When everything is going bad

A post yesterday afternoon on the Quiltart list got my thoughts racing.  An artist who lives in Italy wrote that last year she started her own business, wanting to teach quilting workshops and sell quilts.  But things have not worked out well.

"Everything I did seems not to hit, only one flop after another.  Craft fairs went bad.  I had only a few workshops; people want everything for free.  After one year I don't know what to do and I'm getting a bit depressed.  I absolutely need to raise my business this year because of tax issues," she wrote.

I have not tried to make a living out of art or craft, but I spent enough time in the consulting business to give her the five-euro set of questions (because all important problems are solved through questions, not through answers).  But first a word of sympathy/caveat.

This is a rotten time to start a business, particularly one that provides discretionary purchases.  The world economy is not doing well, and people cut back on things they don't really need.  Many small businesses fail, and it may well be that this is going to be one of them.  But let's give it a good try.

The first question for our correspondent: what made you think this business would work in the first place?  You must have had some success in teaching or selling quilts or both, so let's analyze what used to work.  Who took your workshops?  Were the successful workshops short or long?  What topics and venues were most popular?  Who bought your quilts?  What price range was best for your customers?  Where did your customers come from?  Did they come directly to you or through a shop?  I hope you asked yourself questions like this before you decided to start the business.

So what changed in the year after you made that decision?  And can you tell why it changed?

There are several possibilities. 

First, that the bad economy simply made everybody pull back; that whatever you thought you might sell 100 euros worth of, you were able to sell only 60 euros worth of. 

Second, that people bought some of your goods and services but not others.  For instance, they still wanted to learn quilting techniques but not to buy your quilts.  Or they still bought inexpensive quilts but not the higher-priced ones.

Third, that you missed a step in executing your business plan.  For instance, you might have not signed up for as many craft fairs as you had intended, or couldn't find appropriate space for enough workshops, or didn't have your quilts in as many shops as you wanted.  Or maybe you didn't do a good enough job of scoping out what items would sell at craft fairs, and showed up with things that were too expensive or the wrong color or not trendy enough.  Maybe you didn't have enough money, so you couldn't rent decent space, enter enough fairs, buy enough fabric, advertise, stock enough inventory or whatever else you should have done. 

Often the missed step is not doing enough marketing; the general rule of thumb is that for every hour you spend making/teaching/writing (that is, actually producing the goods and services you have for sale) you need to spend an hour marketing, selling, and supporting the business.  The silver lining of a slow business is that you should have more time for marketing, so it's really important to prepare a list of marketing tasks.  On days when you feel depressed and want to stay in bed and read a book, force yourself to choose one or two tasks off the list and do them.  On days when you have more energy, try to do several tasks, and think of new ones to add to the list.

After you have identified what has changed in your business in the last year, you may be able to figure out why you are not doing as well as you want.  I would also ask you questions like this:  Is there any one segment of your business that is doing well?  If so, maybe you should concentrate on it for the coming  year.  Which segment or product has the highest profit margin -- that is, profit compared to the time and materials you invest in it?  Maybe you should try harder to promote that item.

Look closely at your price and cost structure for the different activities you do.  For instance, maybe you could get more people to attend workshops if you charged less; you'd make less per person, but maybe you would come out ahead in the long run.  Or maybe you should find a less expensive place to hold the workshops.  Maybe you could offer a free workshop after somebody has taken one or two paid classes. 

Often small businesses can save themselves with a better focus on what is profitable and what is possible.  With any luck you can identify a product or service that is both profitable and possible.  If not, find one that is profitable and try to figure out how to make it possible -- or vice versa.  Do your best for two months to market that product aggressively and see how your business responds. If it doesn't, then focus for the next two months on another product or service.  If that doesn't respond either, then maybe it's time to admit defeat and go back to making art in some way other than as a business.