Can I Afford That New Camera? – Free PDF Guide

“Can I afford that new camera?”  It’s a question every photographer faces, but many don’t know how to legitimately answer it.  If you really want to know whether you can afford a new piece of gear, this guide is for you.  Written by Jerry Weiner – PWD Labs CEO and Business of Photography speaker, – this fun and easy-to-follow guide requires no accounting experience, instead walking you step-by-step through the process of creating a simple cash flow table that can be used to monitor your business and plan for that shiny, new camera.

Click here to download this great guide.

Introducing the World’s Next Great Photographer!

You’ve done it. You captured an amazing image. It took serious forethought, practiced skill, and a bit of luck. You took the image home and tweaked it for hours in Photoshop, and now it just sings. It may, in fact, be the best picture ever taken, and it’s on your blog for all the world to see. So why aren’t the awards rolling in? Why isn’t the phone ringing with clients? Why haven’t you been crowned the World’s Next Great Photographer yet? Well, sorry. We all know that it simply doesn’t work that way.  The gap between reality and the dream of fame and fortune found in the photographic arts is pretty wide. And yet, the approach taken by a lot of photographers to their businesses suggests that they are chasing the Holy Grail of using their images to define themselves and their businesses.  Unfortunately, that’s not the way to build a successful photography business. So what does it take?  Yes, a trained, artistic eye and the knowledge required to successfully leverage today’s digital technology – both behind the camera and in front of the computer – are critical to producing images that wow any client.  But we know that it’s not just about the images. It’s also about you. Think about your favorite restaurant.  Think about why you go back again and again.  Is it solely because of the food?  The food, of course, has to meet certain standards but even the best food won’t get you back to a restaurant that doesn’t make you feel good about the experience.  In a word, it’s about service.  But even more than that, it’s about how people feel about the person they are buying from, especially when it comes to professional services such as photography. People initially buy from people that they are comfortable with and go back to buy again from people with which they have had good experiences.  This is not news.  The key is to figure out how best to apply this to the task of building a successful photography business. Here are three things to think about in that regard: 1. Spend some time understanding how you are perceived by others, especially potential clients.  Objectively understand your own strengths and weaknesses.  Learn to leverage your strengths and minimize or eliminate the things that get in the way. 2. Define your niche and become what you want people to think you are.  If you want to be the premier baby photographer in your market, then everything you do must scream “premier baby photographer.” Define what you are to yourself, and believe that you can be all you want to be.  If you don’t believe it, it will be very hard to convince anyone else. 3. Separate the wheat from the chaff.  That is, figure out which activities help to build your business and which ones don’t.  Spending more time perfecting images may not be as worthwhile as networking with other wedding vendors, getting to know the local market, spending time responding to inquiries from prospective clients or keeping existing clients happy. As with most things in life, there is no magic formula or secret sauce that will provide the path to success.  The key is to understand first and foremost what it is you are selling and then to make sure that your day-to-day actions are consistent with that vision. A successful business requires a skillful balance, so don’t get bogged down in the art and technology of photography at the expense of networking and serving clients. Similarly, don’t completely ignore your art. Ultimately, it’s this balance of photographic skill and business prowess that will lead to the world’s next great photographer. Will it be you?

The Business of Photography: Who Are You Hiding From?

 

I spend a lot of time collecting photographers’ business cards and looking at their web sites and blogs.  This is a fun part of my job.  Most of the time it’s fun because I get to see a lot of great images and read a lot of interesting stories about people.  But sometimes it’s fun because I get to be a detective; I have to figure out how to find a photographer’s email address and phone number, even though I have their business card and am on their web site.

This seems to be fairly common in our industry but strikes me as strange, so I asked around about it.  I was told that someone at a marketing class said you should force the prospective customer to go to your Contact Me page and use the contact form.

I don’t understand the reasoning for this.  Why would you want to make it harder for prospective customers to find you?  After all, there are plenty of photographers out there that readily share their contact info.

Prospective customers are unlikely to go to any extra effort, no different than for any other product or service they purchase.  A lot has changed in the digital age, but not this.  Consumers want the path of least resistance for their shopping.  The best response to this is to make it easy for prospective customers to contact you once they’ve found you.

In fact, don’t just make it easy, do whatever you can to increase the chances that prospects can contact you.  Your email address and phone number, along with your name, should be clearly displayed on your business card, every page of your web site and blog, and on all of your printed material.  You never know when the decision to contact you is made, so it is critical that you be as close as possible when that happens.  Having your contact information front-and-center at all times gets you there and makes it easier for the prospect to become your customer.

