How to Plan a Creative Business | Shane Kluiter | Skillshare

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How to Plan a Creative Business

teacher avatar Shane Kluiter, Knowledge is Power

Watch this class and thousands more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Watch this class and thousands more

Get unlimited access to every class
Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

Lessons in This Class

    • 1.

      How to start a creative business Intro


    • 2.

      Writing out your plan


    • 3.

      How to start a creative business3


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About This Class

Do you have a hobby that you want to turn into a business?


This course was built for exactly that!

We will go over the planning process, then we will plan out a creative business that starts as a jewelry crafting business selling product online. 

We will look at how to calculate your cost of goods and ensure that you are pricing for sustained profits.

Meet Your Teacher

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Shane Kluiter

Knowledge is Power

Level: All Levels

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1. How to start a creative business Intro: you can write a business plan in thousands of different ways, and to an extent they're all correct. You can plan your creative company anyway. You really need Teoh and it's gonna change and based on what your company's really doing. But there's a basis that all business plans work off of it. All creative businesses are gonna follow that as well. So in this course we take a look at how did you properly plan our little startup? How to properly plan our side business? How to properly plan are creative entrance into the world of business in college, My teachers always stress the mission statement of a company that it was the description of the heart and soul of the business, that it was some big, important thing that would define your company and your work within the business for years to come. But I would lean the other way, having now had some experience right, having gone through when seen things and done things in the real world. That's not really that true, because you could change that. It's a line, it's a statement. You can take that and you can delete it and you can rewrite it as it changes. And as you need it to changes, your organization evolves. I personally stressed financial planning and putting an importance on generating sales are the most important parts of a business. When I went to college and took courses on how to put a business together, it wasn't necessarily about actually generating sales. It was more about. Here's some general ideas of how to get, you know, basic marketing concepts, but we don't want to discuss that. I don't want you to have basic marketing concepts. Don't want to have basic concept of what it takes to get a product. I want you to understand the practical application. It's important to always think about how you were going to do it, how you were gonna execute, how you were going to accomplish this great goal that you have. How are you going to sell your product sales the lifeblood of any organization? I want to take a look at how we're in a cellar product, how we're gonna develop sales channels, what we want to focus on, and realistically, how are we going to say which products are doing best, right? I want to take a look at a creative business. In this course, we will break down each part of the planning process so that we can take an initial look at What would it take for this business to be profitable? How much sales do we need? How much effort will be really gonna put in before we're going to see that return? Because part of planning a business part of even taking a hobby from just being something you do for fun to something you do for even a side income is evaluating the profitability of it. Because you don't want to start something where you're actually losing $5 a unit or you don't want to start something where you're breaking even or you're making like, a dollar 50 cents on everything that you create because it's not sustainable is not something that's ever going to really pay off. You could easily be working for $2 an hour if you're not planning it, right. If you're not looking at the financials we want avoid that. So in this course, we're gonna look at that. We're gonna look at how to avoid that. We're gonna put and emphasis on ensuring that the end of the day we have a plan that will generate profit to be successful 2. Writing out your plan: and go work for somebody else. If that's it, then stop taking this course. There's no point in building something with the goal of just cashing out. That's something you want to look at down the road. We're not gonna try to build a business here that we have the intention of letting go of because we're not gonna do it right. Great. So if we're gonna build a business that we want to have long term success with long term stability, we're gonna need to take a look out what a business really needs, Right? So what is the number one function of the business? Plain and simple. And I'm going function of businesses profit. If your first concern isn't ensuring the profitability of your plan than your plan is destined for failure. If you do into a business and you're not looking at, how does how does this create a profit? Um, you're gonna end up in a situation where you're doing things in wasting time on things that aren't profitable. You need to ensure that all your activities that you're putting towards the business eventually do lead towards profit, especially in the beginning, because every ounce of energy you put into this company is energy that you're not putting back into your personal life, not even back to your family. Its energy. You're not putting into maybe going back to school