Six Figure Plan
you know, it's a great transition to go from sales into the six figure plan. And this this segment is called the six Figure Plan. And yes, it is a bit of just a nice dramatic name for it. We really talking about here. We're talking about your numbers we're talking about, you know, getting a handle and getting a grasp on the finances of your business. We're only gonna talk about it for an hour. So So don't worry. I think we can all endure about an hour of financial talk and financial talk. That's very general. This is not a financial class. And I'm not gonna make it one because I think I get bored on my mind. You know, there's people for that, but it's so important now that we've laid so much groundwork for our business. We know where we're going. We have a purpose. We have a goal. We have definition who we are and what our business is. We know how to market. We know how to build a system. We know all about pricing all about how to create the right pricing, how to present it. We know ab...
out how to handle the consultation. We know about how to go through and do sales, and so it's important in the business process to know a little bit about your numbers. You've got to know where you're going, and this is why. Sometimes we get to the end of the year and we're like, I didn't make what I wanted. I didn't make enough. I'm not able to save. I'm not able to move my business forward. I've had several conversations here with people who said, I want to raise my prices, Jared, but I don't I can't risk turning away any business right now because I need that business and knowing your numbers planning a little bit is going to help. So this is a general take on that. It's not a deep take, but I want to give you guys the fundamental tools, just the fundamental basics to make decisions about your numbers so that you can start to prepare calmly what Jason said. Prepare for the next client. If you don't have that sale session going now, then start now so you can prepare for the future. Great idea with numbers as well. If you can start now and then prepare for next year. Well, that's a leg up. It's only gonna help your business out. So let's go through what it looks like to know a little bit more about the numbers that are associate with your business. And yes, we will sit down at the end with one of you gonna bring one of you up s so that we can talk and actually with a real life example of how to use the six figure plan. And I also have a bonus that I'm gonna give to every single person here and every single person out there who purchases the course. So stay tuned for that, Okay? We're gonna go and give you a couple definitions. Not many. I think we have five total definitions. If you know these definitions of just these five terms will be good. We can We can work with our numbers revenue. So revenue is a total money receive for the goods and services sold You can think of. This is how much you charged. That's the revenue. Total revenue throughout the whole year is gonna be how much you charge for everything you did. Eso If you sold a $6000 package. Your revenue from the package would be awesome. Good. See, it's not that hard, right? If you book 20 weddings this year, each for 6000 then you would be able to say the revenue WAAS 120,000. This is math. I can do live. As we learned yesterday. There's math. I can't do live. Okay, the next one fixed costs. This is important. We're gonna start. So this was not quite as obvious business expenses that are not dependent on the activities of the business. So it's expenses. Let's first look at that. It's a cost to cost us when you're spending money not making money, and it's a business expense that is not dependent on the activities of the business. And that could be a little confusing. To be honest. When I first read that, I was like, Why wouldn't I spend money on anything that's not dependent on the activity business? So what this is really saying is that this is an expense you incur, no matter whether you book business or not, you know. So no matter whether you book business or not, so you have a studio space that's a great example, think bills, bills, bills come. And it doesn't really matter whether you have business or not. You have a website, the costs you incur for that website. You're gonna have to pay those, no matter what. Whether somebody books you whether 10,000 people book you with zero people book you if you, you know, shoot Q. That's another fixed cost we've talked about. Shoot you a little bit. That's a fixed cost. And so that's something that that I'm gonna have to spend every month. And if I decide not to spend it, it has nothing to do with whether or not I had clients that month. It has everything to do with a fixed costs that I incur every month, regardless of how much or little I'm booking. And so fixed costs are important, understand? Because they don't change with the amount that we book. You know, your power bill isn't gonna change much, you know, it might change a little bit, but it's not gonna change much if you book 30 weddings or if you book to weddings. So it's important. Understand the difference between fixed costs and what we have next, which are variable costs and these expenses that change in proportion to the activity of the business. So variable costs are expenses that change and adjust. And they're only incurred when you actually fulfill a you know, a client, a job, a product, something like that. So they're only there when you you know when you do something, when you actually have a client that spending money and it might be great to think of these as prevent costs or per