I spent most of last Sunday working on my income and expense spreadsheets for 2009. It left me dismayed and outright depressed. Before I started working on the numbers, I knew that sales were up substantially over last year. I had high hopes that there would be a nice profit. What I had forgotten about was that expenses went up as well.
I have been doing glass as a business since March of 2005. My path is a familiar one that I am sure is shared by many. I started creating… I loved it… I was good at it… friends noticed… and pretty soon someone wanted to pay me for my creations. At first it was all word of mouth, and mostly stained glass commissions. Eventually, I wanted to expand my craft. That meant taking classes and buying new equipment and materials. In 2008 I started selling my work online. I needed a website, software, shipping boxes, packaging materials, marketing items, etc. Last year I invested in more equipment (kiln & sandblaster) and also took several classes from leaders in the industry to expand my knowledge in glass fusing. It is easy to see how expenses can be greater than income for the first few years of a new business.
I read recently that of all the new business start-ups, 1/3 will eventually turn a profit, 1/3 will break even, and 1/3 will never make a profit. According to the U.S. Small Business Association, only 2/3 of all small business start-ups survive the first two years and less than half make it to four years. That’s pretty sobering. The good news for me is that in 2009 my sales increased by 109% while expenses only increased by 65%. That means the gap between expenses and income is closing. A good thing indeed! So I guess I shouldn’t be depressed after all.