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

Posted by learntobead on June 10, 2021


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?  

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.  


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  
1/4/18190.00 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)

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.


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):

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.

(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.


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


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)

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

601     PAYROLLTAXES      
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


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:
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.

A must!

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


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.


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.


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.


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



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:

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:

Shah, Vyom.   Crowdfunding the Jewelry business, 11/27/14.
As reference in:

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THE COMPETITION: Underestimate Them At Your Peril!

Posted by learntobead on February 3, 2021

The Workshop

The weekend had arrived.

I slowly glanced around the room, at each and every participant, all seventeen of them, sitting quietly around this very large classroom table, eagerly awaiting what was to come before them. Our guest Jewelry Design Instructor standing at the head of the table. Me sitting at the other end.

Two very special days with this super-hero Instructor. She guiding them step-by-step through the processes of design and construction. Demonstrating how to use the tools. Then the technique. Then the discussion about strategy and materials. And finally, beginning this fabulous necklace project design.

The excitement was palpable. No one could contain themselves. They were lapping at the starting gate. Eyes on the prize. Working together with a celebrity designer. Hearing her thoughts. Seeing her in action. Becoming at least a Facebook friend. Hoping to be able to finish by the end of the next day. And show it off the next.

It took two years to get to this point.

I had arranged everything.

My plans methodical.

My organization without question.

My calendar and schedule to the point.

But until that moment we all entered the classroom, finding our seats, laying out our tools and materials, making sure our water or coffee or tea was at hand, snacks carefully positioned along the center of the table, our guest Instructor passing out the instruction kits … until that very moment, I wasn’t sure this was all going to happen.

The Advanced Study Was To Culminate In 
 A Masters Class In Beadweaving and Design

I am a jewelry designer.

I own a bead store.

I have all kinds of clients and customers interested in various aspects of jewelry making and design. There are bead stringers. Also wire workers. Some fiber artists, silversmiths, and lampwork artists. Toss in some hand-knotters and braiders. The occasional biologist and physicist who use beads in their experiments, and we meet the beading needs of quite a large range of people

One group gets my special attention — the bead weavers. These are people who like to use those tiny little seed beads and needle and thread, and make jewelry, tapestries, embellished clothing, and sculptures, and whatever they can think of. Our bead weavers have a special Advanced Jewelry Design Study Group which has existed for many years. One of the earlier projects this group pursued was to study the life of a well-known and well-respected bead artist and designer. At the time we studied her life, she had already become a celebrity designer and teacher in the bead weaving field.

The question before the group: What makes an accomplished bead weaver and jewelry designer?

Was it family upbringing? Special innate talents? Schooling? Happenstance? What influenced her in her development as a bead artist and designer? Were there ups and downs? Was the career path linear? How important was it to have a mentor or special teacher? How about comradery — what kind of social network did she have, and how important a role did that play?

The group picked their target. I phoned her, and explained what the group wanted to accomplish. I asked if she would be willing to be interviewed, probably about once a week, and she agreed. And that began our adventure and exploration which lasted a little more than a year.

The Advanced Jewelry Design Study Group, to say the least, was very excited. To have this kind of access to a master bead weaving artist and designer was extraordinary. And they had many, many questions for her.

So, my routine began with asking the group what questions they had. Then I would phone the instructor and we would talk about 30 minutes. I reported her answers back to the group. There was some group discussion. Then we generated some more questions.

There were questions about how she got started. She was a seamstress. How she got into beading. She was hired to work in a bead store. How beading became a passion for her. She began to teach classes. She saw how she could integrate the techniques she used as a seamstress into techniques for weaving beads. Did she have a mentor. The woman who owned the bead shop had been a basket weaver, and adapted those techniques for bead weaving. This person was very inspirational, and took her under her wing. Was there any happenstance. Someone was wanting to start a major bead weaving magazine. They came to town — San Diego — to interview several bead weaving artists to see whom they might highlight in the first issue of the magazine. Our Instructor was one of the chosen few.

