Wednesday, September 3, 2008

Etsy Tutorial: VI - Bookkeeping and Taxes

Last but not least in the world of Etsy is bookkeeping. You won't know if you made a profit unless you keep track of what comes in and what goes out. Your level of bookkeeping should keep pace with your level of buiness activity, and if things feel disorganized, they probably are. Don't wait until taxes are due to figure out if your business needs to file a Schedule C. If you get audited without filing and it turns out that Etsy is more business than pleasure, there could be trouble.

  1. KEEP GOOD RECORDS! Very important, and often ignored. I was not financially organized for the first 4 months of my life on Etsy, and it took some doing to get to a point where I could say with certainty that my shop was actually turning a profit. For tax purposes you will eventually need to keep track of your inventory and cash flow to be able to legitimately file a Schedule C income tax form (required for sole proprietary businesses), so there’s no time like the present to start!

  2. My personal solution is a homemade Microsoft Access database. Excel can be fine for lower volume sales and expenses, but Access will allow you to do more with the data - you can manipulate it in more ways without retyping the info. Anything that lets you spend less time doing the grunt work and more time making things will lead to a happier, more-productive you. Both Access and Excel will be able to accept the .csv (comma separated values) files that you can download from Etsy and PayPal that include detailed information about your Etsy fees and all of the data contained in each PayPal transaction. With Access, I am able to print labels for each listing, generate reports that allow me to copy and paste information to reduce the typing required when I list, and link information between Etsy and PayPal to find out exactly how much profit I make from each item I sell. You can do so much with it that it is worth a browse of a MS Access tutorial if you already have the software on your computer.

  3. Information that you can download from Etsy includes detailed data about your sold items (found at the bottom of the page in the 'Sold Items' tab in 'My Etsy') as well as your Etsy Bill (found at the bottom of the page in the 'Etsy Bill' tab in 'My Etsy'). From PayPal, you can download all account activity, or a filtered version of it, by going to drop-down menu of the 'History' tab while logged in to your account, and selecting 'Download History.
Hopefully this info will help you get started or just become more efficient in managing your Etsy shop. You should love what you do, or you should be doing something else!

Monday, September 1, 2008

Etsy Tutorial: V - Shipping and Feedback

Shipping packages and leaving buyer feedback might seem totally straightforward, but it's actually important to consider each before you have to do either.

Shipping Items

  1. Have very clear shop policies. Imagine foreseeable situations and think about how you want to handle them. Being clear can save a world of headache and generally makes the buyers feel more secure in their purchases. Set time frames for payments and shipping, conditions for potential returns and exchanges, and explain anything that might cause a glitch in an otherwise smooth transaction (turnaround time, custom orders, etc). Having something to refer to in a tricky situation can save your sanity and make you more credible.

  2. Estimate shipping as best as you can. You can use www.usps.com to calculate approximate shipping for various sizes and weights of packages, so offer different shipping prices to different countries based on what it will actually cost. Personally, I offer 3 shipping prices: US, Canada and Everywhere Else. It is OK to have a surcharge for international orders since they are more work (they can require customs forms, First Class Intl can’t be printed through PayPal, and they must be physically handed to a postal worker, etc). The amount you charge for shipping an item will not have Etsy fees taken out of it when the item is purchased, so don’t necessarily lower the shipping when you want to reduce the price. Your shipping price should also take into account all of your packaging costs, including business cards, labels, bags, mailers, boxes, tape, printer paper and ink, and anything else other than the product that goes into a package before it hits the mailbox.

  3. Buyers don't like grossly inflated shipping costs, especially international, even if it is the only way that they could get that particular item. I have read about this often in the Etsy forums... potential buyers can get angry because some items are prohibitively priced in the shipping department. I would venture to say that if you upped the price of the item and lowered the international shipping, you might do better than keeping shipping at actual levels. This might seems the opposite of what I've said above, but it is something to think about. Shipping costs vary greatly depending on origin, desitnation, size and weight, but if you want to sell something, do think about shipping and how it might be perceived by a potential buyer.
Getting and Leaving Feedback

  1. Since your reputation is based on sales and feedback from your buyers, a happy buyer equals a successful seller. Give buyers the benefit of the doubt. Be patient and polite all the time (but don’t be a doormat… your time is worth something and you can draw the line… with a smile, of course!). Tossing in a free gift from time to time can help endear you to a customer and might lead to a return visit to your shop. Be yourself and reveal a little personality in conversations with your buyers. Etsy is about the process as much as the product, and people like to feel good about who is making their item and are willing to be more patient with you since they know you are a real person and not a factory.

  2. Leaving quality feedback for your buyers is important for many reasons. It gets your shop name “out there” in one more arena, it encourages buyers to leave feedback for you, it showcases your great products that someone has already snapped up, and it is good for the Etsy community at large by providing a look into potential problems or a history of botched transactions. Quality doesn’t mean positive. If you are worried about the kind of feedback a buyer might leave for you based on how a transaction progressed, you will want to wait for them to leave feedback for you so you can temper anything unpleasant by preserving you ability to defend yourself in the feedback you will leave for them.

  3. If you are very worried about getting negative feedback based on a buyer’s history of leaving it, you do have the ability to cancel a sale, thereby removing the buyer’s opportunity to leave you any feedback. Obviously you lose the sale by doing so, but you will need to weigh the consequences of negative feedback on your reputation. If you haven’t gotten much feedback yet, a negative response from a buyer could do much more damage than if you have closer to 200 positive feedbacks, where a negative will round down to 0 and you will still have a rating of 100% positive.