: DirtRoads - Viewing Profile

I would really consider those questions Mark C bought up.

Exactly where are you going to sell your wares?

When I was first getting into this, I compiled a list of possible shows. Look at craft versus art shows.

And the question of retailing versus wholesaling is big. I'm not a big fan of trying to do both, although a lot of potters seem to do both well. I do think wholesaling is more competitive and you have to be more precise in your output. Recently I worked for a friend potter at a wholesale show for Mississippi based exhibitors ... and there were something like 18 potters there (http://www.mississippimarket.org/exhibitors/directory/category/Pottery_Stoneware). I do see quite a bit of pottery that is not priced to sell at a traditional 2X mark up because it does not really have the perceived value at the retail price. If you have retail stores or gallery accounts you can not sell below a 2x mark up without alienating those wholesale accounts. I like the quicker turn I get by pricing at less than retail prices. Also, I've found that consistency is not necessary. Pieces I would have discarded have sold at the marked price.

IMO it is a lot easier to skip the wholesaling for a period of time.

Look at all these people doing pottery full time. (just look at those 18 in Mississippi that wholesale and I know at least 20 more potters just from this state that weren't there). More people are going to make this a career. ONE of those people might as well be you

One more point: I found I needed additional kilns. I fooled around with a few substandard models. Buying a good production model kiln was an essential move. So evaluate your kiln situation carefully.

On that $16K .... I think it is feasible to sell $16k a year (and more) but not necessarily feasible to sell $1200 every month. You will have to plan for ebbs and flows of cash flow. You will have to keep a supply of clay/glaze all the time, especially in your low sales months so you can stock pile for events or seasons. Even now I would not want to 100% depend on monthly sales to fund my business or myself. I can depend on yearly sales ... but not monthly.

I set my bare minimum break even point at $24K in retail sales per year. In October I will have been doing this two years and I have added one full time employee and sales for 2012 have already exceeded $24k, but with an added employee expense. I project at least 60% of my sales will be in the 4th quarter. I moved to my retail/prodution/living location one year ago. Opened the retail shop last November.

It took me almost a year to start cash flowing. The business has been cash flowing since December 2011. (exception: I used my real estate account to buy a L&L kiln) I needed time to build a line and get a decent level of inventory. You have to allow for the time waiting for shows.

How long do you think it will take you to build an adequate level of inventory? I sell most (75%) of my wares in my small retail location, which is located on a major hwy between 2 small towns and is 9 miles from a casino. I have ebbs and flows in sales. At the end of May I did a complete assessment and found I had sold 80% of my yearly production, with 40% of my sales in the month of May. I am really trying to build inventory for 4th quarter, as sales for the pottery is following the same slaes pattern of retail gift stores. Last December I sold every piece I had and every piece I could make. I only sell retail, no wholesaling so I can push product to consumers at a wholesale price without the problem of alienating wholesale accounts.

The biggest limitation I face is production. I now have one full time worker and we put out a minimum of $2000 of finished product a week. (more if I doing a lot of jewelry) I use a cost based pricing strategy. I will share these numbers with you: (its a cut and paste and the table divisions didn't space. There are 3 sets of numbers for 3 different product categories.

Serve Ware, Larger Items------Ornaments/Crosses------ Jewelry
Cost of Clay 6%--- 2% ---- 1%
Cost of Glazing 10% --- 3% --- 1%
Electricity to run Kilns 5% 2% 1%
Labor Output Clay $400 Day $600 Day $900 Day
Glazing Output $500 Day $700 Day $900 Day
Assembly Time 0 ---- 0 ----$2500 Day (only on jewelry)
Finished Product $450/day $650/day $720/day
Labor Ratio to Output Value 17% 12% 10%(basically i have 4 days making, 1 day assembly)
Findings 0----0---- 5%
_____________________________________________________________________________________________
Gross Margin 38% 19% 18%

*Owners Profit (labor) 20%
**Profit Margin for Business 15%
***Operations Cost 20%
Advertising/Promotion (shows included) 5%

Net: 35-55% profit on gross production (35% serve ware, 55% ornaments/jewelry)

* If you don't have labor, this will even out as your production output will be less.
**A competitive profit margin is 15% in today's market (20% used to be the standard)
** Standard for production business ... I am seeing that this cost can be lower for a home based pottery business, around 10% or even lower. But I think this could be consumed on kiln expenses at a later date.

The biggest challenge for me is production. Sticking to quotas and getting out product. You have no time leverage at all. I've never had a "manufacturing" business before and don't particularly like the production limitation of inventory. I yearn for the old retail days when I could order more than I could pay for in 30 minutes. We are getting slightly faster and producing more. (glazing output has gone up to $600 a day now) I have no idea how these numbers stack up to industry averages because I have not seen any. I ran my retail stores completely on sales to cost ratios and I find these numbers acceptable. These numbers are the ones I calculated in May.

Good luck with your decision.

"noobies selling their wares"

The key word here is "selling". If the pottery sells who cares how long someone has been doing this.

I can not imagine any one any where going up to a noobie and telling them they need more experience to be at the show unless they wanted to be blasted with 4 letter words. The only way this could come up is if a noob ASKED why they were not selling very much.