I've been doing some year-end bookkeeping and other business-y stuff lately. I thought it would be nice to share some of my figures and observations with you in an effort to be more transparent. I always like reading the biz nitty gritty of other crafty people.
I'll give you a little history of my pattern business with this first chart so you can better understand my figures and observations. I'll talk more about specific sales and expense data in the next two charts.
2015: I started selling patterns in Fall 2015. All of my sales in 2015 & the first half of 2016 were to my mom's quilt shop. She was my incubator & guinea pig. I treated this more like a hobby in 2015, so I don't have good sales and expense data from then.
2016: In early June 2016, I finalized my website, and I started marketing to the outside world. I sent patterns by snail mail to about 200 quilt shops across the country. I got great returns from that, and started selling wholesale. I was in almost 40 shops by the end of the year. I vended at my first major quilt show, Wisconsin Quilt Expo, which has nearly 20,000 attendees, in September 2016. I picked up 5 new wholesale customers from that show. My expenses in 2016 were slightly more than my sales.
2017: I decided to jump in with both feet in 2017. I vended at both Spring and Fall Quilt Market, a trade show geared toward quilt shop owners. I picked up a lot of new wholesale accounts from attending Market. By the end of the year, I was in shops in 44 states! I still vended at WI Quilt Expo and had some retail sales from that. My sales in 2017 tripled over 2016. Unfortunately, my expenses went up by 2.5 times. So, I still barely broke even in 2017.
2018: I was picked up by major distributors in early 2018. My sales in 2018 is almost double 2017. I still vended at both Quilt Markets and WI Quilt Expo, plus I decided to vend at Quilt Festival in Houston. That's held the week right after Fall Market. Expenses for 2018 are up about 30% over 2017, but the difference between sales and expenses is widening, and I actually made a nice profit this year.
Retail sales (sales to customers at WI Quilt Expo and on my website) were almost equal to the amount of wholesale sales to quilt shops in 2016. Retail sales in 2017 increased a little, but was relatively flat. My overall sales in 2017 were three times as much as in 2016. That was thanks largely in part to attending Spring & Fall Quilt Market.
Total sales in 2018 were almost twice the sales of 2017. Nearly half of my sales came from distributors. There was an increase in retail sales, too. Sales on my website were up, but most of that increase was from vending at the Houston Quilt Festival.
You'll see that the amount of wholesale sales was down significantly this year. That's attributed to the fact that I got picked up by distributors. Some of the quilt shops that I used to sell to are now buying from the distributors instead. Some shops like to place larger orders and sort of do one stop shopping with the distributors. That's a double edged sword for me. I sell the patterns to the distributors at 30% less than to quilt shops. So I make less money with each order. But it's great that I can reach more shops through the distributors, and it's much easier to pack up several large distributor orders than a lot of smaller wholesale orders.
One thing that's very evident from this chart is that the only income that I have is from pattern sales. If I want to grow more in the future, I need to diversify. Teaching, magazine submissions, diversifying the types of products I sell, fabric design, kit sales, lectures, technical editing for other pattern designers, and more, are some of the other ways that I could make more money in the quilting world. Since I still have a day job, it's so difficult to find the time to just run the business that I do have, not to mention doing lots of other work to diversify my business. I'm also using large portion of my vacation time from my day job to go to Quilt Market and other quilt related things. I just don't have more time that I can take off of the day job to devote to teaching and lectures, etc.
This chart shows the breakdown of each category of expenses. There are several things to learn from this.
Vending at shows: This is by far the largest expense every year. Booth fees, travel costs, and booth supplies accounted for 52% of my expenses in 2016, 61% in 2017, and 58% this year. What this means is that it's hella expensive to rent a booth and vend at these large shows. But, vending at Quilt Market has been well worth it for me.
Even though the percentage for travel costs are the same for 2018 as for 2017, travel costs were actually way up this year, due to a few things. I took my husband with me to Quilt Market in Portland this year, so that I had to pay for an extra plane ticket. I decided to vend at Quilt Festival in Houston, which meant an extra 6 days at ridiculously overpriced hotels, additional meal costs, and additional parking fees at the airport.
There isn't anything I can do to decrease the costs of booth fees, but I may be able to lower the other two categories. I like to fly out of Midway airport in Chicago. But parking fees at or near the airport are crazy expensive. I need to find a way to reduce those costs.
I spend quite a bit on booth supplies before every show. This includes things that I need to display quilts and patterns, decorations, lighting, etc. I keep changing a few things every time I do a show, and this incurs new costs. If I can find a good layout/ display that will work for every show, I could reduce those costs.
These categories in 2018 actually include some costs for 2019. I have decided to vend at the Road to California quilt show in January. I've already purchased plane tickets for me and my mom, paid booth fees, and paid for the first two hotel nights. So my 2019 numbers will include income from that show, but not a large amount of expenses.
Supplies: This includes things like office supplies, shipping supplies, fabric to make my cover quilts, costs to pay a longarm quilter, and more. In the past, I have purchased all of my fabric for my cover quilts at retail prices. Several fabric manufacturers have expressed an interest in working with me. They would give me new fabric lines that are being released free of charge, I would use them in my patterns, and we would do some mutually benficial cross-promoting. Once I get confortable with asking manufacturers for fabric, this will reduce some of the cost in this category.
Cost of Goods: My cost of goods sold this year skyrocketed. 2018 expenses were 8 times more than in 2017. This is because I sold so many more patterns, and had to reprint almost every one of them, and I have 27 different patterns now! There are some popular patterns that I've reprinted 3-4 times. I print in quantities of 1,000, so that's very exciting to realize how many patterns I've sold.
I also bought a lot of fabric from manufacturers to cut and kit in order to sell at Quilt Festival, and Road to California. I still have a fair amount of kits that I can sell at Road to California. So again, there will be income in 2019, but the expenses are in 2018.
Postage: This is a category that I can eliminate almost completely. Right now, I offer free shipping for all patterns on my website. Instead of giving free shipping to quilt shops, I can instead have them pay for shipping, then give them some extra patterns whose retail cost is equal to the cost of shipping. That way, they can basically get reimbrused for shipping by selling those patterns, and the cost to me of sending those free patterns is less than paying for shipping outright. So that would be a win-win for everyone. My current shopping cart can't handle variable shipping, so that's what's been stopping me right now. I've been wanting to migrate to a new host and new shopping cart system for the past year. But I just don't have enough time in the day to design another website. But that's something that will be going on the top of the priority list in 2019.
Marketing: I spend almost nothing on marketing. Truthfully, I consider all of the costs for attending Quilt Market to be marketing expenses. But, I don't do any other "traditional" marketing. I'd like to look into advertising in trade magazines, doing facebook ads, and more.
So that's the analysis of my incomes and expenses for the last three years. This is the first time that I've laid them all out like this and compared. I learned a lot from it and found some patterns in the data. I'll keep doing this every year so I can see at glance how my year has been and get some strategies for moving forward.