Over the year, we talked about variations in several bead weaving techniques, and how she came to choose the variations she preferred. We asked what it meant to her to have a design sense. We discussed other bead weaving artists, what of their history she was familiar with, and how they came to specialize in certain techniques over others. We were inquisitive about her selection of materials. We asked questions about what it was like to teach, and how her approaches were similar or different, given the varying skill levels of her students.

During the summer, I asked her if I could arrange a 3-day workshop with her in Nashville, Tennessee. We decided on the weekend of June 21st, about 1 year later at that point. We planned to do two projects — a simpler bracelet, and a more advanced 2-day necklace.

I added the dates to my calendar. I created my marketing plan and schedule. And did not give it much more thought, since the workshop was not to happen for about another year.

Competitive Conflict #1:
 The Local Bead Society

I had been an active member and supporter of our local bead society until the year previous to when my Advanced Jewelry Design Study Group began its study of the artist and designer.

As a store owner, I actively promoted the bead society. I garnered them a large membership. I offered steep discounts to their members. I steered many opportunities their way. I let them use our classroom spaces. I provided materials for their activities at no cost to them. I assisted their planning, program and development committees. I worked with them to write their bylaws.

Everything worked smoothly for many years. But then it didn’t.

Bead society officers were elected every two years. In that last election before I discontinued my relationship with the group, three of the four officers elected — the president, the vice president and the secretary — no longer managed the society and functioned in the members’ interests, nor followed the bylaws.

The society had a bylaw that stated that every program had to have a prespecified date, on which, if that program looked like it would lose money, the membership had to vote whether to continue with the program, or cancel it. The officers ignored the rule. They scheduled several workshops of interest primarily to themselves, many which had nothing to do with beading, over their first two years in office. They drove down the $8,000 the society had in the bank to a little under $1,000.

The officers made themselves the chairs of all the organization’s committees. Refused to do the monthly reports to the membership, including information about the society’s bank accounts.

The officers refused to let the treasurer have access to the bank, or any signatory powers as specified in the bylaws.

The three officers spent society money on lavish gifts for themselves.

And on and on.

Which is why I withdrew.

The Society Wanted A Workshop Too

About six months after I had booked our workshop with the Instructor, the bead society officers approached this same Instructor, and cleverly booked a workshop the weekend before ours. They did not pick any particular workshop projects at that time. I had already done a lot of pre-marketing, so the message about our workshop and our dates was very visible and out there way before the time they approached our Instructor.

We’re in the same town — Nashville, TN. Our potential market of possible participants is virtually the same. The market was not large enough to support two workshops. I did not find out about their plans until 3 months before our workshop was to begin. That’s the timeframe when they began their marketing.

The Instructor should have had more control over the situation. But she did not. She thought the bead society was located in another part of Tennessee, where there would not be a major conflict.

So, here we were.

I proposed to the Instructor and the bead society the following, hoping for a compromise:

a. We would keep our June 21 weekend date

b. We would do the two projects that the Instructor and I had agreed upon.

c. We would hold the workshop at my bead store

d. My advanced students would get first priority for available seats, which would still leave room for a large number of additional participants

e. The workshop would be marketed as a joint project between the bead store and the bead society

f. The bead society could have all the proceeds, which would have been several thousand dollars

The bead society said No!

I held our workshop as planned and scheduled.

The Instructor canceled their workshop, and told them she would never do a workshop with them again.

Competitive Conflict #2:
 Another Local Bead Store

My bead store is located less than half a mile from another bead store. I view them as friendly competition. They see me as the enemy. The two stores have different mixes of merchandise. Some customers overlap, but I view my market area as a 5-hour driving radius around Nashville. They view their market as Nashville only. They offer classes, but come from a craft perspective. They teach steps. I offer classes, but come from a design perspective. I teach theories and applications. We do not attract the same customers. We do not attract the same students.

