Introduction
For this piece I keep track of the cost of the silver wire, sheet and the stone in a spread sheet
Measuring the success of your online business is not as easy as it seems. In theory it should be gross amount made, which is the total amount of money you made in a year from which you subtract from your costs for that year. Then with that number you decide how much must be spent replenishing supplies, paying fees etc. and the amount remaining is your profit. The problem is all the little pieces that make up the total costs of your work, and then calculating replenishing costs can become very complex. You must have good data in order to figure out your real profit.
Determining profit is also is more complicated because measuring your monetary success is affected by the type of seller that you are. In an earlier post I went into great detail about the different types of online sellers. For the purpose of this post the different types of sellers have been divided into sellers who are doing this full time and people who are doing this to cover their costs. For both populations there are different gauges of success.
Keep an Excel Spread Sheet
It doesn’t matter if someone is selling fulltime on multiple websites and art fairs or if you just have an Etsy shop. Sellers need to keep track of their numbers and statistics. This bookkeeping is the only way to be able to determine profits or to gauge one year’s success compared to another’s. In order to do this it is a good idea to use spreadsheet software. I use Excel, which is a very powerful program, but there are other options like Google Docs or Open Office that are free. If you don’t know how to use Excel or an equivalent then you should invest the time or money to learn how to use them.
I set up two spreadsheets, one for expenditures and one for sales. This way I can keep track of the data on both sides. For the expenditures spreadsheet I list the item, date it was sold, cost and shipping. If it was a bulk order I will list all the items and then make a separate item that is for the shipping. If I buy stones or supplies from Rio Grande I will even list the item ID so that I easily can order again from them. This is a really good idea with stones so you can keep track of their cost.
The sales spreadsheet is a little more complicated. The first column is the type of piece, the second column is who purchased it, the third column is the purchaser contact information, the fourth column is where it was sold, the fifth column is the amount for which it sold, the sixth column is the shipping column and the seventh column is tax. Sometimes there will be empty cells. For example it is hard to get contact information at an art fair. At the same time the more information that you collect, email, gender and location for example, the better.
For the long term development of your business the two most important columns are the type of piece and where it was sold. With this data you can figure out where you can sell certain pieces better. If you find that you sell mostly pendants one online shop and that on another you sell rings then you should specialize more in those shops. I have found out from my limited data collection that 50% of my gross comes from pieces that are under $70, and because of this I started making more items under that amount.
If you are meticulous about keeping your data within a short while you can start to learn many interesting things. As you become more advanced using Excel you can start to run correlation studies to see which products sell together and identify general trends in your shop. This collection of data should be done no matter what type of business you have or what your goals are. You can’t figure out where your shop has been or where it is going unless you have good data.
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Note: Part two will go into more detail about how different kinds of sellers should evaluate themselves
