My client Rosanna had an idea for a scarf project made from beautiful wool and a beaded fringe. She designed the look, chose the yarn and bought the beads. She carefully wrote down the cost of these products and estimated the time it would take her to make each scarf at 1.5 hours. Based on this information, she then decided to sell the scarves for $45 a piece at a craft show. This seems like a reasonable price point. She split the cost of a booth with a friend and helped advertise the show. All of this was natural to Rosanna as she had been in the artisan business for year, even though she had never really made enough to support herself! She sent an email to her friends, wrote a blog, sent out a newsletter and used Facebook to get the word out. Rosanna got to work. She found that creating the scarf and the beaded fringe took longer than expected and was close to two hours. So she told herself to work more quickly. The length of the bead fringe shortened and she switched from a colored bead selection to a two tone look. Eventually, Rosanna had 20 scarves. She wanted a lot more, but considered that at $45 she would make a good profit. The day of the event went well, and Rosanna sold out all of her scarves.
But how much money did she really make? When she came to see me at the small business development center to get advice on how to make her business more profitable, I knew she was about to get some eye opening news. I was going to tell her about the Time/Money Squeeze- strategy #5 in Better, Smarter, Richer.