 

PWD Labs Interview on KEH Blog

PWD owner and CEO Jerry Weiner was recently interviewed by Patrick Douglas at KEH.  Read Jerry’s thoughts on business, the printing industry and more over at the KEH Blog.

Business of Photography presented at Skip’s Summer School

Our own CEO, Jerry Weiner, has the honor of speaking at this weekend’s Skip’s Summer School in Las Vegas.  He will be giving four bite-size presentations on the Business of Photography (BoP), and you can get a sneak peek by checking out the presentation slides here. Click below to download the presentation slides: BoP – The Lessons of Annie Lebovitz (PDF) BoP – Photography Is a Business (PDF) BoP – Marketing ABCs (PDF) BoP - Outsourcing Your Post Production (PDF) Read full BoP articles right here on the PWD blog.  Click here. Do you have a photography business question?  Let us know by leaving a comment below.

The Business of Photography: The Lessons of Annie Leibowitz

If you haven’t seen the news lately, famous photographer Annie Leibowitz is reported to be in deep financial trouble.  Though she earned tens of millions of dollars during her career, she is said to be at least $24 million in debt and in danger of losing the rights to her own work forever.  How could this be?  Was Miss Leibowitz affected by the current recession?  Maybe she was a victim of a Ponzi scheme?

This story isn’t new; Annie Leibowitz’s financial problems started long before the current recession and years before anyone heard of Bernie Madoff.   Her story is a sad but familiar one which provides valuable lessons for all of us.   It has nothing to do with not having made enough money and everything to do with not being financially responsible.  Annie Leibowitz’s specific problems are reported to relate to the purchases and renovations of a number of expensive pieces of real estate as well as her out-of-control personal spending.  Despite this famous artist’s considerable annual earnings, the debt-service, staff and upkeep of her properties, along with a free-spending life style, outstripped her ability to have a positive cash flow.  The only solution when that happens is to take on even more debt to feed the negative cash flow, using whatever assets you have not yet pledged as collateral.  It is a vicious cycle that usually ends in disaster.

The lessons of Annie Leibowitz, obvious as they may seem, are worth reviewing.  Clearly, not everyone grasps them fully.

It’s Not About How Much You Make…
…it’s about how much you keep.  Some stars end up poor while some schleppers retire comfortably.  The math is pretty easy to do:  the less you spend, the more you keep.  Making more certainly helps you keep more (again, only if you don’t spend it all).  Of course, that doesn’t mean a photographer shouldn’t spend at all.  New equipment needs to be purchased, marketing efforts deployed, and employees rewarded for their contributions.  Building a business to be successful over a long-period of time requires as much of an investment in your employees (assistants, second shooters) and products as it does in your cameras and other equipment – maybe more.

Don’t forget about your business plan.  Surpassing expectations is a wonderful thing, but make sure you know what to do when that happens.  Many small business owners consider any earnings above their annual expectation to be a bonus that should be saved for those years when things are not as good as expected.  “Catch a falling star and put it in your pocket.  Save it for a rainy day.”  When you have an unexpected increase in the amounts you bring in, thank your employees appropriately and then do what your plan suggests.  If you don’t have a plan, put the excess in the bank and develop one.

Debt is a Four-Letter Word
Without debt, most people would not be able to buy a car or a house, among other things.  This type of debt is understandable.  What is not understandable is spending more than you need to when you buy on credit.  If you pay cash and want to “buy up,” that’s one thing; however, doing so when you borrow money for the purchase makes no sense.  Buy only what you need.  Finance only what you can’t pay for with cash.  Pay off your debts as quickly as you can.  When you owe someone for something, it is that much easier for them to take it away from you.  Being debt-free should be a goal everyone works toward.

What about credit cards?  Credit cards and direct vendor accounts should be used for transactional purposes, not financing.  These balances should be paid off in full every month.  Owing large amounts of transactional debt, especially if the amounts are going up, is not good.  Vendors, banks and other lenders have limits to the amounts they will lend to any one customer.  Once you reach that limit, then what will you do?  One of the abject lessons of the Annie Leibowitz story is that there is a wall out there somewhere for each one of us, no matter how rich or famous.

