artist inventory together. It will save time and energy when we need to pay them and at the end of the year for taxes.
Did you have to make changes to your bookkeeping as you grew?
When we first opened I kept everything in a handwritten ledger. It was slow when we first opened, and I didn’t have much to keep track of, but then I realized how silly that was and I created an Excel document for balancing our books and keeping track of our money flow.
Do you work with an accountant? How do they help you?
Yes! I think anyone who has a business, no matter how big or small, should have an accountant. There are so many forms that we have to fill out at the end of the year that I would never want to even attempt doing it myself. We have to file taxes for Art Star and for our personal income, plus I have my own jewelry and clothing as a separate business. It’s just too much to think about. We just organize and break down our figures, and send it along to him — and then magic, it’s all done.
It’s also important to have someone to call with any questions regarding taxes, deductions, etc.
How are you weathering the current economy?
We are surprisingly doing alright. It’s always slow in January and February. I think after the holidays people are sick of shopping. Last year we definitely had a lull around August and September, but then our holiday season was a little better this year than last. This was the first year when we had people tell us that they were making an effort to only shop at small businesses. We even had a few folks who did one-stop shopping; we have a good price range in the shop and something for men, women, boys, and girls.
What was the best lesson you learned in watching your finances? Scariest money story?
The first year that our business showed profit was really scary. Our accountant called and asked me if I was sitting down. The month of December is when we bring in the most money, and because we pay our artists in January for sales in December, it seemed that we had lots of extra money, but we didn’t. We had to pay a chunk in taxes that year — very scary. We learned to try to get at least a chunk of artist payments out by December 31st for the deduction, and if there are any improvements or upgrades we need to make to our business, such as buy a new computer or furniture, we do it before the year is up.
What’s your favorite tax write-off?
Food and beer for the opening receptions!
What has been your biggest reward in running your significantly awesome Art Star gallery?
A sense of accomplishment and being a part of a community that’s both local and national. We love the artists we work with and want to promote their work to the best of our ability. Helping to generate an income for artists and expose Philadelphia to work we like and think is important. We also like being our own boss.
I heard that! Being your own boss has its rewards. If you’re in the Philly, Penn., area be sure to stop by their gallery and boutique.
In Austin next week? Join Jenny and friends at the Austin Museum of Art (AMOA) for an evening of “Communicrafting” with local teachers and designers, who will be on-hand to let you jump in and sew, knit, embroider, and just try your hand. Jenny Hart will also be introducing her latest kits (stationery, baby bibs, and some surprises) from Chronicle Books in the AMOA bookstore. Come one, come all next Thursday, June 18th from 6:30–8:30 p.m.
About the Author:
Jenny Hart is the founder of Sublime Stitching, the first embroidery design company to bring tattoos, robots, and pinups to needlework patterns. She is also the author of several titles on embroidery for Chronicle Books and an internationally exhibited fine artist. Jenny lives and works in Austin, Texas, where she is a founding member of the infamous Austin Craft Mafia.