Tuesday, September 23, 2014

The Artist and the Seller

Well I know the difference between an artist and seller.  The straight seller is in it for the money, (and there's nothing wrong with that by the way.  We all need money), but the artist just wants to create.  If they didn't have the landlord and the electric company after them,  they might not think about money at all, and they're kinda pissed that they even have to think about finances. 


But, we can't live in la-la land.  We have to sell if this is more than a hobby.  So how does that work?


Well for me, I started out as a crocheter 6 years ago, and made handmade sewn goods a decade before that, it was all about inspiration and OOAK (one of a kind) goods.  I was making stuff for me more than for any customer.


In the 90's, I mostly made things with cowry shells, mudcloth and ankara prints.  That worked out well because there was a kind of cultural awakening going on in New York at that time, and those types of cultural goods were in high demand, so I really didn't have to think about it any further.


But once I learned to crochet 6 years ago, well the 90's were over and not everyone in my neighborhood was thirsting for African things.  Still, there is a good sized market for it and while I mostly sell amongst them on land, I'm looking for as wide an audience as I can get online.  There are the men, the women who I call "glam" (who like diamonds and pearls and bling), the high end customers, the bohemian style customers, and so forth.  I have so many styles and things that I like that I can create things for all of them, even though the cultural community will always be my home base.   

So how do I know who to cater to most if I want my business to be successful?


On top of that there are the little bursts of inspiration that every creative person gets.  I LOVE following those to see where they will take me. 

But will those bursts of inspiration be enough to pay my rent?


Back when I worked for my family, we too made a lot of our goods, but some we bought.  Me and my mother would do the buying together.  She could count on me to get the odd and funky, unconventional pieces and If times were good, I could get quite a few.  But if times were tight, we had to get the conventional stuff because that's what sells fastest and pays for rent and salaries.  The reason I was always allowed to get some unconventional pieces was because when we had a piece like that, the person who had the not-so-common taste would not only buy it, but become a customer for life because we had a piece that spoke to them.  Problem was, it could take two years for that certain someone to find that piece.  Meanwhile, the conventional stuff sold to everyone and ran out quickly.


So when I started my own business, my dad advised me to make more than one of each style and make them in different sizes and colors.  I had to wait a minute to take his advice because I was still churning out OOAK pieces and I didn't yet know which ones would catch on.  But because I do a lot of made-to-order, eventually I could easily see which ones were the "sure shots".

I noticed that other artists had taken to doing exactly that, with much success.  They had named their pieces, and they had a host of colors their items were available in.  Etsy and many other sites facilitate this by offering "variations", a feature where the customer can choose what sizes, colors and more for the item.  They also did made-to-order, offering the customer the same choices. 


And they were successful doing it too.


So I'm finally doing it too.  I started on land when I vend and do consignment.  I send out the most popular styles in different colors and watch them sell like crazy.


I set up my own website with Prestashop (free!) and it calls this feature "combinations", so I get to make one entry offering the different variations.  I've had a really hard time doing well with online sales so I'm hoping that this will be the thing that turns it around.  So far I've been selling out of those items to the point where I can't list them online, which is hopefully a good sign.


Even if OOAK is where your heart lies, try this method if you haven't already.  Don't worry.  You won't lose your creative edge.  But with an inventory that moves, you won't just have to come up with stuff to fill up your table or online store.  You can wait until you are truly inspired before you make your next piece. Plus the artist in you won't let you only just make the same stuff over and over without doing something new. 


Besides, that next burst of inspiration might just be your next sure shot, hot seller!

The Joy of Lagniappe


noun \ˈlan-ˌyap

Definition of LAGNIAPPE

: a small gift given a customer by a merchant at the time of a purchase; broadly: something given or obtained gratuitously or by way of good measure

                                                                        - Merriam-Webster Dictionary


The word entered English from Louisiana French, in turn derived from the American Spanish phrase la ñapa (referring to a free extra item, usually a very cheap one). The term has been traced back to the Quechua word yapay ('to increase; to add'). In Andean markets it is still customary to ask for a ñapa when making a purchase. The seller usually responds by throwing in a little extra. Although this is an old custom, it is still widely practiced today in Louisiana. Street vendors, especially vegetable vendors, are expected to throw in a few green chillies or a small bunch of cilantro with a purchase.

