Background on Maker Works’ Finances
This page covers the financial state of Maker Works. If you’re interested in helping, please see this page!
Maker Works launched in 2011 by Dale Grover and Tom Root as a for profit entity. In 2020 the decision to transition to a Non Profit was made, and in June of 2021 Maker Works Community Workshops received it’s 501(c)(3) designation. Our gross operating income for 2021 was approximately $223,000 (about $18,000/month), not including grants, consulting, and corporate memberships. Our gross operating expense for 2021 was approximately $355,000 (about $30,000/month).
As of 3/4/2022 we have about $104,000 in cash, and nothing owed to the landlord or the past owners. In 2021 we received some grants from a local foundation and a few donations (Thank You!) that helped provide the initial runway we’re on. Without those grants, our average monthly loss in 2021 was $12,000. For 2022, assuming no significant change in our income or expenses, the cash on hand is no more than a year or so of runway and is not sustainable.
We have already started some initiatives, but need your help in continuing to change that trajectory. Our current average loss for 2022 is down to $10k / month. This document provides some background and suggests a path forward that emphasizes an increased capacity around marketing and membership. We hope that by being transparent about our current situation we can move towards a more accessible and sustainable makerspace for the greater South-Eastern Michigan area.
Current Revenue
Membership
Membership makes up 45% of our current operating revenue. (Estimated to be around $8,000 a month currently.)
This is where we have the largest investment of assets. Delivery of membership is one of our biggest strengths. We have plenty of capacity.
Licensing ("Rent")
In 2021 licensing made up 33% of our operating revenue ($6,000/month). We’ve recently added four new studio spaces, and our existing licensees (Thank You!) have agreed to increased rates. As of March 2022 this is now contributing closer to $8,000/month.
Classes
Classes make up the remaining 22% currently of operating revenue (around $4,000/month). We deliver great classes, and have plenty of capacity. Starting in March of 2022 we will be introducing new Make & Take classes that should appeal to a wider audience base to help introduce more individuals to our shop.
Events
In the past, events (such as the Great Maker Race) have contributed about 5% of our operating revenue. (But events may satisfy other mission elements.) As of March 2022 we have two upcoming Great Maker Race events.
Grants
While grants have played a fundamental role in MWCW's start up and we are looking into grants that match our mission, we do not have specifics on the table at this time.
Paths to a Sustainable Future
Decreasing Expenses
It's unlikely we can decrease expenses significantly, though
--we would like to explore rent reduction (perhaps indirectly through a separate donation) or a reduction in building cost through ownership.
--it may be possible to reduce staff hours a little if volunteers were to fill that void. Staff spend most of their time maintaining equipment, on-boarding new members, giving tours, and teaching classes. All pretty important stuff.
In fact, we have a long-term goal to increase the hourly rate we pay our staff, from a low of $12/hr to closer to $15/hr, and would like to have health benefits available to our staff.
Grants To Add Capacity
One possible path is to seek a bootstrap grant for a new staff position--marketing, membership, and development. This person would work on increasing revenue in our core operations (membership and classes) by increasing the flow of new members and class attendees, and also work on grants and retaining members. If you know of any grants that you think would be a good fit, please let us know
Alternatively (or in parallel with), invest some of our reserve into the position (e.g., for 3 months). Keeping doing what we're doing isn't going to get us sustainable.
Grants For Operating
Are there (local) entities that appreciate the impact we have on the community? And that would be willing to help subsidize our operations on a temporary or ongoing basis? Let us know! Such as
--(local/state) economic development
--local (/state?) government
--corporations (e.g., Honda, Toyota, Ford, Google, etc.)
--foundations (AAAF)
Issues:
the treadmill of grants.
Time--2 years would be a more realistic timeline even if the grant was assured.
expertise to apply
Grants For New Programs
Going after grants for creating and operating new programs such as
--maker bus
--6 month entrepreneurial maker
--workforce development and support for post/alternative incarceration programing.
--etc.
However, these might not add to our operating revenue--the costs of the new program may only be met by the grant. Takes our energy away, potentially, from the core mission and work of operating the physical makerspace, and therefore moves us away from a long term sustainable future.
