Learn To Bead

At Land of Odds / Be Dazzled Beads – Beads, Jewelry Findings, and More

Archive for the ‘creativity’ Category

FINANCIAL MANAGEMENT:How Am I Going To Control The Flow Of Money In My Jewelry Design Business?

Posted by learntobead on June 10, 2021

Abstract:

Financial management includes all the things you need to do in order to determine your Return On Investment (ROI).   It mostly involves a system of data collection, monitoring and analysis methods employed by any successful business.   This system relates risks to rewards.    Activities in this kind of system include things such as general accounting and bookkeeping, inventory management, and record keeping.    These include things you do to establish and maintain formal relationships with employees, independent contractors and suppliers.    These include things you do to secure your money, such as with banks, financial institutions, and even such things as crowd-funding online.     This is a lot of numbers and activities, and often, when we look at why people fail in business, it is often because of a generalized fear of getting in control of all this.   Successful business people and successful businesses need to foster a culture which promotes a growth mindset.    Simply this is a culture where you have permission and encouragement and confidence to take risks.    

A Focus On Your Return On Investment (ROI)

You put a lot of time, effort and resources into designing pieces of jewelry and building up your business.    This all has a cost to you in time, money, and even relationships.    You want a Return On Investment (ROI).    You want to see some benefits that exceed your costs.   Joy, happiness, contentment, money, security, less stress, more opportunities and more challenging opportunities to be creative, more fulfilling relationships.  

When you take your creative endeavors and turn them into a business, the core focus primarily rests on increasing your returns on investments (ROI’s) through smartly and strategically managing your finances.   You want to set into place various management structures and routine data collection procedures to assist you in managing risk and maximizing rewards.   You want to minimize the effects of uncertainty on your business.

Sometimes, creative people think that some people are born to take risks, manage them and live with them, and others are not.   This is not true.    Having a business sense is not something innate or genetic.   It’s something that is learned over time, often with a lot of trial and error, many failures, but key successes, as well.   There is no reason, if this is something you want to do, to shy away from thinking about or attempting to monetize your jewelry as a business.  

Towards this end, you want to get a good handle on such things as:

  1. Understanding risk and reward
  2. Tracking your costs and revenues
  3. Tracking your inventory
  4. Other record keeping
  5. Employees and Independent Contractors
  6. Banking, Insurance and Credit Card Processing
  7. Getting Terms
  8. Getting Paid
  9. Crowd-funding
  10. Fostering a Growth Mind-set


a) ROI: Understanding Risk and Reward

It is important to understand risk and reward, and how to manage these.    Part of managing these is putting into place systems which collect necessary data – primarily about costs and revenues – and evaluating the data and its desired impact on everything you are trying to achieve in your business.  Anyone can do this.   But jewelry designers who foster a growth mind-set are often better at managing risk and reward.

What Is Risk and What Is Reward

Risks and rewards are gambles.   They are probabilities.   Chances.    They help define the likelihood for determining whether what happens next will hurt you or help you.

Risk is the likelihood that you will lose either or both tangible rewards (money) and intangible rewards (success, happiness).    

Rewards are the profits, again tangible (money) or intangible (success, happiness), you receive from taking risks.   

Usually, the greater the risks you take, the greater the rewards earned.  But this is not a guarantee.    Losses can occur, usually resulting from the failures to properly manage the relationship between risks and rewards.

Risk management is important in every business because without it, that business cannot clarify what goals it needs to set, and what steps it needs to take towards meeting those goals.   There are more things to do on a day-to-day basis than you could possibly do and get done.    Risk management helps you narrow down the tasks to those most likely to have the greatest rewards. 

Risks and Rewards must be managed in a deliberate, rational, and day-by-day way.   Routinely.   With fore-thought and organization.    This means collecting data.   This means analyzing data.    This means closely looking at risk and evaluating whether it makes sense, or not, to continue doing what you are doing, or what you want to be doing.    Is it sufficiently rewarding or profitable?    What is the opportunity cost?   That is, you could be expending the same amount of resources (time, motivation, money) doing something else that might have a greater return.

Any business is fraught with risk.   If it were easy to start a business, everyone would do it.    But it is not.    Again, it requires routinely collecting and evaluating data.     It takes you out of that creative mode and way of thinking, and plops you down into a very different administrative one.    In order to sell a piece of jewelry, you have to begin to deal with things like marketing and promotion, production, distribution, inventory management, investments in tools, parts, displays and equipment.   You need to closely track all your costs and all your revenues.    It means taking chances you might lose money or fail.   This is scary.   

When managing risks, it is important to remember:

  1. Don’t confuse Risk with Fear.    Fear keeps you from doing things.   Risk aids you in asserting some control over uncertainty.
  2. Simply be aware that both Risks and Rewards exist.     Where there are greater rewards, there are usually also greater risks.
  3. Yes, risks are risky, but should not be reckless.
  4. Make decisions based on the relationship of risks to rewards.   It is not the number of pieces of jewelry you make.   Rather it is the average return you get from each piece of jewelry you make, given the costs and investments you made in order to finish that piece of jewelry and sell it.   This type of information will clue you into such things as what might happen if you too aggressively seek rewards, or too timidly accept risks.
  5. Don’t put all your eggs in one basket.  Diversify the types of jewelry you make, designs you do, parts you use, markets you seek to exploit.
  6. Keep things simple.   There is a lot of data, systems and subsystems of information to manage.   Things which help keep things simple:  
  7. standardization of forms, collection procedures, the ways data are organized
  8. use of summary indicators like totals, averages, means, mediums, rates, trends
  9. routines developed for procedures and administration

How Do You Measure Risk and Reward

As a jewelry designer, you will be measuring risks and rewards in a few different ways.

  1. Measuring Risk and Reward: General accounting
  2. Measuring Risk and Reward: Financial Management
  3. Measuring Risk and Reward: Inventory Management
  4. Measuring Risk and Reward: Pricing
  5. Measuring Risk and Reward: Impression Management

1) Measuring Risk and Reward: General Accounting

You will set up a General Ledger (G/L) to track your revenues and expenses, and liabilities and assets.    This is like setting up a giant table or spreadsheet.    You enter every piece of information into this table or spreadsheet that represents some kind of expenditure to you or some kind of revenue received.     Below I go into more detail about setting up a General Ledger.

2) Measuring Risk and Reward: Financial Management

Here you try to reduce things you do to a series of rates and trend-lines.     It is NOT the number or dollar amounts of your sales.   Instead, it is your rate of sales.   Your rates of inventory reduction and replenishment.     Your accumulated debt to earnings.    Breakeven analysis.   Trends in gross profit and net profit.

For some rates, management means maintaining a constant velocity or turn in the rate.     For example, if you need to sell a minimum of 6 pieces of jewelry each week to breakeven, are you able to maintain at least this rate every week in the year?   If not, for those times in the year where the velocity of this rate might slow down, what else can you do instead to maintain your business at least at the breakeven point?   

For other rates, management means maintaining an upward trend or trajectory, even though some weeks the data may decline.    Especially when you first get started in business, your gross profit and net profit might be low or even negative numbers.    The trend line is more important than the specific monthly numbers.

Leverage.  A related concept in financial management is leverage.  This is the degree you leverage someone else’s money to make money for yourself.    You might be paying for some of your inventory, equipment, furnishings or other business expenses using a credit card or relying on a bank loan or leasing where you do not have to front all the costs all at once.    You might be listing your jewelry on someone else’s website or marketplace where they are paying internet and website maintenance costs.     You might be co-marketing your jewelry with someone else who sells a product which can be integrated with yours where you thus are sharing the costs.   You might be buying inventory on terms, say NET 30, where you do not have to pay for the inventory for 30 days.   You might maintain bare minimums of inventory items, where you depend on your suppliers to provide just-in-time shipments, thus having your suppliers foot the bill for a lot of storage costs.

In each case, someone else has made investments in things that either you do not have to, or you do not have to all at once.     Sometimes, you pay for some of these over time.   Othertimes, the synergistic effects create payments for all parties above and beyond what each could do on their own.     All of this is called leverage.    

We have to monitor leverage, as well, to be sure the rewards we get do not exceed the risk we undertake to get those rewards.   

3) Measuring Risk and Reward: Inventory Management

There are three important things to understand about inventory up front:

  1. Inventory is a placeholder for money.     You paid for your inventory, and you get that money back when you sell it.
  2. As a jewelry maker and designer, you will have a bi-furcated inventory, a) an inventory of finished pieces ready for sale, and b) an inventory of parts and pieces of jewelry not ready for sale.
  3. An inventory of digitized files and applications.

Holding inventory ties up a lot of money.    This money is in the form of parts, perhaps restricting and constricting you in what colors, styles, materials, components and the like you will be able to use when designing a piece of jewelry.    Too much or too little of inventory – or the right inventory for the moment – can break your business.

This all means that inventory is something that needs to be monitored and managed.   Your goal is to minimize the cost of holding inventory.     This involves figuring out ways to know when it is time to replenish inventory, change out and update inventory, or buy more materials to manufacture inventory.   After all, you want to prevent these kinds of things from happening…

  • Lose sales
  • Hurt cash flow
  • Buy too many things which don’t and won’t sell
  • Create storage problems, including prevention of deterioration, such as plated finishes which fade over time
  • Needing cash, but it’s all tied up in inventory – you can’t eat beads
  • Reduce your profitability
  • Reduce your resiliency – that is, an ability to adapt to fashion, style, demand and culture changes
  • Losing that balance between efforts directed at inventory management with efforts required for general administration, marketing and promotion

4) Measuring Risk and Reward: Pricing

The price you set for each piece of jewelry has to be based on all the costs you incur.   Not just the costs of the parts.   Not just the time you put in.    All the costs.    These include, parts, labor and what is called overhead.   Overhead is everything else:  electricity, heat, rent, business travel, wear and tear on tools and equipment, and the like.     It is not cost-effective to have to track each and every one of these overhead costs separately, so we typically estimate them using a formula.    From a management standpoint, this formula needs to make sense and come close to its approximation.    It has to be defensible.

