You have a grasp on how much money you’d like to make, but you have no idea how it’s going to happen.
I have an ambitious income goal for the year.
With my number in mind, I woke up in a panic moment early (too early) one morning last week.
I was alarmed because I realized that I had no plan to reach that number.
The first step I took was to ground myself in reality. I encourage you to do the same by following the process I went through.
1. Decide on your income goal. It’s not the number that’s important, but that you create a plan to attain it.
2. Create a space to focus. Shut down email, Facebook, and Twitter and clear your calendar for the day. Really. This is all you’re going to be doing for this exercise. You can’t multitask and focus at the same time.
3. Gather your financial documents for the past three or four years. Because of a big jump at one point, I needed four years of data to determine my income goal. You may only need three.
4. Break down your income for each year into categories that coincide with your bookkeeping. For example, you might have income from art sales, teaching, product sales, and consulting. You can further break down art sales into more specific categories like paintings, commissions, sculpture, and the like.
I did this step in a Word document table for each year. My income categories were in the left column and the year was at the top. I also made a notes (comments) column to capture my insights into the numbers for each category.
5. Create a simple spreadsheet with the data from the categories and each year. Study the data closely and look for trends.
What were your biggest moneymakers for each year?
When did they trend up?
When did they slow down?
6. Add another column for 2011 to your spreadsheet. Based on what you know and what you want to achieve from your life and career, add your income goals for 2011.
How will your future income be divided among the categories you have chosen? How much do you plan to earn in art sales? In teaching? In product sales?
What do you need to do more of to attain your goal?
What do you need to do less of?
Where is your time best spent?
What should you delegate? Where do you need help?
Getting a grip on your past income makes it easier to understand where the money will come from in the future.
Do you have another way of identifying income goals?
6 Steps to Identify Your Income Goals
- Alyson Stanfield
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31 thoughts on “6 Steps to Identify Your Income Goals”
I’ve found a very efficient way for my income and expenses to be “filed” into categories in real time, which is yodlee.com. It’s a free financial management tool where you link bank accounts, credit cards, vendors (utilities, insurance, etc.), auto, retirement, and even rewards programs, and it tracks everything according to your parameters. It maintains balances, pays bills, and has budgeting tools. (Mint.com is similar, but did not work well with my primary bank.) Let’s all have a prosperous year. Thanks, Alyson, for all your good advice.
Liz: That’s interesting. I’ve been using Mint.com, but haven’t taken advantage of its capabilities.
What a great post! I do something very similar, but I like to break my product sales categories down by revenue stream, so I have a category for wholesale, one for online sales, craft shows, etc.
Then, I like to look at the last year based on month so that I can see which revenue streams seemed to net the most money each month.
I’m also basing my sales goal for this year on that same month for last year, so my monthly goals fluctuate each month but ultimately add up to my goal for the year.
Megan: Absolutely! That’s an important distinction to make in your business.
Alyson,
This is great. LOVE the pomegranate painting in this post.
I did something similar last year, with income projections. I resisted it A LOT. I didn’t want to get all numbers-oriented. But because I’d told my coach I would do it, I finally sat down with the previous year’s numbers and started crunching.
I was surprised to see new, creative ideas for making money emerge from this process. It taught me that sound financial awareness can lead to more creativity and more money. Last year I made more because of the package I created after doing my income projections, and this year, it’s even more. This supports your invitation to look at the finances over several years.
Thanks for sharing this; I know many of us resist it but this process can yield a lot, both financially and creatively.
It helps, too, to have a Rich Woman buddy. 😉
BTW, I am seeing pomegranate paintings everywhere since I posted this. Okay, maybe just a couple other places, but wild.
Just e-mailed this to a friend. I currently use an approach like Megan’s, comparing months to months. Before I had a steady income with my art I figured out how many commissions I needed to take on each month to have an income that would equal my husband’s. After doing the math and having that project figure in my head I set about to make it happen. Within just a couple of years of focused marketing I reached my monthly goals. I think very few artists ever sit down to do the math. If you sell paintings or teach classes you need to know how many paintings per year it takes to equal your desired goal. If teaching adds to the money pot then how many classes and workshops do you need to teach? Do not let the term spreadsheet scare you … Alyson’s plan will work and it can be as elaborate or as simple as you want it to be.
As I say in the Blast Off lesson on financial awareness: Ignoring it won’t make the money come in. You have to confront it head on.
