Profit Goals with Student
I could sit up here and kind of just plug in random numbers. But it's so much more fun to do it with a real live person, somebody who is in the middle of of running a business. And we can use, you know, your numbers. And I want to be very clear to everyone here that this is this calculator here that we're going through. It's just a rough calculator. It is by no means gonna help you predict down to the dollar how much money you're gonna have. The year you're gonna have expenses that come up as you go. You're gonna have extra bookings that comes. You go. But what it does is it allows you to plan. This should be used as a tool to plan. And everyone who purchases the course is going to get a copy of this. Right now. What I have up right now is a package one. I have one for all the card as well. It's designed to allow you to calculate and look out. You kind of write down for starters and caught in the box A You go with the fixed costs and then once in of the fixed costs figured out. We move...
on to looking at how much you're gonna be plan on booking that year. And so that's what we do in B, C and D. So let's go ahead and go through this. I think it's been a fun little example, and at the end of the day, we'll kind of have this number for you. Okay, so and I want you to just answer these questions. Let's look it, since we're really more than were the 2/3 of the way through 2013 let's talk and you just moved in Virginia, so you probably have no clue what to really look like. You're probably like, Trust me, I know exactly what you're saying. Let's let's let's do this for 2014. This is really meant to be a prediction model and not meant to be looking back. This is not meant to look back at your numbers and be like an accounting method. This is meant to help. You kind of forecast where you're going. So let's talk about 2014 now for the first category. D anticipate having any rent? No, no studio. Okay, so you don't the studio. You need to put anything here in this number. If you did have a studio, you'd want to enter your the amount you have spent. And you want to do this in terms of the yearly cost, not in terms of the monthly cost. That's something that people always ask if you're filling out this form back at home later. You wanted this in term of the yearly cost because they were looking at this on a yearly basis. Let's talk about insurance to have insurance for your business. Yes, it's about $400 a year. 400. All I want is is I don't want I don't need, you know I don't need exactly. Did you probably know that you're like, I don't have that in front of samples to show your product? All that kind of. How much do you think you'll probably invest in that in 2014? Trouble. About 200 will just say to our first somebody said anybody to come along and help you with, you know, blogging or email and like, this is not shooters at the wedding. These air people to kind of help in your studios kind of in that fixed cost category. Remember, we talked about how fixed cost It would be somebody to come help in the studio help with anything from marketing email. Actually, I would put marketing, marketing, but email scheduling, kind of those daily tasks, all that. Not at this point. I didn't change your mind by just talking about it more. I kind of love those tasks. Sort of little, Oh, city marketing and advertising. It is a tough one. You just move down into that area and you're probably thinking, I don't really know what the costs are gonna be. But again, this is just a prediction model. How much should be put in for a yearly cost for you, for marketing advertising for next year? 1,000,000? You're not getting magazine ad. Can't get one with that. I think I mean, yeah, I have no idea what bridal shows are, but that would be an idea or just print materials looking for Okay, so Web. This includes not only your website, your blog's site, whatever it is that you have there for your web presence, but also includes, you know, you're you're hosting of images after any of your chutes, that sort of thing, as long as it's not a variable, cost more. If it was a per prevent cost, that's different. But if you pay, like a monthly fee to host those images Ah, monthly fee for storage, for bandwidth, for your website, all that kind of stuff that would go here. I think about 6 56 50 Good. How about the cost of networking? There's always a hard one to figure out. Um, do you have a rough number? Or maybe you can think of it more in terms of Well, I want to spend X amount per week and so I can figure that out that way. Right. Well, we talked. Um, we talked on the first day about metrics, and I said I wanted to connect with at least two vendors a month in that kind of thing. So, um, maybe for the whole year, maybe about if we did dinner. Maybe about $500 5 hundreds of good number equipment. That is always a tough one to predict for. What do you think equipment costs are gonna be for you in 2014? I've already been saving a little bit so probably about is where it's dress a little bit more fun once we get out of the box. The big A column. You know, this is kind of boring, part bookkeeping, tax prep, Remember you saying and we were talking, I think, during one of same issue that wasn't something that you were doing right now at this point, no. But it's something I want to do, okay? And I have no idea how much it cost. Yeah, it depends if you want outsource all your booking in tax prep that that you know it just vary so much between the business. If you haven't done it before, let's just put it's also in your area. Let's put 1500 in. I really don't know how much it's gonna cost you at all, but we'll put that number in seeing at least have something there. It's always good to put a number of miscellaneous category, even because this is also kind of like I don't know how much it's gonna cost us category, and these are all fixed costs are all the fixed cost. You 203 100? That's a 500. Let's go high sounds good. It's just a prediction model, you know. So now let's talk about your packages, and I know that yesterday I kind of, you know, ripped everyone's packages probably to shreds, and it was like, I don't know. My packages are now because I haven't got the chance to redo them, thanks to you. Just blow them out of the water yesterday. But let's try to take and let's just for the sake of today's argument, let's take your packages that you have right now. And how much are you charging for your starting package? 