Business Plan Q & A
We've come to the end of the business planning. Hopefully it wasn't as scary as you thought is was going to be. And you know what, all the plans are this easy too. So what questions do you have about the planning part of a photography business? This is the overview. And in creating your ideal photography business through CreativeLive, there are really specific examples of exactly where those general expenses are spent. So, how much should you actually spend on education? How much should you spend on equipment? It's very detailed. This is the overview, the big picture of running a photography business.
What adjustments did you make after those fist two years?
Oh, that's a great question. So the question is, what adjustments did you make when you went from making nothing to actually making something? The biggest adjustment that I made was that I implemented wine Wednesdays. (laughter)
That is not what I expected.
So let me tell you about wine Wednesdays. They're fantastic. I high...
ly recommend them. It's the day that I do my accounting. And you don't have the wine with the accounting. It's after, it's the reward for doing it. But basically, I started entering all of my financial information into an accounting program and I started looking at it. And I started sharing that information with Peter. We looked at how much we were spending on education, for example. And I realized that we spent $15,000 on education and brought in $40,000 of sales. That is a stupid decision. Right? That was my entire salary. And while I needed to be educated I wasn't choosing the best platform for that. And so I can look at and say, alright, maybe I won't go to New York for a workshop. Maybe I'll learn something online. Things like that make a big difference. When I was looking at buying equipment, instead of saying oh we need a drone because that will be fun, I'm like how is that going to help our business? This is when Peter and I had- this is probably the hardest part in our marriage. Was deciding what was really important, that would make us money verus what was just fun and something creative and neat to try. So looking at those numbers online Wednesday and analyzing everything and saying, okay, what's a good decision for our business? What's a bad decision for our business? And being on the same page together changed everything. Because the best decision for us was to actually put money in our pockets.
I expected to hear something more about sales and pricing.
Ah, so that's the interesting part about it. So our sales and pricing we started our really well. We had a great mentor. We started out with packages that were six, seven, 800 dollars. So we didn't start with really low prices. We knew that off the bat. Our sales strategy was rock solid, again because we had a lot of eduction. We had a lot of great mentors. What I didn't know is that I should be aiming for $100,000 of sales versus $40,000 of sales. Because I thought, oh my gosh, $40,000 of sales. That's great, I should be making $40,000, right? Which wasn't the case. Again, back to wine Wednesdays. So it wasn't that our prices were off. It wasn't our selling strategy. It was just that we weren't selling enough. Okay? So that is what, it was the whole tipping point. I always think of a business as a teeter totter. And this is the amount of money that you bring in. It's the tetter totter. How you spend that money shifts either way. You're on this side, everything else is on this side. And you always want yours to be higher than what you're spending on everything else. And once we started looking at that data we started keeping 60 or 70% of every dollar in our pocket. And that's when we really started making money. We found out we didn't have to double our total sales to double our salary. We could just spend less. Pretty ingenious, right? You don't really have to work any harder. You just spend less.
When you're looking at the business how do you determine whether you're going to be in a retail space versus working at home? And from looking at that, how do you, if you're going to go the retail route, how do you get into that?
These are also great questions. It's about how do you know if you want a retail space or a home based studio. I will tell you the Peter and I agonized over this for years. Because in our mind, we thought that the pinnacle of success was to have a retail photography studio. We had really made it if we had a retail location. Because then we were professional. And that was our preconception of success. After being in this industry. After over 20 years almost, or almost 20 years, I can tell you I wish that I knew at that very beginning what I know now. We have a hugely successful photography business in an RV. Right? And so you don't have to have a retail location to be a professional, successful photographer. We did a great job out of a coffee shop. Our clients loved us. We had great sales. We did a great job out of our home theater. We had great sales and our clients loved us. We did a great job, we do a great job out of an RV. We have great sales and our clients love us. And so what I can tell you after all of these years of doing it, it doesn't matter if you have a retail location. What it comes down to is what you're comfortable with and what your clients are comfortable with. And if you're willing to spend $3-10,0000 a month to have that space. And to me, that $3-10,000, I would just assume not earn. I'd rather go out kayaking with my family. So it really comes down to your personal preference. And your comfort level. But I can promise you that if everything in your business is professional, from how you interact with your clients, the work you create, your presence, your brand. If all of that is professional, it makes absolutely no difference if you have a retail location verus a home location versus no location.
When you're showing us those PPA numbers of the average salary, and the average amount of sales that you have to earn, is it reasonable to expect to make that 100K if you're in your first year of business? Since he's assuming that many of the businesses in that average may have been in business already for a number of years. So what kind of expectations should we have for ourselves?
That's a really good question. So I think it would be super crazy ambitious to have the expectation of $100, if you are just starting your business today. However, I think that it is very reasonable to have that expectation in year two. Or no later than year three. Okay. And the reason that I say that is because this first two or three months of starting up you are going to be super preoccupied with your website and getting your products together and developing your brand and your marketing strategy that you're not going to have as much time for client work as you will in a year. But after this warm up period, depending on how focused you are and how driven you are to get things up and running, then I think it's very reasonable to expect that the second year. Okay. And even the second half of the first year you shouldn't spend more than six months getting all this together. Peter and I just are rebranding right now, our business. And so we just spent the last two weeks redoing our website. Check, that one's done. We've been working on rebranding. We're working on new product offerings. I think you could do it in a couple of months and then you better jump out into the world and start getting those clients in your door because that's really important. The other thing that I think will help you do this with a burning intensity, is if you have to make money. So when Peter and I started our business I was pregnant. We had just bought a brand new house and we both quit our jobs. And I can tell you that there is nothing like that kind of pressure to get clients in the door. And so I would not recommend that on anyone, however, I think that if you act like you have that intensity of pressure to make this work that it can happen very, very quickly. Give yourself a year, then you better be on it.
Continuing that notion, since we are talking a lot about getting started, there's so many different scenarios on where people might be, but a couple things we have William, who is asking as a teacher, is it viable to set up a business for only the summer months. And those break weeks. So how would you approach the business plan of say, this is a part time thing or a seasonal thing? Do you just break those numbers down into kind of the smaller amount? And is that viable?
I think it absolutely can be viable and I think teaching is the best profession to make it viable in because you have chunks of time away from your normal job. I think an ideal business for a teacher would be a wedding business because a lot of weddings happen in the summer time and so you would just have to book clients throughout the winter, which wouldn't take a lot of time. And then you can shoot in the summer and do the hard work and then you can go back to your normal job. I think for portraiture that would also be a reasonable model. So when I think about a teacher I think of a ten month schedule. So to me that means you have two months of full time work and then you have some part time work scattered in there. So I would recommend maybe you would expect a fourth of what a full time photographer would be making. So base your numbers on $25,000 instead of $100,000.
Silver heart says what if you are interested in wildlife/nature photography? People who are not interested in doing portrait work but do want to have profitable businesses, we have people who are wanting to focus on landscape, nature, art- can they apply these things as well?
Absolutely. It's the same principles. And so you can expect the same dollar amount to produce your product because likely you are making framed prints. So 25% to make your product. Your general expenses will likely be less because you're not really meeting with clients. You will still have advertising costs. You might not need the same kind of insurances so those are going to be less. What that means is you can shift those to your profit. So all of this applies to that arena as well. Your sales strategies will be a little bit different. You're going to be working through galleries likely or through stock agencies or through online shopping carts, but the principles of the business plan are going to be very, very similar.