Get ‘em While They’re Hot
Annie Leibowitz reportedly regrets not doing more when she was in her prime to sell her work.  She always took a very long time to deliver to clients– years in some cases – even after receiving payment.  Doing what it takes to put together prints for sale was something with which she reportedly didn’t want to be bothered, and now she regrets missing out on the extra income.

The artistic, right-brained talent, when mixed with a healthy overdose of perfectionism, can result in what appears to the rest of us as rank procrastination.  Truly famous photographers can get away with it – maybe, – but reputations are made and broken based on an ability to deliver within a reasonable amount of time.  Fortunes are made by capitalizing on a good name while it’s hot.  Waiting to do so later is a gamble not worth taking.  Why wait to market and promote yourself?  No matter how well your work is doing, you can always sell it to more people in more places.

Annie Leibowitz is one of the great photographers of all time, so, regardless of how she got to this difficult spot, it is a painful thing to watch.  It remains to be seen how this chapter in the on-going saga of the financial trials and tribulations of Annie Leibowitz will resolve itself, but things don’t look good for our heroine at the moment.  No matter how this turns out, however, the lessons to be learned are clear and real:  pay attention to what you make AND what you spend, use debt only when necessary and sell what you can when you can – you don’t know if you’ll get another chance to do so later.

The Business of Photography – Love Your Numbers

This series of articles, written by Jerry Weiner – CEO and owner of PWD Labs – provides tips and insight into the business end of professional photography.  Feedback, questions, and ideas for future articles are all welcome.

The wonderful thing about professional photography is the ability to earn a living doing something you love.  However, most photographers work as sole proprietors or partners in a small business, and as such they are responsible for a lot more than just photography.  To effectively use detailed tools like the cash flow analysis discussed in the last article, it is important to have appropriate perceptions of and attitudes toward your numbers.  Think of the following as the left-brained approach to numbers.

Separate Your Numbers
Business is business and personal is personal.  You may nod emphatically in agreement, but in a small business it can be difficult to keep things separate.  Still, this is absolutely necessary in order to really get a handle on your business.  Think of the business as a separate entity with its own assets which you cannot touch for personal reasons.  Keep separate bank accounts and accounting records for your business and your personal life.  Your numbers may wish to co-mingle, but stand firm.

Plan Your Numbers
We talked earlier about creating a business plan.  Your plan is how you translate your dreams into tangible results.  You should have a plan with just enough numbers so that when you compare your actual results to them, you will know whether or not you are on track to where you want to be.

Of course, a plan only lasts so long before it is out-of-date.  The value of having a plan results from the process required to develop it, so revising the plan should be just as valuable.  At least once a year, review your short- and long-term plans and update them as necessary.  If circumstances change so drastically during the year that the current plan no longer makes sense, a new plan should be developed as soon as enough is known to be able to do so.

Know Your Numbers
Accountants love playing with numbers and reports as much as photographers love playing with f-stops and poses.  You may not get excited about numbers, but it is important for all business owners to at least keep an eye on the basics.

As detailed in the previous article, you should update your cash flow report each month.  We mentioned keeping two reports – one for planning and one for actual data, – but here’s a tip to combine them into one spreadsheet:  Start your sheet with nothing but planning data, then begin to fill it with actual data as the months pass.  You will overwrite the predicted data with actual data for the month, then go to the end of the report and extend the projection one month further.  Using this method, you’ll have your past history while still keeping a set of projections running well into the future.  Save each month’s file under a different name.

Another thing worth keeping track of is customer activity.  Who bought what and for how much?  This will help you understand which customers are worth a little more attention.  Knowing what products sell best and bring in the most profit also lets you know which products to push the hardest.

Use Your Numbers
Don’t just blindly update your numbers – look at the various components, think about what causes them to go up and down, and compare them to your overall business plan.  Remember, numbers tell a story. If your cash flow projections are very different from your actual numbers, you need to understand why.  What caused the differences, and, more importantly, what impact will that have on other plans you made?  If necessary, adjust your projections going forward.  If you are not meeting your pre-set goals, then you need to take actions toward doing so or change your goals.  Keeping up with numbers is not an end in itself – it’s what you do with those numbers that matters.

Don’t Sweat Your Numbers
My uncle Manny – a CPA – said, “If you’re paying too much tax then you must be making too much money.  Don’t worry about the tax.  Make the money.”  There isn’t much I can add to that.

Love Your Numbers
Okay, that’s taking it too far.  How about “respect your numbers” instead?  You may not be an accountant, but when you combine hard numbers with the hard work you already bring to your business, you’ll be amazed where you can go.

