Write Your Personal Business Plan
Is this the right job for you? That's the question. Let's write a business plan right now. What do you think? I think we can do it in a short amount of time. We're gonna keep it really simple and then you'll know if this is the right job for you. So do you have a home based business? Right here, are you aiming for $100,000 of sales? Or, do you have a commercial location, a retail location? Are you aiming for $250,000 of sales? Or are you aiming for a portion of that? So right now, make a commitment. Are you a home based or retail? Are you gonna work full time or part time? Those are the only two decisions you need to make right this second. If you are a home based business, write down $100, as your goal if you're working full time. If you're working part time, write down a percentage of that. If you're working half time, maybe $50,000 of gross sales. Okay, same thing for retail. Make it yours. What do you want? Now you get to decide, and you know what? If you know what you want, you're...
on your way to getting there. That's the hard part. Okay, so, your salary, just so that we're all on the same page, it includes your paycheck that you actually put in the bank. It includes the taxes that you have to pay to your state and the IRS. It includes any benefits that you pay yourself. Are you paying for your own health insurance? That's part of your benefits. Are you putting money into a retirement account? That's part of your business. Does your company match that? These are all cool things that you get to decide about your business. Does it pay any of your insurance? So this is where you get to decide what your business is going to provide for you, okay? That's your salary. So here's how this works. You guys just wrote down your gross sales goal, right? You based it on what was happening out there in North America. $100,000 for home based, $250,000 for retail or some percentage if you're only part time. Here's how you calculate how much you're gonna earn. You take that hundred thousand dollars and you multiply it by a percentage, and PPA says that it's somewhere between 35% and 45%. So you take that hundred thousand dollars, you multiply it by .45 for 45% or .35 for 35%, and then that comes up with a number of how much you're gonna pay yourself. So we start with the big picture, how many sales you think you can do based on what's going on out there in the country and then you say based on that, I'm either going to pay myself 35% or 45% and this is how much I can earn. Now, why is there a range here and how do you know which one is right for you? It depends what your expenses are gonna be for this business this year. Do you already have some of your equipment? If you don't, you are gonna need to buy some equipment this year. Okay, the $1,300 or $1,200 will tide you over for awhile, but you're gonna need more equipment than that. That is gonna come out of your overall salary likely in this first year. So if you know you have a lot of expenses coming for equipment or education or whatever it is you need in your business, you should probably only expect 35% for your personal wellbeing out of this total sales. If you have all of that already and you already have a pretty well dialed in business, you can probably expect to keep 45% of your gross sales. So as a business owner, you need to know that, okay? Just make that decision. The first year that you start working with a business plan, it's gonna be your best guess, so remember, it only has to be 80% perfect. The next year, you're gonna be 85% perfect because you're gonna have a history and you're gonna know a little bit more about your business and you're gonna track those numbers a little better. The third year, you might even be 90% perfect and then after that, who cares, right? So the same process works if you have a commercial location or a retail location. General expenses. This is how much it costs you to operate your business whether or not you have any sales. So this is if you pay an accountant to help you, even if you just pay 'em for your taxes at the end of the year, that is a general expense. Your marketing budget. How much was the marketing budget? $200 to start off, right? Rent or utilities. Do you need to pay rent for a space for a meeting room for sales with your clients? That's part of your general expenses. Your office expenses. These are basic things like printer paper and ink and staples and envelopes, things like that. Any additional equipment, so that 12, $1,300 goes here and then your education. What do you need to learn to pull this business off? Because hopefully you keep learning throughout the course of your photography business. Alright, so that's general expenses. Let's give you a budget. Okay, so it's the same process. You take that gross sales number that we talked about that you committed to just a minute ago and you multiply it by a percentage, and so again, there's a range of percentage. If you have a home based business where you don't have to pay rent, you're going to spend closer to 30% to operate your business. If you have a retail location, you're gonna spend closer to 40%, okay? So if you're just starting out, skip the rent. Keep that in your pocket for other important things like equipment and your salary and err closer to here. So home studio, we take that same hundred thousand dollars or whatever your target is, we multiply it by .3 for 30%, and this is our budget. We have $30,000 to work with. Okay, so I'm gonna say that one more time 'cause this is cool. If you can bring in this much sales this year, that means you have $30,000 instead of $1,300 to deal with for equipment and operating your business. Does that seem like something you can do to purchase the things that you need? Yeah, that's way better, right? There is good news about buying lenses and fun things, right? You just have to earn this to get there. That's the important part, right? And that's really why we have a business is to earn money, right? It's way more fun to just give our images away and not worry about the business. If we're gonna take on the business, this is our target, $100,000 or $250,000 if you're talking about a retail thing. Okay, so the question earlier, is this business right for me? This is the answer. Am I willing to charge for this dollar amount and make it happen? Because just like going down the Grand Canyon, it is gonna be beautiful and tranquil at times and it is going to be terrifying at other times and if you are willing to brave those terrifying parts and keep charging ahead, it's amazing and it's the best career choice I can recommend to anyone. We love it, but it's not easy, okay? So cost of sale, the last category. This is your last budget item. How much does it cost to produce your product? So this is your lab bill, your printing bill. It could be albums if you're making albums, it could be frames, it could be packaging your product. Anything that you hand to your client, that goes into cost of sale budget, okay? So if you ship something to your client, a product, that goes in your cost of sale budget, okay? If your lab charges you shipping to ship a product to you, that's all part of your cost of sale. So let's come up with the budget for that. Cost of sale is the same percentage for retail and home based business. 