Okay, I know this is kind of a funny thing. Many, many jokes are made about this. And I laugh EVERY time. Cause I’ve been there.
But deep down, it’s kind of a sad thing.
And if you’re not ready to confront this, STOP READING.
I knew when I started my crochet business that I didn’t have to spend a lot of money to get started. That was why it was so appealing. Most yarn isn’t that expensive, and I wasn’t having to pay anybody for the labor. So if the business failed, I would mostly just lose my time it took me to make the stuff.
I had a vision of making these boho-looking fringed coasters. I could make A LOT of coasters from each skein. Materials = cheap. Smart idea.
(and two years later, I finally just sold the last of them off in my clearance $5 bin: don’t try to sell coasters)
Anyway, I was feeling really comfortable with the risk I was taking in starting my business. It didn’t feel like a financial risk at all. I knew Etsy wouldn’t have a ton of up-front fees.
As I made my first few sales (to friends, not organic Etsy sales), I saw some money come into my account, and then leave again.
I remember the thought I kept having: “I have to put everything I make back into the business.”
It was almost like I was just giving myself permission to go buy more yarn for the fun of it. It freaking IS fun. Or, maybe more gluttonous than fun. Definitely satisfies some kind of craving.
And I justified that by saying “oh well, at least it’s a hobby that pays for itself!”
Thus, a vicious cycle began.
And it felt vicious too. My husband was certainly vicious when I would ask for his credit card to buy “just one more skein” of yarn.
(Actually, he totally wasn’t, he’s amazing. But I was paranoid he was thinking it was a problem. Because it WAS. I still to this day believe he did have a problem with it but wouldn’t tell me because he just wanted to support me.)
YUCK. I hated all those feelings. And I wanted to do something about it, but I didn’t know what I could do. I was trying everything I knew to make my business work.
If I just try making this new thing, it’ll be the bestseller I’ve been waiting for and I’ll finally get enough sales to cover my yarn expenses.
My breaking point?
About a year, $1300, many labor hours and lots of stomach aches later, I realized that I was not only spending 100% of my revenue. I was spending more than that. I was spending some of mine and my husband’s personal money on yarn, too. I was fueling my business with personal cash. I had a $600 deposit from a client from a different business I had enter my business bank account. I should’ve tucked it away. Within a month or so, that money was gone to yarn. And it hurt.
That is the EPITOME of a failing business. And I didn’t know this yet, but businesses can “be failing” for a looooong time.
So. If you’re getting into fights with your husband about all the yarn you’re buying, there’s a solution to that. You don’t need to get his permission to buy yarn. You need to use your business money to buy yarn. The yarn you buy is YOUR business, not his!
What I realized is that if there’s cash in a bank account linked to a debit card, I’m going to spend it.
I watched, and my business bank account would never rise above a certain amount. For me, it was a few hundred dollars. I would find some way to spend the money, “investing back into my business” 🙄. Etsy Ads and Instagram boosts are great ways to waste money if you’re looking for one!
And now I’m going to share with you the most important business resource I know of and the thing that changed EVERYTHING for my business.
Profit First, by Mike Michalowicz
(no, I’m not making any money by promoting this, but I should be!)
Please PLEASE read this book. When I read it, I started to see my business as a machine to generate me cash. Like, cash to SEND to my personal account every two weeks. Like a paycheck for all this hard work I’m doing.
The author wants you to reorganize your business banking. And you SHOULD DO IT EXACTLY LIKE HE SAYS. Naturally I didn’t jump in to that part right away, but once I actually changed my accounting strategy, I started seeing big changes in my finances.
God, I wish every business owner would read this book.
And of course there are other correct ways of doing things. There’s a chance you’re that rare person that’s found a different way to do things already and it’s keeping you in the black. And that’s GREAT. If you’re not hemorrhaging money, then you’re doing just fine! Definitely comment below and tell us all what you’re doing to make your crochet business work for you.
But if you’re not that person…
If instead, you’re me a year ago, realizing there’s a problem and gearing up to face it, just try this. And come back to this post and let me know how it works for you!!
I got more where that came from, love. Get all my free crochet business advice here!