The Business of Photography – Cash Flow

This series of articles, written by Jerry Weiner – CEO and owner of PWD Labs – provides tips and insight into the business end of professional photography.  Feedback, questions, and ideas for future articles are all welcome.

Previously, we started off the business planning process by thinking in generalities of where your photography business is and where it’s going.  Today, we’ll quantify those plans a bit more and discover how to begin tracking results.  After all, what good is having a plan if you don’t know whether it’s working or not?

As we delve deeper into accounting, numbers and spreadsheets don’t worry too much.  The math used in small businesses is, for the most part, simple addition, subtraction, multiplication and division.  “How much did I bring in, how much did I spend and what is my profit?” doesn’t require a bit of calculus to answer.  We do, however, highly recommend becoming familiar with Excel or a similar spreadsheet application, as these will become invaluable tools of your trade.

So, what numbers do we really need to keep an eye on?  Beginning with this one, the next few articles will each focus on a financial topic important to anyone running a photography business.  We’ll offer tips for getting a handle on your numbers, starting with your cash flow.

Cash flow is a great place to begin.  With this single business tool, you can plan and predict your monthly situation to see where you’re going, and you can also track your actual numbers to see how you’re doing.  The first part of this – the prediction stage – is called cash flow forecasting.  By estimating your monthly income and expenses, you’ll know not only how much money is coming in and going out, but also how much money you will have at any given time.  This dimension of timing is crucial and is a main component of cash flow analysis.  In fact, the purpose of cash flow forecasting is less about figuring your profits and more about seeing how much money you have at different times.  For example, you may generate $20,000 in profits this year, but if you don’t have any of that cash when you need it, you may not be able to do what you planned (such as buy that new camera when you want).

The need to keep up with cash flow may seem pretty obvious, but how do you do so?  An easy way to plan and track cash flow is to use a spreadsheet which lists all the possible sources and uses of cash and forecasts them by month into the future.  Here is an example of a six month cash flow forecast:

Let’s break this down:

• On the left, we have our Summary, Sources, and Uses.  To personalize this to your business, you would simply plug in your own sources and uses.  As you do so, think about how to break them out, as the timing of when the money comes or goes is important.
• Going across the spreadsheet are our monthly numbers.  Each month’s Summary section is automated by Excel formulas (again, simple addition and subtraction), so all you need to fill in are the individual sources and uses numbers.  The one exception here is the Beginning Cash Balance for the first month.  You’ll need to enter how much cash you’re starting with, and then whatever is left over at the end of the month automatically becomes the beginning balance for the following month.
• Projecting cash flow for six months is a minimum, but twelve months makes more sense, especially for event photographers who generally book twelve or more months in advance.  Keep in mind that any projection is going to be wrong the moment you put it on paper (or in a spreadsheet).  The further into the future you forecast, the less likely it is that you will be accurate, but that’s okay.  The point here is to think through what should happen as best as possible, not to predict exact future numbers.
• Entering your sources and uses numbers into a cash flow table really is a matter of timing.  Don’t think about your events and other sales in terms of how much you get for them.  Think instead about when you get paid.  Doing a $2,500 wedding today does not mean you made that amount this month.  You probably received a deposit of about 50% upon booking (which means you could have already spent that money twelve months ago), and perhaps you received the remainder thirty days before the event.  Much of the work you do – events, albums, portraits, and more – each have their own cash flow which rarely relates to the timing of when the job is performed.  The same is true for your expenses (think about when you pay the deposit for an album and when you actually see that album).
• Uses of cash fall into a number of categories vis-à-vis cash flow:
  1. Expenses which vary based on the number of jobs you do.  These may include post-production services, printing costs, on-line hosting fees, etc.  You generally won’t pay these costs until two weeks or more after the event.
  2. Expenses which occur every month at about the same level.  These include salaries and benefits, rent, occupancy and other office expenses.  Figure out what those numbers are, figure out when they are going to increase, and forecast them.
  3. Expenses which are paid a few times a year.  These include property and casualty, workers’ comp and liability insurance, and taxes.  Some of these expenses can be paid on a monthly basis but may require a fee to do so.
  4. Expense and outflows which are discretionary in nature.  These include marketing related costs – advertising, sample prints, directory listings, etc. – and equipment purchases.