or pursuing a different career, right? So we want to ensure that we ensure our future success by focusing initially, especially in the first few years of a company having those profitable discussions, having profitable products and making profitable decisions. And when we find out a decision we made isn't profitable. Instead of ramming down that path, we go ahead and we stop and we pit it. Take the probability you think that you can get for an item or a service and cut it in half . Um, once you're up and running, you'll find hidden factors that you probably haven't considered some calls. Factors cannot be seen until your business is up and running. You have to take a look at, you know, maybe you have product that you end up having to basically tossed. You get more returns than you're thinking right. So always planned in that buffer for yourself, always planned that it's going to cost you more than you initially expect to really take care of everything you want to dio and generate the profit that you need. There's some cost factors that you're not going to see until you've been in business for a little while. And there's ones that will crop up over time, especially as you grow. Are you accounting for waste material? Are you accounting for every instance of shipping? Right? Bringing the shipping, shipping the product to yourself, shipping the product to the end user. If you're gonna do an online business right, I start a little online store. I'm going to start buying pieces. I'm gonna make jewelry. I bring them together, right? So I contact three manufacturers that make different parts of what I'm in assemble. I have them all shipped to me. It's very easy for me to see how much each part costs, right. That's on the receipt. And then I also have to remember, Okay, this is how much all of my shipping waas then I have to say great, and I have to ship it to somebody else. Are they paying for my for those shipping materials come from right, so we need to establish the total cost of actually taking a product, putting it together and then selling it before we even know how much it's actually going to be like, how much profit we can even make. If you're running a store in a storefront. Are you running into possible stuffs? Are you building the idea that a couple might just disappear into your into your Priceline right? Because when you go to a store right now, you go to a grocery store. Part of what you're paying is the cost of store insert incurs for theft. Do you have built in profits to cover all of returns products? They're lost in shipping. Ah, profit to cover slow months once you established, and this is kind of what you're doing, you transition to this being your main income. You might see you have industry trends, right? You might see that you sell more around December and less in February, right? So maybe, you know you need to have a higher price because you need to make more profit in December enough to basically get you through the year and back to your next December. There's a lot of businesses that operate at a holiday schedule, so certain holidays happen they make the majority of the revenue, and then that gets dispersed over the course of the year. Needed to take a look and see like it. Is that a scenario? Urine? Is that something you're gonna need to plan for? And you'll find that as you're working through the business, the number one thing you doing business is generate profit, keep the business going. So let's look at how we're gonna play in this business, right? What's look at like a formal business plan. And we're going to take a look at a company that we're gonna call darling Angels gifts. It is meant to be a subscription box that goes out to parents as a gift to their Children. Uh, this is a fictional company. Much. The expedition generalizations are meant to be applied to any kind of business that you're going to set up, especially on the creative side. And don't stress out about this. Once you've written a business plan or two, you can find the crafting of business plans a lot of fun, because once you put all the numbers and lined it up and establish, you know whether an idea will work or not, That's very exciting, cause. And you know you have something, Riel. So in a quick outline of what is in a business plan, we have a mission statement, which is what is the company? What is the goal? The founding believes to the company, right? The executive summary, which is a summary of snapshot of your business they should touch based on your goals in the business expectations. Our company description, which will describe what the company does. Key success factors, which is just outlining what we need to do and what needs to happen to make the business successful objectives, which are the goals that are set for the business. You know what we're going to do to make sure we hit those key success factors? I want to take time to take a look at the market that we're gonna be in right When I look at our competitors, we want to do a market analysis before launching. You should do a market analysis. How big is your industry? Are you going to be one of 10 companies in a $20 million market, or are you gonna be one of 100,000 companies in a $20 million market. There's a major difference there. Um, in terms of where you standing, where you visualize yourself, right? Can anyone just join you? Is there a higher buried entries? Lower barrier entry? Is it a simple as picking up the phone, calling three companies getting a tool from a hobby shop in tweezing stuff together? And there you go. That's anyone can do your product. Or is there something special that you're doing that's different? What differentiates you? Um, who's the biggest player in history? What his market share look like for them? Um, what are your contender competitors doing for marketing? Where they finding customers? That's