For me, the presence of both stores, plus a Michaels craft store across the street creates a lot of synergy — more things to buy, more things to do, more customers to entice into learning beading and jewelry making. For the other store, they assumed loss of sales, loss of students and loss of customers. The reality was that our businesses presented more of a continuum than any overlap.

But having this Instructor teach here was a coup. It was status. Power, Legitimacy. Credibility. It was an endorsement of who I was, what I was, and my way of thinking. And the other bead store owners — a husband and wife — wanted all of this for themselves. They were not happy.

We may have been seen as some kind of enemy in this instance. Or, perhaps conversely, as a friend providing more opportunities to bead artists and designers for fun and professional development in Nashville. I guess it depends how you think about competition and where you are standing.

The first thing the other store’s owners tried to do was steal the workshop for themselves. Not long after I had booked the Instructor that summer, they called her. They asked her to reschedule the workshop the same weekend, but at their bead store instead. Even before she told them No!, they began a premarketing campaign. Emails, signage, phone calls — all indicating that they were to host the Instructor the weekend of June 21st. And after she told them No!, they continued their premarketing campaign anyway.

This confused lots of people. Many people thought I might be lying about our program. Luckily, I was interviewing the Instructor weekly, and reporting back to our study group. I included summaries in our marketing materials we sent out to all our customers each month. Eventually, the other bead store stopped their marketing.

The wife who owned the bead store found out the Instructor was doing a workshop in Kansas City. This was about 5 months before our scheduled date. She drove all the way to Kansas City from Nashville. She arranged to meet the Instructor at the hotel lobby one morning, on a pretense and supposedly to show her and sell her some specialty Czech glass beads. They had never met in person before.

The Instructor told me that she had come down into the lobby, and the wife began pulling out displays of Czech glass. But the conversation quickly turned to the Nashville workshop. The wife asked the Instructor to change the venue to their bead store. The Instructor again said No!, and sent the wife on her way. “Creepy,” was the word the Instructor used.

There was more to come.

Three weeks before the workshop, the husband this time phoned the Instructor. He asked her when she would arrive, and which airline she was flying on. He told her that he would pick her up at the airport.

She was already suspicious of the couple. She told him she had other arrangements.

And one more thing.

For three days during my workshop — Friday and Saturday and Sunday, the husband parked his car in the parking lot. Directly in front of my store. Headlights on. He was there all day, every day. As if he were taking names of the customers coming into my store.


Underestimate Your Competition At Your Peril

Looking back, it all seems so much fun — great stories to tell. An adventure in competitive competition. But it was very important to take competition seriously then, and seriously now. It is important to know…

1. What competition is

2. Who you competitors are

3. The specific characteristics of your marketplace

4. What your competitive advantage over your competitors is

5. How to get the message across to your clients and customers — current and possible — about your competitive advantage

Many businesses do not take the time to truly understand their marketplace, and all the competitive forces within it. They may spend some time listing some differences between themselves and those they compete with. Lower prices. More accessibility. Better quality. Faster service.

But the differences in and of themselves do not make the difference between capturing your market or not. It’s the visibility of these differences. And the credibility of how these differences are conveyed. And the risk and reward calculus of your customers. Your competitive advantage is not the quality or price of your product or service you are selling, but your ability to make this information known in the market, and believable in that market, and valued in that market.

1. What Competition Is

Competition is a process utilized to influence outcomes.

Competition begins with perceptions of differences in status or position, and the subsequent recognition of contradictions between market reality and personal or organizational expectation. Status or position can relate to things like wealth, power, attention, income, market share, access to scarce resources, prestige and fame.

A person or business makes the decision to compete when those contradictions become personally or organizationally untenable. Survive or die.

The motivation to pursue competition, then, is to enhance or impede positive or negative changes in status or position.

A strategic competitive response, intuitive or formal, is developed. It is an opportunity for action based on an assessment of the relative risks and rewards for acting versus not acting.

This competitive response and pursuit can take two forms: 
a) cooperation, when a common goal can be shared, and both can gain,
 b) conflict, when a common goal cannot be shared, and the gain for one is a loss for the other.

