Financial Tracking—The Power of Knowing Your Numbers
Let's get started with the power of money and expense revenue and profit right that's pretty much what it comes down to money in money out and how much left over do I get to keep money is the umbrella of your business right it's what keeps everything able to move forward and it's what our goal is to make money doing what we love okay? Not many business owners like to talk about money right? Why not? It's scary it's very scary and it's kind of one of those things that the tree falls in the woods did anybody really hear it if I ignore it and don't pay attention to it and don't look at it, it might go away right? I was like that for years no even still to this day I hate doing my own bookkeeping so it's been outsourced out but I tell you I would just ignore and ignore it and look at my big gallo there's plenty of money there I'm all right no worries yeah you're laughing because you've been there done that okay, but I'm saying knowing your numbers truly is power and power in your business ...
is confidence and confidence in your business means moving forward without george attacking you okay it's kind of like being on a diet right? You're trying to lose weight it's hard till this way, right? But when you d'oh you feel amazing the same thing with knowing your numbers when you face it, you can transcend it. Daniella port is one of my favorite authors and she has these little truth bombs that she puts out on her instagram all the time and sarah daily my social media manager and I love this one she hasn't posted on her on a piece of paper just above her desk with a little thumbtack in the wall and it says when you face it you can transcend it and this is so true when it comes to money if you face the reality of of your money in your business and take the time to budget, constrain yourself you know rain things in when you need to spend when you need teo that's what's going to make you successful a lot of photographers tell me I don't have money to do this how do I do this? You cannot start a business without any money. I mean, ah lot of teachers want to tell you oh, you can do it. Yeah, you could do it, just go for it. No, you have to have some money to get started, right? Number one you have to survive with your family and pay your bills and eat whenever too running and starting a business takes equipment, it takes gear, it takes software, it takes marketing even if you're not even in a home at this point, if you are a studio, if you're in your home or your on location or whatever, it's still requires a capital investment to start. So I know that sounds awful on everybody says to me, oh, how do I you know, start this marketing campaign? I don't have any money to do it. Well, then you need to save some. I know that sounds very blunt and very like, but I don't ever want to be a teacher instructor who cherry coats things, sugarcoats things and put a cherry on top and tells you, oh, yeah, you can do it. No, you need some capital get started, you really do. So what does that mean? If you're in your current job, you need to pull back now and act like you don't have a job, rein in your expenses, reduce your costs, do whatever it takes that you think is reasonable to save up money to start a business. Is it a risk? Of course it iss and always is entrepreneurship is the definition of risky, right? I mean that's what it comes down to. So whenever you start a business, whenever you do this, you are taking some risk I take risk every single day in what I do. That's a lot of fun to take these stretch strategic risks, okay? I'm not saying go crazy and be a nutcase and, like blow all your savings on your business, you need to be strategic about it. You need to have a family discussion and figure out what's going to be best for you and your situation, you know you're gonna be a lot less risky if you've got kids, you got a raise or kids you're trying to put through college. Okay? I started my business when it was just me, me and my income from k two television, abc affiliate in portland, oregon, and I socked away that money and just that I'm using this too, but to do my business because I knew I want to change careers, and I did it for two years before I left television. Okay, so I built the business with the money from the other income money has to come from somewhere, but the smartest way to do this is to pull back what you're currently how you're currently living. And if you want to go so far as you know, reducing your mortgage, moving into a smaller house, go for it, but reduce those costs and sock that money away and that's the diet that's, the hard part. That's the really hard part because you want to spend money on gear and equipment, but you need to strategize what's going to be the best value for my business. What what money that I spend is going to be the best investment that will get my business bringing in money faster. It's not a new camera when we tell you that so many people want to go home, I need to upgrade my camera. No, you need to get your brandon you're marking in your promotions done right first, then upgrade the camera it's, just like the pencil does not make the writer the camera does not make the photographer. If you're a good photographer, you see light, you understand exposure triangle on all these composition, color design theories it doesn't matter what cameron you have in your hand, okay, so face the reality that money it is important not only when you're starting, but to sustain you, and you have to know your numbers for that power knowledge is power. I've always believed in that, and I think that's why I'm such a perpetual learner, because when I teach, I learned harmful into books and reading business and stuff because I love because of you, I feel like my self esteem goes up when I learn things, so when you know these things about your business you're gonna feel better, it will be more confident you're gonna have a system and you'll be able to plan for growth, which is the big thing you need to make a plan. Okay, so, let's, start at the bottom. Your family? How much money do you need to survive? This is where we start when it comes to pricing our products and figuring our numbers. Okay, so I want you to think about that for a minute. How much money does your family need? What are your expenses? Okay, we've got mortgage or rent food, car, gas, utilities. Any tuition you might have for kids or whatever daycare, clothing, insurance, medical phone, entertainment, debt savings and retirement. I didn't save for retirement the beginning. It's kind of a mistake because I lost out on the investment return that money could have been making in the last five years. Okay, how much of that do you need to contribute to do you and your