If we are on more solid footing, this might be a way to expand our service.
Fundraising
Who from? From our members? The general public?
We’ve made it it easy to donate to us.
Does it take us away (time, energy, focus) from our core work and competencies?
Consulting
We have had a dozen or more relationships that did not work, but one relationship that did end up with realistic consulting work and significant ($50K) revenue.
Increasing Operating Revenue
Among the paths forward, we could stumble into grants or other revenue that would make up our deficit. It seems unlikely, however, that any organization would commit to indefinitely funding our deficit, which is just postponing another day of reckoning.
Far more sustainable would be increasing our operating revenue--that is, income associated with our core activities of classes and membership. We have more than sufficient capacity in classes and membership to greatly exceed a sustainable financial future.
Marketing
Many people in our community do not know we are here and what we offer. They may or may not even have heard of the concept of a makerspace, so wouldn't know to look for one locally. Without the aid of a professional marketer (let us know if you can help!), over the years we have tried the following:
Google Ads:
--Ann Arbor Makerspace, aimed at people looking for a makerspace
--Fabrication tools, aimed at people looking for fabrication services or tools (such as welding, woodworking, etc.)
--These have not been running for a while
--We were just approved (late October) for Google's Nonprofits Ad Grants, which give us $10,000/month in ad credits, subject to ad performance.
Direct Mail: Hyperlocal to businesses and residences within 2 miles ("every door direct mail"). Not productive at all. (We just tried once, a mailing of several hundred.)
Targeted Direct 3D mailer: We made a fancy trinket (a game that played tic-tac-toe) using many tools in the shop and mailed about 100 to local businesses that might need fabrication services. Minimal (1? 2?) responses, at a cost of $10 or so per business.
Events: We have been at every Maker Faire, Mini Maker Faire, and Ann Arbor Creativity and Making Expo.
Articles in Observer: We've been featured a few times and this did bring in people.
Social Media: Limited presence, but our Facebook page is 2-3x weekly.
Newsletter: We have a newsletter that goes out about once every two weeks and is very nicely produced. It goes to 4600 people, including folks who have not been members but just want to be on the mailing list.
Marketing--Audience
An important question is who our target audience is. Most of our members are not hobbyists, but derive some income from their activity in the shop.
Membership
Membership is ideally recurring as long as the member has a need for our services. By offering fine-grained membership, we try to keep fees low, but a lack of cost for starting/stopping membership leaves us open to members not starting up again because of momentum (they are at rest and will tend to remain at rest). (Compare with health clubs whose patterns are aimed at optimizing revenue, not the economic good of the member.)
In order for membership to be useful, a person needs to be "checked out" on the tools they want to use. Check-out classes are thus a barrier to membership.
Another barrier to membership is the transition from check-out class to independent tool use.
Typically we invite potential members to come by for an in-person tour. Our website, which breaks down the tools into different areas (wood, metal, etc.), does give people an overview, but we do feel it is much more interesting and motivating to see the shop in person. This tour takes 45 minutes or so, and covers both the physical space and tools, as well as how it works and what a good next step would be (e.g., signing up for a class).
Classes
We offer three different types of classes:
1. Check-out classes: These are our main offerings. A check-out class is required in order to use a tool. They range from 15 minutes (which may be free) to 4 hours, and average in cost about $30/hour. We've priced them so we can pay our staff to deliver the class and break even for 1 person. We will run the class with one person in it, but can usually accommodate up to 3. People only pay for a given check-out class once--they can take it again if they wish.
Check-out classes can be scheduled at the person's convenience, but that takes some back and forth unless a class has already been scheduled and works for them. This is another barrier to membership, the time and effort it takes to schedule a class.
2. Skill Development classes: These are optional, and go into more detail on using machines or various techniques. In some cases they might not involve our regular tools (or do so indirectly). They often use "outside" instructors, such as a leather expert. Pricing is variable, and dependent on a number of factors. These represent a very small percentage of classes at the moment.