2500 2500? That goes into the package price, and how much does that cost you in variable costs? How much do you have to spend if I feel that package $275 figured it out? I only told her at lunch that I was picking her, and she's already got it figured out. She's definitely numbers girl. How many of those do you think you're gonna book next year? And again, we're having to make some predictions, but here's what I'm going to show you down the road is when we get done with us, you can changes around, and we can use this to predict. That's the fun part. Just give me a starting number that you think you might use to predict you might use for bookings. Well, I'm hoping that I'll be able to book about 10 weddings. Minimum just moved. There have no idea what's gonna happen. So it's kind of my goal for this coming year. So with your little break down the way to winning, I like it. OK, great. Lets move down here to the middle package and let's do the same thing. What's our package price with middle of 323,200 and the variable cost. What does it cost you to fulfill the things that are in that package? 5055 Your detailed. I like it. And let's see here. How many of those you in? Just a booking. Six. Okay. And we'll look at the top package. How much for the top package? 39. How much does the top package cost to fulfill? and two. We had 10 and we already used eight. Okay, so right here we have down here in box B 38 that you're looking at making $10 shy of $20,000 next year? No. Is that what you're gonna make next year? Definitely not. You might make more. You might make less. But here's the cool thing about this. This is a prediction model. So now you get to go back and tweak things. Now you get to go. OK, How much do I need to make? If you said 25,000 then now you get to go back and say, Well, I can't spend that money on the equipment. Or I have to book an extra wedding or I need to book at least 11. I need a book. At least 13 weddings. What happens if you book mawr of your middle package? You know what happens if you actually right now are looking 40% of your bottom package, and that only leaves you with 40% of your middle package. You can see how much that affects your numbers. Actually, not a whole lot only cost you extra $1000. And, you know, maybe now you're saying, Well, I want a book more My top package. You know what happens? It isn't set up to I wrote a book eight of those. You know, that's where you really see the jump is when you book that top package of yours. So what I'm really getting that here is that you have a prediction model that you can use and you want to establish this for your business. You want to be able. This is the point of knowing a general rough idea of numbers. It's so you can use it to make decisions. You know, we're photographers. Most of us don't love the numbers aspect here, but the point of having your numbers so you can use them to make some predictions and so you don't get caught proverb. You know, at the end of the year, not knowing what happened and falling short financially, and I would never advocate that you have to, you know, get a degree in accounting or in finance to try to understand a small business owner, though you need to have a healthy respect of numbers. You need to kind of be fearful of them. They always kind of afraid of things, and it kind of makes you a little bit a little bit more on edge when you're around that and this is meant to give you the tools to make decisions. It's not meant to be a bookkeeping system. It's not meant to be something you hand your account. It's meant to be a prediction model for you to use to make decisions, going forward and to kind of play around. You can now see what happens when you want toe forecast for I really want to get help with my with my email. How much would it cost? Add in an assistant for you know, if I do 10 hours a week that I'm gonna have $ a year to that, and you can really see how that affects your bottom line. You can see what it cost. If you wanted to factor in, you know, maybe sending a few of those weddings over to shoot dot edit. You can see how much that would actually affect you within a year. If you want to bring on a bookkeeper. If you whatever it is that you want to do, you get the ability to plan ahead for it rather than being stuck with the bill when it comes on you cause you weren't able to plan for it. And that's really the point of the prediction model is I want to give you that tool to predict what you will do You can use in your own. You don't need my form. I mean, you can see what it does. It's very simple. You can construct this in five minutes and excel. It's not that hard. And trust me, there is absolutely no rocket science involved in this one even made the column or the some of the columns are soothing that rose red. And that's that. That took about 30 seconds. So, you know, if you're, you know, building the boxes. And the other thing I have over here is I have the one for the all A cart side. So if you book in the other cards side, it has the base package, and then we have all the extras. Now, the great thing about this is I would imagine you're probably going to try to sell a little bit after the event or you're gonna plan on science and portrait sessions. You know, you're probably not just going to book these weddings right here. You're probably