spouse go equal? Fifty, fifty. Okay? Or you on your own it's one hundred percent and you're raising a couple kids on your own. So these are questions you need to ask yourself for. My husband and I it's a forty sixty situation he makes more money than I do, so, uh, we have broken up how much we contribute to family expenses by the ratio of income that we make that makes sense. So he makes sixty percent of the household income. I make forty percent of it. So that's, how we split up the household expenses make sense so you could do it that way. That way. It's fair. You know, you make more money than I do, so you pay more of the expenses and breaks out. Even my husband and I also got married later in life. I got married at thirty seven years old and so I had already developed a career. I was working in tv news. I had bought my own house. So we had separate lives before we came together. So our finances have stayed relatively separate because we're independent. Freakish people like that and that's how that works and it's. Fine. So you need to figure out how your family operates like how do you guys do it together and then figure a budget for all the stuff and then split it appropriately? Now some of you are extremely lucky and you have spouses or significant others who are supporting you while you get started and that's essentially almost what happened to me, we weren't married at the time, but my husband was my boyfriend and I lost my job and he allowed me to move in with him so I could keep doing my business and supporting me, and for a good year before I was viable, he helped me do that, which was awesome, and some of you will have that as well. But then as your business begins to grow, your way would start contributing to your family expenses and you both will lift lift up, which is kind of what happened with us so let's kind of break this down, all of it your mortgage or rent? I'm being conservative here I'm just giving out an example. So a thousand bucks for rent or mortgage, which is actually pretty love food five dollars a month for a family of three four that's cheap actually that's really cheap for food? Most foods I mean, sarah and I were talking and I think we spent about eight hundred a month on food and I eat nice, you know? I like my organic groceries and things like that I'm not obsessive about it. I don't coupon clipped like crazy, but I tend to buy things that are on sale, but if you if it's organic vegetables I kind of like that does not make sense, I'm picky choosy car three hundred bucks a month pretty reasonable for a car payment, right? Utilities three dollars a month overalls between air conditioning and heating obviously depends on where you live clearly I kind of just wanted to keep things conservative tuition or daycare I pay about eight or nine hundred dollars a month for tuition for daycare for my kid I gotta work we both work so dean goes to a montessori school and it cost me buddy and fifteen dollars a month to send him to a full time take care which is very reasonable ah lot of places like los angeles my sister's paying more like eleven or twelve hundred a month to keep her kid in a full time care where she is so she can work clothing two hundred dollars a month that's pretty low that's like for a woman that's like a shirt and a pair of pants a month, right? Okay insurance so car insurance I'm talking like that's very conservative because that doesn't really include your homeowners and start insurance or things like that. I kind of love that in the mortgage, so I guess the point I'm trying to make shoes I'm trying to keep these numbers very conservative medical obama care whatever you've got, some people have it and benefits through their specimen house some people have to pay it on their own I am now in a situation since my husband lost his job that we will be paying this price on our own so not only do the expenses go up but also the insurance goes up as well your cellphone hundred bucks month reasonable okay entertainment glass dinner once a month twice a month debt that's up to you however much you pay in debt um we finally wiped out our debt about three years ago and credit cards are evil things savings and retirement how much money are you putting towards savings and retirement? Three hundred dollars is actually quite low considering this all costs forty two hundred dollars I'm up. I know I'm depressing you I'm sorry, but we need to do this take your medicine you can do it. Okay? So on a household with these types of conservative expenses you need forty two hundred dollars a month after taxes to survive that is fifty thousand dollars a year in income. Okay, that's very conservative. Okay, so if we have fifty thousand dollars a year in income plus, uh who's gotta have some to uncle sam, right? Twenty five percent tax rates pretty middle of the road, right federal and state depending on where you live clearly I'm generalizing that is sixty three thousand dollars a year to support your household and if you're supporting your household completely that's a lot and it's also conservative you'd be on a tight budget let's put it that way you'd be in a very, very tight budget so if your family expenses or sixty three thousand dollars that's what you need to pull if you're supporting your family one hundred percent that's what you need to pull in from your business in order to survive okay right makes sense so now let's talk about what your business needs to operate it's one thing for your family to need money it's another thing for your business to need money what are those expenses rent utilities phone insurance props gear equipment computers software legal fees, administrative fees, website marketing, branding, outsourcing employees you which includes you and any debt the business has it must pay off. How much of that do you need to contribute to one hundred percent your business has to self sustain otherwise it is a hobby. Okay, really? I mean, I hate to be blunt, but that's true I know so harsh today nothing is ours. Okay, so these are a lot of expenses correct that your business needs to be able to operate on and people always it kills me when someone says, how can a buy ten b fifty dollars? Doesn't it only cost you two bucks. Yeah, it cost me two dollars, huh? Okay, you see where this is going, we're gonna make a plan now warning I'm about to severely depressed you okay? I'm sorry in advance I've already depressed a little bit now is going to take it down a black hole a little bit further. Okay, but I'm also gonna lift you out of it, so be patient with me and bear with me, and this is truly like being on a diet right now. I'm sucking all the sugar out of you. I'm like not letting you have the good stuff I'm like making you're going through