Monetization & Business Models: Craft + Money, the Next Steps
By BHLiveblogger on September 15, 2011
Tara introduces session.
We will talk about 1: setting big goals, 2: developing multiple revenue streams, and 3: considering the story of our customers. "Bottom line, there are opportunities to make money everywhere."
Megan is the founder of CraftMBA.com, and starts by explaining that she has multiple revenue streams herself, with multiple degrees in her areas of artistic interest. She started with craft shows and Etsy, and then evolved to include wholesale and e-commerce at her own domain. She has always had a lot of different pieces to her business, including teaching at the university level and then founding CraftMBA to help crafters develop business skills. She sells digital products, eBooks etc and works with clients one on one as well as doing speaking engagements. CraftMBA has led to other teaching opportunities as well.
One revenue stream is not enough for a business; you need multiple streams to even out cash flow. You'll find that business is cyclical. If you position multiple revenue streams right, they can fuel each other. Megan originally had separate social media accounts for different projects but discovered it worked better to streamline her brand. She's seen as an authority in her niche and has a more diverse social media following than she would if she focused only on her studio work on Twitter, which boosts her creativity and her profile.
Multiple revenue streams also fund each other -- making jewelry is capital intensive, but CraftMBA is not, so it can help grow the jewelry business, and has resulted in being able to hire an employee.
Getting to the next level means having big goals. Many people are hesitant to spend money on their business but you have to, and you have to get help when you need it -- Megan just hired a publicist, knowing that that money would come back to her. She does several shows a year, which cost money. She got comfortable with the idea of spending money by watching her parents in business and believes you have to learn to spend.
Anna started out working in non-profits. Taught herself to knit in 2005 and started a blog about it. Found crafting to be therapeutic and started doing craft shows. She chose a name for her blog that could encompass more than just knitting, and eventually decided to use her blog name as her brand. After being published in a major knitting magazine, she decided she wanted crafting to be her job. Anna says, if you sell electronic downloads (patterns, example), use hyperlinks that will lead people right back to your website.
Anna has a distributor who sells her patterns wholesale to yarn shops. Some people are reluctant to do this because of the fees, but it's worth it not to have to deal with the hassle of contacting individual shops. Also, Anna can show her product at the distributor's booth at trade shows, and doesn't have to pay for her own booth when she attends, and she can make contacts with other possible revenue streams.
Anna is involved at Ravelry.com, a tight-knit and vibrant fibercraft community. She says she actually posts less on her blog now because of her active involvement in the Ravelry community. She sells patterns through Ravelry as well.
Anna says: Sell your publishing right, but never sell your copyright.
You never know what's going to be a hit, and there is an investment in designing a pattern, so diverse revenue helps. You can also teach courses, which gets you in front of potential customers. Anna also does blog tours, promotes herself via social media, and is planning a video teaching course.
Being seen by customers is really important, building a rapport with the people who tweet you or comment on your blog or make your project on Ravelry.
Alicia started her business because she wanted to make friends. She'd moved to a new city and wanted to do something crafty and social to meet like-minded people. There was nothing like that in her new city, so she decided to just do it herself. She began hosting happy hour events in bars and restaurants where women would come and craft with her, and pay a fee. She's since made many friends through her work and has gotten involved in her new community. Her past as a chemical engineer didn't feel like a worthy resume for a craft professional, but she was a blog reader and started her own. She considers her blog now to be her resume. It wasn't intended to be so important to her business, but social media has helped her forge great relationships. Alicia resisted running ads on her blog, but is considering it as a potential new revenue stream.
Alicia believes you need a niche. People who visit her blog may not be crafty, they may just like the niche she's chosen. The person who would take a class from her is the person who's intimidated by the craft store, but Alicia can provide the tools and knowledge. Her blog and her niche of fashion-inspired crafts has given her the opportunity to attend fashion-related conferences and shows.
It's been rewarding for her to have a good local network, a few women who get together often to discuss business. You have to treat your business like a business even if it's blogging in bed. She gets together with her network and discusses goals for their different businesses and hold one another accountable. (Audience recommendation: Google your city's Craft Mafia for possible support of this kind!) It's worth it a hundred times over to meet your community.
Tara: There's a lot of different ways to make money. Her business is mostly information, teaching and expertise. She started it 2.5 years ago, with a blog that was intentionally created to be a business. She later created her first digital book, which was a bit of a tough sell because it was ahead of the e-book curve. She followed it with other types of media until she had built her business into a full fledged venture.
