I got up and I was tired, which is not normal for me. I decided to change up my routine for the day and I went for a nice walk down by the Snake River. I walked about 2 miles then I decided to head to Jackson hole for a quick day trip. I’ll probably post photos of it tomorrow or the next day.
When I got home I checked my online sales and Yeah! It’s cool to make sales while your out eating a burger and chillin’ in a national park. But I have a few things I have to finish now because I own a business and I make promises to myself and others and I intend to keep my promises. One of them was to write this blog post.
This is an important one. It’s about money. It’s for all of my photographer friends and anyone who wants to start or own any type of business. I’ll divide this information into two blog posts and this is the first one!
This post is about one thing. Making sure your business is profitable.
I’m going to assume you already have a business idea in mind, but since I’m a photographer I will use photography as an example. A few things you have to know to run a business is how to quantify it. In other words, How much can you make, or will you make?
This is determined by several factors.
1. The area you live in.
2. Your competition
3. Your unique selling proposition.
4. The prices you set.
5. What you offer, or the value you create for your customer.
6. The time it takes to create your product and how much you can do in a day.
7. There are other things but we will stop here for now.
Today is about a simple equation that you have to know and use if you want to have a successful business.
Sales Revenue- Variable Costs- Fixed Costs
Sales Revenue = Net Profit margin%
So why is this so important?
Because if your gross profit margin is lower than 10 percent you are going to fail.
And for photographers your gross profit margin should be a lot higher. If it’s not closer to 40 percent stop what you’re doing and go find an job application to fill out.
Here is an example.
Meet Jeff and Monica
Jeff and his wife Monica decided They wanted to start a photography head-shot business that was mobile. They bought a big van and bought lots of equipment on credit and then found a company to build a killer website for them. They also wanted to undercut their closest competitor in town so they set their price for a head shot at 35 dollars.
Then they set out to create a better life!
They can take 5 headshots a day but they usually take 3 because they live in a mid sized city. Monica edits the images in the evening and Jeff is out shooting and driving up to businesses.
This sounds great right? Let’s go with the 5 per day total headshots, which they can’t really do more. After driving around all day and then editing all evening they are tired and they stop going out with their friends.
Revenue per day x 5 they need two days off to rest….
5×35=175 x 5=875
They make 875 a week.
4×875=3500 dollars a month. Cool! not bad right?
A variable cost for them is gas, snacks for Jeff, flash drives, anything that can vary though the month. Their variable costs are…..
35 a day for gas. 10 for snacks and 15 for flash drives. They have other variable costs and I am sure you can think of you a few but I want to keep this simple.
If you add it all up their variable costs already add up to 1200 a month.
Now Fixed costs.
Fixed costs are expenses that are consistent every month. For example, the van payment which is 500 dollars, insurance for their van and equipment, which is 120, website and marketing/ promotion is 100.
Total is 720 a month!
Let’s put it into the equation now!
3500(Sales Revenue) – 1200(Variable costs) – 720(Fixed Costs)
Equals… 45 percent!
That sounds awesome right?
Hold the @#$%@# on!
They have no room to grow. (Yo! It’s called Scalability and it’s important! I’ll talk about it soon!) They can’t do more Head- shots per day because they have maxed out their time. Their lives are out of balance and we didn’t add in their cost of living and they wage they need to get paid. After a hard month of working and shooting lots of headshots they get to pay themselves a whopping $1,580 and they also need to save about 1/3rd for taxes. They have rent, food, untilities, to pay and still no life!
One thing they could change is they have two unique selling propositions. They have the lowest costs AND they can go to the businesses. My advice would be to get rid of one of those and I’ll bet you can guess which one they should kill.
Any that’s what I wanted to say today. Please! If you are going to start a business or are in a business and you don’t use this equation? START NOW!
It might be that you are cool or it might be that your girlfriend and you sit down and do this and go… Hey! Let’s do something else or at least change how we run our business.
Lol! I’m single so I did this by myself. It’s lovely shit!
This is one reason I will offer a business course with every workshop I teach from now on! It’s not ok with me that someone pays money to attend a workshop to change their lives and then fails because they didn’t come away with the right information.
And I hope you’re looking forward to the next post! It might or might not be tomorrow. 🙂
Wouldn’t it be cool to have a fun photo shoot out the forest or downtown? Maybe you have a cool apartment and imagine how much fun it would be to get a few friends together and have a killer photo session! Let’s set up a multi-session!
3 or more friends (depending on where you live) can get together and set up a shoot and it’s only 150 a piece. Talk to your friends and let’s set a day and we’ll make it happen!
And I’ll have boudoir workshops set up in Multiple cities around the USA soon. If you think it would be cool to have me teach a workshop in your city message me! let’s talk!
All I require now a 30 dollar deposit per individual on photo session so it’s easy for ya!
Call me! 424-202-0476
Ikon Republik- I live and travel in a frickin van and I love my life! I founded a magazine, VEGA Magazine. My magazine is full of beautiful nude women and its based around the idea of respect and soon it will include amazing articles on how to improve your life! Out of the last 8 months, I have spent 4 of them living in the desert, under the stars and cooking over a campfire that was made with two sticks and a bow. I believe in self sufficiency and integrity. Now you know a little about who I am. I’d love to know more about you! My plan to tour the USA and teaching a workshop in every state is almost finished and I’m excited to start this big adventure! It’s almost done!