The word is chiefly used in the Gulf Coast of the United States, but the concept is practiced in many places, such as Southeast Asia, North Africa, rural France, and Holland.

                                                                        - Wikipedia


This is a practice I first learned from my family business.  We would do a repair for you or you would purchase something, and we would steam clean some of the jewelry you were already wearing for free.  I've seen it done in many other businesses as well.  Ausar Auset Society would give free classes on vitamins and herbs.  When you left the class, they were selling the things that you learned of.  It was a win-win situation, and a masterful use of the concept.


I did not start using this practice in my own business, however, until after I became a member of The Handmade Collective.  I would purchase things from them, and receive an unexpected little surprise like a pouch or an extra piece of fabric.  I got almost as much joy from the extra little surprise as I did from the thing I purchased, just as our customers had appreciated the lagniappe we gave them in our family store.  So I decided to do the same for my customers whenever I could, and that's when I got a little surprise.


Not only did the lagniappe delight my customers, but I got something special out of it too, namely that sometimes my lagniappe turned into a new item for me to sell.


Like when I made a pouch, but put some little charms and beads on it the drawstring.  Two customers told me they were using the drawstring like a necklace.   One customer indicated she wouldn't mind buying more necklaces.  So the next thing you know, I was doing necklaces, lol.


This last time, I decided to get proactive with it.  I made a style of loc holder I had always wanted to make.  I threw it in my customer's package as lagniappe, but what I really had in mind was to test a new product.  When I do my followup, I'll find out if it's good or if it needs adjustment.  This lagniappe thing is all right.


So if you're considering giving lagniappe yourself, take it from me, it's a really good idea.  Don't break the bank now; do something that won't hurt your business.  If you're really smart and slick, you could find a way to make it benefit your business even more, like with my test marketing, or Ausar Auset's vitamins and herbs. 


And best of all, it's something that the department stores don't ever do anymore, so it provides still another joy of buying handmade!

Don't Sleep on the Smaller Venues

How do you decide if a vending venue is worth it? 


I know what I do.  I think about what I'm likely to make minus  the cost for my table (I almost always vend indoors), + transport, or something like that.  I figure the amount I'm likely to make based on my inventory potential and the foot traffic for that place.  Then I try to factor in whether or not that crowd is gonna spend money, and if I'm their cup of tea.  If what I think I'm getting is looking better than what I'm going to be spending, it could be worth it.


So when Brenda Brunson-Bey and Delali Haligah started the Diaspora Art Mart, I didn't know if I should be hopeful.  It was an indoor mart, which is right up my alley.  Outdoors can be much more rigorous, as everybody knows. You have to deal with everything from the weather conditions to the expense, to the physical strain of the setup.


But back in the beginning,  I had heard that the foot traffic wasn't strong enough.  I was used to throngs of people coming to the festivals that I attended.   Also, this mart was much, much smaller, with only 15 to 20 vendors.  And it was in the YWCA, so how would people even know we were there?  Plus it was new, unlike the International  African Arts Festival or BAM, both of which had been around for decades.  All I could think of was that I was going to go there and spend my effort and time just to pay them.


But there were a few things that I didn't figure.


For one, the founders of the affair are dynamic women.  Brenda Brunson-Bey was one of the founders of 4W Circle, a collective of entrepreneurs that shared a space, helped many men and women launch their business and was just one of the treasures of its Brooklyn Community.  The market was Delali Haligah's idea.  She is the designer behind Osun Designs and she founded Queens Fashion Week.  These two dynamic women are like some kind of vortex for creating business and positivity wherever they go, so when they put their hand to something, they are never in it alone.  They always draw a following because of who they are, and what they have done, and that wasn't something that I've ever seen discussed in any business model before.  However it can be just as much of an indicator of potential as a good location.


Another thing I didn't count on was how the fact that this was a monthly event could help bring in more business.  Most of the venues I'd heard of were yearly.  This being monthly created much more of a chance to have a following.  People can get to know you once or twice a year if they see you out vending and really like and remember your products.  But if they see you once a month, it's like you're making a relationship with that crowd.