5) Measuring Risk and Reward: Impression Management

Much of what we do these days is digital.   We promote and sell our pieces on line.   This might be directly through a website.   It might be through social media.   It might be through an auction site.

In the digital world we track and manage impressions (often referred to as eyeballs).    Measures of risk in the digital world include concepts like Costs Per Click (CPC), Costs Per Impression (typically 1,000 impressions)(CPI), Adds To Cart (ATC), Cost Per Add To Cart (CATC), conversion rate (relates number of visitors to visitors who actually buy something), costs to maintain current conversion rate, and so forth.

Given the velocity or trends in these rates, and the returns on investments for you (such as costs of maintaining a website, marketing and promotion, supporting an inventory, handling money and credit cards, costs of shipping), you ask yourself questions about your various business and marketing strategies, your user experiences, and user impressions.    What is it costing you to persuade people to take a look and to buy?

Some of these analytics will be provided to you in stats packages you can integrate with your site.   Others will involve collecting data yourself, and analyzing them, usually in spreadsheets you create.

Next, you need to translate your understanding of risks and rewards into systems of data collection and analysis, beginning with the basics of tracking the flow of money in terms of costs and revenues.

b) ROI: Tracking Your Costs and Revenues

You set up an accounting General Ledger to track revenues and expenses, and assets and liabilities.   Your goal here is to adequately account for your expenses and revenues, and your liabilities and assets.

What are business revenues?
Business revenues include all the money coming into your business, including payments for products and services, interest on bank accounts and investments, rent you charge others to use your space or equipment, royalties you get from intellectual property.

What are business expenses?  
Business expenses are ANYTHING THAT HAVE TO DO WITH OR RELATE TO OR CONTRIBUTE TO MAKING A PROFIT.  

You might want to secure copies of IRS publications that define each business expense and how it should be accounted for.

What are business assets?
Business assets are the current values of your physical property, from desks to chairs to computers to printers to major software packages.    These are things which depreciate, that is, lose value over time.

A key asset is your inventory.    If you are selling finished jewelry, your inventory will include all your works-in-progress as well as your finished pieces.    For some jewelry businesses, it might become a little confusing to differentiate between your supply of parts and your jewelry, especially if you only assemble pieces after orders are made.    On a yearly basis, the IRS only lets you deduct the costs associated with finished jewelry pieces sold.    The rest of the inventory is treated like it is cash.   You will need to decide what exactly you call inventory and what other supplies you call supplies.   (See COST OF SALES section below).

What are business liabilities?
These are things the business owes money on, from short term net-30-day payments to suppliers to long term credit card bills and bank loans and leases.

BUSINESS USE OF A HOME:  Many jewelry designers work out of their homes.    While these expenses are red-flagged by the IRS, tax courts have consistently ruled that Congress intended to be very liberal and kind to these expenses.  

You would compute the proportion of “business use” space in your home relative to your home’s total space.   This space could be a whole room or part of a room.    This space must only be devoted to business, not personal use.   Based on this proportion, you allocate your mortgage or rent, your heating, A/C, water, sewer, and other maintenance costs to your business expenses.  

Example:   Your home is 1000 sq ft.   The room you use for your business is 100 sq ft.   So your business “use” expenses would be 10% of your rent/mortgage, 10% of your utilities, 10% of you lawn maintenance, 10% of repairs, etc.

For some expenses, you cannot use the straightforward proportion percentage.  If you use a computer, it is a better idea to have a separate one that you use for business, than for personal.  If you use one for both, you have to maintain a use log, and, based on “time the machine is used for business vs. personal”, you allocate the costs and depreciation of the machine to your business.   Telephone costs are allocated based on the proportion of business calls to all calls each month.

Don’t be shy about what to call a legitimate business expense at your home.   Picture a real store.   If they have to mow the lawn, you would have to mow the lawn at your home.   If 10% of your home were devoted to business, then 10% of your lawn mowing expenses would also qualify.   Home repairs, fixing the roof, mortgage, insurance and the like would be legitimate.   At the same time, if you have little income, do not declare these expenses with the sole purpose of gaming your tax liability.  

SETTING UP A GENERAL LEDGER (G/L):  

When you are just starting, you can set up a spreadsheet to track your expenses and revenues or even use a ledger book bought at a local office supplies store.    Or you can purchase some inexpensive software apps.    Many accounting apps have been moving to a “rent” rather than “purchase” model, where you pay a monthly fee to use their apps.   

With a General Ledger, you are basically creating a giant table for the year.   The rows are the days of the month.   The columns are your revenue and expense categories.     You also build in some summary formulas, such as the total Revenue for each month.

There are single-entry accounting systems and double-entry accounting systems.   If you are just getting started and using a ledger book or spreadsheet, using a single-entry system where you record revenues and expenses only is fine.    If you are using an accounting application, these typically are set up as a double-entry accounting system.    Here, part of the ledger accounts for revenues and expenses and the other part of the accounting system will duplicate this information in the form of assets and liabilities.    When you are making $6,000 – 10,000 per year in sales, you will want to graduate to the double-entry system.    It is a straightforward step to evolve a single-entry to a double-entry system.

IN A SINGLE-ENTRY ACCOUNTING SYSTEM, you set up a spreadsheet, and track each of all your revenues and all your business expenses.   The rows are days of the month and the columns are your various revenue and expense accounts.  Each different revenue and cost is referred to as an account (or line item).     All together, these accounts get assigned unique ID codes, and get organized into a Chart of Accounts.   Each revenue or expense entry gets tagged with a specific ID code, and entered into a General Ledger (of Accounts).

Picture your G/L as a very large table.    Again, the columns of the spreadsheet are these revenue and expense accounts.   The rows are the days of the month.   You should compute subtotals for each column at least once a month.   If your business is a busy one, you should compute subtotals for each column weekly.   You should also keep a running subtotal of year-to-date information.

 Revenue-SalesRevenue- ClassesConsumable SuppliesTelephoneRent
1/1/180.00 12.00  
1/2/1863.0035.006.00  
1/3/1842.00    
1/4/18190.00 29.00  
1/31/1843.00  150.00750.00
Jan Totals338.0035.0047.00150.00750.00
Jan Avg67.60 (/5)7.00 (/5)9.40 (/5)4.84 (/31)24.19 (/31)

What Accounts and How Many Accounts Do I Need?

You set up a sufficient number of accounts in order to satisfy two sometimes competing needs.    You should be able to glance over your general ledger each month and come away with some good understandings of how your revenues and costs relate to your business strategies and programs.   This is called good financial management.    If you have too many accounts, financially managing them becomes more and more difficult.

You also want to anticipate issues of IRS auditing.    You want clear categories, and maybe more categories than is easily managed from a financial standpoint.   The IRS will suggest specific categories.  You are not required to use them.    You can use some of them, all of them or none of them.    For example, I use one category I call OCCUPANCY, where the IRS has separate categories for INSURANCE, UTILITIES, MAINTENANCE.

  Examples of Accounts
a) Revenue (sales, rents, royalties, teaching)
b) Cost of Sales (special packaging, shipping inventory to you, commissions)
c) Employee (wages, benefits, federal taxes, state taxes)
d) Other Expenses (supplies, travel, marketing, fees, shipping things to others)
f) Assets (Cash, Inventory, Bank Accounts, fixed like computer or table)
g) Liabilities (Credit card debt, bank loan; money you owe your suppliers)
   

REVENUE ACCOUNTS
The IRS has one revenue account.    From a financial management standpoint, I like to have several revenue accounts.      I like to be able to look at the numbers (and the rates of change) and be able to figure out if any of my revenue-generating strategies is working well or not.

COST OF SALES

This is the most confusing part of the general ledger, because you have to make some rules and be clear about what you are calling “Supplies-Jewelry Making” and what you are calling “Inventory”.   

As a Jewelry Making business, you wear many hats – you are the manufacturer, the distributor and the retailer.   The tax laws are written in a way that assume you are one or the other – not all three at the same time.

At this point in the ledger, you can calculate the first of two Magic Numbers – Gross Profit.   If using a spreadsheet, you can put the formula into one of the cells of the table.

 MAGIC NUMBER (Gross Profit):
Your REVENUE minus COST OF SALES equals GROSS PROFIT.
 

If your GROSS PROFIT divided by your REVENUE is greater than .50,
then you’re doing well.

With the Magic Numbers, you have some easy to access and interpret information to help you financially manage your business.    You look at month-to-month and year-over-year trends.    When you first get started, some of these Magic Numbers might be on the not-so-good-looking-side, but again, pay attention to trends.

EMPLOYEE EXPENSES
(These are the minimum number of employee line items you will need to be able to fill out all the Federal, State and Local payroll tax related forms.   You can always add more categories than those stated here.)   

If you have employees, it may make sense to pay for a payroll service, that both cuts the checks and does your quarterly and annual payroll taxes.

