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Industry Metrics: What You Need To Know

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One of the reasons I love working with Michael is the new perspective he brings to the business.  He might not be able to knit a hat, but he can tell me that this winter, I should be doing different things to improve my sales.  Today he touches on one of the tools you can use to make business decisions – data analysis.

We are all surrounded by data.  In our daily lives, from the morning commute to the afternoon water-cooler conversations, there exists a wealth of data in the world around us. Data is one part in a hierarchy of ways to think about and interpret the world around us.  Unto itself, individual data points have no meaning. It is only with analysis that information, which is data that is used to make decisions, can be derived.  This decision-making lends us knowledge, which is the goal of informed decision-making.  By being able to interpret and synthesize the data available in any industry, business owners can take advantage of opportunities.

pattern, knit, designing, math, data, analytic, spreadsheet, metrics, tinking turtle
Knitting Designing is all about turning Data like measurements and stitch counts into information: the finished pattern
My day job is as an IT manager for a healthcare technology company in DC; in this role I deal constantly with large data sets, turning various discreet data points into usable knowledge.  This type of analytic approach is vitally important for small businesses (and the craft industry) in order to understand the market and position yourself to take advantage of trends.  For fiberarts businesses (both LYS’s and designers/publishers), this is doubly important; with any commodity based industry, trends can come and go at a breakneck pace.  What was trendy last fall may have fallen by the wayside this year; it is only by being able to analyze the market that you can position yourself to act accordingly.
In the Fiberarts industry, there is a wealth of discreet data that is ripe for the picking.

Bristol, (BristolIvy on Ravelry) writes a regular series entitled The Stock(inette) Market where she takes an in-depth look at pattern sales trends based on Ravelry data for a period of time.  She aggregates this data, and then provides the analysis to be able to discern trends and areas of growth. This provides savvy designers a starting point for getting an idea of where the market is headed.  For example, in her most recent post covering the month of September, she finds that as we head towards the cooler months, neck accessories are the dominant sales driver, along with cold weather accessories such as hats, mittens, and gloves.  Gathering this information over a period of time, up to and including years, the savvy statistician can paint a picture of the market, and be able to position themselves to take advantage of publishing patterns at the opportune time.


For TNNA members, the organization offers a wonderful resource in the form of a series of surveys they conduct of all fiber artists on a regular basis.  This data consists of a wide range of information, from yarns frequented to number of projects on needles at one time.  In addition to being able to demonstrate current trends, the TNNA data is presented in comparison to previous surveys, to show trends over time, a powerful way to look at data to gain insight into the future.

Ravelry itself can be a source of data, such as in the graph below, mined from our Tinking Turtle sales.
chart, excel, pie, tinking turtle, patterns, designs, type, socks, softie, pullover, hat

One must be wary, however, in relying completely on technology to package and interpret data for us.  Technology can be useful to turn data into information, however it is that human interpretation that gives analysis it’s kick.  If computers could provide the right analysis every time, there’d be no need for weather forecasters, for instance.  How you turn data into knowledge is what differentiates man from machine.  This is an important distinction for business owners for all fiberarts related businesses.  Creating knowledge is one of the cornerstones for how one can grow a successful business in this or any industry.

So you want to work for yourself: Now What?

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From the Business Desk

Welcome to the first edition of a semi-regular series that I will be contributing to this site focusing on the business side of running a small fiber arts business.  As introduced in the first post I wrote earlier this week, I officially

 joined the Tinking Turtle team back in August to take on management of the business side of the organization: contract management, accounting and bookkeeping, and strategic/structural planning.  I plan on writing monthly topics discussing some of the trials, tribulations, and learning experiences that have come about in the past three plus years as a small business.

For my first topic, I wanted to open the door with an overview of small business organization, as for many business owners, this is the first consideration after making the plunge and deciding you want to start being your own boss.

The most significant difference that a business owner should understand  among all levels of organization is that there is a trade off between operational flexibility and protection from risk.  As a business owner, this is accomplished by either legally separating your business and yourself into two separate entities, to reduce your individual liability and risk in the event of an issue, or by having you and the business be one and the same to maximize your flexibility and minimize your reporting requirements.

The IRS has a great overview site to discuss how different organizational structures are affected by taxation and reporting requirements.  Additionally, a wonderful resource for the crafty type person to begin to explore what option would be best for you is The Craft Artist’s Legal Guide, presented by NOLO.

Please note that the below information is presented as advice only.  If you are considering any of these specific options, it is highly recommended that you consult with an accountant or attorney to understand any additional legal ramifications of your decision.

The core business structures a small business would be considering fall into three primary groups: Sole Proprietorships, Partnerships, and Corporations of various types.  Sole Proprietorship and Partnerships are considered unincorporated types of business, while the various type of Corporation, explained below, are all incorporated, which means they are legal entities filed within the state of primary operations of the business.

There are no requirements to being operating your business as a Sole Proprietorship at the macro level (certain municipalities may require business licenses, be sure to check with your local licensing board first!); once you start operations, you are operating under this structure.  With the Sole Proprietorship, your only structural requirements are to file additional forms with your income tax on an annual basis.  The drawback of this level of organization is that there is limited protection from risk as a Sole Proprietor, so you personally can be held accountable for the debts and tax liability of your business.

Partnerships are similar to Sole Proprietorship in that they require little formal reporting outside of an annual report to the IRS.  Partnerships are strongly recommended to prepare a formal agreement, to codify some of the responsibilities or distributions, especially if it is not an even split between the applicable parties.  Partnerships additionally do not limit individual liability, and in the event of a dispute, all partners and their assets are considered fair game.

The most formal level of organization for a small business is one of many types of Corporations.  There are three specific types, all of which exist as stand-alone entities, separate from the business owners: the S Corporation (S-Corp), the C Corporation (C-Corp or what is traditionally referred to as a Corporation) and the Limited Liability Corporation (LLC).  The largest difference between these different structures are how corporate taxes are handled; C-Corps are taxed as separate corporate entities with a separate tax governance and structure; S-Corps are what are considered “pass through” entities, where any tax burden is paid by the owners or shareholders.  LLCs are a fairly new entity that are governed by state law, and can be organized in multiple ways, but that’s a topic for another post.  Any of these forms of corporation are established by incorporating with the cognizant state authority, usually the Secretary of State.

No matter which structure you choose for your business, having a plan for how you want to establish yourself is key to being a successful business owner, and turn the craft hobby that you love into a viable profession.

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