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Sometimes you have to jump even if you don’t have a parachute. I know because it’s happening to me right now.
If you’ve been listening to the show then you know we are profitable, even if barely so, but it’s been a struggle to get through most months because our production costs are so high.
Right now we are paying $6/book and selling them for 1 for $20, 2 for $30, or 3 for $40 at shows. If you look at that profit margin, it’s not very good.
Max we are making 3.5x our margins. Since we have con costs and operational costs, or profit was non-existent even if we sold a TON of books.
A good, nice, healthy profit margin is 10x production costs. If you can 10x production costs, you are going to be able to make a decent profit after operational costs, at least at scale.
Scale is when you grow your business over time. That growth is scaling your business.
So long story short, we had to make a change. A big change. If we are going to be successful, we had to somehow find a way to either charge more for books, make them for less, or both.
In order to do that, we had to order a mass quantity of books. See, short run books are expensive. However, if you can order more books then you can get that cost down significantly.
We found a printer who can do that. We found a printer who can get Hardcover book costs down to $3/unit AND we can sell those hardcovers for 1 for $30 or 2 for $40 at shows. So now we are spending less per book AND charging more for them.
That’s a twofer!
But in order to do that we need to spend THOUSANDS of dollars more than we have right now. We already talked about our profit margin being razor thin, and this dips us far into the red. Far enough into the red we can’t even see black anymore.
We can’t afford it, but we had to do it. We have to do it if we want our business to succeed. Any business hits this moment at least once if not several times. In order to scale even a creative business, you need to take risks.
Now, if this doesn’t pay off I’ll have several thousand books and a huge debt. But for me that’s worth it at this moment because I sell a lot of books at cons and I know if I can charge more and pay less then I will be able to make more money at shows. If I can make more money at shows, I will be able to move from slim profit to healthy profit, and instead of teetering we can grow.
But it’s a risk. A calculated risk but a risk none the less. Is it time for you to take a risk? I don’t know. I can’t say. I would love to talk with you about it through our new FREE strategy calls @ thebusinessofart.us/consultation though.
I will say that saying you don’t have money isn’t an excuse, because no business ever has money. Every business is funneling their money into growing their business whether they make $2 of $2 billion. There are so many ways to take calculated risks. Some risks are worth it, and others aren’t.
It’s tough to know the difference, because even the best risks can fail while even the worse can pay off. The trick is in talking the most risks with the best chances of paying off, because over time they will work out more than taking gambles.
If you like this episode, please click here to subscribe, rate, and review the podcast. It’s the best way to help us grow.