withdrawal, ok? And it's gonna feel sucky for a little bit, but then we're gonna build out of it. We're gonna feel really good. Okay, so the break even analysis work sheet. I'm going to go to my computer here, and we are going to have some fun. Trust me. We did this the other day, and I certainly cried. So, um, yeah, again. I apologize. Okay, so this is a break even analysis. Now, for those of you who are who by the class, this worksheet comes with the course, so you'll be able tio toe look at it. Um, okay. So this worksheet is basically going to help you determine what you need to make in your business, to operate both your family expenses and your business expenses, so the yellow areas are areas that you fill out. Okay, and then the spreadsheet does the rest of the work for you, so we're going to put in some costs, and I'm going to be very conservative in my costs, and that will help you see what you need to do in your business. Ok, so marketing should be about five to ten percent of a business owners gross revenue. So if you make one hundred thousand dollars a year in your business, you probably spent between five and ten thousand dollars in marketing, so ten thousand dollars is not a lot. This includes all your promotional materials, the websites you run for marketing your own website. This includes any advertising that you do any promotions and displays you do anything you do to promote your business to your clients or to the outside world is considered a marketing expense. So ten thousand dollars, which is less around with the brown seven to eight hundred dollars a month, is not a lot for that purpose. Okay, but I'm going to go ahead and knock it down to seven, just so we split the difference. Okay, administration office, this is the day to day operating costs. So big feast, loan payments, education seminars, office supplies ten thousand dollars is very low for this. He traveled one workshop, and you've blown for five thousand dollars right not including even that's like just travel onda twist I mean all the expenses of lost cost associate with it with not being your studio is huge too right? So I'm gonna leave that at ten grand that I consider that number extremely low legal and accounting liability insurance bookkeeping, legal fees and they'll say with your business five thousands pretty good you could probably lower it to for that automobile in travel five thousand is actually pretty good uh expenses mileage especially if you're in on location photography you're driving to places five thousand dollars for maintenance and operating costs on your vehicle is actually pretty good studio space so five thousand dollars a year for building that's low so I paid a thousand dollars a month so let's right now that's going up soon to eighteen hundred so I'm gonna put twelve thousand dollars in there so if you have a thousand dollars a month in studio rent which is actually pretty reasonable okay studio maintenance improvements five thousand bucks pretty good stuff you gotta do around the house things like that now even if you don't have a studio if you have a home based business you still have space overhead because they are us takes into account the square footage of your home that you're using so say you use ten percent of your home for your business ten percent of your martin mortgage is considered a studio expense so if you pay two thousand dollars a month and you only use ten percent of your square footage for your business which is actually really low then you're only you're paying two hundred dollars a month for rent for your business for your in your home studio does that make sense so when I had my original home studio that you guys have seen already I was using probably forty percent of the house I was using the entire basement and the living room now not on a full time basis so I ran it out about twenty five or thirty percent of my home was being used for my business and I used the garage so all that adds up as an expense some make sense okay? Equipment purchases this is computers lighting backgrounds, cameras lenses ten thousand dollars a year is very conservative. Okay, now let's put in your salary okay this we figured has to be fifty thousand dollars right for you to cover your entire conservative household family income if you're doing it a hundred percent thirty five to forty five percent of your salary goes toward your benefits and your taxes so that includes health insurance and self employment taxes, medicaid, social security when you work for someone else and you see oh they've taken out three hundred bucks for my social security payment the company has paid an additional three hundred dollars for you for yourselves a security paycheck you don't see that on your corporate paycheck so social security is actually double what you think it isthe same with medicaid and these are government. This is government stuff we gotta pay above and beyond what uncle sam wants from our federal and state taxes, self employment sack taxes kind of suck. Nobody likes him one reason to change over to an s corp which we will be talking about with my accountant cody market at the end of the week. Okay, so do you have employees were going to call it? Know how many of you actually employees? Just one person they were going we're gonna majority rules. Sorry we're going to make it so that there is no cost for employees because it's just you okay? You are the owner. So you yes, you get a salary that's what? We just figured here, but employee costs are zero. Okay, your total fixed expenses are one hundred twenty three thousand dollars a year that's just what it costs to feed your business. Okay, so the growth part profit margin has to do with your cost of goods. So I'm gonna put in point seven five here to equal a twenty five percent cost of good point two five rights. If your cost of good is twenty five percent, your gross profit margin is seventy five percent makes sense now this is a very loose spreadsheet this does not get into the degree details there are a lot more expenses on here that I didn't include and we're kind of just grouping and altogether we're not we're not running exact numbers you see, I just want to give you an idea that means that to break even in your studio break even you need to make one hundred sixty four thousand dollars a year from clients. How many sessions do you want to do a month? How many? Twelve, twelve sessions a month let's put in twelve sessions right here you need to average eleven hundred thirty nine dollars procession in order to make this amount of money now most companies wanna profit instead of just break even that's the whole point stockbroker stockholders all that they expect a prophet to get dividends right? So to make just a ten percent profit in your