7 THINGS YOU SHOULD KNOW BEFORE YOU START A PHOTOGRAPHY BUSINESS

There are a lot of benefits to running your own business - especially when you get to do something you love like Photography.  You get to be your own boss, set your own schedule, and take the clients you want to work with.  There are many rewards, and we often have this idealized picture in our head of what it will look like.  How often, though, do we really think through what it will take to survive?  Here's 7 things you should know before you start a photography business.

1. You might be an artist, but this is a business.

 You'll spend most of your time doing things other than taking photos.  If you're not okay with that, don't start a business.  Don't invest your time and energy if you're not willing to make business decisions, and look at the numbers.  I applaud artistic passion, and I am an artist - but when it comes to running my business, I'm a CEO first.  If you'd rather just take photos, keep the day job and take photos - there's nothing dishonorable or wrong with that!

2. If you borrow money, you'll make decisions you wouldn't otherwise make.  

It doesn't take a LOT of money to start a photography business.  It certainly doesn't require the kind of capital it takes to open a restaurant, or coffee shop, or manufacturing plant.  If you start borrowing money, it's likely for things you don't really need.  Now you're not only paying back a loan (or credit card), but you're paying interest - which is money you can't reinvest in the business.  Debt makes you do things you wouldn't do otherwise (trust me, I know this better than most people), and in a business, it can consume your cash-flow - leading you to more bad decisions.

3. You don't need a Canon 50 f/1.2.  

If you're counting on fancy glass to make you a better photographer, you should probably stop charging people, and just go practice.  I'm not saying no one should ever buy it (although I'm a Nikon shooter, so I can't imagine why you're shooting Canon in the first place), but if you're starting your business, and all you can think about is buying gear, than you're probably not making the best long-term decisions.  

4. There's nothing more valuable to your business in the beginning than an accountant.

Seriously - quit thinking about the Canon 50 f/1.2.  It's not going to make you a better photographer.  It's not going to make you more money.  It's not going to help you run a better business.  On the other hand, a good accountant that you can develop a long-term relationship with, can definitely help you make the right decisions about growing your business.  

5. Most workshops are a waste of time.  

Seriously.  I can count on one hand the number of workshops in the industry that I would recommend.  If you want to know what they are, ask me - I'll tell you.  Most of them are a waste of your money, and you can learn just as much by practicing.  If you're paying money to stand in a pack and shoot models, why not just go get a bunch of cute models and do it yourself?  If you're paying money to be in the presence of a "rockstar" keep in mind that they're only a rockstar to you - and that they're "mojo" isn't going to suddenly wear off and make you successful.  Also, as a note - don't take a business workshop from anyone you can't verify their business success.  

That includes mine.

6. You're not going to get rich as a photographer.

 You'll most likely make as much as a teacher - and that's if you focus on running a solid business, take great care of your clients, and manage your expenses well.  You can certainly make more - but the odds are that on average, you're going to work really hard for moderate pay.  There are definitely exceptions, and if you work REALLY hard, AND get really lucky - you can live a pretty comfortable life, but I wouldn't count on it.  The trade off is, you get to be your own boss.

7. Photography is a service industry.  It's about serving clients.

 It's not about you, or your images, or your ego, or your equipment.  It's about providing a REAL value to REAL people who trust you!  You may be fantastically talented, but if you're planning on being a rockstar to anyone but you're clients - you're in this for the wrong reason.

What else would you suggest people know before starting a Photography Business?

39 REASONS WHY YOU SHOULDN'T START A PHOTOGRAPHY BUSINESS

1. People will think that all you do is take pretty photos

2. People will think that you always bring your camera with you, and don't mind taking photos wherever you go.  Including at your niece's birthday party... "since you're going to be there anyway." 

 3. You'll spend most of your time trying to figure out which photos don't suck. 

 4. You'll constantly be wondering whether anyone else thinks any of your photos are any good. 

 5. You'll want to change your website/blog/logo/business card/brochure/etc every time you log into a photography forum and see another photographer's new website/blog/logo/business card/brochure/etc.