gonna have some extras that go along with that. And so the great thing is, you know, if you are a business that has both weddings and portrait's well, then you can have your fixed costs for the entire business. And then you can set up two of these. You can set up one right here for the weddings and another one side by side that for the portrait's and they both add up together. Or if you also think you're gonna book off your Allah CART list after the wedding or after the portrait session or after the event, you have this one right here that sets up how many, eight by 10 by 10 hours you think you're going to sell. How much do you charge for that? What are the costs of social with that, and what's the net profit and where do we end up with total profits? You want to develop these models, and this is something I've been doing that bomb and photographers ever since the beginning, and I feel like I've always been able to stay ahead of the curve, had the game when it comes to numbers, and it's helped me a lot because I've never really had to. It's don't get me wrong. It has been stressful. There's always stress involved in the finances of running a business. That's inevitable, I think. But and maybe it's maybe it's no better to find out about the stress ahead of time. But I feel like I find out about things that are looking like they're gonna be harder in advance, and so it gives me an opportunity to plan and prepare for them. It's almost like what happened when I had that consult. I'm sorry, the coordinator kind of shake me and say, No, no, no, you won't see the results of the economic disaster until next year. This is kind of like that shake. It's kind of like, Oh, I can see what my financial situation might look like next year by having this is a prediction bottle. So, yeah, we have some questions out there started to give question. If you do weddings and portrait's, if you suggest doing to separate worksheets like this, you know, I'd say to keep it on the same work because your fixed costs can't really be separated by wedding and portrait. And so what I would do is literally just copy all of this and move it, you know, duplicated over here on this part right next to it. And then you have one for weddings and one for portrait's. Because the income you know what you're charging. The variable cost those change for weddings, importance. But the fixed costs they are the same for your business. No matter how many different niches you have, no matter how many different things you dio. Great question. Any other questions here from From In Studio, there are some some questions from online. Have some amazing questions. Good online, this one hot off the presses from Maurice Burke. Thanks Marie's. I think a lot of business owners can probably relate to this. So he is a graduate business student and photographer and find it. He's finding it easier to figure these things out from other people and not for his own business. Do you have any idea of what I can do to get out of that zone? Yeah. Find another person like you and have them help you out with yours. Accountability and not just accountability, but trusted peers are so valuable. I mean, I've shared a few two of my peers already on this course, Jeff and Jason and these Air piers. I consider them to be mentors, though on I really do. And it's important to surround yourself with people who could help you out with these things. There's a huge trust him, but I can't tell you how brave I think it is of you to come up here and just tell the world. Actually that the whole universe now today, the whole universe is turning in today. It was just the world yesterday, but about your numbers, and it's really hard to do that. And so you do have to find someone that you can trust with that. But it's very important. I've had help all along the way with setting this up, and this has not just been me. I did go to school for business, but it sounds like he did as well. And so you know, it helps to surround ourselves with people who can keep us in line and who, who we get permission to call us out to say you're spending way too much money in that category. Um, what you know, you need to be charging more for that package. Are you crazy? You need to have a better margin, that you need to have someone that you empower with the ability to call you out to say what really needs to be said. Yes, Hannah, I want to let you know that the Internet really appreciates you up their first Dom says. I am so grateful to the people who put themselves and their info out there for out there for us because they're all learning. They're like putting their numbers pens paper right now as you're appears. Well, so thank you and Melissa Maza, Motion Design and Teddy Bear. Also Happy birthday to you Cool. And you know, I think the accounting part numbers for me is really, really scary, but curio. So just put it in words for me. He's like it's digital art weight, but it that way it's not so scary and like when you put it all on paper, it's like achievable, I think. Sure it has. You know, it's it's it's hard to. It's hard to make these sorts of it gives you clarity in making decisions. It has so much to do with giving you the power to see down the road rather than having to make decisions in the moment, you know? And I watched so many of my friends who are business owners who have to be forced to make decisions that aren't the best decisions simply because they didn't prepare. And sometimes it wasn't even their fault. Sometimes things happen in our business and in life that were there, they cost us money that we weren't really planning for. And that isn't something you're really ever gonna be able change. But these are things that we can plan for. We can plan for some of our costs and our expenses. We do have a general idea of how much we're gonna need to spend. Some of these numbers are gonna change. We're gonna look back and be