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FAST CLASS: Legal Survival Guide

Lesson 1 of 17

Small Business Failures

 

FAST CLASS: Legal Survival Guide

Lesson 1 of 17

Small Business Failures

 

Lesson Info

Small Business Failures

let's look at our industry now, I'm gonna kind of focus on photographers. But these numbers are not vastly different for graphic designers. For web designers, the numbers are fairly static across the board. Who are we nationally? And where do we want to stack up now? Let's look at some of these. These are 2012 numbers from the census, from the Bureau of Labor statistics. The media that this remember from statistics, you got mean median mode. Um mean his average median is um half above and half is below. Half of the photographers in the country earn less than $13.70 an hour. Half of the photographers in the country earned more than $13.70 an hour. These are percentiles. So the top 90% of, well, the top 10% of the photographers in the country are making them in 2012 were making about $67,000 an hour a year. So that means that 90% of the photographers were making less than that. Ten% 175. That means 90% of the country was making more than that. Um so that's where you get your, your percen...

tile averages. Let's come over here and look at the national average. The national average is somewhat higher. It was about 56,000 nationally. Comes out to be about 1750 an hour For photographers. Uh, I apologize. That's not a there are 56,140 photographers that reported that as their occupation in 2012. So that's what the population that we're dealing with this. The the average was I was thinking that that seems awful high. The national average for photographers in 2012 is 36,000. But look, that is in the in 2012, that's 26% less than the national average salary across all occupations. So if you choose photography in your average, you can plan on making 26% less than the average person doing all of the other occupations combined. And that national average was 23 50 an hour. So you see that photographers are making 17 47 but everybody else averages out to about 23 50. And that number for photographers dropped from 2010. So I present these statistics from the the Bureau of Labor Statistics to ask the question, where do you want to be on this continuum? You just need to make a choice as to where you want to be because, you know, if you don't set a destination for yourself, it's awful easy to get there. Um, If you set a destination for yourself, it's a little bit more difficult to get there, but you know where you're going. Uh, so I, I point that out to, to make sure everybody understands there are some financial realities about the creative professions. These are they, and we have to work awfully hard to beat the averages. The chance of failing in year one, according to entrepreneur weekly is in the vicinity of 75%. I mean that's less than Roulette. I'd have a better chance taking my startup capital for my business and going and betting on black or red. I got a one in 35 chance of hitting it big. I've got a little less than 50% chance of betting black and red, so you'd be better off playing roulette in year one. The odds are not much better. If you make it into year two, you still have a 64% chance of failing and the odds only even out in your three, that's where the odds are in your favor. If you make it into your three, you're doing better. But look, don't rest on your laurels and your three because what happens in your four, we start to face some new challenges. Maybe we've we've gotten a big following, we can't deliver all the product that people want. We start to have some customer service problems, people get mad at us. Um we have to fire people from our facebook account because they're saying bad things about us. We know we're not friends with them anymore and therefore uh so you have to be aware of the odds in starting a new business venture. Now, lack of experience is is is one of the big reasons why creative businesses are likely to fail and the route to being a professional photographer, it used to be kind of a protege mentor relationship where like uh Clay Blackmore was a protege and mentored with monty zucker who's a very famous photographer and he learned all that he knows today about photographer from Mani and now he's a great photo educator and a great photographer because he studied under someone and learned it. Well let's be honest with each other. Uh what's it take to become a professional photographer now? Class a camera camera, It's kind of like being a contractor in Southwest Missouri, you have to have a pickup truck with a cell phone and a hammer. Now I can build a house. So I say that tongue in cheek, but the barriers to calling yourself a professional are are relatively low and that creates interesting discussions between established photographers and the new guard. Um and it creates some heated discussions and I mean each side has some very valid points if you're gonna hold yourself out to from your lawyer talking to you. If you're gonna hold yourself out as a professional photographer or a surgeon to the public and charge money for it. Do you think you should have some basic skills? Right. So if I say you know what, I'll go shoot your family session and I'll take your $500 and I'll give you a disc of images. Should that person be able to expect a certain basic level of professional competency? I think so. Lack of organization is a problem. Cash flow planning, What's it take to run a business cash? We have to Um, we have to be able to pay for things, don't we? We have to be able to pay for things and we have to have the cash when the expenses come for instance, let's say that I have a wedding that I booked a year ago. They paid in advance. So you got $5, And I have taken that $5,000 and I paid my insurance, I paid my taxes, I paid my rent. I've paid myself and now I've shot the wedding and the print order comes in and let's say that my package included some prints and they ordered prince and maybe they got a $500 print credit. And I know that