company company at twelve sessions each session needs toe average twelve hundred and fifty three dollars in order for you to make a ten percent profit in your company and grow every year. So to grow you need to profit right if you want to re invest money back into the company to grow it bigger, you need to make maur than just breaking even now twelve sessions a month is about three a week that's a lot of sessions my number is eight seventeen hundred dollars a session to break even. I know that's depressing. Depressing, isn't it? And when I say eight sessions a month, I mean an average of eight sessions a month, not oh, eight one month five the other nine one month's athe other I mean, we're talking. That means that some sessions like this last month, I've been prepping for creative lives, so we only had, like, four sessions that's gonna pull my average down, right? So I need to make up for that fried by this holiday season, doing ten, fifteen sessions a month to make up for those numbers. Do you follow? So that's an average? So how many of you think you could get eight clients in a month on average? Right now? Good. A few. Can you do it at that average sale? Seventeen hundred dollars a month, seventy five dollars a session. I know it's hard to think about, isn't it, it's really depressing. So, yeah, I could get the client numbers in, but now I'm going to be really expensive to make it happen. Now, those of you who only cover half your family's expenses so let's put in twenty five thousand dollars there. Yeah. Can I ask a quick question? Of course, so when you have your how much you're supposed to be making on your cell does that take into account paying for the products that you need from it does yeah that's where the profit margin comes in ok, so that number there is starting to account for the cost of goods and I'm gonna go into that more here in a minute so back to my was a good question hon thank you s o back to my original thing here if you're only paying half your family's expenses so twenty five thousand you still need to make twelve hundred and twenty two dollars per session in order to break even with eight sessions a month so as you can see, I contribute to my family's expenses by forty percent so my number can be a little bit less do I want it that way? Heck no, I want to be making more money, right? So the goal is to either bring in more sessions or up my average those of my options. Now if you don't have systems in place bringing in more people's gonna run you into a dead end train wreck because you're like I can't handle all these people because I'm not things are not systemized I can raise my prices, but then the phone doesn't ring as much so because you become more of an exclusive trade and it's a little scary and your brand better match your price if clients are going to spend two or three thousand dollars for you every time they come in then your brand better look like you're worth two or three thousand dollars right? So you see the dilemma you've got a choice neither choice is very explained I mean I like it but I'm crazy so you've got to ask yourself where do I want to go with my business if you want more volume with a lower price you better bring in systems to help you handle that that volume in that business granted I think you need systems anyway I wouldn't be teaching this course but my point is is that you'll get even into more of a mess if you don't have things clearly defined on howto handle that kind of volume a plan okay if you want to go the other direction and be a high end high quality business which is much easier for the solo entrepreneur then you need to figure out how to get that average and that number of client through the door correct thoughts I don't see tears rolling that's a good thing I just said well cry later when we're doing this sheet yeah when your own numbers and our own costume oh yeah and you're going to totally fudge with it you're like what can I what can I cat and that's yeah rent is one but even so okay let's do that let's do that really quick okay, so let's say two hundred dollars a month right? I was twelve twenty, fifty dollars here, right? Okay. And half the income of your family I know she's like oh my gosh, I still have to make a thousand dollars a session yeah oh my goodness I'm hearing oh my goodness. Okay, so this works she I don't know if it's exactly the same but when you did that pricing in sales workshop but uh I don't know how long ago was I implemented this into my business and yeah it's a little depressing at first, but the really cool thing about this is that you start to realize that you're basically paying clients to do the work for them if you're not getting those averages and while it might be depressing to realize that it really makes you so much smarter doing this and I'm speaking from experience this is so helpful it's changed the way that I look at things and if you're not doing this you should be thank you don I appreciate that working what do we take that so we record that no and she's she's thank you. That means that actually means a lot thank you if I did the same exact thing that you guys I saw this sheet back in two thousand eight two thousand seven whenever it was and I literally went home that night and the tears were just I was just like oh my god I don't know if I could do this and I know you guys are all have that little doubt in your heart especially if your averages are not over a thousand dollars a sail but now you see why I'm so adamant about having a thousand dollars sailor better and now you see why stress strategically setting up your pricing to make your clients by at that thousand dollar number is so vital to your success and clients don't get it they never will they look at the usb is being a little five dollar piece of gear and wonder why it cost so much to pay for the digital files you know better knowledge is power and then the only accomplishment you need to get into your brain standing up for your business and going it does cost that much and when you see the numbers and the math like that it really makes you go I need to start standing up for my kid no one's gonna bully my kid because I know this is what my kid needs to survive and when I say kid I mean your business okay so be the parent you are to your own true human being children and protect the business protect what it needs and it is frustrating when you see other photographers who are hobbyists who charged one hundred dollars for the disks shooting burn it's infuriating I know I know, I know, I know it's so infuriating that's this is why I changed the stuff I'm hoping they're watching and they'll figure it out they'll go oh my god I need to make a lot of money doing this they will quickly realize or they will always be a