really good information for you to learn where to get your initial sales from. You know, if there's a watering hole, they're all going to if they're all advertising in the same space or, um, doing a similar kind of promotion, Did you already know that that works for them so it can work for you? Ah, and then you can adjust from there. What is the pricing like inside your market? Take a look at the lower end, the higher and see where you fit, right? You might be a kind of a cheaper product. You could be a premium product. Where do you want your product to sit? And if you were gonna buy this product or service, who would you buy from? Why would you bought from them? It is very important to it things to establish when you're starting and figuring out how you're going to sell. This is more of a long term section when we want to talk about organization and management . If you're starting out on your primarily, just doing a company is like a hobby, right? You probably don't have to worry too much about the organization of the management. He just You're the you're the one doing the show, right? But as you grow, that's something that look at, look at, right to say, What kind of person would I put in this role? What kind of first want to put in that role? Who's going to be in charge of what? Do you have a service to have a product line? What are you going to sell? Describe it right out. What you actually plan on doing here, and when you do that part of the part of the goal here is to say, this is what we're gonna do and this is we're going to do for a reason. Um, because we don't want to get into a scenario where we're constantly pivoting and pivoting and pivoting and pivoting and trying to get to something that doesn't exist. We don't want to get to a point where we're saying okay has gone through 12 different kinds of products. I haven't gotten anywhere. It's been a whole year. We've been trying to push stuff and nothing selling. Well, if you went through 12 products in a year, you probably saw a lot of money developing them, testing them, gain them launched putting advertising, listing them online, trying to get company other people to buy them. And by the time someone started looking at it, you started, he walked away and start another one. Right, So this helps you to keep focused. This helps you take a look at, um, what bulk ordering would look like to really drive down your your cost and what equipment that you need to even produce these products. Right. To make sure you have the right tools for you to do this, I always recommend taking a look at software as well. It's not included in some business plans, I always say included. Right. So take a look at software kind of software. Do you need kind of software Would help you write initially. Maybe the system you're using to sell online does all does enough of the sales for you for accounting. But as you grow and maybe you transition doing this full time, you need to attach it to something like QuickBooks, right. You need attach it to something where it's going to do the actual accounting. Or maybe you needed 1/3 party accountant to help you, Um, maybe, or calling different companies to get into stores. Right. So you need ah crm to manage your customers. So you look up a serum and you see, like, what would these things cost for you to dio just getting a quick example? Make sure that you have an idea of what pricing looks like on these. What you need to launch what we'd like to grow into. If you're doing a brick and mortar store, you want to make sure you're doing you know, the costs. Even if you're doing it online, you wanna have the, um, location listed out like this is where we're going to sell. This is what our plan is. You might make this list of life. This is what we're gonna sell. This is a storefront. You might look at it and realize there's other channels that you didn't quite think about, right. So when you're generating this, listen, you're focusing on locations You're focusing on, um, location of where goods are coming from and where you're going to store them, You might realize Well, when I did the product section I was looking at, I was looking at getting getting a bull border. But then I'm looking at my location, and I'm thinking, you know, I was gonna do this on my basement, but I don't have I don't I don't have room for all these boxes. That doesn't make sense. So you gotta figure out your way around that, right? So you think you're gonna do it at home? You might say, Well, I'm gonna set a section of my garage apart, and I'm going to keep some product in the garage that I can work out of, and I'm not gonna put my car there anymore. or if you have a physical location, you look at your physical location and you say cool were popping up a storefront. This is how everything's gonna need to be organized. This we're gonna need to fill that space plan things out, has plays a lot into what we're going to talk about next. And what we're gonna talk about next is our marketing and sales, right? Life, blood, the organization. This is where all the money comes in. So what's your sales strategy? How are you gonna market your product? But will the marketing cost And are you gonna have sales associates? They're pushing this. Do you have, um, cash going in to your actual marketing to generate, um leads for you to call on or do you have marketing going out dry dream, bringing people back to your website? Are you gonna do a e Mail us to help bring them back to your website. Now, these are things you want to look at. These are things you want to type out. And sure, you're adding into that marketing marketing plan going over quickly, you know? Was that look like are you gonna be involved in social media? what social media channels makes sense. How are they going to be managed and really, where you're gonna focus on, right. So how are you