Budgeting Part II – Income
Welcome back to Comix Counsel! If you know any place where it rains dollar bills like the image above, let me know. Here in Massachusetts, all we’re getting lately is snow! Last week, I shared some thoughts on the importance of budgeting for your comics business. I shared a Google Docs Spreadsheet Template that I use to track my spending and manage my budget. (Feel free to download and adapt to your own purposes) and focused exclusively on the expenses side of the budget. Now, we flip the coin and talk about the the fun stuff, income.
None of us are in comics primarily for the money. After all, there are FAR more certain ways to make a buck. (Chimney sweeping, shoe shining, licking envelopes, etc.) Still, it’s not unreasonable to expect to profit from producing good work, in comics or any thing you do in life. While I’ve been making comics since I was a teenager, 2011 marks the 4th year I’ve been treating my comic related endeavors as a business.
Because I’ve been diligent about tracking income and expenses for the past several years, I’m better able to take realistic stock of where I am currently, and where I might take my business in 2011.
If you make comics, you’re a likely a visual person, so i included the above graph, which is very telling about the state of my business. On the plus side, my comics income is growing at a strong clip, more the tripling last year. Unfortunately, my expenses have kept pace with my income, and I’ve managed to end the year in the red for three consecutive years. I was very close to breaking even in 2010, and this year I’m determined to hit that goal. While most businesses take several years of work and investment to become profitable, that profit does need to come eventually.
In last weeks column, I did a thorough review of my many expenses. Keeping those down is one half of the profitability puzzle. The other side is pumping up the many comic related income streams at my disposal. Let’s take a look at those.
Sources of Income in 2010
One of the reasons my 2010 income saw a large jump was because I expanded revenue streams. Here’s where my comics income came from:
Convention Sales – Includes physical sales of books, prints, and sketches don at cons.
Commissioned Work – Yup, I take commissioned work from time to time. I did some comic commission work for a corporate client.
Online Sales – Sales of physical comics sold through online (Thanks Paypal!)
Classes Taught – I taught an after school comics class for middle school and elementary school children.
Retailer Sales – Sales of comics or prints to retailers.
Ad Revenue – Earnings from Project Wonderful banner ads located on my various comic websites.
Keep Looking for New Streams of Revenue
I think it is important to continue to adding new income streams. The main one I’m excited about for 2011 is Digital Distribution. ComixTribe is now hooked in with seven digital distributors (and counting.) While to date, I’ve seen exactly $0 from this revenue stream, I’m getting my first check from a digital distributer this week. (Nothing to get excited about, it might be enough to buy a cup of coffee. A small cup.) But through these distribution channels, I’ll be able to hopefully get my books in front of a lot more people, and digital comic sales has no where to grow but up. I’m bullish on it’s future.
Predicting Income
Budgeting is pretty easy when you have a salary. You work your 9-5, and twice a month the same amount of money gets dumped into your bank account. However, most small press comics businesses are the very definition of irregular. How can you predict when someone is going to buy one of your books online? How are you supposed to know how much money you’ll make at a con? How can you plan how much you can spend if you don’t know how much you’re going to make?
While your best estimates will never be more than guesses, there are some pretty handy ways to get your estimates closer to reality than simply tossing out a number. Again, it helps to have data from the previous year. Take a look at the graph below. Breaking down my income and expenses last year, the pattern is pretty clear. While my expenses are relatively consistent throughout the year, my income is not. Q1 and Q4 are relatively weak for me income wise, as the bulk of my income comes in the middle of year. (Not surprising. That’s con season.)
Since conventions make such an impact in my bottom line, keeping good data on each show is very important. One of the great things about returning to conventions is you get a sense of what works for the crowd and what doesn’t, and you can adjust your product offerings accordingly. The Boston Comic Con is the first big show I’m doing this year, and I’m going to be more than ready for it. It’s my local show, and I’ve been to the three previous ones. Last year’s Boston Con was the best show I did all year, so you can bet I’m going to do a lot of what worked well last year, and less of what didn’t. And because I have earning totals from the previous few shows, I can make a good guess about what I can expect to earn there. In addition to returning to cons that were successful last year, I’ll be expanding my convention schedule in 2011. With more books, better books, and more con experience under my belt, I’m confident I can boost that revenue stream significantly.
So what about you? Do you know where your comics income comes from? Which revenue streams are working for you and which are not? Are you looking to add new revenue streams in 2011? Feel free to let me know below.
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Tyler James is a comics creator, game designer, and educator residing in Newburyport, MA. He is the writer and co-creator of EPIC, a superteen action comedy, and Tears of the Dragon, a swords and sorcery fantasy. His past work includes OVER, a romantic comedy graphic novel, and Super Seed, the story of the world’s first super powered fertility clinic. His work has been published by DC and Arcana comics.
Tyler is the publisher and co-creator of ComixTribe, a new website empowering creators to help each other make better comics.
Contact Tyler via email (tylerjamescomics@gmail.com), visit his website TylerJamesComics.com, follow him on Twitter, or check him out on Facebook.
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Category: Comix Counsel
Wait, people make INCOME from these things!? 😛
Another interesting article, Tyler. One question I’m curious about: how does comic-related income figure into taxation and the like? For example, Tyler, you had quite a big increase in comic-related income this past year, but because your expenses are higher, you’re still running at a loss. As such, since you’re not quite making money from comics, is it something that needs to be included in tax returns and the like, or does that only apply once a writer becomes profitable?
Not really wording this very well, I know, but does your comics work need to turn a profit before the taxman views it as a business and not an expensive hobby?
It’s a good question, John, and one my CPA would be better able to answer. I include my business on my tax returns, keep all of my receipts and keep my books up to day. To the best of my knowledge profitability isn’t a litmus test for a business. Many businesses run in the red for several years before turning a profit.
But it is a good question, what makes a business a business if it isn’t turning a profit? And how is that different than an expensive hobby? Let me do some more thinking on this one.
Business is business. Tyler is right. “Many businesses run in the red for several years before turning a profit.”
For tax purposes you actually want to reduce as much of your income as possible because if there is no profit, there is no tax – which actually makes you money. Even though Tyler’s business is spending more than it is taking in, he is still worth more today than he was in 2008.
See all that money in the expense column? Technically, it’s not all expenses because of the assets he’s accumulated. Some things like the computer hardware, usually depreciates over 3 years. But some things never depreciate. The biggest asset he has going for him is something he shared when he revisited his goals for the year. Here it is:
–Built a network of more than 1000 people (email, Facebook, Twitter, etc.) who have given me permission to keep them informed about my comic projects.–
As this list grows, his value grows with it. If he plays his cards right, by the end of this year, he may SMASH that $1,532 number out of the water, but if he’s smart, he’ll reinvest that as well back into the business. This will do 2 things. 1. Get his income/tax ratio to zero. 2. Increase the assets of his business by that much. Then he can really start making money! 🙂