Linked below is the sample cash flow Excel file.  Taking the time to understand the example spreadsheet or building one yourself is a worthwhile exercise in that it forces you to think through the detailed components and how they fit together.  We recommend creating two versions of your own cash flow spreadsheet: a forecasting version, where you predict your cash inflows and outflows each month; and a tracking version, where you plug in your actual numbers on a monthly basis.  You can keep these as two sheets in the same workbook.

Once you’ve taken the time to construct your own spreadsheet, it is important to keep it updated.  An hour or so of your time each month will pay off big when you are able to get a better handle on your cash flow.  With on-going cash flow planning, you can more accurately predict when you can buy that new camera or how much you can give yourself as a bonus this year.  Knowledge, after all, is power.

About the sample Excel file: The sample workbook linked below has two tabs labeled “Example” and “Blank”.  “Example” is a twelve month version of what you see above.  “Blank” is the same worksheet without any numbers but with formulas intact.    Feel free to modify or fill in either using your own information.  Of course, if you add or delete lines or columns or make any other changes, it becomes your responsibility to make sure the formulas still work.  Enjoy!

Example_Cash_Flow.xls

Let’s break this down:

• On the left, we have our Summary, Sources, and Uses.  To personalize this to your business, you would simply plug in your own sources and uses.  As you do so, think about how to break them out, as the timing of when the money comes or goes is important.
• Going across the spreadsheet are our monthly numbers.  Each month’s Summary section is automated by Excel formulas (again, simple addition and subtraction), so all you need to fill in are the individual sources and uses numbers.  The one exception here is the Beginning Cash Balance for the first month.  You’ll need to enter how much cash you’re starting with, and then whatever is left over at the end of the month automatically becomes the beginning balance for the following month.
• Projecting cash flow for six months is a minimum, but twelve months makes more sense, especially for event photographers who generally book twelve or more months in advance.  Keep in mind that any projection is going to be wrong the moment you put it on paper (or in a spreadsheet).  The further into the future you forecast, the less likely it is that you will be accurate, but that’s okay.  The point here is to think through what should happen as best as possible, not to psychically ken exact future numbers.
• Entering your sources and uses numbers into a cash flow table really is a matter of timing.  Don’t think about your events and other sales in terms of how much you get for them.  Think instead about when you get paid.  Doing a $2,500 wedding today does not mean you made that amount this month.  You probably received a deposit of about 50% upon booking (which means you could have already spent that money twelve months ago), and perhaps you received the remainder thirty days before the event.  Much of the work you do – events, albums, portraits, and more – each have their own cash flow which rarely relates to the timing of when the job is performed.  The same is true for your expenses (think about when you pay the deposit for an album and when you actually see that album).
• Uses of cash fall into a number of categories vis-à-vis cash flow:
  1. Expenses which vary based on the number of jobs you do.  These may include post-production services, printing costs, on-line hosting fees, etc.  You generally won’t pay these costs until two weeks or more after the event.
  2. Expenses which occur every month at about the same level.  These include salaries and benefits, rent, occupancy and other office expenses.  Figure out what those numbers are, figure out when they are going to increase, and forecast them.
  3. Expenses which are paid a few times a year.  These include property and casualty, workers’ comp and liability insurance, and taxes.  Some of these expenses can be paid on a monthly basis but may require a fee to do so.
  4. Expense and outflows which are discretionary in nature.  These include marketing related costs – advertising, sample prints, directory listings, etc. – and equipment purchases.

Linked below is the sample cash flow Excel file.  Taking the time to understand the example spreadsheet or building one yourself is a worthwhile exercise in that it forces you to think through the detailed components and how they fit together.

We recommend creating two versions of your own cash flow spreadsheet: a forecasting version, where you predict your cash inflows and outflows each month; and a tracking version, where you plug in your actual numbers on a monthly basis.  You can keep these as two sheets in the same workbook.

Once you’ve taken the time to construct your own spreadsheet, it is important to keep it updated.  An hour or so of your time each month will pay off big when you are able to get a better handle on your cash flow.  With on-going cash flow planning, you can more accurately predict when you can buy that new camera or how much you can give yourself as a bonus this year.  Knowledge, after all, is power.

About the sample Excel file:

The sample workbook linked below has two tabs labeled “Example” and “Blank”.  “Example” is a twelve month version of what you see above.  “Blank” is the same worksheet without any numbers but with formulas intact.    Feel free to modify or fill in either using your own information.  Of course, if you add or delete lines or columns or make any other changes, it becomes your responsibility to make sure the formulas still work.  Enjoy!