hobbyist but let's look att look at any other industry okay, every industry has this problem graphic design same thing much people out there who think they could be a graphic designer they charge nothing for it. Meanwhile, the major advertising branding and marketing houses air like we're getting sold out to these people who don't nothing and we're never gonna make a living it just comes down to pure business skills. Okay, but consider the number of sessions that you're willing to do a month and able to do consistently with customer service that is systemized in the same for every single client who comes to your door. Eight is a lot for one person if you're going to be a high quality branded studio if you're going to high volume at low price it's not money you're gonna need a lot more but they need to make sure you systemized okay this confirms how important systems are really does if you can ensure that every client will spend your average sale, then all you need to focus on is getting those clients through the door right so if you have a system that you can rely on that you know people are going to spend what you need them to spend all of a sudden your worries focused more on making sure you get enough people right so we're gonna take that worry off your back and we're gonna price that's why a pricing model that's effective is so important bookkeeping I hate booking I hate bookkeeping it's time consuming it's annoying it's depressing and I'm pretty much in denial when it comes to keeping okay you would think my count tells me he got cody here like every monday morning I spent fifteen minutes just inputting all my expenses and so I'm like if I actually committed to that it would be easy but I cannot commit to that so my problem is is what a year I would do all my accounting it's terrible it's so stupid it's so stupid totally admitting my flaws here we are and my husband used to beat me the pieces it's like march fifteenth and he's like taking about keeping tell you about keeping gamble keeping and literally on april fifteenth I'm writing a check and when you have to write a five figure check to the government it's depressing that will never happen again I have now moved over to an s corp and I have people who are now taking care of my bookkeeping my counting so that is a thing of the past thank god but that's why I'm saying outsourcing sometimes it is the best way to go some people are numbers folks I know a lot of sepa and account people who are enough dogs and they're so good at it they just like it it's nothing to them they love it they love numbers and I'm okay go crazy but my point is I'm an artist I don't like it so I outsource it but studio cloud which is my studio management software is how I did it for a long time and it's absolutely fantastic because it keeps track of your entire accounts it breaks things down for you it shows your reports your numbers were spending money okay it shows you where your money is coming from so what types of sessions? How many newborns are pulling in how much money how many products are selling? How many tens are you selling a year? Is that a profitable product? That's how I figured out the standouts weren't really selling in my studio so I was like I should probably pull that that stuff but having a good studio management software that can help you with this and there's lots of them out there quickbooks being one of the most popular for small business owners however there are so many now that are geared towards photographers that will do so muchmore than just money in money out so I strongly encourage you to um look at different options no studio cloud is my favorite it's free you think what's the catch there is a paid version of it, which is the pro version which has some extra features, but I didn't start using the pro version until two years into the game. Okay, so you can't for those of you who can't afford a good software studio college, your answer because it's free until you really need this until you really need the pro features which won't be until your business is fairly launched off the ground. Okay, but there's seventeen hats there's talk of a there's shoot q there's pics if I there's a light blue, which is a london based company or uk based company and most of these integrate with pro select which is what most my biggest thing, so you'll need to research the different studio management software's out there to see what's gonna work for you. And of course, you can keep using quickbooks if that's what you're using right now, but I want a few pieces of software in my studio is possible I have a photo shop, pro select and studio crowd that's it so we need okay? Because all three pieces the software can do everything I need teo and it costs about fifty bucks a month tohave all three pieces to do clouds free photo shops ten bucks a month and pro select pro I think it's sixty bucks for a sec pro is fifty dollars a month if you want to lease the software okay so sixty dollars a month to handle all those things is a nice low cost so think about that stuff my opinion is outsource it totally my opinion some of you may love to do it on it took me years to figure this out I kept thinking I could do it I'll do it this year olds keep up this year I'll do it right this year I'll make it happen new year's resolution this year I will do my taxes before january thirtieth okay I finally just gave up realize my deficiency and went okay outsource it it's not that expensive to outsource you know now that I'm an s corp I'm on payroll so I have to pay a payroll company I don't want to do my paper roll either I do my payroll company and cost me fifty bucks a month for my payroll and okay ping is the same thing so a hundred bucks a month to do my bookkeeping and my payroll that it's so worth it okay, so you guys might not be a point your business yet where you really wantto take that into a factor but trust me as you grow and do this some things are just not worth the time cheaper and easier to pay somebody because it would take me hours to do my bookkeeping and I can pay someone else fifty bucks to do it and it's done that fifty bucks to me I can make ten times over by not doing my bookkeeping makes us okay don't procrastinate don't wait till years in leave it to uncle tom your uncle who thinks he can do your business for you or worse yet uncle sam don't leave it to uncle sam that's a disaster waiting to happen and don't wing it okay I totally did all of those when I first started and now definitely learning lessons so anyway, when is a good time to make the leap it's a scary lied to make how many of you are have other jobs right now? Okay, so was that half of you half like a third of you? I have other jobs right now and so the arrest of uru full time