Monday, May 21, 2012

$72 Dollars a Day

I told you I was frugal, didn't I? $72 dollars a day is my nut, a term I learned from a Slate article of small business tips. There are other useful thoughts there: "passion is the key" is, predictably, my favorite. "Know your nut" stuck in my mind because it's a simple but not intuitive way to gauge how you are doing, while there's still time to make a course correction.

According to the original concept, your nut is exactly how much money you need to stay in business, divided by the number of days you are open for business. This idea is more helpful if I customize it to my situation: a daily-sales number is not that useful to me, as most of my sales are not retail. Most days I don't sell anything at all, except at the consignment locations, which I don't know about until I get the checks. More helpful to me is thinking in terms of making; I can't sell pots I don't have, and I sell pretty-damn-close to every "first" I make, in part because having inventory motivates me to get out and sell it.

Okay, so, maybe I focus on making $72 a day in inventory. That's better, but wait: I don't do wheel work every single day. Some days are finishing: trimming, handles, glazing, firing, kiln maintenance - and other days are sales: prospecting and delivery. One day a week is entirely devoted to teaching. In all I have only about nine days a month for throwing.

This changes the math.

Once I multiply and divide anew, my number is $245. I need to make a minimum of $245, wholesale, every throwing day to stay afloat.

But wait, there's more. As every potter knows, making more costs more. More clay, more propane. And selling more costs more: more gas, more packing material, more shipping. Some of that is absorbed in figuring everything as wholesale, when, in fact, not everything I sell is at wholesale price. But let's say I would have to make 25% more to cover those costs: now I am at $307 for each wet-work day.

Even such a seemingly simple concept as the daily nut ends up making my head swim, which is probably why I usually proceed in such a seat-of-the-pants manner; but $307 is both concrete and doable, and anything (well, almost anything) that gets me to make more stuff is a good thing.

Whoa, $307 is 31 mugs; or 10 lidded casseroles; or 21 honey jars, or 205 refrigerator magnets.

Gotta go.
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