gonna divvy that up hiring to generate that revenue. We're gonna look that more in depth later. Wrong as well. So we look at funding. I'm gonna take all the costs of our start up together and say, this is how much will it cost to do it? This covers all of our bases. That should include some extra cash estimate a little bit high. And how much is Don't guess and say, Well, I think that I'm going to start a bakery. My thinking ovens like $500. I'm gonna guess that. Don't guess. Get real numbers. Um, how a company be funded, You know, a lot of their self funded, Um, some are violent, right? So you do You just need to make sure that you are establishing you know how you're going to get the money to do this and you're planning and part of, actually, um, moving forward from funding is to move into your financial projections, which is what we're gonna look at next. So if we take a look at financial projections that we want to say, Hey, what does it look like to break even? What's a break? Even analysis look like, how much we're gonna need to generate to do that? Where's their first? What we think we can do in our 1st 3 months where you think we could do in the next six months? Do we have enough experience to say that we talked other people about what they've done in starting their own businesses with simple, somewhat of this so that we know what to expect, right? It's good to set realistic expectations because everyone's to start and say, Oh, yeah, we're gonna sell out. I'm not gonna have enough product as soon as it started listening, but that's rarely the case. We're gonna work out how we're actually gonna be able to do the financial projections as well. We're about to go into all of this more in depth. That was broken up into smaller section 3. How to start a creative business3: So let's take a look at the first part of how we're planning our business. Um, and you could do these in any order. Whatever order makes sense for you. I wouldn't put a whole lot of time until, like the mission statement, especially at first. Make it super simple. What's the mission? What do you want to dio? What's the goal? Then? Take a look at what other ones have done like Ted talks. There's is a simple is spreading ideas. The Humane Society celebrating animals confronting cruelty Don't keep it simple. Making X for bringing happiness. An executive summary. It's just going to be a quick snapshot of your business plan. It's a summary that you could read over, and it would tell you, You know, this is what you want to do. This is what you want to achieve. This is what the company exists to dio. So, for instance, with our sample company, we would say Darling Angels Gifts is a unique service for the parents and relatives of Children. Parents and relatives can pages $10 a month for a male set of earrings or necklace for a child in their lives. That service ideal for parents who work a lot travel frequently This service especially useful for parents. Grand parents who do not all over that the household or near the Children. Grandchildren. Justin, Father consent his daughter a monthly gift without having a hassle. Drilling. It will be when opened the only gift box turning parents, relatives of 8 to 13 year old Children in that demographic, right? So although there are other services that do supply toward women, there are mawr at double the cost. And there are very few, um, at this price point for this group. So you were establishing, you know, this is what we're doing. This is why we're doing it. This is what kind of makes us a little bit different and why we're targeting those groups. So describe her company quick. Describe what the company does, right? Company description. Um, very simply, we make the rings that as troops in service, you know, you don't have to get complicated when you write a company description. Keep it simple, so be targeted towards younger girls as well as mother daughter packages. What they look like Mommy kind of marketing. Tell them quickly. Talk about your keys to success, right? What do you know you need to do to make this successful, be a five key success factors for darling angel gifts unique in attractive products. Utilizing low production costs, high volume sales, advertising, getting word out, keeping customers satisfied. And, ah, looking forward to future releases to ensure revenues. Maintain consistency, right? It's a It's a tradition product. The money is made over a long period of time. Go through product lines. We want to make sure we're meeting customer needs and adjusting to that so we can add things that key objectives gross profit of $4 per month. Prescription monthly revenue. We had to get that up to 50,000 to try to scale it appropriately because it is a low profit per product and we want to scale. We want to be profitable right long term. So after tax profits of $40,000 a year to maintain having full time employees and maintain a retaining consistent 10,000 customers a month, um, lofty goals very hard to get to. But you should cycles that are difficult to get to to ensure that you're pushing for success and being the kind of business that you want to next, We're gonna look into market analysis. So for our company, our sample company drawing just gifts before you launch, uh, and look at the market analysis to see how big we are, right? Let's take a look at our competitors, right? So there are more than 100 companies in the business of selling jewelry online, but there are relatively fuel selling on a monthly basis. Um, and below is a list of known competitors in the market here. That's just kind of her example there. And then, although we did here was we went out, we found, Here's a competitor. Here's how much they cost. Here's what they dio and you might even be able to find other people's lists and combine if you list the others have put together just in reviewing these kinds of products, right? Used lists that are out there use people that are already out there because if somebody else has looked into this kind of market right, they may have already looked and said, Hey, here's the main people playing in that data could already be out there for you to grab. It could be from a couple sources so you could put that together and you haven't even more comprehensive list. So, for instance, Kate Coal, 40 bucks a month received two high quality pieces of jewelry. Um, a lot of these air 40 30 dazzle box five or more surprise items. 