you're full time photographer okay one was a good time for you guys who did it who do it full time did you make a leap suddenly or did you gradually move into it suddenly molly says suddenly lost her job same here okay, what about you lost my job lost her job funny how that forces you into things it's never a good time to leap into it is it it's always scary it always will be scary so just know that it's going to be scary face your fear and it won't be quite a scary okay so maybe I was kind of forced a cz well, this is me on my last day at k to television they always send me to the top of mount hood. Okay, I was a meteorologist and so the last day, of course it was april and there was a freak snowstorm at the top of the hill an hour and a half out up the top of mount hood, which is what about ten thousand feet up and they always send me there because the weather person has to go to the top of mount hood when it's snowing it's like you know, even though there's no snow so this is me on my last day at k two in the abc feel in portland and I literally lost my job my boss had come into me and rightfully so I was a terrible employee at this point. I I totally deserved it because I just my heart wasn't in it. I have been doing photography for two years and this was two thousand eight and I was like, john they had demoted me to the weekend iron man shift where I was doing all shows all days and getting three hours asleep on a saturday night and I hated it, okay? I was exhausted all the time I was trying to do two jobs at once, so I did the absolute minimum I had teo on katie you and they knew it. My contract was up in april of two thousand eight and, um my boss pushed me in the office he's like he's like really serious it's kind of funny and he's really a serious he goes julia I hate to say it, but we've decided not to renew your contract and I just looked him right in thank god I need it and he just like, looked at me like, oh my gosh, what just happened? He was not expecting that reaction out of me because I was so happy that he was not going to renew my contract, so it was a mutually agreeable decision to leave they didn't want me and I didn't want them and then I proceeded to over the next course of the hour and a half tell him how horrible his marketing was, how terrible he was the boss and that he should change things. It was a great conversation, he was really nice about it and he was very receptive. It was actually the best conversation I've ever had with my boss I'm like, why couldn't you be like this when I was working for you? You know it wasn't until I actually quit that he was like no ok we can talk now just strange some people don't make good bosses whatever but anyway news directors are notoriously like bad bosses I say that with a and king five is like right across the street the nbc affiliate here and create a black like great okay um so what's the issue with television is that you have this thing called a non compete for six months you are not allowed to appear appear on the air in any other competing station in your market so that was my problem I'm in portland I have a man whom I love I have a home and a mortgage and I can't work in my field for six months it's very stressful I mean for lack of a better word and I can say that because I'm not the industry anymore television news is slave labor they make you sign a contract that basically waves your rights to trials to you no right to work laws all this stuff because there's always somebody younger better cuter who's willing to do what your job for nothing pretty much does that sound familiar yeah ok so it was two thousand eight remember two thousand eight yeah and I had a house and couldn't pay for it what would you call that up a creek without a paddle yeah a big ugly brown creek okay hey you went there! I did I guess I know say's you do what you have to do in times of heat right? You're up another brand creek you better figure out how to get out of it so you didn't don't end up sticking on the way out so sometimes what happens to you is just what you need and I think those of you who have made the leap fulton full time without wanting to did so. Net now looking back I realized it was the best thing for you even though your standard of living I mean literally I went from making almost six figures a year in television down to my first year in business. That was my third year. I only I think I grossed fifty thousand that year, okay, and don't forget I have studio I was sharing space with someone so it was desperate times call for desperate, desperate measures and thank goodness my house sold within three months. But I remember literally my husband let me move in with him at the time and I remember literally having to ask him for gas because remember summer of two thousand eight when gas was like four fifty a gallon and there it was like twenty miles fifteen miles between his house and my house and I could not afford to pay the gas to drive to see him? It was that that okay so sometimes you're forced into it, you just do what you need to do to survive, but I want you to at least try to do it right so that you set yourself up for long term success rather than just a short term band aid fix. Okay, if you are going to make if you have the option and you're not kicked out of your job with the desire to not renew your contract, then you have to plan for it. So you should be having at this, but I know this is hard, but trust me, I worked a full time job and tried to launch a studio for two years. It is not easy to work two jobs. I mean, I was working, I know it was not a forty hour week let's put it that way, it was more like a sixty hour week, sixty five hour week that's all I did, I didn't have a life. My boyfriend was my husband that I was kind of like, I don't ever see you, you know what you want to do is pull back your costs as if you don't have a job while you still have your current one, so cut your living expenses as much as you can pretend that you don't have an income and the income that does come in, suck it away that may mean living on your spouse's income while you're building up a savings account to which you can't because you don't want to end up in a situation where you try to make this leap and then you don't have a cushion to fall back on, so just be a little strategic about this and plan, so make sure you have enough client numbers to sustain you want a good six months savings to help you get your feet off the ground? Ah set and reliable family budget that you guys can stick to a strong business plan a plan for how you're going to grow your clients your system set in place everything ready to go ah, full understanding of your numbers and if you are profitable, why on earth would you take the leap if you didn't