Whatever the response, competition can incentivize. It can set in motion positive things which make the person or business more efficient, more effective, more responsive, more actively learning, more adaptive, and more innovative. Or just the opposite can happen.

Competition is never a fixed state of affairs. It is a journey. So the rivalry has a lot of give and take, and ebb and flow, to it. Things can improve for one party, and diminish for the other. Things can improve for both. Just as easily, things can deteriorate for both. These can lead to compromising ethical standards. These can lead to financial ruin.

2. Who Your Competitors Are

Your competitor is anyone operating in your market — whether individual or business or network or organization or even an event or other more abstract thing — which can influence outcomes related to your status or position.

This might relate to the products you sell. This might relate to the services you offer. This might relate to your design sense, ideas and philosophy. So, you want to get a handle on how your competitors CAN INFLUENCE THINGS, and WHAT RESOURCES AND CONNECTIONS they have on hand to exert such influence, and what their MOTIVATIONS are for wanting to influence things.

Understanding Your Competitors

You cannot compete if you do not have a thorough understanding of who your competitors are. Their understandings and assumptions. Their business strategies. Their operations. Their client / customer base and how they market to them. Their perceptions. Their expectations. Their skill sets. Their level of resiliency and ability to adapt to changing market conditions. How they position themselves within their market.

You cannot compete if you do not have a good estimate of how many competitors you have, and whether they are direct or indirect competitors.

Your competitors include any individual or business which might deter a potential client or customer from choosing you. Some of these individuals or businesses will be obvious because they compete directly with you. Another designer. Another design business. Another business, but not specifically a design business, which sells the same types of design products or services you offer.

These direct competitors may be in the same locale or service area you are in. They may be online. They may have a print catalog. They may be registered as ancillary employees with another service.

With direct competition, you want to be as visible or moreso than they are in order to attract and retain clients and customers. Visibility means that people know who you are, where you are, and the relative risks and rewards for patronizing you rather than one of your other direct competitors.

Indirect competitors are those who do not offer the same products or services that you do; however, the products and services they do offer satisfy your clients’ or customers’ needs in a similar way. They are viable alternatives to what you offer, as understood by a shared or overlapping client / customer base. You must always ask yourself, to understand these indirect competitors, what all the alternatives to your products and services might be.

For example, people buy jewelry for many reasons, one of which is to be adorned in an appealing way. That same person, rather than buy jewelry, might meet their same need by getting a tattoo or buying another accessory like a handbag. Jewelry purchases might be seasonal, timed to special holidays and occasions or the schedule of the partying circuit. At other times, these same people might be attracted to other artistic products and services. In the winter, they might think more about getting a knitted sweater. In the spring, they might think more about planting a garden.

To reach your client / customer base when they are involved with your indirect competitors will still require strategies to increase your visibility. But the specific things you do might be very different, than when competing for the attention of clients and customers who visit your direct competitors. You will need to change your field of vision. You may redefine your client or customer based into different sub-groups. Your marketing messages will probably be very different. Where you place these messages, and when you schedule these messages to go out, may be very different.

3. The Specific Characteristics Of Competition In Your Marketplace

You cannot compete if you do not have a good understanding, not only of who your competitors are, but also, how good they are at competing. What is their position, both in terms of status and location, in your market place –marginal or core? What is their strategy for pricing and how does that relate to clients’ or customers’ perceptions, wants and needs? Do they offer discounts? Payment terms? Do they have anything related to special status, such as awards? What kinds of marketing do they do, and what is the content of their messaging? Are there cultural or social things which impede or enhance their competitiveness? What is their history, how did they get started, how did they keep going? How adaptive and resilient do they appear to be as market conditions change, and what kinds of things make you draw your conclusions?

How Do You Define Your Market Boundaries?

It is very important that you have a clear understanding of how people find you, or find where your products and services are available. This will influence what marketing messages you want to send, where you want to post them, and how often you want to post them.