product costs or, you know, per wedding costs, there's something that comes up. You know what's a great example Prince you include in a package, you know that's gonna be a variable cost. You don't have to worry about those prints. If they don't buy the package, you'll never have to send them those prints. If they buy the package, you do. So it's a variable cost shoot out. It's a great example. You know, you don't have to color correct any images if you don't shoot images, you know, And so that's not a cost you ever have to pay for unless you shoot a wedding. When you shoot a wedding, you send that to shoot dot edit. That's a variable cost now if you were to sign it for the unlimited plan. What's interestingly enough is that kind of moves into a fixed cost because now it's something you're paying every month. And so if you want to get unlimited editing and pay a monthly cost, it's like that just comes in every month now. So that would now move into fixed cost. So you can kind of see a little bit of how that very second shooter, you only have to pay that if that person comes along and shoots. If you don't have a job booked, then you don't have to pay that. And so that's a variable cost. So it's good to understand the differences because we kind of want to start to learn how to categorize those things when we're predicting our expenses that come up well. Is that a fixed cost, or is that a variable costs and fixed costs of things that it doesn't matter how much business you have or don't have? You have to pay it, and so the people call it the monthly nut. You know, it's like how much we're gonna have to spend this month, no matter what. What's it gonna take to keep the lights on. And then there's what happens when you incur costs associated with a job you book. And that's the variable cost. So profit. This is the fun one to talk about. We like profit, profits good the gain. And unfortunately, it's not profit. But, you know, I guess you could lose money, so I had at least put in there. But it's not profit. If you lose money. It's lost at that point, but the game from the business after subtracting for all the expenses. So it's kind of what's left over when you're done spending. Sometimes there's a lot. Sometimes there's a little bit, and there's all sorts of fancy terms for profit. There's net profit. There's gross profit. There's, you know, all sorts of different fun business terms that we're not gonna get into because it really doesn't matter. Think of the day. We're just trying to get a just ah, grasp on what our numbers and financials are on, and so I know there's a lot more details here. There's way only take so much in one sitting, but all your income, all your revenue profit, though, is what you're left over with at the end of the day, when you have spent all the money you need to spend the business. So it's kind of like revenue minus fixed costs minus variable costs. OK, profit per event. And this is only important because we talked in how to set up your pricing, your packaging, about looking at the prophet prevent and making sure we kind of compared it in stuff. And when we compared and went through, we saw how it influences how we make instant except for pricing. You know, we weren't able to go through it that example up here with Satya because you know, there's so many factors that go into. But if you're number 1% of our packaging, we did look at the Prophet prevent. We looked at how much we were profiting. I'm sorry. Profit, Yeah, profit per event. And so that's like if you book a $ package and you have 500 hours of costs associated with that, then your profit on that event is for 4500. If you wanted a reflective as a percentage be, I believe 90% because it be 4500 divided by 5000. And the reason it's important to know is because as we charge more, we typically have to sacrifice some of that profit prevent or that profit percentage. We still want to make more as a whole. We want to make more profit, but that percentage kind of drops a little bit. And so that's why we have that in here is because it's important, understand, as we're building our packaging and we want to double check those things. Okay, so what are some good examples of fixed costs? Andi, For this area, I want to go through and talk about ways that we can start to look at things and start to look at maybe saving some money. But first I want to just identify some fixed costs so rent would be a fixed cost, and you either have it or you don't. Do you have a studio space? It's like yes or no, by the way, just a moment of clarity. I'm not talking right now about what you write off or how we are working with taxes. I'm talking about, you know, financials. I'm talking about trying to predict for yourself how much money you're gonna make at the end of the year, trying to predict how much you should charge and we're gonna do. I'm gonna show you a model to kind of predict how much you need to charge. See, based on how much you want to make it the end of the year. This isn't about taxes and write offs, all that kind of stuff. So I know that there's a lot of questions that tend to come up at that point. And this is really about how much you make, not how much you put you know, not what you do with your taxes. So rent. Either have it or you don't. It's a studio space or it's not. You rent a space you don't. That's a fixed cost, though, because it's something you have to pay every month. You don't get to pay it just whenever you book. Um, event. Now here's one little caveat. If you're out there and you rent space just to meet with clients or you rent space, just a show, maybe do a sales of viewing