20 bucks. They're all geared a little bit differently than what we're going for, right? So there's some of these. They're 12 bucks a month where handcrafted jewelry, Right, great. But they're not. They're not marketed. Quite. How we want to dio is this whole long list here of what put together in the point of this, that that we want to really bring home is we're looking at what your competitors are doing , what the competitors pricing is the quality of what they dio the types of customers that their marketing Teoh. So we know who is similar to what we're doing, who's different where we fit in the market. And realistically, you know, if that if their marketing somewhere, you know, is that somewhere we should be marketing to, because if their marketing there, they've already invested the time to prove that it's a quality place to market, and we want a market there as well. Take a look at the organization of management. That's usually pretty simple. Especially when you're starting a more creative business by yourself. You know, it's usually this person is gonna be in charge. This is the person who is going to be doing marketing this person to be charged. X Y Z, Right? Maybe you have a buddy of yours is gonna help you out. He's gonna do your marketing so you can focus on it, actually making the stuff. So he comes on board, even 20% of the revenue. The company And he helps get your initial sales off, right? In exchange for a part of a company that happens a lot, Um, in service or product line. Right. What are we selling? We want to take a look exactly into this and what it looks like, Right. So in this example, product, when I say laser cutting rings will have a laser cut from a material that we're gonna connect them, um, to the your hooks and put him in. And then what we're gonna do is we have it also so that we have our production costs in our shipping all tidy other right so these air small items So the production cost is only $2 per dollar. 25. The shipping is only going to be 50 cents to bring that shipping and send it to the customer. And the probably designed using Adobe Illustrator, third party manufacturer for production. Right. So what? We will generate designs. I will send it away four products and then we'll have a minimum order of 100 units. So that first month, if we only get 10 customers, we know we're going to eat it on those first for the first set of units. Um, so that's something to always look out for, right? You know how Maney is your minimum order and this is a have a product service where we're gonna have a minimum order of 100. So if I can Onley do 10 units and it's supposed to be a unique gift every month, I'm probably only going to do that first order and then sit on the next 90 if I have 10. Right, So we got to figure out what we're gonna do with those later on, but something to consider with how you're doing Max mortars and if you're doing like a unique product. A lot of times when you're doing bigger orders, you're not doing typically a unique product. A lot of, um, craft stores and startups are gonna dio products that are going tohave mawr. Um, you sell multiples of it over a long period of time, but you might make 20 baskets. They're all a little bit different from each other, but they're all based on the same set. So you're not wasting product. You don't want to start a company where you're wasting a lot of product right away, then listing the equipment that you need. This one's pretty simple. It's basic packing supplies, printer and a computer for order entry. Right. But you might have you might get a sewing machine, right? Um, you want your sewing machine that could be used for eight hours a day and is designed for that because you're going to sit there and you're gonna so and you're gonna make you don't make pond shows or you're gonna make, um, hats wherever you're gonna make. Ah, that comes together. You need to make sure you have the right tools for interactive tools that they're meant for being used over a long period of time. If that's what you're gonna be doing, right, make sure your tools are appropriate to what you're doing and make sure you account for those and what you're actually gonna need touched on software a little bit earlier. Um, I do like to touch on that again just because when we take a look at software, um, it's always good to remember. You know, what do we need? How are we going to do it, You know, list off. What you gonna do if you're gonna collect money from pay, pal? Just even lift list Were collected money from Pay pal um, listed in the plan so that at any point in time, you need to question what you're doing. You need to take a look at for refresher on what the plan was to know. This is a document that serves as kind of where you're going, where you've been and what's happening in the company. Kind of that initial startup snapshot. And it's really fun to be able to look back and say that we only started up. We started out, we had these things, and this is how we operated um, and this is why we had them. So when we take a look at our marketing in our sales on looking at her strategy, right. So this is gonna be an online company. We're going to do some stuff with who? Sweet to automate. We're gonna do some stuff with our vertical response to make sure we automate our