In addition, there is much more likelihood of having a made-to-order situation.  People can order from you one month, and pick up the order the next month, or have it shipped.


Still another benefit is that my poor website, which I had gone to all the trouble to set up but didn't know what to do with, suddenly had a reason for being.  When  customers wanted something, I could send them to my site so they could see my styles and yarn swatches.  They could order right then and there, or they could come see me already with an idea of what they wanted.  I'm currently redoing the site for just this reason.


And don't forget that meeting monthly means you now have a special relationship with the other sellers.  This means wealth on so many levels.  They inspire me.  We have done photo shoots together, which means we can get high quality photos from a professional photographer and models because we split the cost.  We are putting together a website as we speak and they always know about more vending opportunities, including smaller venues that most other people don't know about, but that have really great customers that don't mind spending.


The best thing of all is that it's going very well, and certainly didn't see that coming!


Now I'm not saying that every small venue has the potential that the Diaspora Art Mart has had for me.  And I'm there have been some days that are more lucrative than others, but that's true for the larger markets as well.  But I'm so glad I tried it!


If you know what to look for, the next smaller venue opportunity that you come across just may surprise you too!



Credit Card Readers and WiFi Signals

Awhile ago, while vending indoors, I had trouble with my credit card reader and I wanted to share it.
Back when I went to Circle of Sisters Expo,I purchased some hats from a vendor on the street. He had been out there all day, and his phone was running out of charge. He tried to use his Square and it just wouldn't go through. He pulled out his Gopayment Intuit and it worked. That's when I learned it pays to have a backup. I have heard more than once that if your Wi-Fi signal is even a little compromised, your Square will be the first thing you have problems with. So I got Square, Intuit and Paypal readers.  After all, they are all free!
I first tried to use them on my Ipod, but it wouldn't work and I thought it was too old. Looking back, I realize it was probably just not a good signal.  When I tested it at home, it went through, but when I got out in the street, it didn't work. I would have lost buku dollars if I had had no credit card system at all, so in a pinch I wrote down credit card numbers, expiration dates, and security cards. 
When I got home that night, I was able to use the Gopayment Intuit's online website to punch them in.  At first I was mortified to find out that they system was asking for the customer's zip codes, which I had not thought to take.  But at Camara's suggestion, I punched in a fake zip code from the area.  Even though it didn't match my customer's zip code, I found that the credit cards went through anyway.  The zip code was just an extra measure to alert the merchant that the customer might be lying about their address and the credit card might be stolen.  Important thing is, I GOT MY MONEY! 
I don't have a smart phone, so for $99.00 I ordered the Netzero hotspot.  I can carry 7 more people on my Wi-Fi connection because of it, and it works great.  Since I only really use it for my credit card sales, I can use their free monthly plan with no contract, and it's enough.  It can be used with laptops, ipads and all types of devices. 
You can stop by their website and choose my wireless device (you only have to plug it in to charge it), or their stick that works for netbooks and laptops and which is half the price.  As a matter of fact, if you plan on using more than 200mb a month, they are offering a 50% off sale for their plans that are $19.50 and up.  And I don't think they have contracts so you are not stuck with any plan.   Their website also offers a way for you to check and see if they have Wi-Fi in your area.
Check the website and see what the plans are now that they are offering.  Also I have since found out that once you upgrade, there's no going back, so choose wisely only what you need.

The last thing I wanted to talk about was the problem that since I vend indoors, the Wi-Fi signal being blocked is an issue.  One charge will go through, the next one won't, the next one will make me put the customer through it many times.  So I learned that I had to go to certain spots.  Some sellers were going by the windows, but that only worked sometimes for me.  The front of the building near the windows and doors did the trick every time for me.  I noticed that other vendors had to do this as well whether they had a smart phone or whatever device they had.
I wanted to share my experience because if you are out there vending, and you know your devices are correct and all charged up, don't freak out if you lose your connection.  And some of the time your device may tell you that you have no internet connection.  Sometimes, your reader software will sit there "initializing" for an eternity, sometimes your reader won't read the card.  So there are a number of error messages you may get when all that's really wrong is that your Wi-Fi signal is not coming through.  It may tell you that your volume needs to be higher.  Check and make sure it is on the highest level (headphones too, found on the outside of your Ipad), before getting worried.
Next time, I will try each card just once at my table.  If I see that the signal is not coming through, I will pack up my customer and take them to "the spot" so we can redo the transaction one time and then let them go out the door.
Sometimes, the other vendors already know where "the spot" is and can tell you in advance.