EXPENSE ACCOUNTS

Your expense accounts are how you track what happens when you spend money.

Sometimes it gets a little confusing how to enter credit card expenses into your general ledger.

Now you are positioned to calculate the next Magic NumberNet Profit.

MAGIC NUMBER (Net Profit):  
Your REVENUE minus COST OF SALES minus EMPLOYEE EXPENSES minus all other EXPENSES equals your NET PROFIT.
 

You want this to be a positive number.   However, for your first year or two, it might be negative.   Again, it’s most useful to look at trends.

NOTE: There is NO IRS rule that says you have to show a profit in 3 of the last 5 years, or any rule about the frequency of profit.    As long as you a trying to run a business as best you can, even if you are failing miserably, there are no consequences for showing continued losses.

In a double-entry system, the other part of the general ledger will account for

a) ASSETS
b) LIABILITIES

Example:   You buy $10.00 of beads.    

Debit Inventory by +10.00Credit Cash by -10.00
(increases inventory total by 10.00)(decreases your cash by 10.00)
  
  

Assets are things you own and have value for your business.

ASSETS 501    INVENTORY   (See discussions of inventory above)
502     PREPAID EXPENSES
503     PEOPLE WHO OWE YOU MONEY
504     NON-COMPUTER EQUIPMENT
505     COMPUTER EQUIPMENT
506     FURNITURE
507     ACCUMULATED DEPRECIATION  

Liabilities are things you owe to others, which until these are paid off, decrease the value of your business.

LIABILITIES
601     PAYROLLTAXES      
602     OTHER TAXES
603     SALES TAXES COLLECTED
604     GIFT CERTIFICATES OUTSTANDING
605     NOTES PAYABLE – BANK
606     CREDIT CARD #1
607     CREDIT CARD #2  

You now have in place a system for gathering information about money costs and money revenues. You need to expand this system to gather even more detail, specifically about your inventory.

c) ROI: Inventory Management

The Kinds Of Things You Want To Be Doing
In Inventory Management

Monitoring and managing inventory involve several interrelated activities.     These activities will place time and cost burdens on you.    Luckily, much of this can be computerized.     There is inventory management software available, some of it specialized for jewelry.      If you are selling things online, your shopping cart system will accommodate a lot of this.

These activities include:

  1. Par Levels
  2. Storing and Tracking FIRST IN, FIRST OUT
  3. Supplier Relationships
  4. Resiliency
  5. Auditing
  6. Prioritizing
  7. Forecasting
  8. Timing

To the extent that you can systemize all this, relying on a central, computerized database, the more efficient and effective you will be.    Ask yourself, as well, whether your inventory management system will grow with you as you continue to develop and expand your business.  You always want to have the right stuff, in the right place, at the right time, at the right cost.

  1. Inventory Management: Establish Par Levels

What is the minimum inventory needed on hand at all times?  For example, when doing craft and art shows, you will need to have 4x the amount of inventory from what you want to sell (thus, $1000.00 of inventory to sell $250.00 of merchandise).

Do you have a tickle system signaling times to reorder?

What have you based your par levels on?   Sales rate?    Time it takes to acquire items?

If demand changes, do you have strategies for adjusting your par levels?

Do you need to maintain any samples of your work which never get sold, but are used for displays, promotions, or photography?

Do you need to have finished pieces on hand, or will you make pieces to order on demand?

  • Inventory Management: Storing and Tracking your FIRST IN, FIRST OUT (FIFO)

You want your oldest stock to get sold first.   

Are your things stored and displayed to meet this principle?
Do you have adequate storage space?    Containers?

What is it costing to you maintain your desired storage levels?

When stock doesn’t sell within a reasonable time, what are your plans?   Deconstruct finished pieces and re-use the parts?   Discount or write-off dead parts inventory?

  • Inventory Management: Maintain strong relationships and communication with your suppliers

What is it about some suppliers that you like, or that you dislike?

Will they accept returns?

Can they handle special orders?

If something is not currently available, can they tell you when it will be in stock again?

Will they work with you to waive minimums?

Do you have back-up suppliers in case your primary supplier can’t come through?

  • Inventory Management: Maintaining Resiliency and Doing Contingency Planning

You need to actively and continually do What If Analysis.    

What if…

  • An item becomes especially popular?
  • You run out of cash?
  • Storage becomes an issue?
  • Your tracking and data system somehow goes awry?
  • Parts become unavailable or are discontinued?
  • Parts or merchandise are damaged or spoiled?
  • Customer wants, needs, demands, desires or shopping behaviors change?
  • Other unforeseen circumstances?

Do you have any part of your inventory set aside for use in case of an emergency?

  • Inventory Management: Auditing your inventory on a regular basis.

Auditing will include a mix of big, scheduled activities and some spot checking.  Auditing means establishing a baseline.    It means identifying current inventory challenges.    It means evaluating your current procedures and data systems, and identifying their strengths and weaknesses.

  • Inventory Management: Prioritizing Inventory by Value.

Some value might have to do with how much something contributes to revenue and profitability.     Items with higher mark-ups would get more attention.

Some value might have to do with the rate of turnover.   Items more popular and sell faster would get more attention.

For management purposes, it might be useful to establish 3 groups of value.  Group A might represent things contributing 50% of value.   Group B might represent things contributing 35% of value.  Group C might represent things contributing 15% of value.

  • Inventory Management: Forecasting.

You want to be in a position where you can predict future demand, perhaps over the next year or two.   You want to be able to define seasonality fluctuations.     You want to anticipate the impacts of any upcoming promotions or advertising.      Much of forecasting involves tracking your orders/sales and relating this back to inventory.

  • Inventory Management: Timing.

What time issues/management would be associated with maintaining the lowest inventory possible to meet your demand.    Here you tried to understand if you can shift the costs of storage and securing supplies over to your suppliers.     Customers these days often demand immediate satisfaction, so shifting some costs to supplies may be problematic for you.

The systems you have built to track, maintain and analyze your money flows and your inventory are sustained by a whole set of receipts and administrivia related to banking, insurance, credit card processing, travel, and working with employees and independent contractors.

d) ROI: Other Record Keeping

You want to keep all your receipts together for each calendar year.     You do NOT want to keep all your receipts stored in a shoe box.    File your receipts, say in an accordion file, organized alphabetically by company.

If part of the transactions listed on any receipt are personal and some are business, then circle the business related ones and write something like “business” next to these.

If you did not get a receipt for something business related, write out your own receipt, with the date, purpose, description, and amount.

You must store these receipts (and your other business documentation) for 10 years.   Some places list 7 years, but you will need to store these for 10 years.

Don’t rely on paying an accountant to sort through all your receipts in order to calculate your tax liabilities each year.   The cost of this would be prohibitive.    You yourself need to do that kind of leg-work, and being very organized will help you do this efficiently and effectively.

You probably will also be generating these kinds of forms and documents in the course of doing business, and you need to maintain files of back up copies:

  • Purchase orders
  • Invoices
  • Packing slips
  • Order sheets / line forms
  • Catalogs
  • Checkbooks, and copies of checks written or check requisition forms with check numbers of checks written documented
  • State, local and federal tax documents
  • Leases / rental agreements for property and equipment
  • Account numbers and agreements with each of your suppliers and creditors
  • Travel logs
  • General Ledger entry forms

TRAVEL LOG

All your business travel is deductible, but the IRS has different rules for how you handle various business expenses.   So, you keep separate accounts of


– Auto expenses (gas, depreciation, mileage, car maintenance and repairs);

NOTE: On your income taxes, you can use either a standard mileage rate or actual expenses allocated.   You pick which method of expense tracking you want to use.   You have to use the same method all year.    You can, if you want, change the method from one year to the next.


– Meals while traveling;
– Lodging while traveling;


NOTE:  Within any calendar year, you can only use one way to calculate these expenses.   You can change from year to year.   Either use Per diem (IRS maintains allowable food and lodging rates for every city in the US) or Actual expenses (whatever you spend).


– Ticketed travel (plane, boat, railroad, taxi, limo, ferry);
– Other travel expenses (newspaper, shoe-shine, gym).

NOTE:  IRS RULE:  You should be able to live your life on the road the same way you live your life at home.   If you have a personal trainer come to your home 3 times a week, then you can have a personal trainer come to your hotel 3 times a week, and this would be a legitimate Travel-Other expense.    If you don’t, it’s not.    If you purchase the New York Times each day at home, you can purchase it while away, and declare this as a legitimate Travel-Other expense.   If you don’t, it’s not.

Keep a travel log in all your cars, and record:
DATE, BEGIN MILEAGE, END MILEAGE, subtract to get TOTAL MILEAGE. 
Write down the business purpose of each trip.  

For example, if you’re in business selling beaded jewelry, you can deduct all your mileage for all your trips to any bead or craft store, any bead society meeting, any bead-related or jewelry-making classes, any trip to a museum to see jewelry on display, any trip to a store to do research on jewelry, check out the competition, mail bills at the post office, go to the bank to make a deposit, and the like.

BUSINESS CARDS 
A must!

LOGO
This can simply be how you print the name of your business – font choice, layout, positioning of words.  Or it can be a fancy image.

There are Logo-Maker apps online that you can try.

Once you get your logo, you will want to place it on all your forms, documents, marketing materials, and online webpages.    


You will want to trademark your logo.

e) ROI: Employees and Independent Contractors

Sometimes you need to work with help.    You might hire part-time or full-time employees outright.   You might pay someone on commission or per piece where that person works as an independent contractor rather than an employee.    You might barter and trade teaching someone some skills in exchange for some work, like hiring an unpaid intern or apprentice.

