In our latest podcast episode, we delved into the essential aspects of tax preparation and business structuring for designers. Here are some key takeaways:
Obtaining a federal tax ID, maintaining detailed records, and considering an LLC for personal asset protection are crucial steps.
Familiarize yourself with tax laws, file regularly, and seek professional advice to avoid audits.
Starting out? Consider using Excel for financial tracking if QuickBooks or Quicken are not feasible.
It’s vital to track both income and expenses. Tools from payment processors like Square and PayPal can be invaluable.
Consider making quarterly tax payments and explore avenues for saving money through bulk purchasing or wholesalers.
In addition, one of our speakers shared their journey of securing funding through a mini grant to kickstart a sewing camp, which led to subsequent renewals for more resources. Here’s a quick look at their insights:
Community involvement is crucial for financial credibility. Our speaker emphasized the significance of community engagement when applying for a business checking account and building business credit.
Stay informed about available grants, seek assistance for grant applications on platforms like Fiverr, and explore small business grants and loans from the federal government.
Finally, we underscored the importance of knowing the value of your products, confidently setting prices, and not hesitating to assert that value when selling. As small business owners, don’t hesitate to reach out with any questions related to the fashion business via email, Instagram, or your websites.
Remember, knowledge is power, and seeking advice and support is a sign of strength. Stay tuned for more insightful discussions and practical tips to fuel your entrepreneurial journey.
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Welcome to the designer’s plants and coffee podcast where we discuss how to succeed as a designer
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while staying true to yourself, finding peace in the process, and making money doing what we
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love. Subscribe on YouTube and wherever you get your podcast. Question, how do you prep prepare
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for taxes, federal and state?
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Get a federal tax ID number. It is free. They start charging taxes by the penny, so get a tax
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ID. And keep good record Because at the end of the year or the end of the quarter, you don’t
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have to come with those records.
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See, I use, Quicken, and that actually keeps track of all of my business Expenses. Because the
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one thing I will definitely say, if you are a entrepreneur and you’re doing, let’s say some
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of your clients with the 10.99, You’re not paying any taxes, so you need to make sure that you
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have enough expenses and deductions to counterbalance out. You can actually look up on IRS website
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and give an idea of the percentage of taxes that you should be putting aside. Also, putting
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some money aside for social security. Banking tax and unemployment. You really because if If
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anything ever happens, you wanna make sure that you’ve kinda put money in that little bank.
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So did you guys set up a LLC, sole Prior to Escort, what did you guys set up?
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LLC over here because I actually took a class, and it explained it. It broke it down. And the
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difference is LLC, they can’t come after your personal property. Right? When you get an LLC,
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if the business goes Under, it happens, and you owe people, the government can’t come for your
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house because it’s not a business asset. A lot of people think sole proprietorship is the way
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to go, and and I’ve Even hurt people say, well, I don’t own anything, but you will.
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I did LLC as well, and it was only a couple of $100 if I remember because I kinda just just
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renewed it. I also filed for trademark, registered my name, the business name. So that’s another
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thing. You definitely Want to make sure that you’re actually looking on patents and trademarks,
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and you want to make sure you are checking to see does anyone else Have your name for the product
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that you are actually selling.
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The the first business that I had, I did as a s corp. Mhmm. It was just too complicated in terms
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of keeping track of all of the the paperwork and the filing that you had to do. Yeah. But my
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second one is a LLC. I am electing to File taxes as an escort because it protects your money
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better instead of putting it with your, personal money. We are not accountants.
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Right.
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We’re CPAs. Right. So speak with your accountant or your CPA and see the best way to structure your business.
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As Tedious as it sounds, you do have to keep up with latest in tax law. That’s just a necessary
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thing if you wanna not be audited.
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And I was ordered at one time, and it’s not fun. I think we had to go about 7 years back.
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Mhmm.
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It’s insane. Listen. Keep your records. Keep all your receipts. You know, file it on a, like,
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a weekly, monthly basis, so and make sure you have everything. You can hire people to do it
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for you, but if you’re starting out, probably do it yourself. Yeah.
