Have you ever heard the phrase, “You need a checkup from the neck up”? Business guru Zig Ziglar used this phrase to remind us that taking time to reflect and reevaluate your life is important, and a key component for your personal development. The same holds true for the success of your business. Today I’m going to walk you through a “check up from the neck up” for your photography business. With a new year upon us, it's a perfect time to review and reflect on your business results over the past year, and make plans for success in the coming year.
Before we get into the details of this exercise, I’d like you to take a few minutes to reflect on what success looks like for your business. Why are you in business? What is the purpose, cause or belief that inspires you? Where do you want to be five, ten, twenty years from now? Lewis Carroll said, “If you don’t know where you’re going, any road will get you there”. You don’t want to wake up one day and realize that you’ve been working your tail off to build a business that you don’t love or doesn’t meet your life goals. Make time to regularly review your business to make sure you are still on the right path, or to make a course correction if necessary. There is nothing wrong with changing course, just make sure you are doing it with intention.
Now that you've reminded yourself WHY you're in this business, take a couple of minutes to review the past year in your mind. What were some of your greatest successes, or things that went so well you will definitely want to repeat them? What didn’t go as well as you would have liked, or could use a little tweaking? Are there some things you’ve been wanting to do or look into that you haven’t had time to? Jot those things down on a piece of paper. We’ll revisit them again after we've reviewed the details of your business.
WRITE IT DOWN
- What went really well this year?
- What did you struggle with, or what needs a little improvement?
- What have you been wanting to try, or look into?
We've done a high level check in, now let's get down to the nitty gritty details of your business. For each area below, I've included ideas and questions to get you thinking about your business – how you operate it, how your clients are affected, what is working, what could be improved, changes you'd like to make. Make notes as you go, and keep a list of your action items – the things you want to change, tweak, or look into. Be sure to keep your clients in mind as you review each area as well; how will any change you are considering impact them? Without clients, you don’t have a business, so you need to keep them top of mind in everything you do.
Pricing is one the most widely discussed topics in photography forums, but the reality is that pricing is different for everyone, and should be based on your cost of doing business (CODB), not by comparing yourself to other photographers. At the end of the day, if you have the best photography in the world, but don't set your prices for profitability, none of it will matter because you won't be in business for long. If you don't know your cost of doing business, my article, on Calculating Your Cost of Doing Business will help you get started. If you've already calculated your CODB, now might be a good time to revisit it and make adjustments to reflect your current costs. If, for example, you want to take more time off in the coming year, attend more training or other events that will take you away from earning income, you will need to factor that in, and adjust your pricing accordingly, or find other income streams to make up the difference.
Is your pricing in alignment with your CODB?
Were your prices high enough to cover your actual CODB vs your projected CODB, i.e. did your pricing produce profit?
What kind of pricing feedback have you received from clients?
Are you reaching your target client with your current pricing structure?
When was the last time you increased your pricing?
PRODUCTS AND SERVICES
What products and services are you offering to your clients? You should review your product lineup on a regular basis. You need to know what items are selling, and you also need to know how much money you're making on each. As an example, if you're selling an album with almost every session, but it's taking too much time to create for the amount of profit you are making, you need to make a change, and either increase the selling price of your albums or find a faster way to create them.
Knowing your gross profit on each item will be helpful in determining the right product mix to offer to your clients. You can calculate this by subtracting the cost of the item from your selling price. Don't forget about costs like image retouching and album creation time when you're doing the calculation, however. Even though you're not paying yourself each time you prepare an order, there is an associated cost, and it should be factored in. You must remember that every hour you spend retouching or creating an album is an hour that you can't book a session. Don't undervalue the cost of your time.
It is important to retain gross profit on the items you are offering to your clients, but don’t get so profit focused that you lose sight of the types of items your clients want. The key is to offer products that meet your client's needs AND the gross profit goals of your business.
What are your best selling products and services by volume?
What are your most profitable products and services?
What products or services have you been wanting to offer?
Are you happy with the product quality and the vendors you're working with?