In these situations, you will need to anticipate if, after paying someone, and with employees also paying additional taxes, you can still make a profit.

Some forms to pay attention to:

With hired employees:
forms W-4 (when hired)
forms W-2 and W-3 (annually)

With independent contractors:
forms W-9 (before contract gets implemented)
forms 1099-MISC and 1096 (annually)

f) ROI: Banking, Insurance and Credit Card Processing

BANKING

BANK ACCOUNT:  It is better to have a separate bank account for your business than for personal.   If you use a personal bank account for your business, it is a good idea to have your bank-checks printed up in the business-check size.    If you are a solo proprietorship, you would print your name on the checks, and under your name, you would print your doing business name as (DBA), as in: 

Janet Jackson

DBA Retro Jewelry Designs.

If you have employees, it is useful, from a financial management standpoint, to have a separate business bank account that is dedicated to all payroll expenses (salaries and taxes).

Whether you are using a personal or business banking account, be sure to print your checks using the Business Check format.    On your business checks, it is a good idea to have checks with your business name on it.  You can either open a Business Checking Account, or have your business name printed on your Personal Checking Account checks.   If printed on your personal checks, then again, you list your own name (which is your official business name) on the check, and under your name, you list “DBA, Your Business Name”, where DBA stands for Doing Business As.

INSURANCE

At some point, you will need to purchase business insurance to cover liability and theft or loss of property (inventory and equipment) issues and medical issues (you or an employee getting hurt in the context of the job).    In most places, running a business out of your home violates local zoning codes.  You may not qualify for a company’s business insurance package if you are violating these laws.

REMEMBER: When working with any insurance agent, that agent is professionally obligated to report any violation of the law, including these zoning laws, to the authorities.    This is true, even if your insurance agent is your sister!

So, when you discuss insurance with your insurance agent, you will need to pose your questions as “What If?” questions – “What If I were to start a business in my home” — rather than indicate you already have or absolutely intend to locate a business in your home.  

USE OF A CREDIT CARD:  It is a better idea to use a separate credit card for your business than for your personal uses.  If you do use one card for both personal and business, be sure to mark all original charged invoices as to which use they refer to.

CREDIT CARD PROCESSING

Whatever location your business is in – home, storefront, craftshow – you will need to be able to take credit cards.    Very few customers use cash nowadays.
You will need to be able to accept a lot of different credit cards:   Visa, MasterCard, Discover, American Express.    Ideally, you want to use a processing company that lets you accept all these cards.

You will need to be able to swipe a card, insert a card to have its chip read, as well as manually enter a card number without the card present.    You might need to be able to let someone touch their phone to your credit card machine to do the transaction.

You may want to open a credit card processing merchant account.   Or you might use a company that doesn’t require you having your own merchant account.   In this case, you would be using that company’s shared account.     Some prominent companies which do shared accounts include PayPal and Square and GoPayment and Stripe.    With the internet, competition for credit card services has gotten so fierce, that many of the rates and combined costs have been converging.    Using a company with shared accounts will reduce the various certification and reporting requirements associated with having you own account. 

Check your options online and do some serious comparisons here.    Comparisons will not be straightforward because different companies which offer credit card processing services make their money in different ways.    They will be inexpensive on some things, and more expensive on others.   Some companies make money by leasing equipment.  Others by charging you a fee for each sale (per transaction fee).  Others by charging you a rate per dollar volume of each sale (discount rate).   

Sometimes you can get used/rebuilt equipment very cheaply on line.    But how cards are processed can change frequently, sometimes necessitating the purchasing of new equipment.

If you are locked into a multi-year lease on equipment or on credit card processing through a particular company, you will be liable for the expense through the end of the contract, even if you close your business before then.    No-contract options are very appealing.    One-year contracts are OK.   Three-year contracts start to get risky, but may be an appealing option, given their whole package.

It is a good idea to check whether the credit card processing company has credit card scanning attachments that connect to your phone or tablet or operate with Wi-Fi.   This is especially important if you are doing sales off site, like at a craft show.

Data systems are in place. Procedures are in place. Basic business relationships are in place. Now you need to create mechanisms to secure all this, that is, to secure the in-flows and out-flows of money so that you are taking the risks you want to take and achieving the rewards you believe you should get in return. These mechanisms include formal and informal arrangements and contracts, such as getting terms, getting paid, and crowd funding your business.

g) ROI: Getting Terms

Whenever possible, I suggest trying to get net terms with your suppliers.    Net terms is a form of trade credit.    Instead of paying upfront for your supplies, your suppliers will give you some predetermined period of time to pay for these goods.    You get your supplies right away without having to pay until an agreed-upon future date.

Usually, you would get Net 30 terms, meaning you would pay within 30 days.   Sometimes, if you have not paid within the terms set, you might get assessed a penalty fee.

To apply for net terms with any supplier, you would submit a Credit Sheet.

CREDIT SHEET

You will want to prepare a Credit Sheet which lists the following information.   You give this sheet to businesses where you want to apply for terms.   When you buy things from businesses, you can pay cash (sometimes check or credit card) – this is considered Pre-Payment.   You can pay COD (cash on delivery), but there is usually an extra COD charge tacked on.   Or you can pay on terms or “on account”, usually signified as Net 30 or Net 10, where you would have 30 or 10 days to pay your bill.   If you don’t pay within that time, the business may take away your privilege to buy on terms, or charge you a late fee.


h) ROI: Getting Paid

Getting paid for your work can range from the straight-forward to the nightmare.    If you are doing a lot of custom work, your clients will probably pay you in increments, say 50% up front, and 50% upon completion.   If you are doing a lot of consignment, the shops may pay for anything of yours that sells perhaps quarterly.   If you are selling wholesale to other retailers, you might have extended them terms, say Net 30, where you expect to get paid at the end of the term period.

For each piece sold, or for several pieces sold at the same time, you will be generating some kind of invoice.    Each month, you might also be following up with your customers with a statement form, showing what has been paid, and what still needs to be paid.

INVOICE or STATEMENT FORMS (2-part forms – one for you and one for your customer).   You can get a blank pad at a local stationery store, or have these pre-printed with your business name, address and phone.

i) ROI: Crowd-Funding

Crowd-funding is when you seek funding from angel investors, government grants, loans or crowdfunding campaigns online, like with Kickstarter, to fund your creative pursuits.    Crowd-funding creates financing opportunities.     You might be looking to start a line of jewelry and mass produce and distribute it.   You might be looking to franchise your business.    You might have a product idea that you believe has great market potential.   Jewelry products can be costume, semi-precious stones and metals (bridge jewelry), or fine jewelry.   

Other crowd-funding platforms include Indiegogo and Ivylish.   These provide a great opportunity for upcoming and small jewelry businesses who have an especially marketable idea.   Each site has rules, requirements and fees.   It is important to research what types of jewelry projects are most successful and least successful on each site.

The most popular crowd-funding campaigns offer a reward to the backers.    This could be in the form of product, money, or an opportunity to participate in an event.   

Crowd-funding gives the designer an opportunity to pre-test his or her ideas and how the market will respond to these ideas.    

Some pointers:

  • Pitches with video presentations work best
  • Have clear and concise goals; any potential backer should be very clear about the parameters of your project and what their money should be going towards
  • You want your audience to be able to visualize your project; show them in images what you have done before, and what you hope to do with this project; make them want it
  • Reach out to your inner circle first, and evidence of their backing will legitimize and validate you and your project as you reach out to the larger market; enlist them as deputized marketers, asking them to spread the word, increasing your visibility and exposure, through their own social media connections
  • Name your donation levels in a clever and tied-in way; you might point out that they could donate the price of a coffee or price of a cab fare to make it easier to understand how to donate to your campaign
  • It helps to offer samples of your work or promotional items like stickers, posters, autographs, even T-shirts with your products branding on these
  • The campaign will be a commitment of time and energy; you will always be hustling; no time to sit back and watch
  • Keep your backers up-to-date with posts, newsletters, whatever
  • If your donations slow down to a trickle, try a new approach to your marketing
  • Remember, many campaigns reach their final goal in the eleventh hour

Accounting, bookkeeping, inventory management, record keeping, business relationships with financial institutions and suppliers are in place. You still won’t be able to achieve that sweet spot between risk and reward without the appropriate business growth mind-set. In the creative marketplace, where your success relies on both your artistic/design, as well as your business, acumen, this can be difficult for you. But it can be done. With that right mind-set.

j) ROI: What Does It Mean To Foster A Growth Mind-Set

Failure is uncomfortable.  Disconcerting.    Too often, we do everything we can to keep ourselves out of situations where we might fail.   We focus on what could go wrong, instead of what could go right.   We think we don’t have the abilities to do the task.    We get paralyzed.   We do nothing.    Or we keep repeating ourselves, producing the same-ole, same-ole, whether there is a continued market for these items, or not.   Or we begin to visualize any risk as insurmountable, way bigger than it really is.

But allowing any fear of failure to become some kind of insurmountable wall works against us.   If we are trying to make a go of it by selling our jewelry, we can’t build these kinds of walls.   Successful business people and successful businesses need to foster a culture which promotes a growth mindset.    Simply, a growth mindset is a culture where you have permission and encouragement and confidence to take risks.    