session, as I should call it. That would be now a variable cost cause you're only gonna rent that space to show them that viewing session. When you have a client, you need to do it. So that's one caveat. Their insurance liability and equipment insurance. Eso There's insurance costs here, and that is a fixed cost. Because we don't We don't pay that on a variable basis. We pay that on using on a yearly basis samples, studio sample products. You know, you gotta get albums to show your prospective clients. You've got to get sample prints to put up on the wall. I have to get some products from the various canvases you might offer just the products that you sell and you have studio samples for that. Well, that's gonna end up being a fixed cost again. Not related back to the client assistant. Now, when I say assistant, I'm talking about maybe a studio manager. I'm talking maybe something to help you with your emails I'm talking about. Maybe somebody's gonna help you out with some of the day to day tasks may be doing the blawg posting. We talked in day one about state of A system and then figuring out where you trust people to help you in that system. And if that's something you do for again on a non shoot basis on a kind of a studio basis that's gonna go under fixed costs. Market in advertising market and advertising is a fixed cost, you know, very rarely is a variable cost. You know, you come up with that marketing budget and it's something toe where if you're gonna run maybe an ad in a magazine, let's just use as an example that's a fixed cost. You pay them your $5000 you see what comes of it. You hope you book some weddings. You hope that leads to more business, but it's not a variable cost. It's a fixed cost, Um, Web. So Web Meeting website and Web also meaning hosting for the images. When you're done, you know whether you put them online and online gallery, or however you want to present that to them. That's actually usually a fixed cost. Now there are some models nowadays where you're not doing it on a fixed cost basis, but you're doing it on a preventive basis. So if it's a monthly expense is gonna be a fixed cost. If it's a per event basis, then it's gonna be a variable cost. So just depends on how your you know what you use charges. It kind of go both ways. Nowadays, networking networking is most definitely a fixed cost. You take somebody out for coffee, you go out to dinner with somebody that's gonna be a fixed cost. Jason's example of going out to dinner with somebody that's, you know, that's a great way to do it. That's gonna be a fixed cost. What else? We have your equipment that's going to be fixed cost bookkeeping and tax prep. That's gonna be a fixed cost. You know, it's not gonna variable costs and miscellaneous Who knows what it is? But typically, the miscellaneous does fall under fixed costs because typically those are things like buying pens for your studio. You know that kind of stuff. Typically, that falls under a fixed costs. Let's look at what variable costs looks like. What are some examples of variable costs? Albums? Great example. Variable costs. You don't have to buy an album for someone unless they bought it. If they bought it, then it's for a client. It's a one time by and it's gonna be a variable cost. And so that's important as we see is we're gonna build things. This is gonna go in a totally different category than the fixed costs are. And it's a variable cost. Prints are unless you're adorning the wall of your studio. You're buying a print of a fill in order that's a variable cost. Um, second, photographers or assistance, thes air variable costs. You don't need to hire those unless you're booking or shooting a job frames cards. You know that anything, basically that you sell to them and then you fulfill any product you're gonna fulfill. That's gonna be a variable cost or a prevent cost. Any time you hire a shooter to come along in a shoot with you, that's gonna be a per event costs. Okay, Before we actually go into what I call the six figure plan, I want to just do a little segment on cutting costs, and this is just something I get asked a lot. So I thought I'd throw it in. People are always asking, you know, Jared, you run a successful run, a successful business. You know, you kind of seem to know a thing or two about that, and I always tell people that it is easier to save a dollar than it is to make a dollar within reason. There is the point where it isn't but at first glance, for somebody who's in financial trouble for somebody who is having a hard time getting where they want to be financially, it's usually easier for them to save a dollar than it is for them to spend a dollar. Now, when you get to a certain point when you've optimized things, obviously that's no. One in the case. There's only so much you can kind of optimize. But when your time with somebody who's at that point where there, They're asking me for advice on how to get their finances in line, how to get their business finances in line. One of the first things I says, We'll take a look at what you're spending before we talk about making more, because if you're gonna go out, make more and just spend more, that's not gonna help you and either. So figuring out how to save on extra dollar is sometimes easier when you're that financial position than it is to go and find another dollar again. There's also a great argument says, Hey, you know, go out and find more business. That's the best way to advance your business. Ford that I don't disagree with at all still think it's good to analyze your studio, analyze your business and make sure that you're not kind of