How did everyone go last week with their timings? Make sure you keep them written down, what you wrote out, as this is the start of you writing your systems for your business.
Every business needs systems to fuction properly and to create a consistant and postive image to your business. If you allow staff as you get them to create their own systems this will give your business an identity that you may not want or need. Sometimes it’s hard to think about that sort of thing when you start out, but this is the most important time to do it. If your prepared along the way, your allowing your business to grow in a more postive and natrual way . If you don’t have them and all of a sudden your business gets overwhelming to deal with, you make decisions on the fly ,which may have a negative impact.
It’s never to early to think about where you’re headed and your end goals, without goals for you business you can’t put the steps in place to get there. Where are you headed, how many staff would you like? What would a week look like when you have gotten there? What would your life look like? May sound airy fairy but it isn’t, this is extremely important to a business to give it a postive direction.
Remember a business is like a tree, if it isn’t growing, it is dyeing. Taken from Brad Sugars book ” The Business Coach”
While I’m on the subject of books, every person starting out in business should read the book. The E myth revisted by Michael E Gerber.This book talks about why businesses don’t work and how we go about changeing that.
Every business owner needs to wear 3 hats, The Technician which us photographers have no problem with… this is actually carrying out the work of our business. The Entrepreneur – this is the part of us that grows the business and thinks up the fabulous ideas to make things happen. And last The Manager – this is what most people in our line of business have trouble with and it’s the part we all need to learn the most. It’s running the business, working on the business, creating systems, managing staff. I am a victim of this side…I love the entrepreneur in me, I love thinking up new ideas and watching my business plans grow. This is really my 3rd business, I love starting up new businesses and find it terribly exciting but I need the manager to come out and control and direct these wild ideas I have, otherwise I just spend and spend to grow and grow without systems and planing.
After selling my first business I realised the importance of having systems and a business manuel. I started this business with my sister in our lounge room which is the story of most SAHM’s. We grew it so big so quickly that we didn’t have the time, energy or resources to keep running it. We needed a commercial property to house all out wares as they were taking over both of our houses. We were also doing this with at the time 5 little kids running around ( I had 2 under 2 and my sister had 3 under 4).. surely a recipe for disaster. I had my third child due any day and that was when we decided to sell, it was getting too much, we were working 7 days a week, 16 hours a day whilst running our families, something had to give.
I knew we would not be able to sell the business unless we had a turn key operation and so that is when my Husband and I ( He writes manuels for his business) sat down and had to get everything out of our heads onto paper.
What a task!! But we did it and we made really good money out of the sale. This I put into my photography and interior design business which is now just photography ( and that I love more than anything, oh except my family). I quickly learn’t the importance of growing organically and also having those systems in place so when it does get busy I can hire staff and they know their place and job from day one . This I developed further and learn’t more through having a coach as I knew I had to do it.
Anyway thats my story of what forced me into action.
Today we are chatting about working on your break even amount. So many people just float through their business with no idea how much their business costs to run and how many sales they need to make in order for it to run.
Again it’s so easy to work out.
I re-did mine again the other night which I think you need to do every year. My business has gone through massive growth the last 2 years and so has my expenditure so it was time to re- evaluate what my business costs to run.
I’m not the best with excel, so i had my hubby finally sit down and teach me it and boy how embarrassing… it was so easy!!
I printed out my P&L for this year to date( profit and loss) out of MYOB so it was easy to see what I spend money on etc.
Write a column in excell of all your costs eg:
commecial ( if you have one)
public liability insurance
memberships ( AIPP etc)
Personal development ( seminars etc)
This is just an example of some costs that most photography studios have, your’s will probably be different. Now in the next column write how much per year these things cost you. It’s always better to be exact or to over estimate as people tend to think they spend less than they actually do. Add that all up in a total column at the end. Now you can divide that into 12 months and even weeks..This is how much you have to make a week to break even.
On the next page on your spreadsheet you can put your package costs. I itemise it so I can see eg: time, album, prints, etc in a colum with how much each package costs me. I put down how much I charge for the package under the total and than can work out my profit margin on each package.
package 1 ( a plucked an example use what ever you charge)
time 35 hours ( as per last blog post) @ $ 50 = 1750
album 20 sides $800 ( example)
DVD etc etc
total = $2650
price I charge the customer $2,200
Total profit = -$450 ( woops I am loosing money on this package time to revise)
The good thing about having this in a spreadsheet is that you can go in and change it when ever things change and the tally’s will change accordingly. It is also always there if you need to go to the bank to borrow.
Once you have this on paper it’s now time to play around with goals… Ok so I know I need to make this a month to break even, lets say $15,000 for a just a number. I can now predict how many of each package I have to do a year to make a profit. This gives me control as well over my year and allows me to not to just book things in willy nilly.
As an example ( totally fiction just plucking numbers out of the air) : I would like my business next year to have a turn over of $200,000 a year…what does this look like in terms of sales? How many customers do I need to book to achieve this? can I do this on my own or will I need staff to help me achieve this? you can see how this enables you to have more freedom and not let it just sneak up on you. How much will my costs be ?
Ok so i will need an admin person for 15 hours a week to guarantee my customers are answered promptly, bookkeeping up to date, orders dispatched etc as I will be busy shooting. I will also need another part-time photographer to help. If you want to remain boutique and only have you shooting, than you may need to up your prices so you can handle the workload and only do say 35 weddings a year and than hire an admin person full-time and maybe someone to help with raw processing. Totally up to you.
This is the good thing about knowing your facts and figures, it gives you freedom to plan ahead. So you can see where your heading, to play around with numbers so you can shoot what you can handle and really look after each customer the way you would like to. There is no use being super busy doing loads of weddings and spending 16 hours a day behind the computer, if your letting your customers down in the process, because you can’t do it all.
Think ahead, know your numbers and work how you would like to work and how you dream of working. We spend so much time on seminars learning our skill yet we don’t spend the time on our business. Crazy hey!
Here is an example of my pie chart, my fabulous Hubby showed me how to do this the other night this is easy to do once you have your costs into excel. This shows me what I spend most of my money on and the least.. how I can reduce it or where I need to do better. This is actually a prediction for me for 2 years time…as I said I love planing my future!
This took me about 1.5 hours the other night to do, so don’t say you don’t have time!!