Well, I can say 2021 was a much better year for my “side hustle” of woodworking than 2020. My primary mode of sales has been the local Farmer’s Markets/Craft Shows – and there weren’t many of those in 2020. I did take the opportunity to pay to upgrade my website and enhance it for internet sales – though I haven’t had much luck selling anything on the internet. In a lot of cases, I’m competing with products from overseas, where they use lower quality woods and cheaper labor – so I can’t compete on their prices. At least that is the story I am telling myself.
So what do my financial reports look like?
|Cost-of-Goods Sold Expense||($531.55)|
|Earnings before interest and Income Tax||($3,539.20)|
|Earnings before income tax||($3,539.20)|
|Income Tax Expense||$0.00|
- Cost of goods sold is coming in around 38.9%, which is a little higher than I expected. It may be that I was purchasing more materials that what I needed, and I certainly have some inventory remaining
- Operating expenses (insurance, business fees, etc.) were high, but $2,400 of this was for work on the website, which was a one-time thing (hopefully). This number should drop significantly in 2022.
- Still, coming in at a loss of $3.5K for 2021. I lost $2.5K in 2020, so I’m $6K in the hole for the side hustle so far
|Subtotal of current assets||$3,113.31|
|Property, plants and equipment||$0.00|
|Cost less accumulated depreciation||$0|
|Liabilities and Owner’s Equity|
|Advanced payments from Customers||$0.00|
|Accrued Expenses Payable||$0.00|
|Short-term notes payable||$0.00|
|Subtotal of current liabilities||$0.00|
|Long-term notes payable||$1.00|
|Owner’s Equity – invested capital||$3,113.31|
|Owner’s Equity – retained earnings||$0.00|
|Total Liabilities and Owner’s Equity||$3,113.31|
- So I’ve got about $2.5K in cash, and $680 in inventory (the inventory is listed as the cost of materials only, not its sale price).
- When you look at what I put in vs. the current balance sheet, I’d say I’ve lost about $3K for the project in the first two years.
The cash flow report (the last of the big 3) showed that I had to inject $500 on four (4) occasions throughout 2021 to make sure my cash was sufficient in the account. If I had not been getting the website done (-$2,400) I probably would have been fine.
- Need to go into the business well capitalized. Even for this small business, I’ve got $6K+ in, and I came with my own tools and shop.
- Continue to look for ways to save money. I’ve got a friend who I borrow the pop up and tables for the Farmer’s Markets/Craft Shows. Cost = $0 vs. $200+ to purchase them
- A good website will still drive traffic & interest, even if it doesn’t generate internet sales. I believe this was money well spent
- Identify the “price point” for your market/show. Depending on the clientele, people will be spending within a certain price range. If the price point is $50, you aren’t going to sell a lot of $300+ items.
- Commission work can be very lucrative, provided you price it correctly. For your existing work, you’ve identified the time it takes to make it, and put your labor into the price. For “one offs” commission work, you need to do a good job of estimating time in order to make the work pay for itself.
- As the year goes on, do an analysis of what items are getting people’s attention, and what sells. Those are the items you need to emphasize, while the lower ranking items can be “pushed back.”
- Signage is important at craft shows. People walk by very quickly, so your signage needs to show what you do, and what are the advantages of your product vs. others.
Overall, I’ve enjoyed myself, and gained some useful experience in running my own company.
Hopefully your “side hustles” have done well!
Mr. 39 Months