25% is the recommended amount to spend to produce your product, okay? So again, we take this hundred thousand dollars of sales, we multiply it by .25, and we come up with $25, for our budget to make our product. Alright, oh my gosh, you guys just wrote a business plan. It was easy, right? So now you know what the budget is. That's actually the easy part. Making that happen, that's where the work comes in. But I'll tell you, our first couple of years in business, I didn't know any of these numbers. I was guessing, wildly guessing. I had no idea how much a photographer should expect in sales. I had no idea how much a photographer should expect to earn and I was way off. I will tell you, in our first few years of business, we did not make much money. Like, less than $10,000 for two of us working full time. Ouch, right? The year that I discovered this data, we hit it. Nailed it, because I knew what I was supposed to be doing. That gives you power. That's what's amazing. So now you guys know, you just skipped the first three years of flailing, right? So now that you know these things, let's go back to that original budget that we talked about. What equipment do you need and why do you need it? This question you will ask yourself for the duration of your time in this industry. Peter and I have this conversation all the time. Peter says, oh my gosh, I need a drone. What are you gonna use a drone for? Why do we need it? Who are we gonna sell those images to? And either it's a good investment or a bad investment. It's always fun to have a drone, right? It's not always good for your business, so what did we do? We bought two drones. (laughing) We use them all the time. So what equipment do you need and why do you need it? You could also print that out above your computer and just put that there. Why do you need it? What marketing tools? Marketing tools bring new customers into your business. What do you need, why do you need it? Okay, if you don't have customers coming into your business, it's a pretty big deal. It's almost impossible to get a hundred thousand dollars of gross sales without any customers, right? But the cool thing is, there are so many free ways that you can market your business. I can almost guarantee that if anybody calls you out of the blue and says, I have a great way for you to get new customers, you just need to say no thank you and hang up because it's probably not in your best interest. Okay, there's tons of information online. Search how do I market a new small business? Tons of ideas out there about how to do this for little or no money for marketing, okay? The basics, do you remember what they are? Business cards, gift certificates, and a website. Those cost money, those are good investments. 200 bucks, easy. Alright, what sales tools do you need? You need to have samples of your product and you need to have a meeting location. That's it, and your clients love it when you come to them. Check that one off the box, right? Alright, and then your other expenses, so this was your attorney, your CPA expenses to get your business started properly. You don't wanna make a mistake when it comes to the IRS, right? Big deal. Do that one properly. Insurance, do that one properly. Also a big deal. It can ruin your life, really, if you are caught in a lawsuit, so make sure that you have your insurance. Now, so here's the budget laid out. This is your home business. This is a business plan. Your salary, $45,000 if you can make $100,000 of sales. If you spend your money carefully, this could be even higher with that same amount of work. Your general expenses, $30,000. How much it costs you to operate your business on a day to day basis, including equipment and other things. Now, I put this little deal here. Your initial investment. This is what this class is based on, $3,000, right? That was the promise, okay. That's coming out of your general expenses, so after, you're gonna pay yourself back for that. Then after that, you're gonna have $27,000 left to spend to run your business, okay? Your target should be to have that money back in a month, two months, okay? It's really important to pay yourself back that investment. Then to make your product, $25,000. Business plan, I bet it's not what you thought, huh? It's a little easier? This won't get you a loan from a bank, but if you do all this right, you're not gonna need a loan from a bank, anyway. Alright, let's look at the retail one. Same thing, your salary, $87,000. That's the average. $100,000 to operate your business. There's that upfront investment, either way, $97, is your budget. $62,000 to make your product and this is your sales target. I think it's interesting. This is always the hardest part of any workshop that I teach because this is reality and I think people come in to this business and they're like, yay, we're gonna go make photographs and it's gonna be fun and it's amazing and I love doing images and this is how it really works. This is what it's like running a business. But I think the really amazing thing about all of this is you get to control your destiny. You can choose where to spend your money. If you wanna spend less money on your general expenses, you can add it to your salary. If you worked for any other company in the world, would you ever be able to make that kind of a decision? No way, right? You are in charge of all of this, and so, thinking about all of this, it's kind of sobering, but at the same time, it's empowering because you know what to expect and you can change it. It doesn't have to be this way. It can be any way you set it up, but this is what's happening out there in the world.