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Financial statement : 2008 results ...

Posted by Dave Bull at 12:33 PM, February 18, 2009

February again ... and tax time is here. Income taxes here in Japan must be paid by March 15th, so last week I fired up my bookkeeping software, punched in all of the waiting receipts, finished up the tabulations of last year's sales data, and sent the summaries off to the accountant who does my tax returns.

I do all the bookkeeping myself, but leave the tax calculation to the experts. Living and working in the same building brings a whole host of special twists and turns to the calculation, and there is simply no way that I can invest the time to try and understand it all.

In a newsletter story last spring, I showed the basic Income & Expense statement for the previous year (2007). It was pretty grim. Although I did indeed sell a whole pile of prints - just over $60,000 in all - I barely broke even for the year. There is no 'secret' as to where the problem lies - there are no frivolous expenses anywhere along the chain; it is simply that my prices are too low.

In that story I also described how I would try to pull things up over the coming year if I possibly could, and outlined a few ideas for doing that.

Well, a year has gone by, and it's time to put the new numbers on the table - the Income & Expenses for 2008. To help make the comparison, I've overlaid two charts. It first shows the 2007 figures, but rolling your mouse over the chart will 'flip' it to show the 2008 figures. (For those of you who think in US dollars, imagine these figures are in pennies, and you'll be fairly close (just about 8% too low, actually))

2008 graph

What's different?

Well, the first surprise for me was what was the same ... namely the sales figures, both for my regular prints, and for the Mokuhankan catalogue (listed separately in the chart). The inner details of the sales figures were actually up and down all over the place - I lost a couple of subscribers to the Grim Reaper last year, domestic sales were down quite a bit, foreign sales were up, quite a number of back-issue subscribers came to the end of their series - so the yearly total could actually have gone in any direction, and to find that it was actually stable was quite a relief. I didn't increase sales, but in this current climate, not to have them collapse was quite an achievement!

The expenses show a different story. These I have much more control over, and I was determined through the year to keep them down as much as possible. I didn't really have a lot of room to move with most of them, but cancelling the January 2009 exhibition made a huge difference. (Many of the exhibition expenses are actually booked in the previous year). All in all, I managed to cut expenses by around 800,000 yen, and that cutback amount went straight to the bottom line.

That's the good news ... The bad news is that because I made a profit, I am now back over the minimum level for taxation, and I will have to pay a good chunk of that out in taxes now. If I had known in advance, I would have used the money for business-related expenses - maybe stocked up on some more paper - but it's too late for that!

The next big question is of course - what next? As is completely obvious, we are in the early stages of what is almost certainly going to be a very severe, and very long, depression. No 'recession' about it. It's 'game over' for the good times for at least a decade, I believe. There were simply too many fundamentally unstable factors in the economic situation, a crash of this sort was inevitable at some point, and it is going to take a very long time to find a new stability.

So what's a printmaker to do? Woodblock prints are completely frivolous items, and if too many of my collectors lose their employment, it will of course have an impact on me too. But even if most of them can hang on through 2009, for the final four prints in the 'My Solitudes' project, what will happen next?

I had actually been toying with the idea of producing a number of large-scale versions of some of the Solitudes designs, but - given the current climate - I think that 'large-scale' may not be such a good idea. Whatever I produce next is going to have to be first and foremost ... affordable.

As we are already seeing, some businesses are managing to be successful in this new environment - those that offer good value (defined as a desirable product at a reachable price). I'm sure I can produce the 'desirable product' part of the equation, but I'm not sure about the 'reachable price' part. And indeed, what price is 'reachable' when so many people are going to be out of a job themselves ...

Anyway, cross that bridge when we get there; for now, I have to focus on getting these next four prints designed, cut, printed, and out the door!


Following comment posted by: Gayle on February 18, 2009 11:25 PM

Dave, it is a dilemma for anyone who is in business. We all understand that when gas, groceries and housing are taking our income first, there's little left for beautiful things, though all of us would love to have that beauty to enhance our experiencing. Artists end up suffering because art is necessarily what people must put on hold during hard times. I wouldn't call woodcuts "frivolous". They are delightful, meaningful luxuries.

Following comment posted by: Michael Kohne on February 18, 2009 11:52 PM

Assuming I continue to be employed, I'd love to subscribe to another small print collection. Thanks!

Following comment posted by: Dave on February 19, 2009 12:31 AM

... another small print collection ...

Well, that brings up a kind of contradiction in how my print series have been structured lately. For the Hanga Treasure Chest I made a couple of years ago, the price seemed low - 2,000 each print. Wow! Anybody can afford that! It's only a quarter of the cost of the prints in my current series ...

But with 24 prints in that set, going out one every two weeks, the collectors paid 48,000 yen over the course of the year. In comparison, this past year I have sent out 4 of the Solitudes prints, at 8,000 each, so to be a collector has cost 32,000 yen for the year.