Don’t forget to include photo sessions in your product and service review. Evaluate which sessions are your best sellers and the profitability of each. Be sure to factor in the amount of time you're spending, including travel, planning, retouching, etc. Do you include hair and makeup with your sessions, incur location fees, or other hidden costs? If you want your business to be successful, you need to make sure you are fully aware of all the factors and pricing accordingly.
Running a photography business involves a lot more than taking pictures, so it's important to review your workflow, or the way you're running your business. Do you have systems in place to stay organized and keep your clients informed, and to ensure that you are able to exceed your clients’ expectations? If you happen to be that stereotypical “creative” that creates beautiful work, but you're unorganized, miss appointments and rarely deliver images on time, this is an area you need to focus on if you want to be in business five years from now.
Communication with clients – Are you keeping them informed with a consistent method of communication?
Scheduling – Do you have a good system for scheduling client appointments, and a means to remind clients about their upcoming appointments?
Client Info – Do you have a process for gathering information on new clients, and a place to keep it?
Invoicing – Is your invoicing efficient and easy for your customers to understand and use?
Contracts – Are your Photography Contracts understandable, easy to complete, and archived for future reference?
Workflows – Do you have workflows set up to streamline and document your business activities, or do you need to tweak the ones you already have?
Having the right products, pricing, and system to keep track of clients and their information won’t matter if you don’t have any clients to manage. Review your current marketing strategy to make sure it is aligned with the goals you have established for your business and your life. If one of the reasons you went into business for yourself was so you could spend quality time with your family on the weekends, you probably shouldn’t be marketing yourself as a wedding photographer! This is what I mean by aligning your marketing strategy with your business goals – make sure they are in sync.
Are you getting the desired results from your marketing efforts?
Review the types of marketing you are doing, and determine which is giving you the best return on your investment, whether in terms of money or time.
Are you getting the right clients in the door?
Is your marketing speaking to your ideal clients?
Social media and other marketing activities can suck up an inordinate amount of time if you let them, so take the time to develop a marketing plan that is in alignment with your business goals, and stick to it. Don't waste time with the latest and greatest marketing trend if it doesn't align with your strategy.
As we’ve discussed, there’s a lot more to photography than taking pictures, and things like setting appointments, invoicing, contracts, culling, retouching, and ordering are all part of the deal. Review each of these areas of your business to see if there's something you need to change.
- Are you happy with the amount of time you’re spending on it, or is it something you could have someone else do and free yourself up for other activities?
- Is your ordering process labor intensive, is there a better way to do it?
- Do your clients appreciate your ordering process or do they think it’s cumbersome?
Work Schedule – Set up your work schedule to align with your business goals.
- Did you find yourself working more than you wanted to this past year?
- Did you budget adequate time for the projects you booked, or were you always stretched to get things done?
- Did you schedule time off for vacation, training, etc.
- Do you need to make changes to your work schedule for the coming year?
Do you struggle with the business aspects of your business? If you do, find some help to get those things done, whether in the form of outsourcing to another person, or finding a tool to help you set up systems to keep you on track. There are a number of client management systems out there that can help you – 17hats, Tave, Honeybook, Sprout Studio, and Dubsado, to name a few. I have used 17hats for a couple of years now, and there's no way I would be able to work full time AND run my photography business without it. But, whether you have a software system or not, it’s important to have structure and systems in place to help you stay on top of things.
Take time to calculate financial metrics for your business. I've included a list of some common metrics below. Compare them to last year’s numbers and evaluate the changes. Why did your number of clients decrease, for example, while your gross profit per client went up? Was it by design, perhaps you increased your pricing, but reduced your number of sessions this year? Analyzing your results will give you helpful insights to plan for the future. We often make decisions on how we “feel” things are going in our businesses, but having cold hard facts to back up those feelings is very useful.
- Number of clients
- Total Sales
- Total Gross Profit – Total Sales minus the direct costs of the product or service. Direct costs will include the lab costs associated with prints and other products, location fees, equipment rental for specific jobs, hair and makeup costs, payments to retouchers, etc.