On the Grid Part 2: EIN's, Sales Tax ID's, and Reseller's Certificates

Ok so now, Created by Ta Ankh is officially a business, so

it's time to get it straight with Uncle Sam.

The first step was for me to go online and get my EIN number, or Employee Identification Number.

This is kind of like the social security number for your business. It is free and takes about 5 minutes or

The hours of operation are Monday through Friday 7:00 a.m. to 10:00 p.m. Eastern Time. You can't apply at other times.

Once you get your number, you must save a copy of it. I printed mine for my files, saved a copy on my hard drive, and make sure the number is on me should I need it.

Once I was straight with the federal government, it was time to get straight with the state of New York. Paying taxes varies from state to state. Some have no taxes, some have taxes only on certain things, and some try to kill you, like New York. In addition, they call ability to collect taxes on your items by different names, like seller's permit, sales tax ID, etc. In New York, it's called a Certificate of Authority, and the number you get will be the exact same number as your EIN from the federal government. Here, once you get it you will be required to file your taxes quarterly for the first year, no later than 20 days after that quarter ends, and all done online unless there's some reason that you can't. They may switch you up after that, with some having to file monthly, or yearly or whatever.

I had to create an account with the state government (I already had one because I had received unemployment), but now I had to add a business section to it, and ask for access to all of their services. I then had to give them my EIN/Certificate of Authority number, or either my social security. I remembered that all

the accountants had said not to put your social all over the place. They had sent me a notice telling me when I

had to have my account up and running for, and when my first filing deadline was and they had given me a temporary pin number. I had to declare my jurisdiction and they determined what my tax rate was. I pay a tax rate that is a combo platter of New York State and New York City, and my first payment was about $22 and change, $21.50 because I got a little discount for being a vendor.

I was also interested in what if I wanted to buy wholesale as well. I found out that I could use my EIN/Certificate of Authority in those instances so I would not have to pay taxes on purchases, and that sometimes a Resale Certificate would have to be sent to the seller. Haven't done that, but I'm looking forward to buy my supplies wholesale to cut my costs in the future.

My Certificate of Authority had gotten lost in the mail, so I had to call and let them know, and they issued another one that arrived the very day my first filing was due. But all that time I was watching for it like I was getting a present or something. It kind of made me feel more legit, even though now I have to pay my taxes and file those forms. I'm glad that I can now get space at different fairs and things, because you need that number to get a temporary vendor's license in New York.

I'm on my way. We'll see soon what the ups and downs are of being on the grid.


On the Grid Part 1: To Get On or Not To Get On, Sole, Inc. or LLC

It's Official!  I'm On the Grid


Ok, like I wrote before, I decided to go "on the grid" with my business, meaning that I decided to declare to Uncle Sam my income from my knitting/crocheting business. 


I was already partially on the grid because I have a partner who had always declared all the income in the past.  But in the past we had one business account and every time I made a sale I had to go through her to get my money.  I got tired of doing it that way so I set things up so that my sales went into my own account.  Most of you are probably on your own so this info wouldn't apply to you.


The thing to think about, and why I decided to get "on the grid" for 2013, was the fact that I was already "on the grid" and just didn't realize it.  For example, I had been using Intuit Gopayment and Squareup mobile credit card devices to process my sales.  The fact that the government knew about this was brought home when I received a document with my total sales stating that the government would receive a copy of the report.  In addition, I was on Etsy and several other online stores.  Etsy in particular just takes one look to know when the person opened the store and how many sales they made.  The others don't have this info front and center, but I don't doubt that the sites wouldn't happily give the info to the government if asked.  I think that many, many crafters and sellers do things "under the table", and once upon a time you probably could.  But in today's electronic world...


