making money with a hobby turned business

Last year, I spent 50% more on my business than I earned. That was fine with me for the first year, what with startup costs and figuring out pricing and so on, but I didn't want it to become a habit.

So this spring, I made some changes in my business-related spending. One was to only spend what was in my PayPal balance (nearly all payments to me are made through PayPal). If I don't have enough to cover the purchase, I don't buy it. If I buy something locally, I immediately transfer the cost from PP to my checking account to cover it. This ensures that my business is not costing me money to run, at the very least. It just about killed me when there was a yarn co-op in August that I wanted in on, but I was $30 short and stuck to my guns. And honestly, I have not seen a shortage of yarn around this place because of it.

Another thing that helps me figure out what I'm making (since I'm really bad about entering all my expenses and income into my spreadsheet) is resetting my balance each month. At the end of each month, I figure out what I'm going to spend on supplies the following month and transfer anything that's left over into checking. That gives me a general sense of how I'm doing.

And the third recent change was to stop buying yarn that other people dye, unless I can't live without it. Most of my orders are complete customs, where I dye specific colorways. It didn't make any financial sense (though, naturally, it made plenty of emotional sense) to buy commercially dyed or HC yarn, just to have it sit in my stash. I broke this rule a lot in July and August when a LYS was going out of business, but it's okay to fall off the wagon for a 70% discount, I figure.