TEXTILE ARTIST
We have been working with Joe and Sam for 18 months and in that time, they have worked really hard to get to know and understand the numbers that drive their business.
About the company
Overview:
Joe and Sam started TextileArtist.org way back in 2013 as a passion project. It was a blog featuring interviews with some of their favourite artists working in fabric, thread and mixed media - but at the time, it wasn’t a business. It wasn’t until 2017 that they both decided to produce their first online course with their mum, a textile artist and tutor. That was a big turning point. Since then, more than 2,000 people have taken their mum's online courses. The next big milestone came for them in the first lockdown when they produced a free initiative called the Community Stitch Challenge, a series of short workshops with various textile artists. The Stitch Challenge was so popular that they decided to adapt their business model and start a subscription membership called Stitch Club, which has been their main focus ever since. They currently have around 4,000 members taking part in the regular workshops offered in the private member's area. For now, they are fully focused on providing the best possible service to the Stitch Club members and incrementally growing that membership over time. They only open up registration for a limited period twice a year, which means they can spend the majority of the time really honing and improving the workshops and member experience.
We have been working with Joe and Sam for 18 months and in that time they have worked really hard to get to know and understand the numbers that drive their business. Joe and Sam were already aware of the Profit First methodology and were very keen to implement this in the business, even though cash flow wasn't a major problem for the company.
Our results
Solution:
We have started the Profit First journey and immediately put in place a plan to deal with the annual subscriptions paid in advance, moving this to a "Drip Account". Every month we release a set amount back into the main "Operating Expense Account" to ensure the business is spending money within its means and does not "overspend" the subscriptions paid in advance, avoiding potential cash flow problems in the future.
We then looked at the target allocation percentages that Joe and Sam would like to achieve, starting with the Profit% and Owners Pay%, based on the sales banked after taking into account the Direct Costs that had to be paid to achieve the expected sales. This change in mindset has been enlightening as these two were normally paid after paying the Operating Expenses and Taxes, but now the company pays Joe and Sam what they are worth for running a successful business. They have profit allocated into a separate bank account to pay themselves quarterly bonuses or to invest back into the business, and they then run the business from what is left in the Operating Expense account.
They are now able to review what is in their bank accounts in real time and get a feel for how the business is operating without having to look at a Profit & Loss Account and Balance Sheet, which is out-of-date and which they found to be confusing to look at.
WHAT THEY SAID:
We talk the talk and walk the walk.
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I finally feel I have a clear understanding of our tax obligations thanks to the brilliant guidance of the team at Raffingers. Raffingers has been instrumental in helping us become more financially conscious and efficient, which has had a massively positive impact on the way we do business. Working with Raffingers has been a 100% positive experience.
Joe Pitcher, Co-Founder of Textileartist.org