After each market (physical or virtual), tallying up sales and expenses to work out whether it was profitable will help you decide whether to book that market again. In this blog, we’ll list and then talk about the various income and expenses you might consider after each market. I’m going to focus on physical markets here, but the idea is the same for virtual markets – just with far fewer expenses.
First, we’ll remind ourselves that profit is:
Profit = Income – Expenses
- Cash sales
- Card sales
- Stall fee
- Cost to make goods sold
- Your time
- Payment processing fees
- Incidentals paid with cash (food & drink, parking, etc)
- Any other expenses
Let’s discuss each of these below along with an example to bring it to life.
You need to know your sales income you make per day per location.
You should always be able to find your sales income on any given day at a particular market, on your website, on Folksy, etc, just in case HMRC ever asks.
So, make a note of your total sales income at the market you’ve just been to and keep it with the rest of your accounting records.
Let’s say we took in £1,000 of income at today’s market.
There are many POS (point of sale) devices you can use for card sales. You can use many of them to track which items you’ve sold, too, which I do recommend (more on that below). Here are a few popular choices:
Some require you to buy or lease expensive equipment; others work on your phone with just a simple card reader. Some charge set monthly fees; others charge a percentage of sales. Some will only be able to tell you your total sales income; others will be able to tell you exactly which items you sold, how many, whether you applied any discounts, and more.
I recommend thinking carefully about the needs of your business when choosing one, as well as considering how well that provider’s data signal will work in the locations you’re likely to need to use it.
We can see from our POS report that we took in £800 through card sales today.
Some POS devices will let you track cash sales at no extra charge, so if you have one, check to see if yours does. This is by far the simplest option, meaning that you have reports readily telling you how much cash you should be depositing and which items have been sold.
Otherwise, you can take a cash float of a known amount to use for cash sales and subtract that from what you come home with to work out your cash sales. Be sure to write down how much you’re taking as a cash float before you go, so you don’t forget.
If it’s a multi-day market, make sure to count your cash box at the end of every day so you can enter your sales per day.
We’re using Square, and we can see that we took in £200 from cash sales at today’s market.
You should know this before you book. Usually, it’s a flat amount, often paid before the market day, though sometimes they collect it on the day.
Occasionally, a stall fee might be based on how much you sell (a percentage of your takings), either instead of a flat fee or in addition to one. This model is more popular with events run by charitable organisations.
Either way, remember to get a receipt or invoice from the event organiser for your stall fee so you can claim it as a business expense.
Also remember if there were any extras charged for: you might have to pay extra for lighting, electricity, to hire a table or gazebo, etc.
In our example, we paid a flat £50 for the stall we had today.
Cost to make the products you sold
Which items did you sell?
You want to track which items sold for two reasons:
- To see what’s popular and what’s not, and
- To work out the cost of the items you sold at this market.
To track this, the simplest, low-tech option is probably a notebook. You could write down all your products and then quickly pop a tally mark by each when you’ve sold one.
If you have a POS device, you can use it to track not just total sales but which items you sold. You’ll need to enter your items into your POS to do this!
If your POS lets you track cash sales at no extra charge, it means you can enter all your sales and have your reports about which items sell and which don’t all together in one place. That’s quite handy!
I’ve explained how to calculate the cost per item in training videos available in my Facebook group, but the basic idea is to add up all the materials cost, your time to make each item, your profit margin, and your markup. Once you’ve done that for each item, you can multiply by how many you sold of each to calculate the total cost for the products you sold at this particular market.
In our example, we look at our Square report and find that we’ve sold:
- 10x item A which cost £25 each to make = £250
- 8x item B which cost £17.50 each to make = £140
- 20x item C which cost £10 each to make = £200
- 12x item D which cost £5 each to make = £60
Adding these, we see we spent £650 on making the goods we sold today.
You’re going to need to drive your car or van to most markets. You’ll need to take quite a bit of stuff, so it’ll be hard to go on public transport, though not impossible.
If you go by public transport or taxi, the amount you spent on the fare is the business expense. Gratuity is generally not an allowable business expense when you report to HMRC, though for your internal purposes of working out whether the market was profitable, you may wish to include gratuity.
When driving, most sole traders claim mileage, which (for a car) is currently 45p per mile for the first 10,000 miles and then 25p per mile after that. Motorcycles are 24p per mile. You can check the current rates here.