In June she released a book called Art of Earning, a near and dear but also scary subject, knowing her customers needed the information (knowing their story). She wrote it as a gateway to her philosophy, and it resulted in a boost to her coaching business, which is mostly done electronically, with clients all over the world. She has no formal training in business, but her educational background does prepare her for connecting with people and her passion for business has evolved from that.
Her digital products allow people to make a small investment, but can lead them to make larger investments in her philosophy. She's able to help people wherever they're at in their business.
Tara notes that nobody yet has talked much about the art or science of blogging. She says it's because blogging is a tool, it's 100% business and it's also 0% business. When people read your blog, that's a transaction. But it's not a six-figure business, you won't sell enough ads to make it one. You have to have a business outside your blog. Your blog can fuel it, and empower it, but this is not about how to make money off your blog, that won't work. You need a hook, and a story, that people will buy into with their time and attention but also their dollars.
Anna: I view blogs as a branding vehicle, to reach out to customers, vendors, peers. People want to know who you are, who's creating the product. Your social media stuff too -- put your Twitter on your blog. Think of yourself as someone important and big, but be accessible to people. You can be very successful if you diversify, you can't just "put ads on your blog".
Megan: When I started CraftMBA most of the blogs I was reading were design blogs. I thought "maybe I'll run some ads, get a few speaking gigs." But because I was reading blogs outside of my niche, I read stuff from people who told me no, don't run ads, diversify. Think about what you can pull in from other groups, there are other industries doing different things -- what can you pull to make your business a success? Don't copy what everyone else is doing.
Tara: Anna said your blog is about teaching people about yourself. I think that points to the fact that this is an experience economy, not a stuff economy anymore. One of the reasons we're attracted to this handmade, DIY movement is because we can also craft experiences for the people who visit our sites. And that experience has worth, because people are interested in spending money on self-care, knowledge, expertise.
Audience Question: Megan, you mentioned making $10,000 a month -- is that feasible? What qualities does a person need to have to make that kind of money?
Tara: You have to be able to envision them. That's the quality. I started my business with a $75 payment to a web hosting company. I put it on my credit card and didn't tell my husband. I wanted to stay home with my daughter and I needed a few hundred dollars a month. I was replacing my monthly income within nine months. Soon, I surpassed my husband's income. Six months later I had my first six figure year. This year I will gross $250,000. Last month I made $32,000, more than I made in a year at my previous job. No sleazy, spammy anything, I just envisioned my goals. I didn't know those goals existed until I visualized them. It's about making these ridiculous numbers seem tangible, because they are.
Megan: You have to pay attention to your numbers. You have to look at what's coming in and going out. I knew I had to make $8000 a month to pay for my business and my personal expenses. Because I know that number, I sit down and figure out what I have to do to make it happen. I think about it ahead of time, not thinking about bringing in money tomorrow but thinking about bringing in money months from now. You can't be creative if you're panicking.
Audience Question: It's difficult to realize you have to spend money to make money. If you have an existing following, you can monetize that instantly by saying "Look, I'm building this project" and then using Kickstarter. It instantly sifts for good ideas -- if you don't get funding, it sucks or needs tweaking. I was wondering about your take on "angel investors" and wondering how you use them.
Anna: I don't have a lot to say on that, I've never posted a Kickstarter project and have no plans to. But I have a friend who was writing a book and put it on Kickstarter, and I think whether you get funded or not, you get attention and people know you're serious. If you do something like Kickstarter, put a lot of thought into what you're proposing and your gifts if you get successfully funded, and blast it on social media.
Megan: I love Kickstarter, wish it had been around when I took out a loan to start business. It's another revenue stream. I do extra courses to bring in revenue knowing I need to, in order to fund a project. That's my Kickstarter.
Tara: We're so used to being dependent on a paycheck, which is a scarcity mindset. Monetizing your web presence flips the model on its head: you know what you need and you go out and get it.
Alicia: Anyone who posts a Kickstarter project, I applaud you. Taking that first step is the hardest thing. Even rejection gets you closer to that right tweak that makes it a great idea. You might fail, you will fail, that's okay. When you have diverse revenue streams it's okay to try things. I think being a little bit delusional is a good skill in business.
Audience Question: Someone mentioned video teaching, which I'm considering, and I'd like to know more details about how you do this.
Anna: I haven't started yet, but I took a site from CraftyPod, and I think it's just what works for you. Some people do traditionally printed magazines and are switching to digital now. You can host a video on YouTube, do a video podcast, webcasts, subscription based, etc.
Megan: You can also use free video teaching as a tool to sell something else. I have a ton of posts on CraftMBA on how to do videos. I know a woman who sells patterns, and whenever she had a pattern with an interesting technique she would create a free video tutorial to teach it. Now when you Google that technique she's the first hit and her business has exploded.