 6. Most of the people that contact you will think you're overpriced.  You'll never know how many didn't take you seriously because they thought you were underpriced.

 7. You'll constantly be asked "that includes a disc of all my images right?" 

 8. You'll constantly be asked "can you do that thing where part of the picture is in color and the rest is in black and white?" 

 9. People expect you to be able to make their children smile... on command... every time. 

 10. When people realize you can't make their children smile, they'll get mad at you... as if you punched their kid in the face. 

 11. You'll spend hours at your computer "processing" your images, which is really a euphemism for staring blankly at your screen wondering why anyone actually pays you to take these terrible, terrible photos. 

 12. Usually, everyone else is sleeping, while you're still sitting at your computer at 2:30am. 

 13. Camera companies release new gear all the time, and you'll constantly think you need it in order to make your photos suck less. 

 14. The average photography business lost money in 2011.

 15. You'll have zero job security 

 16. You'll spend about 20% of your time on photography, and the rest banging your head against the wall, trying to figure out how to make money doing this so you can still pay your mortgage.

 17. Most small businesses last less than 5 years. 

 18. The average photographer has $14,520 worth of camera gear... 

 19. that they put on a credit card... 

 20. You'll meet with 50 people to get 15 to say yes to you. 

 21. You'll be required to learn to like coffee. 

 22. There's no pension plan 

 23. There's no health insurance 

 24. You'll wonder why XYZ photographer always gets to shoot at the cool venues. 

 25. You'll also wonder why she gets published all the time. 

 26. What you won't realize is that she sits up at night wondering if her work sucks... just like you do. 

 27. Running a business is really hard. 

 28. You'll often feel very alone, and that no one else in the world understands what your life is really like. 

 29. You'll wake up on Saturday mornings for the rest of your life, wondering if you are supposed to be at someone's wedding. 

 30. You'll attend weddings of family and friends and will spend the whole time watching the photographer, not the wedding. 

 31. Then you'll look at the photos later and wish you'd have paid more attention, since the photos suck. 

 32. You'll have to hire an attorney and an accountant. 

 33. Wedding photographers get sued by their clients. 

 34. They also get audited (3X more often than people who don't own their own business). 

 35. You'll find yourself worried more about what other photographers think, than what your clients think. 

 36. You'll have to carry 50lbs of gear around for 10 hours, often without food or water. 

 37. People will think that you have little elves that work for you that can apparently "photoshop" anything.... even people who didn't actually show up at the wedding... for free.... 

 38. Someone will always show up at a wedding with a nicer camera than you.  

 39. And they'll post their terrible photos on facebook, and the bride and groom will love them, and you'll wonder why you even got out of bed. 

 BONUS - Here are three reasons you should: 

 1. Owning a business means creating something that supports the kind of life you want to live.  It means freedom. 

 2. Being creative means you get to give the world something it has never seen before. 

 3. You have the opportunity to help people remember the way they feel at the most important moments of their lives. 

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WHY CREATIVE BUSINESSES FAIL

Creative businesses fail for the same reason as every other business fails.  They fail because they have too many expenses, and not enough revenue.  Creative types (photographers, artists, etc) tend to think about forming a business around something they are passionate about.  That's fine.  You should absolutely be passionate about something if you're going to give your life to it.  You should love what you're doing.  You should be GOOD at it.  This is no different than people who are passionate about helping other people, going into social work.

Ok, reality check time.  Being passionate about something isn't enough.  If it's going to be a business - it HAS to be profitable.  It HAS to make money.  Not only is this common sense, but the IRS won't even let you call it a business if you don't have what they call a "profit motive."  There are several indicators they use to determine whether an endeavor is a business or a hobby, but the bottom line is - you have to be acting intentionally so that the result will be that you make a profit. 