HMRC also allows you to add up all the expenses for your car for the year, work out the percentage of your miles which were for business expenses, and claim that percentage of your car expenses.
Either way, make a note of how many miles you drove for this market and work out what your expense for it was.
Also consider your parking costs, any toll roads or bridges, and any other travel costs you may have paid.
In our example, we went to a local market just 2 miles away, and we’re claiming mileage at 45p/mile, which comes to £1.80. We also spent £4 on parking out of our cash float.
If you don’t yet know how much your time is worth, use my Hourly Rate Calculator to work that out first.
Then simply multiply that result by the number of hours you spent on that market, including:
- Researching and booking the market
- Completing necessary paperwork
- Packing and unpacking
- Set up and break down
- Standing at the market
You might think that your time should be taken care of by whatever’s leftover at the end. However, you need to make enough money to meet your goals – or at the very least, to pay your bills. Only by accounting for your time as an expense, exactly as you would if you’d hired an employee, can you be sure that you’re earning enough to pay yourself.
In our example, we went to a local market that ran from 10 am to 4 pm. In all, it was 12 hours of work for us. We found from the calculator that we need to charge £20/hour for our time, so this expense was £240.
Payment processing fees
Be sure to check how much you’ve paid your POS provider for payments they’ve processed.
If you’re paying monthly, you could divide the monthly fee by how many markets you’re doing that month. Or you could divide it by how many pounds of sales you made and then multiply. Use whatever makes the most sense in your business – the important thing is to do it the same way every time.
For cash payments, your bank may charge you to make cash deposits. If so, be sure to add that expense here.
In our example, using Square to process £800 of card payments means we paid £14.00 to Square.
Our bank charges us 0.7% with a minimum of £3 to make a cash deposit, so depositing that £200 of cash sales means we pay a £3 bank fee. We could choose to keep this cash in our petty cash box instead, but today we’ve deposited it and paid the fee.
Cash expenses – parking, food & drink, etc.
If you make any purchases out of your cash takings, keep the receipt or make yourself a note so you don’t forget. Pop it in your cash box. This might be for parking, lunch, or even the stall fee. You’ll want to claim any business expenses you can so you don’t overpay your income tax.
Even if you can’t claim it as a business expense, you’ll want to note that you spent money so your takings will tally at the end of the day.
(Your food and drink is not always a business expense, so check on that before you count it as one.)
In our example, our only cash expense was £4 for all-day parking, which we already accounted for above.
Any other expenses
Every market is different, and you may have needed something different at this one! Remember to add it in here (and get a receipt).
In our example, we didn’t have any other expenses.
Putting together our example, we see we had:
Income: £1,000 total
- £800 card sales
- £200 cash sales
Expenses: £962.80 total
- £50 stall fee
- £650 cost of the items we sold
- £5.80 on travel (mileage + parking)
- £240 for our time
- £14 to Square
- £3 to our bank for the cash deposit
Profit = Income – Expenses
- Profit = £1,000 – £962.80 = £37.20
So in our example, out of £1,000 of sales income, we made a £37.20 profit, but we also did pay ourselves the £20/hr we need to pay our own bills.
First, you can decide whether that was enough profit for you to book that market again, or if you can find a more profitable way to spend your time.
But once you’ve got this information together, you can use it in so many different ways!
You could compare markets to each other to choose where is best to spend your time.
You could compare this to other ways you might spend your time in your business to see if there’s another way with a higher return. Maybe you could do an Instagram Live or a Facebook Event of showing off your products once a week for 30 minutes (and spend maybe another half hour on prep). If you profited more than £3.10 from each of those, perhaps those would be a better way to spend your time. (£37.20 profit from today’s example market divided by 12 hours of our time makes £3.10 profit per hour.)
You could see what impact changing your prices might have on your overall sales. Since you’ve tracked what combination of products sold, you could play around and see what your profits might look like if you increased the price of each product by £1, and sold 90% of what you had before. You could try other combinations.
You can look for ways to cut expenses. Knowing how much in card sales you actually take, you can more shrewdly compare POS systems’ fees, and see if you could save money by switching to another system.
There are so many possibilities – so many questions you can answer – once you have the data. The sky’s the limit!