wasting money in certain places, you know? So with your rent, one thing we've done down at the studio over the years is sub leased out some of our space we've actually sub leased out from the space to over the years a videographer Onda florist, and it's kind of it's great. They get a desk upstairs and then they can use the meeting space and they pay a monthly fee for that, and I have all sold. I never followed through on it. I also toyed with renting it out to other people just on a per use basis to use the meeting space because there was some interest there. But the real value in renting and sub leasing party your studio is that now, all of a sudden it's so much easier to be referred by those vendors because their clients come in and they sit there named meat in our studio, so It's our pictures on the wall. It's our work that's on the table. They come in and the sign on the door says, Bomb and photographers. And so that was a great way. We actually got a lot of extra business from it, along with getting some extra money every single month. So it really served two purposes, so you can save some money in your studio. If you have a studio by sub Lee seen or kind of working with another vendor that you are closely aligned with, it's really great if you're a home you want to meet. Instead of taking on a studio space, try subleasing or try renting. Just when you want to meet with a client, it usually will save you a lot among the long run. As you're making as you're getting your way, you're making your way to that jump. You know, I always I think, that it would be wiser for most people that instead of jumping straight from a home based system straight into a full time studio that to spend money on every month, try it out for size. See if you can sublease, see if you can rent just for when you need it and see if you like it. See how it works. It won't have as much of a monthly cost for you, and then you can go full time with really jump in full speed and take on a whole story yourself. If you like it. Insurance insurance is a tough one. What's funny is insurance like you can goto three different companies and have three massively different quotes. And so I really want to encourage you Teoh to shop around toe. Ask around on, and I also want encourage you in photography. Industry insurance is a very interesting thing because it is kind of finicky, meaning, like if you make one insurance claim, a lot of insurance companies just drop you, and that's not really healthy. You don't get dropped by your insurance, so get quotes from multiple companies and then talk to them about your quotes, talked to them and see what the real rules are behind the scenes. You know, you don't want to get an insurance policy that has a deductible for $500 then come to find out that if you actually take advantage that insurance policy, they're gonna drop you the next year. That's not a very good insurance policy. The other thing is often times they're gonna throw unnecessary things into your insurance policy. That that I don't know about that you don't know about. I'll tell you how I know this because I have a friend who does insurance and randomly, he was over the house one day and he kind of start looking through. My business insurance plan is like, Do you know that you're paying for rental car coverage? I was like, What do you mean? You're paying $28 a year for rental car coverage? My, I don't need rental car coverage for my business. My business says, even own a car. He's like Exactly. And so we found about four or five of those things that totaled up over $150 a year. I think is what it was. So anyways, understand what's going on when it comes to insurance studio samples. When it comes to studio samples, what stores samples are you offering? And what I really want to make sure you're doing is not offering products that are outside of the range that you're trying to sell we as as photographers, often times If we go back to the idea of the must haves don't substitute. Your clients must have for your must have, you know, and don't also show products that you wish you could sell but aren't at the point where you can yet, you know, don't sell. I don't show and by and try to sell products that just don't make sense for your client because you're going to spend a lot of money on him. And one of the day it's not gonna help you get closer to your goal. Assistant. This is a great thing to take on at the right point. It's so great to go out and get help. And when you're trying to go out and get help, it is fantastic to start small because you don't want to hire. You could, But it's significantly harder to hire someone full time out of the gate, you know, I mean, not having anybody working for the studio and then all the sudden you have someone full time, and I'd really recommend that you try to take advantage of hiring different You know, specialists in those spaces. And so when you can hire Specialist start small. Maybe a few hours a week could be a huge help. That's what we did. We hired someone for 10 hours the first time, 10 hours a week. We brought Lindsay in and she work for hours a week at her studio, just helping with email and scheduling and calendars. And then from there we slowly moved on to where now we have, you know, two full time people in the studio at all times a studio manager and production person. And so start small and member the systems that we talked about. Remember how we talked about Senator System marketing and advertising market? Advertise another area where we talked about not necessarily going for the full thing right off the bat to get creative in your marketing, get