- Total Expenses – Business expenses not directly related to the sale of a specific product or service. This includes things like software, telephone and internet service, advertising, office supplies, utilities, studio supplies, etc.
- Net Profit – Total Gross Profit minus Total Expenses. This is what is left over after all of your costs of doing business have been paid. If you're not paying yourself a salary as part of your expenses, then this is what you would have left to pay yourself.
- Average Sale per client – divide Total Sales by the total number of clients
- Average Gross Profit per client – divide total gross profit by the total Number of clients
Compare your year to date expenses to the previous year. Make note of changes, and determine if adjustments are necessary. Compare gross profit percentages to determine if you have increased your costs without increasing sales. This could be an indication that your product costs have increased, but your pricing remained the same.
Review Software and Subscription Expenses – Make a list of all software and subscription services you're paying for, and determine if you even use or need it. Does it give you a return on your investment (ROI) or is just nice to have? If you're not using the service to produce income, you probably don't need it.
Here’s a list of some of the some typical software and subscription items photographers use:
- Online Album Proofer
- Sprout Studio
Are you surveying your clients to find out how they feel about your business? Are you meeting and exceeding their needs, or are there things you could do better? Having a plan to check in with your clients, and just keeping them front of mind as you operate your business will help you make better decisions. The easier it is to do business with you, the more likely they will be to keep coming back.
Is it easy to do business with you?
Is anything more difficult or cumbersome than it needs to be?
Are you getting reviews?
Are you asking for reviews?
What are your clients telling you?
Do your clients like your processes, is there something they dislike or have suggested you do?
Are you giving clients what they want and need?
Are there products and services your clients are asking for that you don't provide?
While this area may be a bit more ambiguous and harder to analyze than the others, it's important to gauge where your head and heart are at. Are you working too much? Do you have a life? Are you enjoying your business or do you wish you were doing something else? Now is the time to take a realistic look at how you can modify things for 2018 to align with your life and business goals.
Now that you’ve done a deep dive into each area of your business, step back and review all the notes you’ve taken, and the action items you’ve identified. Are some of the items related? If so, and they can be implemented simultaneously, put them together in a group as one item. Now, let’s compare your list of action items to the three items you jotted down when we first started. Is there any overlap? Do some of the action items match the first three? If so, they may be your highest priority items, but only you can determine that for sure.
Now assign a priority to each item on your list, considering the following:
- Alignment with your business goals and value system
- Client impact and satisfaction
- Financial impact, both in terms of cost to implement and profit potential
- Resources needed to implement – time, equipment, software, etc.
Some items will be quick fixes and others will take longer to implement, but if you prioritize your list, and then set goals to make the changes happen, you will be well on your way to the more successful business you desire. The goals you set should be SMART – Specific, Measurable, Achievable, Relevant, and Time-sensitive. Set your goals, write them down, and assign a deadline.
SMART Goals are
Specific – Be very clear about what you want to accomplish (Who, What , Where, Why)
Measurable – Can you track progress and measure the outcome?
Achievable – Is it attainable, but big enough to scare you a little and excite you a lot?
Relevant – Is it aligned with your mission and immediate and long term plans?
Time-sensitive – When will this be completed? You need a deadline.
Throughout the course of this “check up from the neck up”, you’ve identified the areas of your business that are working well and those that need improvement. You've also created action items and priorities for each. Don’t shortcut the process now by bypassing this final step of goal setting. You already know what you need to do, now you just need to turn your prioritized action items into SMART goals. Determine how you're going to measure success for each goal, write it down and set a deadline. At the beginning of this article, I quoted Lewis Carroll, who said “If you don’t know where you’re going, any road will get you there”. Don’t be a dreamer who wanders through life, never accomplishing your dreams. If you want to turn your dreams into reality, you need to set goals. Goals are just dreams with deadlines and a plan, after all. Let’s do this!
I hope this exercise has helped you gain some perspective on your business and allowed you to step away from working IN your business to working ON it. Did you find this process helpful? I would love to hear your plans for success in the new year, and have you share your top goal for 2018.