Risks are OK because they bring rewards.   Rewards allow the business to maintain itself, sustain itself, grow and expand.    Failures are OK, as well, as long as they become learning experiences.    Doubt and self-doubt are OK only if they are used to trigger reflection and new ideas to overcome them.   Not having the skills requisite for the moment is OK because we are all capable of continual learning.   Temporary setbacks are OK because you have had them before and overcame them.

Carol Dweck wrote the seminal book on growth mindsets called Mindset: The New Psychology of Success (2006), with a series of related books to follow.    People have either a growth-mindset or a fixed-mindset.   

Those with a growth-mindset believe their abilities are developed through continual learning and hard work.   They are more willing to experiment and try new things, and see failures as opportunities rather than set backs.   

Those with a fixed-mindset believe that abilities are innate – you’re born with talents or not.    They seek out opportunities where specific talents, rather than effort, leads to success.   They prefer to repeat tasks and apply skills they are already familiar with.

Developing a growth mindset means such things as…

  1. Understanding the power of “Not Yet”.
  2. Setting learning and continual learning goals
  3. Being deliberate and constantly challenging yourself
  4. Asking for honest feedback and criticism
  5. Always reflecting on and being very metacognitive about your thoughts and actions, successes and failures
  6. Recognizing if you are stuck in a fixed-mindset, and acknowledging your weaknesses
  7. Focusing on the process, and less-so on the result
  8. Getting comfortable with self-affirmation, rather than needing the affirmation and approval of others

___________________________________

FOOTNOTES

Campbell, Casandra.   What Is Inventory Management? How To Track Stock For Your Ecommerce Business, Inventory Management, 6/19/20.
As referenced in:
Inventory Management

Caramela, Sammi, 10 Essential Tips For Effective Inventory Management, Business News Daily, 4/15/2020.
As referenced in:
https://www.businessnewsdaily.com/10613-effective-inventory-management.html

Dweck, Carol.  Mindset: The New Psychology of Success, 2006

Fundbox.com.  Trade Credit: Everything you need to know about net terms for your business.  n.d.
As referenced in:
https://fundbox.com/resources/guides/trade-credit/

Shah, Vyom.   Crowdfunding the Jewelry business, 11/27/14.
As reference in:
https://betterdiamondinitiative.org/crowdfunding-the-jewelry-business/

Posted in bead weaving, beads, beadwork, business of craft, craft shows, creativity, design management, design thinking, jewelry design, jewelry making, professional development | Tagged: , , , , , | Leave a Comment »

NAMING YOUR BUSINESS A Video Tutorial By Warren Feld

Posted by learntobead on April 26, 2021

SCHOOL HOME PAGE:  https://so-you-want-to-be-a-jewelry-designer.teachable.com

CLASS HOME PAGE:  https://so-you-want-to-be-a-jewelry-designer.teachable.com/p/naming-your-business

FREE PREVIEW PAGE:  https://so-you-want-to-be-a-jewelry-designer.teachable.com/courses/naming-your-business/lectures/22712033

It really is difficult to pick a business name.

Your choice of name can make your business the talk of the town, or doom it to obscurity.

Coming up with that great name for your business takes a little work, some organization, some thinking, some getting opinions from several other people, and some reality-testing.

Some of you may be selling pieces of jewelry to your friends and acquaintances.   Others may be selling at craft shows or home shows, or selling wholesale or consignment in stores.  Some of you may be planning to go into business but haven’t gone very far yet.  And some of you may have store fronts or online businesses through which you sell your jewelry.

Whatever your jewelry making business, the basic goals, strategies and steps for naming your business are the same. You want a business name that

  • Works for you
  • That your customers can relate to
  • And that makes your business a success

What is important are:

…how your business name looks and sounds

…how your customers recognize and respond to your business name, and

…how appealing it is today, but also how adaptable it is over time, as you grow or change your business

In this video tutorial, I go step by step, in great detail.  We cover a lot of ground together to get you thinking and critically evaluating your options for naming your business

In this video tutorial, these lessons work for all jewelry making businesses, whether you have already gotten started in your business, or are still in the “I’m thinking about starting a business” stage.

We will be examining the pros and cons of different types of business names. We will be doing some self-marketing analysis. We will rehearse a best strategy for brainstorming and for filtering.

We also are going to review other critical business and marketing tasks which you can do, given the research work you have done generating a business name. These include,

  • registering your business, trademarks, copyrights
  • creating a tag line
  • working on an elevator pitch
  • naming your jewelry and jewelry lines
  • writing short descriptions of your business, as well as a short story to use with your marketing plans.

This class includes 14 video modules (over 2 hours of materials), plus 11 practice exercises, and a downloadable handout summarize all the materials in this course. 

FREE PREVIEW PAGE:  https://so-you-want-to-be-a-jewelry-designer.teachable.com/courses/naming-your-business/lectures/22712033

Warren Feld
warren@warrenfeldjewelry.com

Posted in Art or Craft?, bead weaving, beadwork, business of craft, creativity, design thinking, jewelry design, jewelry making, Learn To Bead, professional development, wire and metal, Workshops, Classes, Exhibits | Tagged: | Leave a Comment »

COMPONENT DESIGN SYSTEM: Building Both Efficiency As Well As Effectiveness Into Your Jewelry Designs

Posted by learntobead on April 16, 2021

articleCover

Abstract

 Jewelry designers do not necessarily think of efficiencies when organizing and arranging their designs. They primarily focus their thinking and energies on how to effectively and successfully go from one end to the other. But the next question becomes: Is this efficient, as well as effective? Could the same piece be done just as well in less time? With less effort? Component Based Design is a process of building a piece of jewelry in pieces, sections or segments. A component is a something well-defined that feels like a whole unto itself. It can be a form. It can be a shape. It can be an object. It can be a set of steps or procedures. It has these kinds of characteristics: modularity, replaceability, portability and re-usability. Component Based Design unifies the design process and reduces variability in the numbers and types of choices we have to make as designers. It helps us tackle Design Debt. Design Debt refers to all the inefficiencies in the design process which add more time and effort to what you are trying to accomplish. This article finishes with discussion about how to create a Component Based Design System for jewelry designers.

 

article1
Can Jewelry Designs Be Both Effective And Efficient?

Jewelry designers do not necessarily think of efficiency when organizing and arranging their designs. They ponder how to go from one end to the other, focusing their efforts on achieving an effective level of satisfaction and appeal. They think a lot about the use and placement of colors, textures and patterns. They figure out ways to attach a clasp. They jump from selecting design components to arranging them. And in this sense, visually, they tend to see their designs as a Gestalt - that is, they appreciate and evaluate their satisfaction with the piece as a whole. That piece as a whole should evoke a greater satisfaction, sense of finish and success moreso than the individual parts. And in general, that’s the way it should be. Designers want to be effective as designers. This is what effectiveness is about.

But the next question becomes is this efficient, as well as effective? Could the same piece have been done just as well in less time? With less effort? With less thought about design elements and their arrangement? With less investment in all the beads and other pieces which eventually become finished pieces of jewelry? Is this a piece which could be created over and over again for multiple clients and larger productions? Could we be just as creative and just as effective by building in more efficiency into the process of design? Would adding an intervening step - that is, using design components to build components and then using components to build compositions - be smarter?

Re-thinking the design process in terms of components and component design systems provides one intriguing set of answers. Approaching design as a Component Based Design System is an especially good option for designers to incorporate, and for those designers who want to build their designing into a profitable business. Even if you are not headed in a business direction, thinking of design in terms of components and component systems offers a whole new way of creative thinking and design possibilities.


What Is A Component?

A component is a something well-defined that feels like a whole unto itself. It can be a form. It can be a shape. It can be an object. It can be a set of steps or procedures. It has these kinds of characteristics:

· Modularity
· Replaceability
· Portability
· Re-usability
· Functionality encapsulated within the component’s design
· Is minimally dependent on the use or presence of other components
· Anticipates its implementation
· Intended to interface and interact with other components
· Not context specific
· Can be combined with other components to create new possibilities


If we think of a piece of jewelry as an architectural object, then it would be made up of a set of components which in some way conform to one another and interact with one another in a common, predictable way. The designer would create sets of components. Then any finished composition and design would be assembled from these components.
Components will range in complexity. In general, the more complex the component, the more limited its applications. The more re-usable your components are, the easier they are to design with. The more re-usable your components are, the easier it will be to scale your projects larger or smaller, longer or shorter, more volume or less volume. Components allow you to take something apart which isn’t selling or no longer useful, and re-use all the parts.


What Is Component Based Design?

Component Based Design is a process of building a piece of jewelry in pieces, sections or segments.
These pieces are combinations of design elements.

These combinations of design elements become a set of smaller, manageable parts, which themselves are assembled into a piece of jewelry.

Systems of re-usable design components will allow any number of design possibilities. A component based design system provides a commonality within a visual language.

Instead of focusing on designing a particular product, the designer concentrates on creating a design system. The designer’s principal responsibility in the formation of style is to create meaningful forms. These forms are more than shapes. These forms contain the essential elements which contribute to the jewelry’s aesthetic and functional structure and composition. Some forms will be able to stand on their own; others, may be dependent on the presence and organization of others.

Component Based Design Systems enable the designer to build better products faster by making design re-usable. Re-usability allows designs to more easily be adapted to different body types, context-requirements, and/or scales.
Component Based Design Systems require clear documentation for each component, and a set of rules or standards for their use and assembly. Standards govern the purpose, style, and usage of these components. Documentation and standards help the designer avoid situations where you find yourself reinventing the wheel, so to speak. It helps the designer deal with such things as backlog, adapting different versions of a particular design, and concurrently managing both short-term and long-term goals and aspirations. It allows the designer to spend more time and focus on the trickier and more difficult part of coming up with designs specific or unique to each client.


