Tuesday, October 21, 2014

Why business plans are a waste of time

Many of you might be surprised to learn that I have never written a business plan for my business. I have written a couple of mock business plans while working on my master's degree in International Business, but there has never been a point in my ever-evolving business where it made sense to have an official business plan. I could research and put my best estimates down on paper, but there are far too many variables for any business plan to be more than a wish list. My best advice to entrepreneurs has always been, "Just do it." Don't waste time trying to perfect it before going live, because while you're busy working on the perfect logo and brilliant marketing materials, all of your competition are getting their products into customers' hands. Once a consumer has tried a product that works well enough, you'll have a hard time getting them to switch to your product. If all you have to get started is $15, figure out what you can do with that and do it. Just get started and learn as you go. Snowball your earnings into more supplies and better equipment. You need to start working with actual customers if you want to find out whether or not your business idea is viable. And you need to be willing to accept that what you think is a good idea, may not be what sells. Ask for feedback and be willing to change until you find something that works.  

Here's a short and sweet article on the subject.


Thursday, October 2, 2014

Earning potential in the face and body painting industry

I posted this as a response to someone on a newbie face painter forum who was asking about earning potential in our industry.  I thought it might be helpful to some of you who follow my blog as well.

 I've met "headliner" award-winning, instructor/ sponsored artists who travel extensively for their work and only earn $20,000 - $30,000 per year. And I've met mediocre artists (whose names you never would have heard of) who run their own entertainment company, with multiple artists and services that earn six figures. I also know people who lose money every year because it's just a hobby (which is fine). Based on my experience, I would estimate that, most artists (for whom this is a 2nd income in their household) are earning in the $5,000 - $20,000 range. What you can earn depends 100% on your desire to make money, your willingness to work hard, and your business sense. You can be the greatest artist in the world and be broke if you don't know how to run a business or if you only make emotional decisions about your business.

I started my business with a $15 henna kit. I lost money for the first few years because anything I earned went back into the business, and because I had to fine-tune what I wanted to do vs. what made money. There were a lot of poor decisions (or "business seminars," as my husband likes to call them) that cost me money in the beginning. But you're always learning, so just figure out where you went wrong, forgive yourself, and move on. I went from being an artist, doing festivals and parties, to being an instructor, to running a supply business. You never know where it will take you. My husband retired early last year because I now earn enough to support our family. 

You have to decide how much you need/ want to earn, and then do everything you have to do to reach that goal. I write my financial goals down and tell others what my goals are so that I feel more accountable. I have a sticky note on my computer right now with $15,000 written on it, and tick marks for each $1000, because that's my next short term goal I need to reach to pay for a couple of big purchases. Trust me, it works.

The most important piece of advice I have is to never stop your marketing efforts. I thought I could get to a place where I'd have enough customers and the business would just kind of run itself, generating more business naturally. I nearly lost my business with this kind of thinking. You will never get to a place where you can stop expanding your skills and marketing your business because your customer base and competition is constantly evolving.

Tuesday, September 23, 2014

Conventions and Tradeshows...Worth it?

Here's an interesting article I came across on my Facebook feed.


I see this at conventions for all industries, not just comic book conventions.  Instructors, featured artists, and vendors are usually sacrificing income they could be earning at home or even going well into debt to attend conventions these days.  I used to attend 8 - 12 conventions per year.  Now I attend 2-3 at the most.

I'm looking at this from the convention/ tradeshow standpoint, but it also applies to any festival or event where you pay a booth fee.  You have to measure the potential impact of your marketing dollars.  How many attendees are going to be there?  How many are potential customers?  How many vendor hours are available?  How much in sales do you have to earn per hour just to break even? How much does it cost you (per potential customer) to attend the event?  Remember to include cost of goods when you do your math.  If your booth fee is $2000, your hotel $1000, your travel expenses $1000, and staffing costs $2000....You might think that $6000 is break-even, but how much did it cost you to buy the $6000 worth of product that you sold?  Your break even might actually be closer to $10,000. If you're at an event with 10 vendor hours, you'd have to have $1000 in sales per hour just to break even.  Unless you have products with a very high price point, that level of sales may not even be possible.   And let's assume that many of those sales at the show were actually to current customers, who would have purchased from you online if you had not been at the show.  You could have stayed home and made money instead of going through the stresses of traveling and working a tradeshow, hoping to break even.

The best way to reach customers yesterday may not be the best strategy for today.  The marketplace is evolving and customers are more savvy than ever.  Instead of buying the first thing they see, customers wait to go home and read reviews and compare prices.  I'm not saying that conventions and tradeshows aren't worth doing, especially if you have a new product or the show attendees are mostly unfamiliar with your product.  But be sure that you do your homework on the event and make sure that you are getting as much marketing impact as you can from the event.  I see far too many new products debuted at shows before they are ready to launch.  By the time the creator gets their act together, either the moment has passed, or competitors have already gotten their version of the product out there.  Have your product in stock and ready to sell.  Polish up your website.  Make sure you have plenty of advertising material to hand out.  When given the choice between getting your company name and logo in front of customers or spending that same amount of money to get your actual product into actual customers' hands, which do you think will have more impact?

My cousin works for a large international professional hair product company.  I know they can spend upwards of $30,000 to attend a tradeshow where they are pretty much just meeting with current customers, supporting vendors, and maybe gaining a handful of new customers.  I can't help but think that they could have sent out $100 worth of free product to 300 good customers or potential new customers and have gotten much more value for their investment.  An online competition with $30,000 going to help somebody start a new salon would have gotten them incredible amounts of publicity.  But some old dogs take a while to learn new tricks.

It may be tough love, but sometimes you have to remove emotion from the equation and do what makes business sense.  As my favorite money guru, Dave Ramsey likes to say, "It's math, not magic."