You are an artist in business and as such you need to know how your business is doing. Start simply tracking the numbers. Money coming in, money going out. Start to learn what it costs to run your practice as a business. It is OK to operate at a loss for the first couple of years. But you need to be AWARE.
Video:
[embedyt]https://youtu.be/IceLPStiRdQ[/embedyt]
Podcast:
[powerpress]
[miniorange_social_sharing]
Video Transcript:
John Paul: Hi. I’m John Paul Fischbach, the Chief Alchemist here at the Auspicious Arts Incubator. For this Hot Tip Tuesday I’m joined in the studio who you used to know as our IT guru but what you probably didn’t know is that Mr. Lambie also has a degree in finance and has run many small businesses.
We have lots of discussions about moving an artist’s business from the hobby stage into a business that makes money and helps to create the lifestyle that you want. We thought we’d have a bit of a conversation about some of the things that make the difference between having the business as a hobby and the business as a viable business.
Craig: The one thing that you should start doing if you want your hobby to become a viable business is to track the numbers. It’s as simple as that. It’s not a business if you dont know if you’re making a profit or not.
John Paul: They say in small business if you can’t talk the numbers you’re not in business. We dont like it as artists and we’re kind of clumsy at it but suck it up. We have to be able to talk about the numbers to be in business.
Craig: It’s really simple. All you need to do is go and buy an exercise book and each month take one page on the left side and write down any sales or invoices that you’ve issued. Write them down invoice number 1 or sale number 1 and the amount.
John Paul: That is money coming in.
Craig: Then on the right side you write all of your expenses that relate to your arts business. Your accountant is going to love you for this as well by the way. On this side these are all the money going out. Every expense that you have that is related to your arts business just write it down and then at the end of the month add up all of the numbers on this side and all of the numbers on this side. The difference is your profit or loss for that month.
John Paul: It’s okay to have loss. It’s perfectly fine. The ATO will let you have a loss for three to five years because they understand that you’re trying to build your business. In the early days of building a business you’re going to spend more money than you’re going to make and that is okay. Also in the early years you’re going to be giving away product, you’re going to be giving away services, you’re going to be giving away performances to build your client base and that is fine too but you have to know, you have to be conscious of these numbers.
Craig: When you make the conscious decision to move from a hobby to a business you not only start tracking the numbers but you also realize it’s going to take at least a year before that little bit of profit gross to the amount that is going to maintain that lifestyle. That is totally okay. Every beginner’s business that is being developed in the planet takes one to two years before it starts paying real dividends or real salary to its owner.
John Paul: If this Hot Tip was helpful please like the video. If there’s questions or comments that you want to make about your journey with tracking numbers or wrestling with numbers please do that below. Let’s open a bit of conversation because the number thing is tricky for artists so let’s start a conversation and de-mystify some of that for you.
If you know someone who could really benefit from this Hot Tip please share this video with them. That would be great because here at the Auspicious Arts Incubator we want you to more than survive we actually want you to thrive in an arts business. The best way to thrive is to subscribe. Subscribe to this channel and there’s lots more Hot Tip coming at you. From our IT Guru/Finance Expert. Ciao for now.