Over the past few weeks I’ve been trying to figure out how to grow my business. Actually, as a small business owner I try to figure that out every day. Other photographers have been in and out of my studio trying to work out their own business models as well. And finally, a few weeks ago I read the PPA’s Benchmark report (Professional Photographers Association). All of my thinking combined with a very expensive equipment failure has led me to wanting to blog about all of this. If you’ve been wanting an idea about the “business” of photography, stay tuned this week.
What’s it gonna take to earn a living?
My business is now 4 years old. They say small businesses will have a handle after 3 years, but I still don’t. After reading the PPA’s Benchmark survey I at least have some numbers to work with.
My first career leaving graduate school was as a network engineer with Sprint PCS. I’d left grad school after doing a thesis on the economics of digital networks (still a newer concept then), and taught myself network engineering while doing the thesis. Incredibly after a short term contract making a WAN for Sprint (Wide Area Network) I was offered a junior engineer’s position with the company. The salary? $42,000 a year. That was in 1996 during the network boom, market run up, and everything else.
Given inflation, the tough economy, etc, I decided a while ago that I’d be very satisfied if my business could make me that starting salary from Sprint. $42K per year. That would be nice. Of course, not being a long term established studio I knew that the first few years would not get me there, but that after year 3 I could realistically start expecting growth. And after reading the PPA report I know what that will take.
3rd party numbers always drive the point home
The quick and short of it is pretty simple after reading the PPA’s benchmark. The average retail location studio (that’s me, have a retail location and overhead) pays out somewhere around 25 – 30% to the owner. If we go with 25% then what we’re saying in order to pay me my starting salary in 1996 is my overall business needs to do 4 times the money to pay me.
168,000 per year
There’s the goal. And let me just say we’re nowhere near that marker. Not even close. And honestly after working my books a few weeks ago (after reading the benchmark report) my business yields me just under 20% of the money that rolls through it. I’m well below the average retail studio, and that needs to change.
Between my retail location rent, electricity, supplies, advertising, equipment replacement (two dead printers in 4 years), etc, etc……overhead really hits home. Eventually even camera equipment needs to be replaced as well, just because digital SLRs are cool doesn’t mean they don’t break over time. All told my overhead and supplies for my business take about 80% of all the dollars that come through the door. What can I do?
Where does my income come from?
Not only do I photograph for the public, I also do print reproduction for photographers and all sorts of artists. I have a few revenue streams to work with. Where does the money come from currently?
- Print reproduction for painters
- Imaging for painters
- Portrait sessions
- Commercial photography
That’s my top 5 in order. What can I do to increase income streams? Print for more painters, image more work for them, grow my portrait business? All of the above?
What I’d like to do is expand the bottom 3 items. Printing for folks, while it generates revenue, also generates a lot of expense. Tens of thousands a year into inks, papers, and printer replacement. With the new leased printer in place I can tell you that my average monthly expenses on gear and supplies is over $1800 per month (that’s printer, ink, & paper). So the printing has costs involved. While photographing for people also has associated costs, the monthly printing costs far outweigh the photography costs.
So, what to grow, what to grow? Well, I enjoy the high school senior sessions I’ve done. And commercial work has been a lot of fun over the past few years. Finally, the weddings we’ve done have been enjoyable. How do I grow the income from these three?
- Raise prices and continue the same volume of portraits, commercial, and weddings.
- Do more of the 3. Expand the volume. More portrait sessions, more commercial work, more weddings. I wouldn’t mind more of any category to be honest.
- Outsource print work thus saving on other expenses that are impacting my business.
There’s my short list. In speaking with a few of the “pro’s pros” over the past month (I know several) almost every one of them has told me the same thing. Raise prices. Of course, in the current market environment where there’s a saturation of cheap unlicensed studios out there raising prices isn’t that simple. I’ve written about that previously.
The goals are simple
Business has to expand. If I want to make $42k a year we’re going to need some major growth. And I’m still thinking on the how’s and wheres, but that’s the bottom line. Working a 40 hour work week, let’s say back in engineering for example, $25 per hour would yield $48,000 a year.
For the rest of this week’s photo business talk we’ll set a base line of $25 an hour for the simplicity of our discussions. And keep in mind, photographers aren’t shooting 8 hours a day 5 days a week.
P.S. The tech who came to work on my down printer charged $145.00 per hour. 5 hours of time was spent determining that we still didn’t know where we’re at. That cost $725.00 to get nowhere. When I mis-print I throw away the bad print and make a good one, and I don’t charge the customer for the bad one…….just saying.