How Is Component Design Helpful For Jewelry Designers?

Component Design allows for the designer to…
– Design consistently
– Prototype faster
– Iterate more quickly
– Improve usability

Design consistently. Standardized components used consistently and repetitively create a more predictable outcome. Standardized components also allow designers to spend less time focused on style, and more time developing a better user-experience and client outcome.

Prototype faster. Working within a coherent design system allows you to more quickly and easily organize your work flows. It allows you to experiment over and over again with the amount of prototypes and variants. Working with and within a design system should also provider greater and faster insights into design dilemmas and solutions.
Iterate more quickly. Design systems reduce the effort in design, from having to try out myriad colors, patterns, textures, scales and other design elements, to only having to try out a few components in the design system.

Improve usability. Should reduce inconsistent, unworkable or illogical combinations of things within any composition. In return, this should increase client satisfaction when wearing any piece of jewelry so created.


Design Systems Do Not Limit Creativity Or Design

Creating a design system does not limit or restrain the designer. In fact, it opens up more possibilities, more easily attainable. Design systems will also allow pieces to be easily customized and adapted to different situations. Design systems take away a lot of the worry about what to do next.

Design systems do not limit creativity. They offer a different way of allowing the designer to assert their creativity. The designer is still free to experiment, evolve, play, adapt. Design systems improve efficiency; they save time. Design systems do not constrain, restrain or otherwise limit the designer to work and think and speak and play as a designer.
Design systems can evolve and adapt to changes in styles and fashions. In fact, these systems trigger insights more easily apparent, as to how things need to change. After all, a change in one component will automatically define what changes need to be made in all other components it will interface and interact with.

Component based design systems are not one-shot, one-time deals. They are never complete. The work to create and maintain and improve them is ongoing. These systems are living. But because a change in one component will trigger changes in others, the effort it takes to maintain and grow these system can be many times less than what happens when the designer does not rely on such a system.




Design Debt: Something Serious Which Needs To Be Managed

In more jargoned, but eye-opening, language, Component Based Design Systems reduce what is called Design Debt.
Design Debt refers to all the inefficiencies in your design process which adds more time and effort to what you are trying to accomplish, as you are designing any piece of jewelry. Design Debt continues to accumulate and increase as a project matures over time. Even after the designer has relinquished the project to the client, Design Debt will continue to accumulate if the designer fails to deal with it head on.

Design Debt includes things like…
– Taking too much time to meet your goals
– Having to do too much research or experimentation when figuring out how to proceed
– Spending too much time thinking how to make a particular piece of jewelry unique or special for a certain client

Design Debt also includes all the good design concepts or solutions you skipped in order to complete your project on time. Design Debt includes all the additional time and effort you will have to make, should you have a backlog of projects which keep accumulating and accumulating as you are trying to finish the particular project you are now working on.

Some designers might approach the ever-accumulating Design Debt by cutting corners or relinquishing the project to the client prematurely. The designer might settle for a lower fee or less profitability. The designer might find that negative word-of-mouth is building too quickly with unsatisfied clients or demanding business stakeholders.

There are many sources of Design Debt, some very tangible, others less so. Examples of these sources of Design Debt include…

· The designer relies on an overabundance of non-reusable materials, or too much variation in inventory, or, inconsistent styles and conventions, all difficult to maintain

· The designer might start a project with assumptions, rather than research

· The designer might not have sufficient time or budget to implement each choice and step with care

· The designer might not have a full understanding of how each design element, form and component should best be arranged and interact within a particular composition

· The designer might be working with a partner or assistant, with incomplete information passing hands, as each works on the project

· The designer might not have a chance to test a design before its implementation or sale

· The designer might not get the opportunity to find out what happens with a particular piece after it has left the studio and the client wears it

· The designer might not have in place any formal or informal time and procedure for reflection and evaluation, in order to understand how various choices led to good or bad designs, or whether there is an improvement or degradation in the designer’s brand due to good or bad performance

· The designer might rely on published patterns without the wherewithal to adapt or customize them, or otherwise approach unfamiliar situations


Ultimately, Design Debt is measured in how satisfied our clients are with the products we design, and how that satisfaction affects what is referred to as contagion - the spread of word of mouth and its positive or negative impacts on our brand and reputation. Over time, Design Debt accumulates and becomes a great burden on any designer and design business.



Component Based Design Systems Help Us Tackle Design Debt

Anything which unifies the design process and reduces variability in the numbers and types of choices we make as designers will help us tackle Design Debt. That is what Component Based Design Systems are all about.
Component Based Design allows the designer to deal with a smaller number of pieces and variables at any one time.
Component Based Design leverages previous thinking and exploring, reducing the number of tasks which have to be done for each subsequent piece of jewelry.

And Component Based Design allows the designer to more easily and directly relate any kind of feedback to specific project design choices.



Creating A Component Based Design System

A Component Based Design System has…
· Visual elements
· Modular elements
· Standards
· A voice and tone
· A relationship to client needs

 

Your Component Based Design System can either be
(a) decoupled from any specific project, which is effective for establishing a brand identity, or
(b) coupled to a specific project, which is more effective for developing a line of jewelry made up of individual pieces.

 

Creating a Component Based Design System involves Six Key Task-Activities, which are…
(1) Conducting Visual Audit of Current Designs / Inventory
(2) Determining Your Voice and Tone / Brand Identity
(3) Designing A Component / Modular Elements
(4) Creating Component Based Design System(s) / Library of Documentation and Standards
(5) Defining Rules of Scale / Size, Volume, Distribution and Placement
(6) Relating To Customer Needs / Shared Understandings

 


(1) Visual Audit of Current Designs / Inventory


You will need to carefully review the visual elements you use in your current jewelry design practice.
You want to create a visual design language of discernable design elements, shapes, forms and components you are using now.

You will in effect be creating two inventories:
· First, a Visual Inventory of design elements which are visual features, and
· Second, a Functional Inventory of those beads, findings, shapes, forms and/or other component parts which are functional and interface with the wearer, such as clasp assemblies or things which allow a piece to move, drape and flow, or things which make a piece of jewelry adjustable, or things which allow a piece of jewelry to maintain a shape or position.


For each discernable set of design elements, (such as, color, pattern, shape, form, movement, dimensionality) or completely formed component, you would generate a description based on auditing the following design elements:
a. color, finish, pattern, texture
 b. point, line, plane, shape, form, theme (typology)
 c. sizing and spacing and scale (2–4 sets of standards of utilization; or by body type)
 d. movement and dimensionality
 e. canvas (stringing materials; foundation)
 f. principles of composition, construction, manipulation; layouts
 g. support systems (allows movement, drape and flow), structural systems (allows maintaining shapes or positions) and other functional elements
 h. plans, guidelines, icons


Your inventories can be a simple check-list, or more narrative descriptions.

By creating a 2-layer Inventory of Design, you will be able to visualize the possible design components and patterns you might have at your disposal, as well as quantify what you are working with. Cataloging these details puts you in a better management/control position. This makes visible many of the consequences of your choices and selections in terms of managing Design Debt.

After you have finished creating your initial Inventory, review it. Identify where inconsistencies are. What things are must-haves? What things are superfluous?

Then look for things which go together or will be used together. Develop a simple system of categories to group things into. Keep the number of categories short. Examples of categories might include Patterns, Templates, Themes, User Interface, Foundations, Center Pieces, Color Palettes, Linkability.



(2) Determine Your Voice and Tone / Brand Identity


You want your parts, components and groupings of components, when used in the design of a piece of jewelry, to give the impression of you as a designer and/or your business’s personality.

Look at your inventory and ask yourself: What are the more emotional, intangible qualities these seem to evoke? Do they evoke things, not only about my design sense today, but about what I aspire to be as a designer? How do I want my clients to respond to my pieces?

There should be a high level of coherence within your groupings of components. They should express a voice and tone, either of your entire brand, or of a particular line of jewelry you have created.

If there is not a high level of coherence, determine why not. What adjustments do you need to make in your inventory to achieve this?

 


(3) Design A Component / Modular Elements


Begin to take your visual inventory and re-imagine it as one or more collections of components.

Types of components to think about:
– Re-usable
– Repeatable
– Build-upon / Connectible / Linkable
– Scale-able
– Evolvable over time
– Has necessary function
– Has necessary shape, form or theme
– Can easily interface with customer as the jewelry is worn

Some components will be modular and self-contained, thus not dependent on the presence of other components. Some components will be compositional in that they fit or coordinate well with others. Some components will be generic, thus usable in many different kinds of situations. And some components will be flexible because they can be tweaked and made to work in a variety of situations.

Now, actually begin to develop components. Towards this end, start with developing one component.

1st: List the key design elements, such as color, pattern, texture, shape, movement, dimensionality, and the like. These are the particular design elements you want associated with your core brand identity.
2nd: Define the smallest re-usable parts, such as beads, bead clusters, connectable links, stringing material and the like.
3rd: Scale up and define a complete component
4th: Scale up and define a composition consisting of several arranged components
5th: Fully layout the piece of jewelry, which will consist of one or more components and one or more compositions.