creative and how you do your marketing and get creative in the way that you do it. You know, if you want a cheap form of marketing, switch over to networking. Networking is kind of a cheaper form of marketing, and what I mean by that is, you know, in marketing, we talked about taking out ads and search engine optimization and print ads on that kind of stuff bridal shows or another way toe market that I didn't touch on yesterday, and mainly because I've never really have done, like one or two bridal shows, and I don't consider myself to be very much of an expert on it. But these were all kind of high cost things. You know, they have a huge cost. So if you need to cut costs, ramp up your networking and ramp down your marketing and your advertising. So you know, market advertisers are great for the branding of your business, but they're hard to stomach when you're just starting offer when you don't have a ton of money. If you don't have a ton of money to advance your business forward, you want a network you want to network, and you want to really spend that time networking. Um, Web. I don't really have a whole lot to talk about in this one for cutting costs. There's a lot of options available out there, and I'm gonna skip over that one just because I want to make sure I touched on some of the other ones equipment. The equipment is something that you have got to separate your desire for equipment with the businesses need for equipment. Now, I know that I'm probably, you know, offending a lot of people out there when I say something like that, because I get it. I love my 51.2. I love that beautiful glass. I love the good equipment. I love it just as much as all the rest of you dio And you know, I know it's hard for me to say that, but I have to think about the equipment that I buy for my business, as in terms of what would the business do and what does the business need. And so I have to answer the question before I'm allowed to buy that piece of equipment. Does the business need this? How would this make the business more money? Because that's what a shareholder would ask. That's what the shareholder the business would say. They would say Yes, that is a beautiful piece of equipment right there. But tell me about how that makes me more money. You know, Jeff talked about how your business is not looking out for your business. Only cares about one thing, and it's itself will think about your business and think about how it thinks about your equipment. Don't get me wrong. I love I love what I was talking earlier with somebody about having an equipment budget, and I think that's a great meet the middle. I mean, that's fair. You know, I think if your ex selling and growing a studio, you can set aside some money to get new equipment because that is helping your product. There's no doubt about it, you know. But what I think we do sometimes is we don't think about that purchase in terms of the business, and we kind of justify it by saying we have a business. And so that's where that's where that slippery slope starts is when we start buying equipment just because we have a business, you know, and I get it. If the purpose of your businesses to buy new equipment, then great but the purpose of your business. And if the purpose needs to contribute financially to your lifestyle, I need to pay bills. Typically, you don't need that new piece of equipment. You might, but typically your business is not How is that new lens? That new camera actually gonna help you make more money. That's what your business cares about. So again, a good happy meet in the middle. Maybe start with an equipment budget and use that use that to buy the necessary stuff. And then, yes, you can definitely expand that as you grow in a business and bison becoming you want. But just know that it's not going to making the business more money. It's part of the benefit of having the business understand what and how equipment plays into your business because it's important to understand the distinction between just wanting something and needing something. There's other wrong with wanting something and giving yourself something that you want. There's no problem with that. We all should be able to as we grow in our businesses, enjoy the fruits of it. But understand what I want is and understand what I need is and just be able to separate the two so that your business doesn't justify your expenses. Let's talk a little bit about bookkeeping in tax prep on then miscellaneous, some different things that might enter into the miscellaneous categories bookkeeping and tax prep Bookkeeping is something that I actually used to do all my own, and I would think it's well worth the time and the effort. I told you guys a story about how I was actually spending more money, just paying the late fees because I was always messing up the accounting and the bookkeeping, all that kind of stuff, the payroll and all that. We have a great example from 99 beans. Andi, I think I heard actually from Jason that if you go on enter that if you go to nine and beans and enter the code creativelive that there's a surprise discount waiting there for you. I don't even know what it is. But Jason did tell me that he had he had set something up. 19. Does he accounting for bookkeepers and Jason See the owner of that company? Tax Prep. Another thing I know that they do. But tax prep from a from a global perspective, that's a tough one because it is something you can dio. And so it's hard toe. Justify pain when you can do it, especially when you might be at a point where you're having trouble with those expenses, you know. But honestly, guys, and