Wednesday, April 29, 2009

Turning your Quilting Passion into Profit

Did you know it costs between $50,000 and $100,000 to start a quilt shop?

Did you know a long arm machine can run anywhere from $7,500 - $10,000 for a basic model and for a fancier model, between $30,000 and $40,000?

These were all things I learned in the Quilting Passion for Profit Class taught by Morna McEver Golletz, Publisher and Editor of The Professional Quilter Magazine. This class was awesome. I learned so much about copyrighting, taxes, zoning, and small businesses in general.

Here’s some things I wrote down that you might be interested in if you are thinking about starting a sewing or quilting business.

*On average, for every one hour of design or work time, you should figure there is at least two hours of administrative time that should be put into your business. The design time includes things like creating patterns, sewing, quilting, etc. The administrative side could include things like figuring prices, advertising, marketing, taxes, billing, etc.

* If you open a business and later decide to close it, there is a lot of red tape to go through if you have registered as an LLC. It may be better to go as a sole proprietor instead.

* Be sure to check zoning requirements before you start a business.

* Do you know how to get into quilt market? It takes a business card and a bill from a supplier or a letter from your banker. They look to make sure you actually have a business, since it’s an industry only event.
I also learned a few things about how to price an item.

*One way to figure a price is to charge 2.5 times the amount spent on supplies.

*Another way to figure it is to find your overhead cost. This includes utilities, rent, equipment, and other general expenses. Then you need to figure an hourly rate for yourself. Next, decide how much of a profit you want out of the item. Be sure to factor in your materials used; this includes needles, threads, fabric, glue, etc. So, now that you’ve figured all those numbers:

~Say your overhead is roughly $12,000 per year. If you work 40 hours a week for 48 weeks of the year that is 1,920 work hours. $12,000 ÷ 1,920 hours = $6.25 per hour. That is how much you need to add into your price for overhead.

~Let’s say you pay yourself $20 per hour for labor.

~For this example, let’s spend $30 on materials.

~Let’s go with a 20% profit.

~Now let’s work out the example for a project that took us 3 hours to make.
(3 hrs x $6.25/hr + 3 hrs x $20/hr + $30) x 20% = $138

This was a really interesting class. If you ever get the chance to take it, I recommend it. Morna really knows her stuff!

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