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Like Leticia said, QuickBook, Quicken, if you can’t afford that software, Excel does wonders
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with math. You can break your Excel sheet down into categories, and, you know, you know what’s
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going out, you know what’s Coming in, just set aside that one day where you compile all of your
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stuff for that month. I use Square, and they do very good with keeping the records for me. Right?
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They look at the tools on your website. Look at the tools on your PayPal has a similar tool
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if you accept PayPal.
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Stripe as well as most places that collect Money because they have to report it as well. They
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keep records for you. So just use that to your advantage. Yeah. This leads us into the next
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question. Do you set aside funds or do you pay quarterly Or do you pay annually?
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Right now, I pay annually.
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I’ve been paying annually, but going forward, I would like to start paying quarterly I’ve heard
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that it’s better in terms of, keeping track of everything, and it’s better in terms of taxes,
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you know, how much they tax less than what they tax.
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And along with that, we keep talking about the money you bring in. Keep a record of the money
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you put out. It’s just as important to keep track of the money you put out because you’d be
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surprised at things that you can write off. Every time I buy business cards or or labels or
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envelopes. All of those things go into that spreadsheet. Speak with an accountant if you have
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1. TurboTax is really good.
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Right. Right.
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With your business taxes, pretty inexpensive as far as taxes go if you can’t afford an actual
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accountant. Look into TurboTax. Look into H&R Block. Look into look into these places that offer
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these discount on how to do your taxes because it’s tedious, but You don’t wanna get caught
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in an audit.
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So we wanna move on to the next question. How did you access start up funding?
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For me, my start Your funding was whatever extra money I had laying around to invest into my business.
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That’s yeah. I mean, my family, they helped me when I was doing, like, shows and, you know,
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setting up stuff and all that stuff.
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You know, the bulk of that money is gonna come out of your pocket. So it’s another thing you
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wanna think about. Think about how much you can really put out How much can you really afford
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to invest in this business? Because it’s more than just the making of your product. I wait until
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the site that I get my labels from has 40% off Sell right? And then I stock up. So it’s just
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little things like that that you have to think about. Think about buying in bulk where you can.
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Think about wholesalers where you can. You’re making bags. It’s Some great wholesalers where
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you could get zippers for, like, 79¢. Really, really research.
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You know, question everything because that’s how you learn and that’s how you do the best thing
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that’s gonna work for you.
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You know, a lot of the web hosts have now built these things into their platform so you don’t
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have to have several different things To get your newsletter out, to get your emails out, to
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get your receipts printed, you can do it all in one place, which is great.
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Tish, did you at one point get, funding for, like, machines for
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I actually got a mini grant. So I filled out grant application, won, the grant and received
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to start a sewing camp, to purchase 16 machines, a bunch of fabric, and they kept renewing it.
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So the 1st year, I got the sewing machines, the fabric, and I had the, classes Free. Then the
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next year, we order more fabric, more patterns. So that’s how I did the sewing academy. That’s
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but with the Keeping you in stitches and the consulting. I actually applied for a business,
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a checking account through Navy Federal. When I was getting my invoice, because I wasn’t using
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it all the time. I was sending the invoices to my personal account. I’m like, if you don’t send
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it to your business account because with, Navy Federal, you know, it’s It’s all about community
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and then they like to see the money come in and you paying the bills and everything in order
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to get the business credit card. But also with the business credit card, you also, there you
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also need to get have a really good business, credit score. But you can start out really small
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by it’s like 3 different types of, companies that you can open up business accounts. They will
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report to your business credit agencies, and they will help to build you up your score. Uline,
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Grainger, and I can’t remember what the other one is, But you can actually order supplies through
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there. They, generally like to do, like, a net 30. You pay the bill, like, within 30 days. And
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every time you pay it, they report they’re reporting to the credit agencies. That’s like the
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bottom tier entry level of how I would say if you really wanna get business credit, to Start.
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If you do that for about maybe 6 months, your credit score will begin to go up, and then you
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can actually try to apply for, business credits and, credit cards or business loans.
