” A guy shouldn’t have a family unless he is rich. If he comes into to this business with a wife and kids, and wants to be a serious photographer, the market is pretty bleak. If you’ve got no responsibility and don’t have to generate a certain amount of cash each month, and can live on a shoestring, and are ambitious enough then you might have a chance. You can be dedicated but that is no guarantee that you’ll make it.”
- Elliot Erwitt - 1974
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So you’ve thought really hard about your future in photography and decided you want to go forward with it. You’ve talked with your family and friends, other photographers, asked all the right questions and you’re going to do it. You don’t necessarily want to work for an organization so you’ll go out on your own. Now what?
Take a vacation and clear your mind. You’re about to embark on one of the most difficult ventures of your life.
When you get home, get a job.
Seriously, find a job in something that will bring in cash. You’re going to need it. If you’re like most Americans and strapped to your ears in debt this makes even more sense for you. In my opinion, the best jobs out there are part-time with full benefits. Companies Like Starbuck’s and Trader Joe’s offer these up to employees. You work over 20 hours a week and get a health care plan just in case something happens.
There’s no shame in this, you do what you have to do. You won’t be making it overnight so you’ll need something to survive on, buy/rent equipment, spend on portfolios and marketing, etc.
Next write a business plan. This will force you to think like a business person and provide you with something tangible to go back to. It also helps in securing loans if you need some extra cash to get going. A loan officer is going to want to see that you know what your’re doing and have a plan of action. Your business plan is your key. Although, in this market you might be better off opening a 0% interest credit card with no annual fee for the first year.
There’s one more interesting benefit to writing your plan down.
A Harvard study conducted in 1979 revealed the following: 10 years after graduation, students who had written down their goals, which was only 3% of the class, made 10 times more money than others who didn’t write them down.
It sounds ridiculous, but there are psychological mechanisms that make this work. When you write something down, you’re more likely to commit to it. Your brain subconsciously reminds you to keep thinking of your plan, your goals, how to achieve them. This is very important. Write it down. You’re more likely to accomplish your goals if you do.
The Business Plan
There are a plethora of books and software programs available out there on how to do this and what to include. Some programs will even interview you and populate the document for you. Here’s what you need to include:
- Executive Summary - A summary of your plan on one page and how you will achieve your goals.
- Objectives - Be specific. What do you want to accomplish as a business. List at least three.
- Mission - Why are you in business? Of course to make money. Of course to take pictures. But think of it in terms of what problems can you solve for your customers.
- Keys to Success - Specific action steps to achieve your objectives.
- Company Summary - What do you shoot? Portraits, Weddings, Humor, Lifestyle, Editorial…
- Start-up Summary - Who are you as an owner, how much capital (money) do you have? What are your start-up expenses, what equipment do you own, what do you need, how will you acquire it?
- Company Locations and Facilities - Where are you based, do you want to expand?
- Legal Considerations - Most of you will be registered as a sole-proprietorship or limited liability corporation. This is also a good section to discuss copyright issues and how you will communicate with outside entities on how you intend to handle copyrights to your images.
- Products and Services. Self Explanatory.
- Management Summary - It might just be you right now, but eventually you might need assistants Who’s on your team? Who will be on your team in the future?
- Competitive Research - Along with market analysis, this is arguably the most important part of your plan. You need to research and understand who you are competing with. Check out their sites, studios, request more information by calling and asking for brochures, talk to assistants that have worked with them. How do they do marketing? Who are their clients? What are they doing that you aren’t? What can you do better? What is your competitive advantage. Do your research!
- Market Analysis - Extremely important. In order to be successful you have to understand who your customers are and how to segment them so that you can track them. For many of you it will be Magazines, Non-Profits, Universities, Corporations and Ad Agencies. Take note of what’s available to you in your target area and start making a list of these potential clients and how you can solve problems for them, i.e. help them create a some promotional materials by taking portraits or creating images that will go on their promotional materials. Break these segments up into percentages on your list and even better if you can find out how much money they bring in. This information is usually publicly available except for the ad agencies because they operate privately. For example, magazines make up 10% of your market, Non-Profits 5%, etc.
- Market Needs - What will your market segments need and how can you provide this to them? You can find this by studying the promotional materials they distribute. Their customers should be in your pictures. Also try to quantify the need. For example, if you want to shoot advertisements research industry publications like Ad Age and you’ll find stuff like this: “According to the 2/11/08 issue of Ad Age, Eighty-four percent of agencies surveyed predicted growth of advertising revenues of 8% to 10% in 2008.” That’s great information to include in your plan because it shows you understand where your industry is going. If you belong to a public library, they can provide you access to these materials online through EBSCO Host.
- Implementation Summary - How will you reach your audience and how will you execute your plan? This is essentially a summary of your marketing plan which I’ll write about in future posts.
- Sales Forecast - Essentially you’re going to predict how much money you will make for the next three years, for each year, for each segment. A good way of doing this is to make a table with years at the top of the columns and market segments down the rows. Specify how many jobs you plan to have for each segment. Also specify how much money you plan to make on each of these jobs. In the end you’ll have your predicted sales for each of your market segments for each year.
- Financial Plan - This is where photographers really struggle. But think of this in the most simple way possible. You will have revenues coming in and expenses going out of your account. The left over is your profit. This is your Profit and Loss Statement or P&L. Here is a sample. When you predict the next three years of profit and loss, it’s called a pro-forma statement. Create a pro-forma in addition to your sales forecast. It’s a great way to help you understand what you’re expenses will be and how this will eat into your income.
- Break Even Analysis - This is optional but I think it’s a good place to see where you stand. You can use a table similar as your sales forecast. List the next three years across the top of the table. List Total Revenue, Average Revenue per Job and Total Expenses you expect to have down the rows. Your goal is to determine how much you will average per job and how many jobs it will take to cover your total expenses. In other words, figure out what you’ll need to cover your marketing, equipment, business expenses to have an income of 0$.
Some plans also include a cash flow statement and balance sheet. I think these can be too confusing for a small business and people should hire accounts for this work, so I’ll leave them out of this discussion. I know this is like reading latin if you haven’t seen it before and we’re all visual people. So here’s a sample business plan from a company that has software which generates the plans for you. I don’t own the software or have anything to do with the company.
Good luck! - Monk