As you develop components, you will always need to keep in mind two things:
a) How you want the component to behave within your piece, and
b) How you want the component to interface with the client wearing the jewelry



CHAIN LINK COMPONENTS
 A Simplified Example of Component Design
G-CLEF COMPONENT

article2
I have a basic component I call a G-Clef Component. It is a simple chain link which is very connectable to other things. I use this as a simple example of a Component Based Design System.

I use this in several ways. I can use these as links in a standard chain. I can easily adapt two of these links to function as a hook and eye clasp. I can add beads between each link. I can use this as the basis for creating a pendant center piece. I can use this for earring dangles.

article3
article4

article5
The general infinity shape and reference to music (I’m based in Nashville, Tennessee - ”Music City USA”) are easily incorporated into several lines of my jewelry, though there is one particular line of jewelry totally focused on this link component.

My documentation for this component is as follows:

article6a

article6b

 


Two Other Examples Of Jewelry Designed Based On Components

article7

article8


(4) Component Based Design Systems / Library of Documentation and Standards

Your design system is much more than a pattern library. It is a collection of re-usable components which can be assembled together in any number of ways, and used to clearly signal and cement the identify of your brand as a whole, or of a particular line of jewelry you have developed.

As such, the system has meaning. It has structure. It embodies a system of concepts relevant to and representative of you as a designer and your design business or avocation. It is resilient.

Towards this end, to build in these meanings and intentions and expectations, you will develop a set of standards. Adhering to standards is how we manage and maintain consistency with how these meanings / intensions / expectations are expressed within any piece of jewelry we create. Following the standards is how we influence our clients to consistently come to share these understandings. Standards remove a lot of the arbitrariness in our design decisions. These standards should be put in writing, and be part of your documentation library.
Regardless of what materials, tools and techniques specific to your jewelry design practice, a successful design system will follow a core set of standards developed by you. These standards will inform you how components should be designed and how they should be organized within any composition.

These standards will focus on the following:

Brand touch points. What design elements or their arrangements evoke immediate associations with your jewelry designs?

Consistent client experience. What design elements, components or their arrangements result in a consistent client experience? When your client buys your jewelry and wears it, how does the client feel? How does the client want others to react, and does the client in fact get these reactions? When you client wears your jewelry, what needs, wants and desires does s/he want to be fulfilled, and how successful has your jewelry been towards this end? How do you maintain consistency in construction, functionality and durability of your pieces?

Coherent collection. To what extent do all the pieces in your collection similarly represent your brand and result in a similar, consistent client experience?

Naming conventions. What names should we give to our components, our pieces of jewelry, our lines of jewelry, our business and brand identity as a whole? How will these names resonate with our clients? Which names do you want to be universal, and which iconic?

Emphasis. What aspects of your jewelry do you want the client to focus on? Which aspects of your jewelry are most likely to trigger a conversation between you and the client, and between the client and that person’s various audiences? Is that the conversation about your jewelry you want people to have?

Utility. What is each component, and how should you use it? What rules should you follow for building modular, composable, generic and flexible components? For linking and connecting them? How do you manage modifying any one component?

Potential. What determines if a component is to have a high potential value? Does the component have great commonality in use and/or re-use? Does the component have great business potential, whether or not it can be commonly used? Does the component have great potential in creating patterns or textures or shapes or forms or themes? Is the component technically feasible to create? Can this component be created within a certain timeframe, if there are time constraints? Does this component have the potential to excite others?

 


Codify, thus standardize, how components are described and detailed. Include information about basic design elements, such as color, pattern, texture, finishes. Give your component a name. Describe how you can adjust for scale - making something larger, smaller, with more volume, with less volume. Elaborate on any assembly considerations. Also anticipate in writing any situational or contingency requirements. Provide insights into how this component fits in with other components, or becomes the core component from which additional components might be fashioned. Write some notes about how the component is consistent with the standards for your brand / jewelry lines which you have developed. Last, take a picture of your component and include this image in your database.

 

 


(5) Scale / Size, Volume, Distribution and Placement


Scalability has to do with size and volume, and your strategies for adapting your component to different scales. You might think about a larger version for a necklace and a smaller version for a bracelet. You might think of modifying the component to increase its volume for use as a center piece pendant.

Scalability in jewelry will also refer to the ease of placing or distributing variations in size and/or volume.

Scalability begins with taking a modular approach to your jewelry design work. Additionally, your component must express some characteristics which are both generic as well as flexible. You want your components to be able to grow and shrink with the content of your pieces. I like to develop both a larger and a smaller version of each component, which I get very specific on and document. This usually gives me enough information should I still want to change size or volume.

 


(6) Relate To Customer Needs / Shared Understandings


For any design, it is a long journey from idea to implementation. This journey involves different people at different times along the way. The designer’s ability to solve what is, in effect, a complex problem or puzzle becomes a performance of sorts, where the designer ferrets out in various ways - deliberate or otherwise - what the end users will perceive as making sense, having value and eliciting a desire powerful enough to motivate them to wear a piece of jewelry, buy it, utilize it, exhibit it or collect it. The designer, however, wants one more critical thing to result from this performance - recognition and validation of all the creative and managerial choices he or she made during the design process.

People will not use a design if their agendas and understandings do not converge in some way. They will interact with the designer to answer the question: Do You Know What I Know? If they get a sense, even figure out, that the answer is Yes, they share understandings! - they then become willing to collaborate (or at least become complicit) with the designer and the developing design.

A Component Based Design System forces the designer to incorporate these shared understandings into the development and organization of components. Component choices must be justified according to a set of standards. This set of standards relates design choices to how the client will perceive and respond to your brand identity or the identity you want any line of jewelry to reflect. A Component Design System creates tight guidance and boundaries, increasing not only the efficiency of your operation, but your effectiveness at developing jewelry which is consistent, coherent, user-friendly, user-desirable, and contagious.

Re-orienting your design practice towards a Component Based Design System may seem daunting, at first. But it gets easier and faster as the system grows and evolves. It is well worth the effort.


_________________________________________
FOOTNOTES

Elliott, Gavin. “Design Debt: How to Identify Design Debt, Measure It and Overcome It.” 5/7/20. As referenced in:
 https://medium.com/@gavinelliott/design-debt-f8026795cc1c


Fanguy, Will. “A Comprehensive Guide To Design Systems.” 6/24/19. As referenced in:
 https://www.invisionapp.com/inside-design/guide-to-design-systems/


Feld, Warren. “Jewelry Design Composition: Playing With Building Blocks Called Design Elements,” Medium.com, (2020).
As referenced in:
https://warren-29626.medium.com/jewelry-design-composition-playing-with-building-blocks-called-design-elements-d2df696551d8


Koschei, Jordan. “How To Tackle Design Debt.” 4/19/17. As referenced in:
 https://www.invisionapp.com/inside-design/tackle-design-debt/


Mazur, Michal. “What Is Design Debt and Why You Should Treat It Seriously.” 8/12/18. As referenced in:
https://uxdesign.cc/what-is-design-debt-and-why-you-should-treat-it-seriously-4366d33d3c89#:~:text=In%20simple%20terms%2C%20design%20debt,the%20users%20will%20make%20do
Suarez, Marco, with Jina Anne, Katie Sylor-Miller, Diana Mounter, and Roy Stanfield. Design Systems Handbook. DesignBetter.Co by InVision.


__________________________
Other Articles of Interest by Warren Feld:

Disciplinary Literacy and Fluency In Design
Backward Design is Forward Thinking
How Creatives Can Successfully Survive In Business
Part I: The First Essential Question Every Designer Should Be Able To Answer: Is What I do Craft, Art or Design?
Doubt / Self-Doubt: 8 Pitfalls Designers Fall Into…And What To Do About Them
Part 1: Your Passion For Design: Is It Necessary To Have A Passion?
RESILIENCY: Do You Have The Most Important Skill Every Designer Must Have?
PART 1: SHARED UNDERSTANDINGS: THE CONVERSATION CENTERED WITHIN DESIGN

______________________
I hope you found this article useful.


Also, check out my website (www.warrenfeldjewelry.com).
Enroll in my jewelry design and business of craft video tutorials online.
Add your name to my email list.
Visit Land of Odds online (https://www.landofodds.com)for all your jewelry making supplies.

Posted in architecture, Art or Craft?, art theory, bead weaving, beads, beadwork, business of craft, color, craft shows, creativity, design management, design theory, design thinking, jewelry collecting, jewelry design, jewelry making, Learn To Bead, professional development, Stitch 'n Bitch, wire and metal | Leave a Comment »

THE JEWELRY DESIGNER’S APPROACH TO COLOR:

Posted by learntobead on February 14, 2021

Learn To Adapt Basic Concepts In Art When Making Jewelry

PREVIEW MY ONLINE VIDEO TUTORIAL:

https://so-you-want-to-be-a-jewelry-designer.teachable.com/courses/the-jewelry-designer-s-approach-to-color/lectures/21825453

Jewelry creates a series of dilemmas for the jewelry maker — not always anticipated by what most jewelry makers are taught in a typical art class.

That’s the rub!

Painters can create any color and color effect they want with paints.

Jewelry makers do not have access, nor can they easily create, a full color palette and all the desired coloration effects with the beads and other components used to make jewelry.

Jewelry is not like a painting or sculpture that sits in one place, with controlled lighting, and a more passive interaction with anyone looking at it.

Jewelry moves with the person through different settings, lighting, times of day. Jewelry sits on different body shapes. Jewelry must function in many different contexts. Jewelry serves many different purposes.