Some of this information may involve mapping out local shopping behaviors. An example, 25% of your clients or customers visit both the local mall and your business or where your products or services are on the same shopping trip. Another example, 15% of your clients or customers interact with you or your products or services three times each month.

Other information may be specified in terms of how extensive the driving radius is, such as, 50% of your clients or customers are willing to drive 1 hour to get to you, your products or your services.

Within your market boundaries, you may have some sub-markets or market niches. This might break down by age or by income or by gender or by some other variable. You might have clients who want fully customized services, or those who want boiler-plate.

Your physical, geographic market boundaries may have little to no relationship to your online market boundaries. In fact, you may have several different online market boundaries, given where and how you create your online presence.

Concurrently with all your analyses, with a simple review of your various competitors advertising and websites, you can determine how they define their market boundaries. This might trigger new ideas and understandings for you in your own marketing efforts. Or it might create new competitive puzzles to solve. It might give you a better way of calculating whether any one marketing approach is worth the costs.

Also, ask yourself, are there any gaps in the market which you might exploit? Conversely, are any parts of the market oversaturated, and should be avoided?

How Do Your Competitors Position Themselves?

Your same products or services can be presented within your market or market niches in a number of different ways, and through various combinations of circumstances and contingencies.

Based on the packaging and presentation, different existing and potential clients or customers may vary in what resonates with them. That is, even though the products or services may be the same or similar, people won’t always recognize how all of these may equally meet their needs, wants and demands.

The circumstances surrounding the packaging and presentation of products or services is known as positioning. It is important to know how your competitors position themselves. Ask yourself: Am I positioning myself similarly or differently from my competition?

This information about positioning helps you differentiate what you offer from what they offer. It helps your clients or customers compare you to your competitors in a way which influences them to believe that they would trust purchasing from you rather than them.

What Is Their Pricing Strategy?

One of the most visible aspects of your business is how you price your products or services. Your prices provide a concrete measure your clients or customers can use to compare you to your competition. They are perhaps the most singularly important way you recruit and retain your clients or customers.

Obviously, it is critical to get an understanding of how your competitors price things. Do you use a similar or different strategy for pricing your products or services? How appealing are your prices? Are prices in line with what people in your market area are willing to pay? Do your clients or customers trust you in how you value things in order to price them — especially if your prices are higher than your competitors?

Do any of your competitors offer discounts? Are there volume requirements before giving someone a discount? Do they offer different payment options? Terms?

And many designers find they often have to compete with other designers who under-price their products or services, sometimes even below their costs, because they are unaware of the business fundamentals of pricing. There is no good competitive strategy here except to ignore them. Under-pricing is a yellow flag that these designers will not be able to provide a quality service or product, and won’t be able to survive very long as a business.

What Are Your Competitors’ Strengths?

You want to fully understand what clients and customers like about your competition, and like more about your competition than your own business. Then you ask yourself, are these qualities or products or services you need to adopt and include in your own business. Or maybe differences in appeal come down to how you market yourself. Or maybe these are things you need to ignore and not try to offer.

Examine the backgrounds and skill-sets of the owner, and if a larger organization, that of the staff. How much does this lead to their success?

Have they had any particular wins? Can you learn from those?

What Are Your Competitors’ Weaknesses?

It is not only the strengths of your competitors which you need to be aware of, but also their weaknesses. This may further help you identify both your own strengths and weaknesses. This may help you understand how your clients view the strengths and weaknesses of both you and your competitors. It may help you better sharpen your marketing messaging or reveal how to add to your list of products and services.

Often competitor weaknesses in design businesses relate to those businesses trying to impose one design solution on every situation. They have no adaptive skills. They aren’t very resilient. Their knowledge and skill-set in design is shallow and limited. They have difficulty overcoming unknown or unfamiliar situations. They do not know how to engage with their clients in a fully empathetic way.

Has your competitor had any particular failures? What can you learn from those?

