To Invest or Not to Invest? How to Determine if Something is Worth Investing in For Your Business
Not All Expenses are Created Equal
When I first started my business I had to really wrap my head around the fact that now I could deduct business expenses from my taxes. I'm sure whenever anyone makes the leap to creating a business for themselves they are filled with lots of emotions: excitement, fear, determination, anxiety, ambition, accomplishment etc. It's often easy to make judgments (especially purchases for your business) out of excitement with little thought behind them.
Take Your Business and Your Money Seriously: Plan Out Your Expenses
Before buying, subscribing or investing in anything for your business I highly recommend you sit down first and make a list. Create 3 colums labeled: Must haves, Nice to Haves, and Cost. List down the items you are thinking of spending money on into the first two colums. Make sure to ask youself "do I need this to run my business" or "will I be unable to do business without this". If the answer is yes, put the item into your "must haves" column, if not the "nice to haves". After you complete your list do your research. Shop around and read reviews for the items you must have.
For example, I decided that for me to be able to work remotely I would have to invest in a laptop. Although I knew I wanted a Macbook, I did research on exactly what I needed (upgraded RAM, memory etc) so that I could purchase what I needed and not invest in anything extraneous which would just drive up the cost. I read reviews online and I also went into our local Apple store and talked to the staff there for their opinions.
One of my nice to haves was a new Wacom Intuos Pro. I actually bought one but after it didn't work with my computer (it may have been a defective item) I decided to make do with my perfectly good (although smaller) Wacom graphire that I had. I still need to upgrade my tablet eventually (I use it for 90% of my work so it is essential) but for now I have one that suffices.
After creating your list look over the total cost of the "Must Haves" column. Do you have enough on hand to purchase everything you need for your business? If not, you may need to prioritize that list even further. I personally don't recommend spending money that you don't have but that's my personal view.
If you have extra budget available after going through your "Must Haves" list feel free to purchase a few "nice to haves" if it will benefit your business.
Do I Really Need That?
Once you've established yourself and have income coming in, there is more flexibility in spending on business expenses. After I started creating income and feeling a bit more financially stable, I decided I wanted to focus my spending on beefing up my website, social media and educating myself. Here are a few things I invested in last year:
Squarespace- This wasn't such a big investment as I first anticipated. Squarespace is a site where you can easily build a website using one of their many templates. If you don't have a domain yet, you can set one up for free (for the first year) through them. I used to have a hosted WordPress site and although I was able to manage it ok, I often found it difficult and frustrating when I wanted to change designs or add features. I don't enjoy coding (even though I can a little) so that made Squarespace an attractive system. There are some aspects that are a little more difficult or limited than WP but overall I'm happy with Squarespace. I chose convenience over a multitude of features because I felt my time is very valuable and I don't want to spend more than I have to updating my website. Although you don't have to pay an arm and a leg to set up your website, invest as much as you are comfortable with to set up the best site possible. A website is essential these days, especially for illustrators. Potential clients want to see your current body of work and having an easily accessible online portfolio is one of the most convenient ways for them to view your work.
Dropbox - This has really changed the way I manage my files. Initially I was using the free 2GB storage limit but it wasn't enough. I had needed an avenue to easily share larger files without the use of FTP so I signed up for the paid version. It worked out great because after I got my laptop, Dropbox has made it so easy to keep my files up to date and synced across my iMac and Macbook. With 1TB of space I have more than enough to hold all my files and back up work too.
E-Courses
In my first year of business I made it a point to create the opportunity to educate myself in areas I felt I really needed help with in my business. I spent over one-third of my business expenses, nearly $1400, on ecourses. This may not sound like a lot but my business only pulled in $12,000 for my first year so it was a relatively big investement up front for me. Some of the courses I enrolled in include:
Holli Conger's Building Your Career as an Illustrator Consulting course - Holli Conger is a seasoned illustrator who has been offering her consulting expertise since 2012. The Building Your Career as an Illustrator course is a 9 week course where she guildes you through the process of finding clients, refining your portfolio, self promotion and building an online presence. Holli sends weekly emails and check ins along with lovely customized advice and even a Q&A session at the end in case you had anything else you wanted to cover.