People use and understand colors using their senses. These perceptions among wearer, viewer and designer include:

(1) The Sensation Of Color Balance

(2) The Sensation Of Color Proportions

(3) The Sensation Of Simultaneous Color Contrasts

Better designers are able to manage these sensations. They do so, in major part, by relying on a series of color sensation management tools.

We review these in great detail in this course.

In this course, you will learn some critical skills for jewelry designers that you will want to know…

  • How to pick colors for jewelry, and how this differs from picking colors as a painter
  • How to adapt basic color concepts in art when making jewelry
  • How to recognize the differences between universal responses to color from the more typical subjective ones, and what better designers do about this
  • How to manage the sensation of color within your pieces to achieve your designer goals

You will learn to make smart choices about color when designing and making jewelry.

Enroll in my jewelry design and business of craft video tutorials online.
Of special interest: My video tutorial THE JEWELRY DESIGNER’S APPROACH TO COLOR

8 Lesson Units
1 1/2 hours of video plus practice exercises and downloadable information .pdf files
$45.00

___________________________

I hope you found this article useful. Be sure to click the CLAP HANDS icon at the bottom of this article.

Also, check out my website (www.warrenfeldjewelry.com).

Subscribe to my Learn To Bead blog (https://blog.landofodds.com).

Visit Land of Odds online (https://www.landofodds.com)for all your jewelry making supplies.

Enroll in my jewelry design and business of craft video tutorials online.
Of special interest: My video tutorial THE JEWELRY DESIGNER’S APPROACH TO COLOR

Add your name to my email list.

_________________________

Other Articles of Interest by Warren Feld:

The Jewelry Designer’s Approach To Color: Video Tutorial Preview

Cleaning Sterling Silver Jewelry: What Works!

What Glue Should I Use When Making Jewelry?

Why Am I So Addicted To Beads?

A Very Abbreviated, But Not Totally Fractured, History of Beads

The Martha Stewart Beaded Wreath Project

When Choosing Colors Has You Down, Check Out The Magic Of Simultaneity Effects

The Use of Armature In Jewelry: Legitimate or Not?

Pearl Knotting Warren’s Way

Organizing Your Craft Workspace…Some Smart Pointers

You Don’t Choose Clasps, You Choose Clasp Assemblies

Know Your Anatomy Of A Necklace

Mini Lesson: Making Stretchy Bracelets

Mini Lesson: Making Adjustable Slip Knots With Thicker Cords

Mini Lesson: How To Crimp

Mini Lesson: Attaching End Caps, Cones, Crimp Ends

Mini Lesson: Flat Even Count Peyote

Mini Lesson: Ndebele Stitch

Mini Lesson: Petersburg Chain

Mini Lesson: Right Angle Weave

Jewelry, Sex and Sexuality

Everyone Has A Getting Started StoryThe Nature-Inspired Creations of Kathleen

The Jewelry Designer’s Orientation To Lampwork Beads

The Jewelry Designer’s Orientation To Crystal Beads

The Jewelry Designer’s Orientation To Seed and Cylinder Beads

The Jewelry Designer’s Orientation To Choosing and Using Clasps

How To Design An Ugly Necklace: The Ultimate Designer Challenge

The Jewelry Designer’s Orientation To Stringing Materials

Posted in Art or Craft?, art theory, color, creativity, design theory, design thinking, jewelry design, jewelry making, Stitch 'n Bitch | Tagged: , , , , | Leave a Comment »

THE JEWELRY DESIGNER’S APPROACH TO COLOR: New Video Tutorial Added

Posted by learntobead on November 18, 2020

Warren Feld Jewelry

Update, 11-17-20


NEW VIDEO TUTORIAL POSTED:
THE JEWELRY DESIGNER’S APPROACH TO COLOR


Jewelry creates a series of dilemmas for the jewelry maker — not always anticipated by what most jewelry makers are taught in a typical art class.

That’s the rub!

Painters can create any color and color effect they want with paints.

Jewelry makers do not have access, nor can they easily create, a full color palette and all the desired coloration effects with the beads and other components used to make jewelry.

Jewelry is not like a painting or sculpture that sits in one place, with controlled lighting, and a more passive interaction with anyone looking at it.

Jewelry moves with the person through different settings, lighting, times of day.

Jewelry sits on different body shapes.

Jewelry must function in many different contexts.

Jewelry serves many different purposes.

People use and understand colors using their senses.

These perceptions among wearer, viewer and designer include:

(1) The Sensation Of Color Balance
(2) The Sensation Of Color Proportions
(3) The Sensation Of Simultaneous Color Contrasts

Better designers are able to manage these sensations. They do so, in major part, by relying on a series of color sensation management tools.

We review these in great detail in this course.

In this course, you will learn some critical skills for jewelry designers that you will want to know…
• How to pick colors for jewelry, and how this differs from picking colors as a painter
• How to adapt basic color concepts in art when making jewelry
• How to recognize the differences between universal responses to color from the more typical subjective ones, and what better designers do about this

• How to manage the sensation of color within your pieces to achieve your designer goals

You will learn to make smart choices about color when designing and making jewelry.

9 Video Lessons (approximately 80 minutes)
8 Exercises
1 Article (40-pages)
$45.00 enrollment

Check this out and view the free Preview!




<!–


–>


VISIT MY ONLINE SCHOOL

26638c3f-adf4-4d3c-aff0-8d4529779d08.jpg

Learn to Think and Speak and Work
Like a Jewelry Designer!



As always, we look forward to seeing you.


Stay safe and healthy.

Warren

www.warrenfeldjewelry.com

Posted in architecture, Art or Craft?, art theory, bead weaving, beads, beadwork, color, creativity, design management, design theory, design thinking, jewelry design, jewelry making, Learn To Bead, professional development, Stitch 'n Bitch, Workshops, Classes, Exhibits | Leave a Comment »

MY ONLINE VIDEO TUTORIALS: So You Want To Be A Jewelry Designer

Posted by learntobead on September 25, 2020

 


VISIT MY ONLINE SCHOOL

Learn to Think and Speak and Work
Like a Jewelry Designer!

Making and designing jewelry is fun, awesome, challenging and rewarding.  You enter a world full of inspiration, creativity, color, texture, construction, beauty and appeal.  With your jewelry, you impact the lives of many people as they go about their day, attend special events, or interact with friends, acquaintances and strangers.

As a jewelry designer, you have a purpose. Your purpose is to figure out, untangle and solve, with each new piece of jewelry you make, how both you, as well as the wearer, will understand your inspirations and the design elements and forms you chose to express them, and why this piece of jewelry is right for them.

Your success as a designer is the result of all these choices you make.   Our courses are here to help you learn and apply key insights about materials, techniques and the jewelry design process when making these kinds of choices.  We also introduce you to things you need to know when trying to conquer the creative marketplace.

Empower yourself to become fluent, flexible and original in jewelry design.

Enroll now.

Begin with our ORIENTATION TO BEADS & JEWELRY FINDINGS COURSE. For newbies just getting started, or experienced designers as a great refresher.

 


Everything People Wished They Had Known
Before They Started Beading and Making Jewelry!

We require all our students to take our ORIENTATION TO BEADS & JEWELRY FINDINGS class first, before taking any of our other classes.

I have created an updated, extended version of this class online, which you can register for.    The class is divided into 18 short video tutorials on such topics of seed and delica beads, metal beads, clasps, stringing materials, adhesives, miscellaneous findings, and the like.   There is a downloadable handout that accompanies each video segment.

19 lesson modules.   This class is $30.00.
You can find it online and register here.


 

16 Important Lessons I Learned Doing Craft Shows!

In this SO YOU WANT TO DO CRAFT SHOWS… video tutorial class, I discuss critical choices jewelry designers need to make when doing craft shows.  That means, understanding everything involved, and asking the right questions.

Learn How To…

…Find, Evaluate and Select Craft Shows Right For You

…Determine a Set Realistic Goals Right For You

…Compute a Simple Break-Even Analysis

…Best Ways to Develop Your Applications and Apply

…Understand How Much Inventory To Bring

…Best Promote and Operate Your Craft Show Business

 

Doing craft shows is a wonderful experience.  You can make a lot of money. You meet new people. You have new adventures.  And you learn a lot about business and arts and crafts designing.

 

19 lesson modules.  This class is $45.00.
You can find it online and register here.


 

Learn An Easy-To-Use Pricing Formula
and Some Marketing Tips
Especially Relevant for Jewelry Designers!

 

This PRICING AND SELLING YOUR JEWELRY course is about one key to success: SMART PRICING!

 

I share with you my knowledge, experiences and insights about…

(1) Why Jewelry Sells

(2) Three alternative pricing formulas used by jewelry makers and the jewelry industry

(3) A simple, mathematical formula for pricing your jewelry which I developed and prefer to use

(4) How to break down this mathematical pricing formula intoa series of easy to implement steps

 

Then, we practice applying the formula to some different pieces of jewelry.

At the end of the course, I discuss the differences among retail, wholesale and consignment.

I briefly discuss several key business strategies which are very related to pricing.

And I offer some final words of advice.

11 lesson modules.  This class is $35.00.
You can find it online and register here.

 


Posted in Art or Craft?, art theory, bead weaving, beads, beadwork, business of craft, color, craft shows, creativity, design management, design theory, design thinking, jewelry collecting, jewelry design, jewelry making, Learn To Bead, professional development, Resources, wire and metal, Workshops, Classes, Exhibits | Tagged: , , , , , , | Leave a Comment »