Your competitor’s weakness may have less to do with the competitor but rather some deficiency or disorganization in your market. You might learn how that competitor has tried to respond to market imperfections, and take that into account when formulating your own responses.

What Are Your Clients’ or Customers’ Views and Understandings
 of Your Competitors?

Clients and customers make or break your business. It is what they perceive and what they expect and what they value which are critical. Every business, whether a 1-person office or a multiplex, must be able to anticipate the understandings people have who use their services, or who may use their products. And then ditto for that of your competitors.

Additionally, every business needs to have an arsenal of competitive strategies for aligning the understandings of others with those of the business. Do you know what your competitors’ strategies are towards this end?

You may think you offer quality products, but they may not know or may not recognize this. You may think your hours of operation are sufficient, but they may not. You may think your design sense is current and fashionable, but they may not or may be unaware. You may think you have better messaging, connections, and relations with your clients and customers, but they may feel that moreso with your competitors.

One place where all these dynamics converge is online through facebook likes, customer reviews, customer comments and the like. It is important to devote resources towards managing and participating at these types of nexus points.

Always do some reality-checking: How do the understandings and views your customers have of the competition or your own business coordinate with your own understandings and views?

What Are The Primary Ways Information Is Exchanged 
 About The Sale Of The Types Of Products Or Services You Sell?

How do people find out about you? About your competitors? How do they know what your sell? Where you sell it? The value? The opportunity to buy? What happens if they are dissatisfied after the sale?

There are all kinds of options.

– Print advertising in newspapers and magazines

– Ads or classifieds in directories and neighborhood papers

– Marketing materials like brochures, business cards, hand-outs

– Online promotions — banners, search engine ads, search engine listings, classified listings, online calendars

– Indexing of websites

– Links from other websites

– Online reviews

– Articles written about you, in print or online

– Co-marketing with a compatible business

– Relationships with your suppliers or distributors

– Classes you teach

– Trade fairs, exhibits, art and craft shows you attend or participate in

– Attendance at social or business events

– Sponsorships

– Word of mouth

It’s that last one — word of mouth — where you usually get your biggest bang for the buck. So you need to think of ways to drive it.

4. What Your Competitive Advantage Over Your Competitors Is

Part of driving that word of mouth is establishing in clear, visible, legitimate and valuable terms what your competitive advantage or advantages are over those of your competitors.

Your competitive advantage(s) are all the reason someone should contract for your services or buy your products rather than those of any of your competitors. What are those 5–10 things about you and your work that sets you apart from, and perhaps makes you better than, your competition?

There’s always something to differentiate yourself from your competition. Even if your products and services are the same, your pricing is similar, your turn-around time the same, your choices of design elements very similar, there are always other things which come into play and with which you can use to differentiate yourself. You can be a better manager of relationships. You can be clearer and more directional about how to develop your business, and assist others in developing theirs. You can deliver an outstanding customer experience better than anyone else.

5. How To Get Your Message Across To Your Customers 
— Current And Possible — About Your Competitive Advantage

What gives any individual or company a competitive edge are four values:

1. Authenticity

2. Rarity

3. Individuality

4. Legitimacy

You want to position yourself so that you stick out among the competition. This is true geographically. This is true in cyberspace. This is true in the marketplace of ideas, feelings, and values.

Start your strategic planning by focusing on the client or customer, their needs, wants, demands and decisions to buy. Get a solid handle on their thinking, their understandings of the marketplace, their understandings of your business and those of your competitors. Get very detailed about their shopping behaviors.

Last, you want to build relationships and emotional connections with these clients and customers. You want to be known as someone who hears, listens and understands them. You want to be a part, not only of the present, but their history and future, as well.

Design your communications and your interactions to maximize your advantages. You have core convictions — Authenticity. You are a unique source for things — Rarity. You can tailor what you do to the needs of each client of customer — Individuality. You can justify why patronizing you makes more sense than patronizing someone else — Legitimacy.