emails. Going out wearing a build email list. That's how we're gonna help to bring people in. Um, we're going to some online advertising were to be social, but, you know, if we're gonna be targeting certain groups, you know, would this probably one target parents when a truck hit? Single parents likely? Um, more target parents that, um, might be divorced, um, and have Children. Right. So that's kind of our demographics that are really gonna connect with what we're going for here, right? We also want toe may reach women with Children. Um, because of the maybe mommy me package, the things that we're looking at here. Kind of like what? What are we gonna market who were gonna market to? How we're gonna break up those demographics And then then you can measure and see where those work, right? Say we do a YouTube head and we target it towards single fathers. And we find out that that's not converting, but we run the same ad single mothers, and that converts a lot better, Really run on grand parents and works out really well for grandparent's. Grandma and grandpa don't see their granddaughter that often, but they really do like being able to send that gift. And then they have a conversation about it. Um, they like the idea of that. Right, So maybe we have an ad that appeals to that. I want to mark out how we want to do that. How we want to bring in revenue. Maybe we're listing on a few different sites, right? So maybe you have a product. You make dozens of them at a time. You want to list them on multiple sites, so you might have a couple little shops on more boutique sites. Then you also have an eBay page. Maybe are also listing on Amazon, right, utilizing the markets. So you have multiple sales channels coming in and you want a list Those off in plan, um, for what you want to do there, Right? So Maybe certain products you'll find are going to sell better on other platforms. So you could take a product that sells really well on eBay. Put on Amazon and it won't sell that well, or it might not sell for less just cause the marketplace is different. And taking a look at what products were going for, where you want to sell it is very important to ensuring that when you do start and you are putting product up, you're putting it up with the right pricing. You're putting it up with the right kind of descriptions, and you're ensuring that you get your foot in the right doors and in front of the right people. And in the funding section we want to look at is, you know, how much is it gonna cost to start this company? Right? What does it really take? Um, so legal set up. Maybe you get legalzoom, you do an LLC real quick. For 500 bucks, you do some registration fees for various websites. Various list tickles. $1000. You order some supplies. 300 beginning inventory is 152. Really? Do that startup order for your first small group of customers. But you're gonna put $1000 in the advertising so that hopefully you shoot through that inventory really fast and you get to a point where you're buying more inventory within a week. Right? Um, maybe you want a domain that's gonna already be taken, but you feel like it's essential to your company and the branding you're going for, and they're not really using it, right? So you make them an offer, you buy it so you can get and it's easily established. Financial projection there, Right? So what do we think it's gonna cost us to start? What does it look like? I like I said before a price it a little higher than you think. Right? So say isn't cost us $9000 to really start a company. Um, it's first earning aircraft company. It's probably a little less if you're staying at home and working honestly. But the estimated profit for sale here, right? $5. So how many of those would I have to sell to make back my 9000? Um, and with this at $10,000 the owner takes no sales. It'll break even at a payment of $25 point of sense for sale. The owner breaks even in 13,000 sales. And it's important to take a look at stuff like that, especially if you're looking at spending like $9000 to start a company. You know, what do you need to do to get to a point where you break even? What do you need to do to get to a point where the owners can realistically take profit? And this is just a quick breakdown of what it looks like to build the product, right? So, um, cost of goods sold is the cost of goods for everything attributed to it. Right on the example I'm showing on the screen right now. It doesn't take into account overhead. Right overhead is the building and maintenance on the building that you're in. But say I'm doing this in my basement, right? I already live here. It's already being paid for. Right now, my business doesn't have overhead. Um, but I might have I spent 33% of product costs on having it cut than the finding, which is the part that goes in your ear like the hook that is 16% and knowing different parts fit right. So I know shipping to the customer. I know the packaging costs and the credit card fees. Right? So card a card fees on my monthly. Right? When I took a look at software, I said, how am I gonna process payments? And I chose the one I did. I looked at it and it said it's gonna cost me X amount of money to process a sale. So I built that into the cost of my good sold because I know it's going to cost me $2.96 to sell this every single time in the best scenario. And then I just did a quick projection here of what it would look like, right? So if I got 50 new customers a month what the prophet looks like So once you've done these things, once you've taken a look at it once you've built, um, all of your product out and you really can see you know where your profit is, what you need to do to generate that profit and plant how you're gonna do it. Then you ready to actually take action, ready to build some samples? You ready to go out and try to launch something? So do it