3. Make and Take classes: These offer the experience of making a particular thing rather than learning in general how to operate a tool. They will usually target hobbyists rather than professionals, tending more towards craft. At the moment they represent also a small percentage. However, we have hopes that they may function as a marketing tool (e.g., our Household Tools class).
We also offer longer experiences, such as the 5-day long Makerspace Operations Bootcamp. This draws from across the US, though usually with strong regional representation.
We have discussed offering "destination" packages of classes, for example a weekend of CNC-related content, mostly just re-packaging our existing classes and adding some meals, etc.
Transition from Class Attendee to Member
Many people who take a class do not then become members. The tool may not be what they thought it was. They might just want to take classes, not make things. Or the tool may still be too intimidating to use on their own.
We believe investing in the creation of more "bridge projects" could help. A bridge project is a simple project that is documented in a Standard Operating Procedure (SOP), and forms that bridge between the supervised and directed experience of the check-out class and the unknowns of trying to apply that tool to your own project. It can also form the template for simple variations.
A limited form of membership--e.g., a few hours to follow the bridge project SOP--and some materials are provided as part of the check-out class. This gets the person back in the building to exercise their skills, and hopefully gives them success being on their own.
Where to go from here?
For 2022 our focus is primarily promoting and filling the existing available capacity. Sounds boring, but what we do every day is pretty amazing! Once we’ve stabilized the ship we’ll shift back to reviewing our vision and long term goals. Here’s what we’re doing to change our trajectory, please let us know if you can help!
Today we’re supporting approximately 130 members, but the shop can sustain significantly more both in physical space and classes to teach. We need help introducing more individuals and groups to the shop!
We’ve increased both our shop studio rates (Thank you Licensees!) and the number of spaces available. While we don’t have much space available, it never hurts to get on the waitlist.
We’ve provided an easy way to donate online to Maker Works Community Workshops.
Corporate / Organization Memberships and Corporate Sponsorships have both recently launched!
We have a board member looking into grants. If you know of a foundation, fund, or grant that could support what we’re doing, let us know.
We’ll be updating our blog by the 1st Tuesday of every Month with a financial update, what our goals are, and how you can help. Thank you for listening.
Profit & Loss - 2021
Common Questions
How can I help?
We’re so glad you asked, please see our ‘How To Help’ post!
What happens if you run out of cash?
We’re having this conversation now so that doesn’t happen. Should that become a concern, we’ll be very public about any planned changes to our day to day operation at least two months ahead of time.
Should I be concerned about purchasing an Annual Membership if you’re worried finances?
Short answer is: No. Why? We follow Generally Accepted Accounting Principles and are tracking what we’ve received and what we can treat as earned income. In other words: If you purchase a year membership and six months later we close, you’ll get 50% of your membership fee back. While it’s easy for anyone on the internet to write “Just trust us!”, we are happy to review our books with you. You can also pay for monthly memberships or make quarterly payments
Questions about the Profit & Loss Statement
P&L: Under 41000 Grants and 41500 Cash Donation I see some significant contributions?
Those are one time anonymous donations that helped provide a runway while transitioning from Maker Works LLC, to Maker Works Community Workshops 501(c)(3).
P&L: 49000 Licensing Fees bumps up and down a lot, why is that?
Licensing payments tend to come in just prior to a month ending, or just after a month begins. Some licensees pay for two months at a time. On average in 2021 this comes out to around $5,700.
P&L: 61800 Wages sure is a big number, can’t we fire some staff?
Staff spend most of their time Maintaining Equipment, Teaching Classes, On-boarding new Members, or working towards increasing our revenue (see “How to Help”). Eliminating staff at this time would mean equipment breaks more often (higher expenses), classes don’t get taught (less income), or members can’t be helped (less income). We do not plan on ‘saving ourself to prosperity’, and in fact have a desire in the long term to increase wages and provide health benefits.
P&L: 74200 Rent Expense for September 2021 was $75,616!?
For a little over a year we were only paying half our rent due during a portion of the pandemic. Once we had a significant donation to help cover the back rent, we paid the back rent to our landlord. Other months are a little high/low due to a miscalculation. Our rent as of 2/27/2022 is $11,324.00.