Thank you for confirming a process I have been doing for the past twenty years and I had no idea this was such a good idea. I also included in my chart my expenses for each of my income earning activities (I track my expenses by income categories), so I knew what my net earnings really were. Of course, my goal is to lower expenses and raise income so my final income figures are supporting my lifestyle. What you are writing about is a great process for staying in focus.
How has it worked for you, Suzanne? Does it help you increase your income?
This is an inspiring article, but as much as I plug away at what feels like 14 hours or soeach and every day, I have no regular income at present. People tell me “You’re really good!!!” etc which is amazing, but as much as I read, I still have no idea what I’m doing wrong.
I believe as an illustrator, I tend to get overlooked and sadly, even dismissed by the “art” side but because I’m not “modern/avant garde” style, or use digital software, (I use pencil) I’m not embraced in the illustration world either.
Despondent but determined
Karen: Have you been doing the math?
Thanks for this, Alyson, as it confirms that what I did last year and the results. Decision: whether to continue my personal art company as I had been doing it for 4 years. This was a post-retirement adventure sparked by the surprise of my initial commercial success. It was a legitimate and tax-compliant home business venture, and it had been doing OK until 2008, then it tanked just like a lot of others. Should I continue to do the accounting, take advantage of the write-offs and improve my marketing or just shut it down and retire for real? The increased effort of doing the business side, now that the initial excitement and easy success were past, seemed to be over-shadowing the joy of painting.
After due consideration, I am now painting for myself and with friends and enjoying my art again. Sometimes less is more.
In my earlier post, I forgot to say that I actually used a similar process to the one Alyson outlined. While the result was closure of the company, the analysis showed that specific activities produced income with little expense and could continue. Teaching workshops and participating in art shows are two such activities, and it is a bonus that I also find them enjoyable and challenging. They will help finance what is now my “art hobby.” It was hard to get my head around this “hobby” concept after being a “professional artist”, but I am already seeing the benefits in both my art and my personal life.
That said, I can see that my art activities might lead me back into art marketing again – it is hard not to put those marketing skills and contacts to work. I can already see some possibilities…
Jean: I guess I’m confused. Did you do the math and make a decision? Or are you still in a quandary? I see your 2nd post was 10 hours later than your first.
Sorry about the confusion, Alyson. I only meant to clarify that I had used a similar process to your 6 steps and that it had worked very well. It showed me what was happening in my business – declining sales and ongoing expenses. I had to give the marketing a lot more time or give it up until the local economy and my enthusiasm recovered. That is what I am doing now – a year or two to regroup and then back into the marketing, probably with a better handle on what works.
No problem, Jean. I’m easily confused these days. Or put a different way: I’ve learned not to presume anything.
You’d think with a snowstorm I’d have had more time not less, but it didn’t work out that way and I’ve only just now seen this post. It made me shiver. It made me shiver because it’s scary. For that reason alone – scary financial things are always things that need to be done – I’m going to find some time over the weekend to do this. Or at least as much as I can. Having to take care of my mother’s finances has made me so much more aware of pitfalls and somewhat less scared of forms, filings, finances.
After all, I am carefully working on filing for Aid and Attendance for her and there is NOTHING more daunting than that!
Wish me luck and good logic.
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This was an interesting post but I’m wondering how this could apply to someone who does not yet have any income from their art. As someone just starting out it is hard to use this formula as a way to get started and set goals. I would love any suggestions.
Beatrice: How about doing it for your expenses instead of income? Find out exactly how much your new career is costing you.
That is a challenge, isn’t it? There seems to be only expenses at the beginning. One of my painting partners, when starting out, decided to “sell” her paintings to her household, That means that if she gave a painting as a gift instead of buying a gift, she would take the amount she would normally have spent on the gift as the price of the painting. This keeps her painting expenses from being a drain on the family budget. It also gets her more respect – it isn’t “free.” It is generating an increasing number of commissions as her work is seen beyond her immediate circle. What a great start!
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I have used a financial program called “TinyBooks Pro” for the last 2 years, and it would eliminate a lot of research work for an artist–you can designate from the start when you set up your “books” what category your sales are coming from, and then enter them that way–you get a “sort” anytime you want, and it is easy at any point in the year to see where the money is coming from (and also where you are spending it.Very inexpensive program, you only buy it once, very intuitive (for Mac users). i have 4 categories for income: I designate “Sales, SUT” (sales and use tax) for my direct artwork sales, “Sales, no SUT” (for gallery, out of state artwork sales), “Class Income, ” and “Reimbursements.” for me, this seems to ocver it. Very easy.
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