Ask yourself: What devices do my competitors employ to get their messages across and build customer loyalty in terms of authenticity, rarity, individuality and legitimacy?

Messaging About Your Competitive Advantages Is Not A One Shot Deal

Managing your design business and growing it means you have to be constantly learning about it and making necessary adjustments. Learning about your business in relation to the competition provides a myriad of clues and ideas. Anticipating the shared understandings of your clients and customers allows you to refine your business in a very positive way. And don’t forget to assume that your competitors are assessing you at the same time you are assessing them.

Keep a running list of your ideas, and as they evolve or change.

a. What you do better than your competitors

b. What your competitors do better than you

c. Things your discovered, learned about, and might exploit, and which might be incorporated into your own thinking

d. Things you have learned and insights you have gained which you might leverage into new innovative ideas

Keep on improving. You want to at least match your competition, but better yet surpass them. They are not the standard. Don’t copy them. Innovate, don’t imitate.

Workshop Post Mortem

So how did competition play out after my workshop?

The bead society lost a lot of members, and soon closed down. But many of their members stopped coming into the store. As one former bead society member and former store customer put it: It was more important for her to have a group to come to every Tuesday night, get out of her house at least once a week, and be with others who shared her interest, in spite of any wrong-doing on the part of the bead society officers.

Having a bead society in the area, and maintaining a visible presence in it, was very cost-effective for the store. They were 300 ambassadors spreading good word of mouth about my business. The bead society was also influencing people in the community to take up beading and jewelry making as a hobby and avocation. These were things I didn’t have to utilize store resources for.

My bead store competitor is still in business. To this day I do not think that the owners there recognize that we are different businesses. We have different values and goals. Our customer bases overlap some, but we provide different experiences and attract different market niches.

I try to minimize a sense of Us vs Them. I always refer customers to them and to Michaels. To me, the local customer does this calculus. Is it less risk to find what they want locally, see the real colors and real quality, and get it immediately, or is it less risk to try to find what they want online? With three stores merely blocks apart, it lowers the risk to shop locally. This is incredibly advantageous. I don’t think the other bead store recognizes this.

I was lucky to have approached the design of my classes differently from the traditional craft, step-by-step, learn mechanics approach. The internet, where now you can get all these types of step-by-step classes for free, has driven the value of this type of class to $0.00. My classes focus on the art and design aspects of beading and jewelry making — things not easily conveyed in video tutorials online. So my competitors — the bead store a few blocks away, as well as Michaels — have significantly reduced the number of classes they offer. At the same time, I have tripled mine.


Other Articles of Interest by Warren Feld:

Should I Set Up My Craft Business On A Marketplace Online?

The Importance of Self-Promotion: Don’t Be Shy

Are You Prepared For When The Reporter Comes A-Calling?

A Fool-Proof Formula For Pricing And Selling Your Jewelry

Designer Connect Profile: Tony Perrin, Jewelry Designer

My Aunt Gert: Illustrating Some Lessons In Business Smarts

Copyrighting Your Pieces: Let’s Not Confuse The Moral With The Legal Issues

Naming Your Business / Naming Your Jewelry

Jewelry Making Materials: Knowing What To Do

To What Extent Should Business Concerns Influence Artistic and Jewelry Design Choices

How Creatives Can Successfully Survive In Business

Getting Started In Business: What You Do First To Make It Official

So You Want To Do Craft Shows: Lesson 4: Set Realistic Goals


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.

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



360 Live Media, Who Is Your Competitor? 8/28/2017.
 As referenced in:

 Info Entrepreneurs. Understand Your Competitors. Canada Business Network, 2009.
 As referenced in:

Grey, Ingar. 6 Advantages To Knowing Your Competition. Bizjournals, 5/3/2016.
 As referenced in:

McCormick, Kristen. 5 Things You Should Know About Your Competitors. 12/22/2016.
 As referenced in:

Misner, Ivan. My Philosophy About Competition, 6/21/2010.
 As referenced in:

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