Tara: You may be wondering who really pays for this stuff, why would anyone buy this? I've been bombarded with negative comments about the economy, but screw the economy. People will prioritize your work, and your customer's priorities aren't yours. You probably make what you make on a budget, but your customer can't make what you make and are willing to pay for it.
Audience Question: How do you decide what to offer for free?
Anna: I don't personally believe in giving away free things. But using it as a vehicle to support your product, yeah. If I'm introducing a new technique I might do a small free pattern, but there are a lot of free patterns, and you get what you pay for. If you're using a free product as a marketing tool, still treat it as a product in terms of quality. I give things away promotionally, like to a 1000th Twitter follower.
Megan: I would add that when you're starting out your business it will feel like you're giving away more than you're selling. But you're doing that and people are paying with their attention.
Tara: Nothing is free, some things don't cost money.
Audience Question: How do you fight theft?
Tara: I use a service called ejunkie.com; you upload your products to it and it integrates with Paypal. There's a lot of security within ejunkie.com and outside of that I don't worry about it. I can't worry about it. I'm happy my ideas are being paid for and being appreciated.
Audience Question: Why don't you sell through Apple or Amazon, would that help with theft?
Tara: That's the plan, but it wouldn't help with theft. And through Apple and Amazon I'd make less, which is still better than traditional publishing.
Megan: It comes to brand positioning; Apple and Amazon have set a precedent of ebook pricing that doesn't meet my needs.
Anna: I have a pattern ebook, and I can automatically update the pattern for my customers through ejunkie.com, and each time I revise that pattern, that's a connection with a customer. If someone's going to steal your stuff, they're going to steal it.
Audience Question: Do any of you use affiliate marketing?
Tara: I love affiliate marketing; it's like having a sales force you don't have to pay for. It's a way better way to make money than advertising. I recommend ejunkie.com
Alicia: Just sign up for Amazon's program and dip your toes in. You can link to Amazon products in a tutorial and get a few cents when your customers buy through them.
Tara: I don't do Amazon because they pay pennies. I do it for other authors.
Megan: I do the Amazon program and I have them pay me in gift cards.
Tara: To answer your technical question, you could sign up through ejunkie.com to be one of my affiliates, and I pay you. And I highly recommend trying Outright.com if you need bookkeeping services, and I get a referral fee for that. There's a company called Commission Junction you can try. These things really add up. To me the other things are more fun than Amazon.
Audience Question: As a business owner I have guilt that if I'm not working, I'm not making money. I feel like you must be working 20-hour days, please tell me I'm not right.
ALL: You're not right!
Megan: there are times when I work a lot of hours because you just have to. But you prioritize. I think that holds people back, thinking they have to do it all. But you don't. I have an assistant now because otherwise I couldn't do everything I do. But last week I spent thirty hours making jewelry. And I just hired a publicist because I don't have time to pitch media outlets. But I do work a lot, and I love my job. But I also like to make dinner, and go to the bar. And sometimes I take an entire day off.
Tara: I don't believe in work life balance. I believe we do what we do because we want to integrate our work with our lives. I don't mind that my daughter sees me working on my laptop, it means her dad gets to be a stay at home parent. I play a lot, too. I do what needs to be done and I don't feel guilty about anything.
Anna: Knitting is a very social thing, and sometimes in knitting groups I hold back my personal life because it's social, but it's work, in a fun way. And now I hire sample knitters to help me, I have "volunteer interns" to help me. I prioritize with them so I can work less on some things, and harder on others.
Alicia: I once heard Elizabeth Gilbert talk, and she said "Instead of saying to thine own self be true, I think we should say to thine own self be kind". So I keep that in mind.
Audience Question: We always feel obligated to give product to charity. How do you handle that?
Alicia: You need to write out some guidelines, and then stick to them. Whatever makes sense to you, and then point people toward your guidelines. You're a business.
Anna: You can say you've maxed out on what you can give that year or month. You can offer a discount.
Tara: Are your prices high enough? If your prices are higher, your friends might think twice about asking so often.
Megan: My jewelry's expensive and nobody ever asks me to donate it.
Anna: You can offer coupons, too.
Audience Question: When you're thinking about multiple revenue streams, how do you stay true to your passion?
Tara: You stick with your mission. Anything I do within my mission is fair game. This panel falls into that. Know your vision, know your mission. If things start to come along that don't fit, rethink it.
Megan: If you don't love it, don't do it. I gave up retail craft shows. I'm missing out on an extra revenue stream but it didn't make me happy. I run a business to be in control of my life.
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