know you were making money? That would be stu p I d very stupid don't do that to yourself if you've already done it it's okay, we all make mistakes no, seriously, I mean, we do will make mistakes and some people don't look before they leap I'm kind of one of those people I get really excited and passionate about something you just do it okay? Some people like have to make sure there's water down there at the bottom of the cliff before they jump, okay? So ask yourself if you look before you leap you leave and know how many extra clients you'll need to cover your former income that means doing the break even worksheet and of course factoring in those self employment costs. Okay, so those of you who are part time right now are you ready to make the leap to full time yet based on what we've just told you know it's gonna be a little while it's okay? It's okay, I was there too we all are we all start the bottom and have to go up I just hope you're being able to see it strategically now from the big picture what am I doing this whole time? Guys? Since day one what have I been doing to you? I'm making you get on a plane and see your business from forty thousand feet and then I'm taking you dive for a dive back inside of it to explore the nooks and crannies and then we fly back out again and look at it from forty thousand feet that's what it means to be an entrepreneur if there's one skill I want you to learn this entire five weeks it's how to do that and how to be self aware within your business. If you could do that it's gonna work trust me, you could make it work, okay let's talk about moving to studio space now how many of you have actual retail space okay, so just two of you so a lot of you probably are thinking that that's the dream right that you want to move to a studio spaces at the dream who wants to? Okay, I'll tell you the present, hans, and we're gonna talk about when is a good time to do that again. Consistent client numbers six months savings, a steady income from your business capital to improve the space and a solid brand that's what you need very similar to what you need when it comes to leaping to full time. Okay, any space you get is going to require capital improvements, right? Sometimes your landlord will provide tea I or tenant improvement cash to help you do that, but that means you're ready because it all gets patted into the price of the of the space. Okay, you have to have a solid brand because now all of a sudden you're in a space that business has its own entity it's a personality, so you need that personality and brand to emanate from every part of the space. If you have six months savings if your client numbers start to fluctuate because you've actually basically change your business right, you're probably raising your prices things are moving around a little bit, so keeping those consistent client numbers might not might be a little inconsistent for awhile as you change things up so it's important to have a cushion that will allow you to cover that too to make up for until things start to smooth out don'tjust rent what you can afford that's crazy talk don't be in a hurry don't take whatever is available this is a very strategic decision in your business ok don't jump without thinking about it or be learned by squirrels and shiny objects you're laughing because you know it's true oh shiny things what's that movie it's bugs a bug's life henry don't look at the light oh good feeling gone yeah neighbor disney rosh huh and squirrels is from up right yeah from the movie up lots of disney references for me I have a four year old okay so what is important when it comes to a studio space what should you be thinking about and how should you strategize what to get idea's location square footage yeah lighting lighting yeah accessibility what did you look for my dear your brand and what you how you want it to be represented with a space yes very good you guys are on the right track you're learning something a fighting the lightbulbs going on lovett location location well okay send it's just like in any of your real estate industry right it impacts your brands right you have a high end brand you need to be in a decent spot now do you have to be in the best spot possible you don't need to be on rodeo drive or what's the driving them florida and that palm beach, which is true, south beach is like some great, like all the chanel stores and stuff from that slipping my mind, but you don't have to be on with those fancy shmancy horny twenty street, but you do need to be in a clean, safe, accessible area, an area that reflects how you want your brand to be. If you really have it good, then you want to be where your clients are. You know what your clients to have to drive the huge distance to come see you right now in a major, much policy area that sometimes a challenge because there's so many people I always say, focus on your zip code for especially if you live in a decent zip code. If you don't live in a decent zip code, figure out the zip code you want to be in and go get a studio space there if you can afford it. So this is where strategic thinking and, you know, you need to kind of search a little bit and there's going to be options to away and there's so many scenarios, I can't you know hashem all out with you, but you need to figure out where your clients are. And try to get space in that area are very close to it, but don't go somewhere dangerous or ratty or dirty or I mean, think about where you're putting your space because it makes such an impact is their accessibility. I mean, me, I wanted to be downtown, ben, but I thought the better of it parking in downtown ben is a nightmare, and I've got mama's coming in with car seats and siblings and babies, and that would be such bad customer service, so I'm in a little retail outlet that's, kind of between the two downtown course and it's got a big, beautiful parking lot think about those things. Consider sharing space, but make sure it's a good fit don't share with a direct competitors that would be a little silly. Right? However, there is nothing wrong with sharing with someone who doesn't do something in your field. For example, molly shares with a family photographer, and she does newborns close but not close enough. If she was sharing with another newborn photographer, it would be hard for her sharing with the wedding of your portrait sharing with wedding or commercial. For me, the commercial photography thing was awesome because they use the studio on certain days of the month so they would use the studio all day on a wednesday. Or whatever and so I knew and my sessions were so short and in the mornings I could share the space around them without stepping on their toes and it worked very symbiotically it was