Uncover the Secrets of Etsy Income Reports
Table of Contents
- Introduction
- Revenue Breakdown
- Managing Expenses
- Cost of Goods Sold
- Shipping Costs
- Etsy Fees
- Business Insurance
- Legal Fees and Payroll
- Office Supplies and Expenses
- Travel Expenses
- Bank Charges
- License and Fees
- Equipment Costs
- Total Costs and Expenses
- Tax Strategies
- Sales Planning
- Profit and Loss Statement
- Future Plans for Etsy Shop
Introduction
In this article, we will take a detailed look at the financial aspects of running a multi-six-figure Etsy shop. We will dive into the actual revenue, expenses, and profits, providing a breakdown of different expense categories. You will gain valuable insights into the costs involved in operating a successful Etsy business and how to manage them effectively. Additionally, we will discuss tax strategies, sales planning, and the future plans for our Etsy shop.
Revenue Breakdown
Before delving into the expenses, let's first take a closer look at the revenue generated by the Etsy shop. Over the past few years, the shop has achieved an impressive revenue of approximately 1.5 million dollars, with last year's revenue standing at around 370,000 dollars. It's important to note that this figure only includes revenue from Etsy and does not take into account other revenue streams such as Amazon and Shopify.
Managing Expenses
Running a successful Etsy shop requires careful management of expenses. While the revenue figures are impressive, it's crucial to understand how much profit is left after accounting for various expenses. By focusing on scaling profit and margin rather than just revenue, the shop owners have been able to maintain a comfortable level of revenue between 360,000 and 400,000 dollars over the past three to four years.
Cost of Goods Sold
One of the major expenses for the Etsy shop is the cost of goods sold. This expense includes the total cost of procuring products from various suppliers and manufacturers. In this case, the cost of goods sold amounted to 73,980 dollars, spread among 21 main suppliers and manufacturers. The shop owners work directly with factories as well as retailers like Home Depot, Hobby Lobby, Michaels, Amazon, and more.
Shipping Costs
Shipping costs are another significant expense for an Etsy shop. In this case, shipping costs totaled 46,801 dollars. The most commonly used shipping carriers are USPS, UPS, and FedEx. Materials for shipping are sourced from platforms like Amazon, eBay, and Staples. Specifically, the Etsy shipping fees, excluding shipping supplies, amounted to 42,438 dollars.
Etsy Fees
As an Etsy shop owner, there are fees associated with selling on the platform. However, these fees are relatively low compared to the value and traffic Etsy provides. With off-site ads turned on, the total Etsy fees for this shop were only 11.6 percent, equivalent to 42,893 dollars. This includes accidental ad spending of a few hundred dollars.
Business Insurance
To protect the entire LLC, the shop owners have business insurance in place, which costs 2,056 dollars per year. This ensures that any unforeseen events or risks are adequately covered.
Legal Fees and Payroll
Running a business also involves legal compliance and payroll management. The shop owners paid 475 dollars for tax preparation and 324 dollars for payroll services. The payroll services fee was for three people and includes the use of ADP, a reputable payroll processing company.
Office Supplies and Expenses
Just like any business, an Etsy shop requires office supplies and incurs various office expenses. In this case, the shop owners spent approximately 4,900 dollars on office supplies and expenses to ensure smooth operations and an efficient work environment.
Travel Expenses
While the idea of travel for an Etsy shop may seem unusual, these trips serve a purpose. The shop owners utilize travel as an opportunity for buying and sourcing trips. By combining business and travel, they can source products, buy inventory, and even arrange photoshoots. The total travel expenses for the Etsy shop amounted to 3,725 dollars.
Bank Charges
Bank charges are a part of any business's financial operations. For this Etsy shop, bank charges totaled 550 dollars. These charges include transaction fees and other services provided by the bank.
License and Fees
To legally operate the business, there are certain licenses and fees that need to be paid. In this case, the total cost for licenses and fees was 3,638 dollars per year. These expenses ensure compliance with all legal requirements and regulations.
Equipment Costs
Running an Etsy shop also involves investment in equipment. In this case, the equipment costs were relatively low, totaling 364 dollars. These expenses include the cost of any equipment necessary for the smooth functioning of the business.
Total Costs and Expenses
When we consider all the costs and expenses associated with running the Etsy, Amazon, and Shopify channels, the total for the year amounts to approximately 179,382 dollars. It's important to note that this figure considers the blended margin across all three channels, which is slightly over 70 percent. As the business has grown, the shop owners have implemented strategies to drive the margin higher, resulting in a steady and predictable margin percentage.
Tax Strategies
As an LLC taxed as an S Corp, the shop owners implement conservative yet effective tax strategies. Quarterly estimates are paid to ensure compliance with tax obligations. The sales plan, created at the beginning of each year, serves as the basis for determining tax payments. The shop owners focus on staying ahead of their tax responsibilities and keeping cash flow in check.
Sales Planning
To maintain consistent revenue and profitability, a comprehensive sales plan is crucial. With a background in corporate e-commerce, the shop owners leverage their expertise in building sales plans and pricing strategies. In the multi-six figure Etsy blueprint program, they provide their exact sales plan and teach others how to create their own. This program offers actionable insights and strategies to drive sales and optimize profitability.
Profit and Loss Statement
While keeping up with monthly P&L statements can be time-consuming, the Etsy shop's high cash flow and steady margin make it a manageable task. With a predictable margin and steady growth, the shop owners have confidence in the financial stability of the business.
Future Plans for Etsy Shop
Considering the significant growth of their other businesses, the Etsy shop is no longer a significant portion of the shop owners' income. However, maintaining the Etsy shop remains crucial for testing and developing effective Etsy strategies to share with students. Selling off certain product lines in the shop may be considered to simplify operations and focus on more profitable ventures. Though future plans may involve changes to the shop, it will always serve as a playground for experimenting with new strategies and providing up-to-date insights.
Conclusion
Running a multi-six-figure Etsy shop involves careful management of revenue, expenses, and profitability. By focusing on scaling profit and margin, implementing tax strategies, and comprehensive sales planning, one can build a successful Etsy business. While the Etsy shop may not be the primary income source, it serves as a valuable learning experience and playground for strategy development. With a clear understanding of expenses, profit and loss, and future plans, shop owners can navigate the evolving landscape of the Etsy marketplace.
WHY YOU SHOULD CHOOSE Etsyshop