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And to piggyback on that, I know Amazon has a business, site where you can apply to be a business
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account holder. And Square And PayPal both have checking accounts where you get this business
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checking account. You get the credit card. You use that credit card for your business.
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Another question to us, how did you on the grant to get just the machines.
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K. So DC government actually puts out, I wanna say maybe every month, they put out a newsletter
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of a list of All of the grants that are available based on, let’s say, education, arts, you
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have to look out for it and really get the emails, the newsletters, and Make sure you just stay
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on top of what’s coming out, when the closing cycle is. But also even writing a grant can be
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a bit intimidating. So Fiverr, get Some help to write and apply for grants because it can be
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quite intimidating. Also, with the federal government, you can actually apply for grants and
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loans as Small business grants and applications from from the federal government.
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Because I’ve also gotten a creative grant from the DC government, and they they do this Brand
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every year. So you have to use it towards your business. Another thing that people forget is
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you do have to report. You don’t have to report with receipts Or say what you’ve done with it.
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Just follow the instructions to the letter. Yes. And they will give you that grant. Every word
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they Type. You type.
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You can literally get a grant for just about everything.
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We all get 50,000,000 emails a day. Put those grant emails at the priority. Get a separate email
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address for your business just for your brand information, just for your pop up information.
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If you apply for your domain name, take that domain name And get a email address.
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There’s another question. It says, when pricing your merchandise service, do you use a formula,
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and how do you set your profit margins?
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Generally, we don’t have those those high priced names yet. And so we can’t charge $34100 for
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certain things. You know, if I’m putting a lot of work into it, like, if I’m making a custom
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jacket or something like that, yes, I’m charged a lot. Because the materials are also different.
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Right. Some of the vinyl and, vegan leather I use might run me $30 a yard. So you have to factor that in.
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When I was doing product, when I was actually making things, What I did was cost of goods sold.
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So basically, all of my, fabric notions, all that stuff, put all that together, put the, The
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rate together, the hourly rate, how long it took, and basically triple that. So say for instance,
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everything costs $10, so you would charge 30. You’ll charge 20 for wholesale If you’re selling
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to stores but actually, you actually, you would charge 40 for retail because wholesalers gonna
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double what they pay. So say for instance, they buying it for you from from you for $20, they’re
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gonna sell it for 40. So you have to sell it for 40 on your site. And in terms of services,
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for my agency, the region design agency, I have packages. So I don’t charge hourly. I charge
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per package. But when I do freelance, I do charge per hour. I give them a range and per hour,
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and that’s it. It depends on the service. It depends on the product, and depends on what you’re selling.
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Don’t be afraid to ask for what you think your stuff is worth. Don’t be afraid. I had a $10
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item Other day, and the girl’s like, $10 for this? Well, I guess since it’s handmade. And I
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was like, but you don’t have to buy it.
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Wow.
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Uh-oh. You’re going to get people Who are
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telling you that your things are too expensive. You’re also gonna get people who are telling
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you you’re not charging.
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And you’d have to be comfortable with how much you’re charging as As long as you’re making money
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on your product and you’re not just breaking even Right. You’ll be fine.
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And you have to comfortable saying, no. I’m not going to Give you a discount. When you’re selling
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a product and you’re doing pop ups, a lot of people tend to think that small business owners
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are desperate for money and will take anything, and most of us are not. Most of us know our
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worth, and it takes us a while to get there. When you’re selling a product and you’re doing
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pop ups, a lot of people tend to think that, Small business owners are desperate, you know,
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for money and will take anything, but you know what your products are worth. You know what that
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labor was like. You know What blood, sweat, and tears you put into it. So don’t be afraid to
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say, no. I can’t sell it for that. And don’t say, I’m sorry, when you say, no. I can’t sell
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it for that. Don’t apologize.
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So if you have any questions on anything, fashion business related. Please send it to us via
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email, via Instagram, or reach out to one of us on our websites. Just let us know. We will be
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glad to answer all your questions.
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I’m Leticia Winston of keeping your stitches with Naima Dozier of fearless threads And Zahir
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Dulkare with Regent Design Agency in Cover Me Chic. Next time.
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