Also, there's the "they-ain't-thinking-about-me-'cause-I-don't-make-enough" thing.  I learned about that the hard way when my parents business got audited.  Now mind you, my parent's store made WAY, WAY more than what I make.  But I had it in my mind that the government only took the time to investigate big stores like Macy's.  My accountant friends set that thinking straight by letting me know that 85% of all business is small business, so it's worthwhile to go after the little guy.  There's so many more of us and we actually comprise most of the nation's income.  In addition, it's often harder to go after the big boys because they have all kinds of fancy lawyers and accountants in place to find them the right loopholes and represent them should they get audited.


So, I was really happy when Camara got her accountant, Linda Tiller, to speak to the Handmade Collective.  I knew I didn't want to do any more than necessary (e.g. filing for my LLC), and she confirmed that it was best to wait until bigger and more steady money comes in because you would then have to do things and pay all kinds of fees even if you made nothing that year.  My own personal accountant confirmed this.  That just left me functioning as a sole proprietorship.  Linda Tiller had suggested that if you had made $600 - $700 or more, you needed to report your income.  So that's what i set out to do.


When I got to my accountant, she repeated what Linda Tiller had said, namely that the government goes kind of easy on a business that can show a loss for the first 5 years.  So I had to now produce records for my business, records that I did not really have organized since I had not planned on declaring my income until it was already 2014.


Lucky for me, most of my expenses were online or on a credit card, so I got my bank statements for all my credit cards for the last year.  Also lucky for me, most of my supplies come from the craft store, so it was easy to identify from my banking statements what my supply expenses were.  By doing it this way, I realize that I wasn't catching all my expenses, since there were times when I went to the craft store with cash.  But I'd rather die than dig in that big ol'bag of receipts I had.  Not to mention I had gone on a cleaning jag once and shredded a lot of the receipts, especially the cash ones.  But oh well, I spent so doggoned much it didn't matter.  For this year, I am creating folders for supplies, vending expenses, etc., and I have a separate credit card that I got from Paypal to use for the supplies.


Next, I went online and downloaded CSV reports from Paypal and Etsy.  The right thing to do would have been to have separate Paypal and Etsy accounts for personal and business, and because I have a partner, those things were set up.  But I'd gotten sloppy since then, so I had to go through with a highlighter to differentiate between personal expenditures and business ones.  As of this year, I'm doing a much better job of keeping things separate.


Long story short, I ended up getting only a few dollars back from the government, and owing the state hundreds of dollars.  However my accountant worked with me, and I just went back and found more expenses (e.g. i had used my personal paypal to buy supplies and had forgotten about it).  So when I finished, the federal was giving me back hundreds of dollars and I only owed the state $50. 


The accountant did not ask for the receipts for these things.  She just asked for the figures.  But I made sure that I could account for every penny that I declared should I get audited.  Also, I made sure everything with a "paper trail" was accounted for (e.g. credit card sales, online store store activity).  What you do with your cash sales is up to you. 


At no time did I have to fill a separate form or do anything declaring myself a sole proprietorship, or at least not to my knowledge I didn't.  I simply had my accountant declare my income.

Now a couple of things.  I used my savings from my IRA to live on.  There are penalties that go with that, which is why I ended up owing.  If you don't have a situation like that, you probably won't have to pay anything.  Another thing is that I live in New York, the land of high expenses and bullshit.  Therefore, your fees and things for everything from declaring a LLC to the taxes you have to pay will probably be less in most places.  In other words, it really wasn't too painful.  My fee to the accountant was $300, about $100 or so more than it would have been had I not mixed business in with the personal.  My brother's fee for his LLC is about $800 so doing the sole proprietorship is cheaper by far than the LLC is, and since I probably won't be using savings with a penalty for next year, I expect to make out even better.


The last thing is that my accountant is getting me a sales tax ID.  In New York, getting a permanent vendors license is damned near impossible if you are not a vet.  You have to get a temporary one and pay about $10 per month plus fees for the months you might possibly be vending.  Many of the biggest festivals require them, and you need to have your tax ID# to get one.  Plus, both Linda Tiller and my own accountant said that it's best to have this number because without it, you'll be using your social security number all over the place which is not good.  I'm using my social security number in one of my online stores right now.


I wrote this stuff out so that each one of us will consider if we need to go "on the grid" or not, and would know what to expect should we decide to go the sole proprietorship route.  At some point, I plan to get my LLC, but probably not for a long while.  I'll definitely report the process when I do.