Wen Feb 16th

HOWDY!!

Just thinking about how it would be nice just to sail all around the seas and not have to worry about money.   Wow! how great would that be?  St. Pete today, Boston  and New York in a day or two, and then back to Jamaica for a month.  Dream on,,,, Dream on... 

But, ya know a lot of folks run their business the same way, on a wish and a prayer with no thought of what it really takes to get where they want to go.

Here is the formula for success in business.  NET Income = A+M+B+CS- OH + COS

                     

What those quantities stand for in any business is for advertising, marketing, branding, and customer service, minus the cost of monthly expenses added to the cost of producing what you are selling.

 Take away any part of that equation and you are doomed to just sit on the bank and watch the ships sail by.

I recently was asked by someone wanting going into professional photography and opening a brick and mortar studio, to look at their business plan.

This thing was 27 pages long, and on the surface was impressive until the figures were looked at closely and then cking out the web page for the photographer.  Not much understanding of lighting, posing, or composition.  Not that one has to be well accomplished to start, but just because you can make images, does not mean you should be in the business of charging others for your services.

On paper he had it figured out and quoted statistics from PMA, that in 2010 studio photographers saw a 23 % increase in business.  REALLY!!!   What planet are you from?

 By his information and those standards in his market area, he could spend $1600 a month for his studio space, and at the same time he had signed a two year contract for radio ads to the tune of 800 a month. 

Now even a blind man can see that with average utilities of maybe another $200 a month, he is looking at $2600 a month in FIXED OVERHEAD.   So let's look at that with logical spectacles.

In a month a business might open 6 days a week and is open 8 hours a day which gives 48 hours to produce any income. But we all know there is much after hours work..but we won't even look there right now.

It is simple math.  Divide 2600 by 48, which is 54.16 per hour, every hour, every day, and every week.

That is just the inhaling and exhaling of the business.  No profit, no new equipment, no advertising, no repairs.

My experience shows that most studios operate on 20-30% profit.  With that understanding, to come up with just a 20% profit on sales to cover just the cost of  54.16 and hour, the business needs to be turning 243.72 per hour to give the business that 20% profit..Now add on the owners salary.  What are you worth an hour?  A janitor makes 12-15 and hour.    So what is your time and talent, and experience worth.  I will just grab a figure of $30 and hour, so now we are up to $273 and change per hour.

 

This still leaves no room for repairs, updating of equipment, new furnishings, new backgrounds, marketing costs and any additional advertising.

The photography business can be very gratifying.

The photography business can be very gratifying,  but it is also hard work if your going to make a living for you and your family by selling it. 

Know your costs.  Know your market.  Know your clients.  And, above all know your market place AND WHAT IT CONTAINS.

This same individual is opening in a population of 70,000 house holds with an  average income of $42,000.

HMMMMMMMMMM  NICE SIZE POPULATION, BUT..........................

Now, knowing that the poverty level in the U.S., by government standards, IS at $36,000 a year, and that means that out of those 70,000 households only about 1/6th of those could even afford his services.  Now introduce the 79 other studios marketing in the same geographic area. That divides the pie pretty thin.

You must anticipate Market Share.

He is spending over 2 grand a month for a potential market of 6000 households, divided between 80 studios or a starting market share of a possible 75 families for the year, and that is starting out with NO reputation. 

 I really hated to break the news to this individual that he is about to loose his shirt.

 

Now, I love the photography business, and I know what it takes, but even with that knowledge, to open a new studio, one must be prepared for the the fact that for first 5 years of a studio business,  in today's world,  it will loose money, or at best break even. 

To operate a profitable photography business it is more than making good pictures. 

What B&J Consulting is all about is to look at a business and its potential, and make suggestions to make it profitable, if possible.

If you can't figure out where you are, and make a plan out for your business, then give me a shout, and we can set up an on site visit to see where your going, and at best get a direction. Let me help you find the compass so you know where your going.  The cost is an investment into your buisness.

Now..everyone say SPRING, SPRING, SPRING...I think I can hear it headed this way.

Have a great day,

B



Of course that sounds like fun to sail of looking for a rainbow, but very few of us are in that shape financially, so we must figure out a way to take the money from a customer's account and put it in our account,... legally.