I mean every word of this. I have never, ever got my taxes back. And look, I looked through them and they've always found a way to save me more money by something they know. Then I spent on them. They know about some sort of business deduction that I had absolutely no idea about. They know about some sort of, you know, some sort of waiter to write, sing, offer some new program that just got launched this year, or some depreciation schedule I don't know about and little every year. All comments. What's this right here before? Oh, that's blah, blah, blah. Got safety $700 in your taxes this year. Oh, wow. Literally every single time it's paid for itself and then some. So I know that we kind of hold. And I held onto it for a while to until I had to figure how to do that depreciation stuff. I held on the doing my own taxes. And once we got a corporate, ones here became a corporation. You have to find like a K one, and there's all this extra jazz to it. So I started trusting other people to do it a professional and voila! I actually make money now because I trust that professional. So just something to think about you guys. I mean something to think about and usually tax people if you find a good one, and I would recommend getting a referral for one in your area. Usually you can go in and meet with them and talk about your situation and say, Hey, look, you know, I need help in the tax area, but I need to also Can you look this over and tell me you know what sort of things you're seeing? And you can kind of talk about it with him ahead of time, so you know what you're doing yourself into. And last but not least, miscellaneous were some things that could Internet, that miscellaneous category Well, these air kind of studio related expenses, just things that come up along the way. You know, if any of you had any fees you incurred to come here and be part of creative lives their education sees, and you wanna have room in your budget to go and get educated and learn more So you know, an education environment that's gonna end up in here and you know, these kind of things. You want to also be smart about what you want to leave some money set aside for them. Now here's the thing. It's a challenge to come up here and talk about how to cut costs, because I feel like I'm going to tell you guys things to pull away money from. I want you guys will invest money in your studio in your business, but the same time I understand there is that tension. You know, we talked about a lot and I read every single one of those in the business roadmap. And a lot of guys are saying I'm having a hard time with managing my finances and making sure that everything's dialed in and making sure that we have the right amount of money at the end of the month. And so I really want to keep this segment in just so we could have an open, honest conversation about so we could talk about strategies that hey, if you have to save a little money here or civil boning there, where can you do that? What some good ways to do that? What are some good tips that I've picked up over the last decade. Plus, in doing this, so next up is the kind of six figure plan, and we're gonna go through a little bit of a worksheet that I put together with one of you. Before we do that, I kick it over and see if we've had any questions about some of things we've talked about so far in this segment. Yes, absolutely. First question in the chat room is from Excuse me from accused. Have is from Tina Brown, who asked if their gear or lenses you right for every wedding or portrait shoot, Does that make it a need and therefore something I should work on purchasing? Or is that some place you can still cut costs on If you find yourself renting the exact same piece of equipment and I would recommend purchasing it, and it sounds like the reason that you're renting it every single time isn't because it's for fun. It's because you need it. But really it should go back to the question of Does the business need? This lends this camera this light, this flash, whatever it is, is a business need it, or does it just want it again? There's nothing wrong with wanting it, but it puts it in a different category. Is if you're renting that lens for the example here every single time because you need it. Yes, I would definitely recommend buying it, but that's what that lens rental can be Good for. You got to try at Elin's before you invested it, where it could be good to kind of have some fun time with these different lenses of these different things. You can rent it and get your get your fill of it if it's in the want category, okay? And we have another question from Melissa Maza, would you? And with the caveat that Jared is not a tax expert. But would you put tax estimates into fixed or variable costs? I put him into fixed costs. And yes, I'm not a tax adviser, but as far as how you categorized it financially. Speaking about that, Yeah, you You do that every year, and it doesn't matter at the end of the year, the only reason you wouldn't file your taxes if he didn't if he didn't book one client and without being in mind. Since you are gonna book a client this year, I'm very confident that if you made to these three days, I really think you little book. At least one client. You're gonna have to you file your taxes in this year. And that's gonna be a cost that you encourage us once year. All right. Another great question from online. Lakota Wolf from Sacramento, California asked. Does purchasing the creative live courses qualify for the miscellaneous area? That's exactly what it qualifies for. A fixed costs and I'd stick it in my education bucket.