like, Oh, my gosh. I had no idea that I was actually spend $3000 on marketing. And oops, I spent triple on equipment and good. I actually booked eight of those packages and not for you know, these things aren't gonna ever stay set in stone, but it gives us a head start on when those those random things come up and we have to make split second decisions. At least we will have planned for as much as we possibly can and prepared for that. Awesome. Okay, the questions are starting to come in. Now, This one from Melissa Mas o. Do you recommend keeping to worksheets? One for planning and one for keeping track of the current year. What if you really want you definitely wanna have an accurate count of where you are, and your bookkeeper will always go to provide you with exactly where you're at. So I actually wouldn't recommend using this worksheet for where you're at. I really would recommend using actual financial software to keep track of where you're at. I know that. You know, Nineteens provides that your local bookkeeper can provide that If you use QuickBooks on your own, it will provide that. If you keep track your books on your own, it will provide. It'll provide an actual snapshot of where you are financially. That's where I do it, because you just now you're doing double work with this too. If you use this for financials, you still have to input it somewhere. So you keep track of taxes, and so you might as well just use the reporting features that come along with your bookkeeper, Come along with the company you're using or come along with the software using to keep track of where you're at right in the moment. This would be better for a prediction model. That's what I'd recommend to use this for. Great. We'll keep going on Good. What were actually about to wrap up here? And so what I wanted to leave you guys with is the idea of when it comes to numbers and when it comes to figures on guy want to ask you a couple questions to close with here when it comes to predicting, I want you guys to embrace the power of what we talked about with metrics and use this sheet to your advantage. So this ties in with our very first segment. Remember how we talked about a goal really being a purpose but using metrics to build those? And so what I want to do is go through with you a little bit. And actually, instead of just talking about what maybe would be a bottom of, you know, bottom line, what would be your metrics? You want us to shoot for next year as you're building your business and where things that you want to dio. So we talked about having 10 weddings. You talked about how I can't really expect to get more than that. I can't. I know it's so hard to predict, but let's look at this now instead of from the from, you know, from the aspect of what was the minimum number that I can book to What now? Where do you want to be with this? Let's not look at this from a standpoint of what do you expect? But where do you want to be? What would be some metrics weaken set for you in this work so you can get an idea of what it will look like when you do arrive there. You know that You see the difference there. Where do you want your business to be calling? Three years calling. Three years. How many weddings do you wanna be shooting? Um, probably 20. But I think I probably want to be making more profit, more profit. So let's talk about that. What would be the package price roughly of your middle package when you are, you know, in three years from now, maybe more on what the top packages I'm not sure. Finnerty's seven. Let's put 3900 and then let's go ahead and just adjust these packages to kind of fall in line with what we think That that would, you know, would make sense for that. I'm just putting in some rough numbers, but you know, you've raise your prices. Now, how many of these you want to shoot? 20 total. You want Paul Standard Easy percentages of what we talked about. That'll keep it nice and easy. Um, 4 and four. And obviously your fixed costs are gonna go up as a studio at that point. But you know, there's certain things we can look at here. You know, you still might not deem to be renting a place. Your insurance. Let's just say it goes up by a little bit. You have some more gear. Your studio samples go up a little bit. It looks like already factored in. Somebody different assistant. Let's just go ahead. Make that 6000. You know, that gives you a little bit of a budget there to work with. To get that money, you might have to double your marketing budget, but really what? We're left here is this stuff is all going to stay about the same. With the exception of maybe we'll do more networking. I don't know. There's only so many hours in a day, though, and what's really looking at here is you know, you can kind of use this as a model toe. Look down the road of what's realistic for your business. God, if I shoot 20 weddings and I get to raise my prices by 10 or 15% look at that. This is how much I'm gonna walk away with his prophet and you can start to think well, is 20 weddings realistic? Should I be shooting for 25? Do I need to add a portrait leg? You know, do I need to bring on a portrait section of my business? You know, that might be a way to get that number up and so you can use It's not just a look at kind of don't want to a worst case scenario, but kind of next year as the minimums beacon. Use this for a prediction model for the coming years for where you want to be for where you want to see, and you can use that to prepare because what you don't want to do is get three years from now and go. Yes, I've made it. I've arrived. I'm shooting 20 weddings at the price when I want Oh, I need $20,000. I need to make $20,000 more than that doing it, and so this can help you plan ahead and go Well, that's what it's gonna look like. And so do I need to start thinking about adding a portrait leg or about doing something else to get that extra income.