my margin is 40% on prince so that 500 bucks on prince is going to cost me 200 bucks. They ordered the prince. I send them to the lab. The prince comeback in. What's the lab expect me to do? I am I've got to pay him. So if I don't have $ when that that lab bill comes due, I've got a problem. Yes. I got paid from that client but I have to be able to forecast cash for cash. My cast did I say that right Jim forecast my cash needs. Here we go. Articulate failure to predict actual costs, huge problem. Um You know I had everybody, if you if you've done a pricing seminar, you know, you've got your package, you never want to sell the package that you want to sell all the time, the one that can expire two and then your whopper, okay? And then when you start selling your whopper, you raise your prices. Heard that before? Well, I had my whopper package right as I was developing my um wedding business. The black label package sounds like elegant black label signature. So it's $6000. Well, one of the things in there that I was gonna delivers a 20 by 24 print And I think I had checked the price on the black label, 20 by 24 print when I rolled that out five or six years ago. And uh, anyway, I started booking it. Well then when you have to go print the 20 by 24 prints, you realize it's 200 or $250 at miller's. You've got to make sure that you understand that you're gonna have to pay that amount of money to deliver the product and you have to know what the cost is. So going back and looking at your costs of your business periodically are super important to being successful, insufficient capital. Uh, like I said, the reality is the barriers to entry into creative businesses. Um, how much does a good computer and a Mac book cost? I mean, do you think we could probably start, uh, if we had skills a decent business for 56 7000 bucks? So the other thing that we do is we over invest in those fixed assets. If I'm starting out as a photographer, um, and I had my bag of equipment laying in front of you, I would not encourage you to duplicate what I have in my bag. Okay. Number one, the way I approach my business might be a little bit different than the way you approach it. And I may have some things that you don't necessarily need, Some things that I might use once or twice a year. Um Likewise, if you're gonna start out, people tend to get the things that they can afford. You know, the old adage is true by the most expensive lens that you can afford in the cheapest camera that you can plug it into. Uh, and chances are you're gonna have some success, but people tend to over invest and fixed assets and, and new photographers will borrow money to buy cameras and equipment. So you really need to walk alongside a mentor and get some good advice from somebody that's been there, done that on what you actually need. The other thing that we might do that would cause us not to be successful is to make personal use of our business funds, low sales, of course, always a killer of a startup. If you dive in and you do all that you need to do and you're just not generating the cash from your activities. You need to make some changes. You need to look at your pricing, you need to look at your marketing, you need to look at the quality of your work. You need to look at your business location, uh, you need some help. So, you know, as we move forward, the key thing is we need to admit to ourselves what we don't know, it's okay not to know something. I mean, I I I am a huge proponent of just being honest with yourself. I don't know that I'm gonna make a list of what I don't know, and then I'm gonna seek the answer and along the way, I'm gonna be honest with myself. Because as I'm moving through that first year of business, it's kind of like the first year of marriage, the first year of marriage can be kind of hard. You have to make sure that you're careful and you make smart decisions because it's hard that first year and it gets easier. And that's true with the statistics that we saw. So we need to be honest with ourselves. Um again, goal setting for our business. What do you want to do? Let's look at where we're at, How much money do you want to make? Have you written that number down? Everybody write it down at home or at work? How much money do you want to make? Because we're gonna, we're gonna play a little startup business game and I need to know how much money you want to make. We're gonna talk about writing a business plan and that can be kind of overwhelming for some folks. You can get a business coach, my friends Gerry and Sandra. It buzz worthy success would be happy to help you. They can do telephone conversations. Uh Telephone consulting South san kata will do uh telephone consultations, but we need to invest in our business as we create the business plan because only by doing that are we going to achieve long term success? Remember a bad plan is better than no plan. A bad plan is better than no plan. So making a decision sometimes the best thing for you can do the best thing that you can do for yourself, and your business is simply make a decision uh, might be wrong, it might be right, but you're gonna move in a direction. Paralysis kills businesses.

Class Description

Ready to turn your creative side project into a thriving business? Join Craig Heidemann for an introduction to the business and accounting principles every creative professional needs to know. 

In this class, Craig will take you step-by-step through the process of setting up, running, and growing a small business. You’ll learn how to use QuickBooks to manage your finances, including managing client contracts and invoices. Craig will also help you navigate the potentially confusing tax, legal, and copyright issues surrounding small businesses. You’ll also learn how to contract and/or hire people to do the tasks you can’t do yourself. 

Whether you’re just starting out as a business owner or you’re a longtime entrepreneur ready for a refresher course, this course will give you a roadmap to business success.

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