On the other hand, it takes 3+ years before a new small business makes money.  Read that again - you should be prepared to operate in the RED for 3 years before actually drawing a paycheck.  Knowing that, wouldn't you want to do everything you could to increase your chances?  Then stop treating it like a hobby, pull it together, and start acting like a business.

The reality is, that many creative/photography businesses don't understand or even manage their expenses in a meaningful way.  This causes them to make decisions about their business without all the information.  For many photographers, bookkeeping is simply an exercise in making sure you can do your taxes each April.  You keep a loose understanding of how much you brought in, and somewhere there's a box of receipts (or post it notes, or whatever).  

While it might be true that you have enough information to file your taxes (assuming you're actually filing them, declaring all your income, paying your sales taxes, etc), you still won't have any understanding of the health of your business.  A few months ago, PPA released their Benchmark Survey.  It's got some great information, and I HIGHLY suggest you read through it.  I'm going to summarize a few things for you - and hopefully help you think about how you can have a healthy business.

1. Start by understanding what it costs you to be in business.  This means, how much does it cost you to do business, whether or not you ever sell anything.  These are fixed expenses.  This includes your lease, your capital expenses like camera gear and computers, insurance, business licenses, employee costs, advertising, accounting, and legal.  It includes your utilities, your telephone, your website, and everything you spend money on just to keep the businesses alive.

For most photographers, this number is staggering when you start to really look at it.  Most photographers forget that the wear and tear on their vehicle is an expense of their business.  Most photographers don't consider that there additional utility costs (even if you're a home based business), associated with the additional work you do. 

According to PPA, these expenses should be no more than 30-40% of your revenue, depending on whether you're a home-based, or retail-based studio.  

2. Most photography businesses fail to accurately account for Cost of Goods.  These are all the things that go directly into the production and procurement of your products.  Materials, Prints, Labor, equipment use, consumables, and more, all add up to the expense of selling your product.  

If you really want to understand the health of your business, doesn't it make sense that you'd want to know how much it costs you every time you sell an 8x10?  How would you even know where to begin to price that 8x10 if you have no idea what it costs you?

PPA suggests that these expenses be no more than 35% of your revenue or 25% if you're a retail-based studio (to make up for the additional overhead associated with a storefront).  

3. Treat yourself as an expense of your business. My recommendation is that you start early by managing your cash flow - and pay yourself a set salary.  In the beginning - this probably won't be much, but if you have a good understanding of your expenses, you'll know what you're able to pay yourself.  Often the temptation is to simply pay yourself out of the "proceeds" of a wedding.  You deposit the check in your account, and figure you'll just pay for the album - or whatever other product they order - as it comes.  

Realistically, this NEVER works.  You end up paying for albums with your next clients retainer.  You end up paying your studio expenses from your personal account.  The minute this starts - you can start counting the days until your business fails.

Instead, be realistic about what your pricing will allow you to make.  Be realistic and start the habit now of paying yourself a set amount - based on your revenue and other expenses.  This will allow you to manage both your business AND personal budget/cash flow - especially during off-season. 

4. Only buy it if you NEED it AND you can afford it.  New gear doesn't make you better.  New gear doesn't get you new clients.  A new website won't automatically increase your bookings.  

There are a lot of cool gear that I'd like to buy. I don't need it and I can't afford it.  That's why I won't be buying new gear anytime soon.  Sure, it's true that if you can afford it, sometimes you can buy things you don't "need."  That's the entire point of making money right?  But if you're borrowing money to buy gear that takes you 4 years to get a positive ROI out of, and 5 years to pay off, do you think you're business stands any chance?

5. Get Help! The great news is, there are great resources available for helping photographers build profitable and sustainable businesses. You don't have to reinvent the wheel, and you can learn solid business principles and best practices from people with the experience to help.  That's one of the reasons I created YEAR ONE - to help photographers build something profitable and sustainable.  Of course, YEAR ONE isn't the only resource - so there's really no excuse for not being one of the businesses that succeed. 

What do you think? What other tips would you give to help photography businesses succeed? Leave a comment below with your thoughts!

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