Chris Wilson's Zero to Illo Course - Chris Wilson is a highly experienced illustator who has traveled around the world. He offers an easy to follow, step-by-step course in how to find and contact targeted leads via email and convert those leads to clients. There are two versions of the course, one with bonuses and one without. I highly recommend the version with the additional bonuses. The bonuses include a sample illustration contract template and over 20 email scripts you can use when generating leads.
Make Art That Sells Part B - I first tested the Make Art That Sells courses with the MATS Bootcamp classes (enrolled twice) before I dove in with the in depth Make Art That Sells course (part B). These courses are really intense and packed with great info, tips and reviews. Content is provided in both pdf and video format. I chose part B (there are currently 3 different parts) because I was the most interested in these areas: Paper,Baby/children’s apparel & décor, Scrapbooking, Editorial, and Party paper. There is also a part A (includes: bolt fabric, home décor, children’s books, wall art and gift) and MATS – Creating Collections for Home Décor.
The Blog Hive - The Blog Hive is an intensive course with 8 separate modules to take your blog from hobby to a source of income (if that's what you wish). There is a ton of content here from goal and content managment, increasing your site's traffic and newsletter subscribers, to setting up and selling your eproducts.
Modern Thrive's Monetizing Your Art through Licensing with Ronnie Walter workshop- I had originally learned about Ronnie through her book License to Draw: How I built a fun career in art licensing and you can too! I was really excited to take this workshop she was hosting because after reading the book I knew she was going to be informative and still fun and witty. Included with this work shop are 3 one-hour videos and a pdf that has additional info. She covers: developing a niche for licensing your work; finding relevant markets and attracting new clients; and negotiating licensing deals and navigate lengthy contracts.
*Imporatant note: I purposely left out pricing of the ecourses in this list because pricing can change. Check out my Twitter feed for updated tips on current ecourses, workshops and webinars that are going on. I share a variety of online resources that I feel will benefit followers interested in blogging, business and creative pursuits!
Promotion
Another larger chunk of my budget went to promotional items (mainly postcards and a promo sheet). Self-promotion is a bit daunting to me. I have always been rather shy and my nature is to be self-deprecating rather than self-promoting. When I was told I should be promoting myself at least 4 times a year (not including follow ups) I was shocked, but truthfully it makes sense. Art directors and buyers are constantly looking for new artists and they are always receiving promotions year round. You have a better chance of being "discovered" if they see your work and name more often. It's always worth investing not only money but time into your promotional materials. Take the time to create a spectacular, eye-catching image, make sure all your contact info (website and social media) are updated and do your research on targeting potential clients.
"Fun Stuff"
Now when I say that I invest in "fun stuff" I don't mean trips to Starbucks for some liquid stimlation or the movies for "visual inspiration" (although kudos to you if you can legitimately count those towards business expenses!). My "fun stuff" are expenses that include fonts, digital textures, and brushes. Although I can run my business without these things, they definitely benefit my work. I love shopping Creative Market for fonts and Design Cuts for font bundles (when available), RetroSupply for textures and Kyle Webster's brushes for awesome Photoshop brushes that help me achieve a more "hand painted" look to my work.
Don't Forget These Deductible Expenses!
Even though you can plan for your major business expenses, don't forget to keep records of your smaller, everyday expenses that come up when doing business. It's easy to remember to log expenses that you only paid for because they directly apply to your work, but don't forget about these other expenses you can justify:
mileage (trips (to and from) for any work related meeting, appointment or research
bookkeeping and accounting services
taxes: such as general excise taxes if applicable to your state
fees, whether it's application fees for registering your business, Paypal transaction fees, Etsy transaction fees, etc.
self-employment taxes (check with your accountant for the exact percentages)
Cost of website maintanence (hosting and domain registration)
A Little Help to Get You Started
Ready to start planning out your major expenses for the year? Fill out the form below and get access to a free Business Expense Planning Worksheet. Print out as many times as you want as your needs and expenses change. I recommend you reassess your expense needs every month based on your income and what you can afford. If you have an annual subscription, for example to Dropbox, you can always just divide it by 12 to get the monthly cost.
*Disclaimer: I'm not a tax professional so always check with a certified accountant or tax preparer when preparing your taxes.