So although I am indeed thinking of perhaps producing 'Treasure Chest #2' ... I wonder if that would actually be a good idea?

Following comment posted by: Maria Arango on February 19, 2009 1:13 AM

It's the "revolving" money that scares people off in hard times. Yes, they may have the money now, but what about next month or the month after that?

Many cell-phone companies are understanding that the "contract" thing is scaring people off and paid-throw-away phones are available at the nearest Walmart. Now most cell companies offer a no-contract pre-paid line as an alternative.

The good news is that in VERY hard times there seems to be a "bachanalian (sp?) feast" attitude and people sometimes start to spend on themselves. Sort of a learned helplessness effect.

Good luck this year, I will of course continue to support you no matter what. And raise your prices! :-)

Following comment posted by: Jeff on February 19, 2009 11:24 AM

Times are indeed financially tough!

Long-time followers want you to succeed!

Here is an idea. Consider expanding and creating new print lines while continuing your current long-term series.

Develop a small quick print using only a few blocks. In other words, a key block and two or three tone blocks at most. (White-paper, light tone, medium tone, dark tone, black) That’s only 3 tones and one key.

… Or make one-block prints. The hardest print to master is the simplest; in which you carve and print using one block in black and white with ‘singing lines’.

That may offer a partial solution to your recent question in an earlier posting: "It may in general be assumed that the greater an artist the simpler his prints are from a strictly technical point of view. [...]

The creative challenge is in the limitations. It’s hard to print simply, but it also offers a huge financial savings in time and material.

This print concept has one purpose. If you sell inexpensive prints and make money now, it will grant you and your collectors the luxury of continuing the time-consuming collector series. Sell it at a very low price. It doesn’t have to compete with your collector series. It can be designed for current world-market tastes and Depression-based pocketbooks. You have tons of ideas. Pop a ‘new one’ out when time allows. If you start a separate category or product line of ‘one-up’ ideas turned into open edition prints, you will always have something under your Baren.

You print in smaller batches of 10 to 20 at a time and only print more if and when the print sells out. No need to waste precious materials on piles of unsold prints for this project. This is pure commerce. Take your existing stock of poorly sized paper and use the portions of the paper not wrinkled. Maybe you have leftover paper from other projects too. Base the new design on your existing stock or left over wood blocks. Cut the ends off good blocks no longer needed and glue them up into new blocks. Use up the colors you have on hand – maybe a few grams or kilos of ugly pigments stored in the bottom drawer you bought on a wild shopping spree. A postcard-sized print costs less to mail as well.

You are running a business and as they say in the newspaper; “all options are on the table”…ha!

Gasp! – You could even set up an ebay or etsy account and sell quickies or ‘one-up’ prints with the ‘buy-it-now’ option.

Your long-term collectors have to understand in this economy - if you don’t financially survive – you don’t produce -- and they can’t continue to invest in your museum quality editions.

Art lovers still purchase prints by Picasso, Warhol and Hokusai produced in their employee run print factories, so there is no reason David Bull, as a sole-proprietor, cannot expand his current offerings to include separate, faster selling, money generating, low cost prints without harming current collectors or their investments.

Following comment posted by: Dave on February 19, 2009 1:49 PM

OK, lots of stuff building up here to answer ... don't have time for it all just now!

Consider expanding and creating new print lines while continuing your current long-term series

Umm ... have you seen Mokuhankan? I set it up for exactly that purpose (among others) - to make single-sheet prints available for people who can't extend themselves for my subscriptions. It has provided a good share of the income for a couple of years now (it's in the chart above).

You print in smaller batches of 10 to 20 at a time and only print more if and when the print sells out.

This is something that sounds like a good idea, but in practice, is impractical (for my kind of work). Once my proofing is done, the blocks are charged up, and the pigment bowls are ready, it's most efficient to make as many copies as possible. Getting blocks out of the closet to 'run off another 20 copies' is hugely inefficient - the cost per sheet starts to skyrocket. (It's the time that is far more expensive than the materials.)

waste precious materials on piles of unsold prints

Actually, the only way I have been able to make a living at this in recent years is because of those unsold prints. I can't possibly live on just current subscriptions. For example, a lady in California purchased a couple of the Surimono Albums in December; they came off my shelf, went straight out the door, and paid my mortgage for that month. And in just the same way, the 'extra' 100 copies of the Seacoast in Winter that I will spend the next 10 days making even though there are no orders for them, will do their part to help feed me later on ...

Sorry to be negative about some of your suggestions; I have no such intent at all. Over the next year or so, I am indeed going to have to re-think many of the ways that I do business, and actually, such a re-think has been going on for over a year now.

Anyway, can't 'talk' much more right now; the paper downstairs is waiting ... Thanks everybody for your comments!

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