great. Okay, so sharing is sometimes a great option but make sure everything is laid out in writing, scheduling who's going to pay for what? How its gonna operate who's going to decorate and the other challenge you're gonna have is who gets to brand it yeah molly's going yeah I'm in that situation right now it's hard because you want your brand to speak out but they want their brand to speak out so how do you do it? Do you split the space evenly? Do you trade out every month? I mean, what do you d'oh so think about these things before you decide to share space because they're all very strategic decisions and finally don't before you know that the pros and cons of moving into spaces is uh something to really ask yourself a lot of people ask me do I really need to get studio space? No you don't it's perfectly fine to work out of your home however I want to tell you what happened to me when I moved to studio space my clients, my business increased for sure my clients looked at mia's more professional I was able to charge higher prices which meant higher averages I had more brand because I was able to take it out of my home and put it into a business I felt an enormous amount of respect from my clients and from potential clients who were visiting the space there was more of his ability and best of all I'm able to lock the door and walk away from it which for my personality was huge I really needed that you realize I needed that until I got a space that's gonna cost you a lot more there's a lot more ongoing expenses there's maintenance more commitment or responsibility and a lot more pressure because you've got a lease and you cannot break that leased or you will lose a boat ton of money okay, so you have to be able to make that commitment and your prices have to be hired to cover the overhead it's easier to do so because the business looks more you know it has that more professional aura but it doesn't mean you can't spin having a home studio into something really amazing and beautiful and still make money and like I showed you in previous lessons pp a benchmark says home studios make a hell of a lot more money than retail places dio you're actually going to be more profitable if you stay at home does that make sense to you to see that so there's nothing wrong with being in home studio there's just a different vibe and you have to ask yourself what vibe you want and what you need to run your business efficiently. All right? Yeah. Question before I move on, it's kind of along with brandon as well. But when you shared a space, I know you were in charge of the branding, but whose logo and business name went on the front was their business name on the front. Was it all of you are? Yeah, we all three were listed. Um, it was like, a it was our old historic building in downtown portland, and so we had kind of a major section of the second floor, and so clients had to walk up stairs inside the building to get to it. So it wasn't like a store street front space. So when you walk up the stairs, all of our logos were sitting on the side there, so my clients knew that I shared space and that was fine. But like I said, they were commercial photographer guys, they didn't really care about the inside of the space looking good. It was so utilitarian for them, they just needed to function. But when I walked in and sign, like, listens hip, cool space, I could make this into something neat, I mean, you guys saw it the other day, it's very chic and brick walls and old nineteen hundred wood floors and had that charm associated with it that I love so much and so I knew I could work with it and they knew they could work with me because of my scheduling and when I did actually put in furniture and make it look pretty with the brand they liked it they were like oh this is great and they started bringing more klein and in but it didn't have to be their brand because that was not without their business depended on does that make sense so yes there was a sign on the door and I had all three of us on there so the question for you on k kinks ah lot of you have been in business for the wall right? How many years what's my top what's my longest running person here five years, eight years nine years okay are there times when you can't figure out why you're not making money? Yeah, I think that there's times where you look and start to feel the burn out and feel like you're busting your behind and doing in your mind everything right and you just can't quite get over the hump yeah basically yeah there's been many times when I felt like that and pushing on sometimes it's really hard to dio I want you if you have a moment in your business when you're not profitable or year running ragged burning the candle at both ends you need to look at a few key areas this is where you've got to get on a plane and go out to forty thousand feet I want you to look at your cost versus what you're charging these are the major three areas why studios air not profitable there costs are too high and their prices are too low and they're underestimating their costs they haven't really put their cost together to figure out what it's what it's what is taking to produce a product in both time hard costs, packaging all that good stuff then step out and look at your expenses versus your revenue especially if you're not doing your bookkeeping very well chances are you're spending too much money yeah, I know it's like nobody wants to admit it but it's true I spend too much money I totally d'oh okay it's time to go on a diet you know it's time to stop spending money stopped the bleeding and only you are in control of that blood coming out if you can't cover your expenses with your revenue you're going to lose money right that's kind of a black and white the moment the other evil twin to money is time you may be spending way too much time on things, so ask yourself if everything in your business is time efficient because if it's not that's, costing you money, right, time is money his age old saying, time is money and it's very true, and a lot of photographers, uh, find themselves running ragged at both ends, and they can't figure out why they're so busy, but not making any money well, because they're spending too much time or they're paying employees they can't afford. Okay, a lot of people bring on employees way too early, increase their hours way too early, and they realized I can't afford to pay this because I'm not paying myself. There is absolutely no reason for you to be paying someone else to do something. If you're not making money, so there's a balance between that. If you can pay someone less, then what you pay yourself to do the same job, and you know that your time can be spent making more money than yeah, it's. A good deal so important to assess.