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7 Questions to Ask Before You Start a Business
Most people think that the barrier to entering the photography business is low. All you need is to buy a camera, create a Facebook page, and start taking pictures. But consider the odds: 25 percent of new business start-ups close in the first year, and another 25 percent fail in the next four years. How do you beat the odds? You have to set your business up to succeed by asking and answering the following critical questions:
1). What products and services will you provide?
Your business plan should clearly define what you are offering in terms of products and services and how that compares to competitors in your market. It is important for you to carve out a piece of the market to make a profitable and sustainable business.
2). Who is your target client and how will you reach them?
In other words, it's not only important to identify your target client, but you also need to reach them through different marketing mediums. Your integrated marketing strategy should include a blend of marketing mediums such as print, digital and interactive and social media. The results of these efforts should determine if you have an adequate population of potential customers to reach your sales goals.
3). How does your business stand out?
Your one unique selling proposition is YOU. It's who you are that makes all the difference. It's the reason that the one product or service you provide is different from and better than that of the competition. This is where you need to shine through your art, product offerings and customer service. You must be distinguishably different from your competition.
4). Where will business be conducted, and how many employees will you need to provide the level of customer service your ideal client will expect?
It's important for your physical presence, the way you present yourself, where you conduct business and how you conduct business to be an extension of your brand and should resonate with your ideal client. Initially, the number of employees you need to deliver the level of customer service you want to project might not be ideal, but don't compromise. Find ways to outsource workflow in seasonal times so customer service isn't neglected.
5). How much start-up money will it take to open the doors and keep them open until you turn a profit?
I mentioned the barrier to a photography business is relatively low; however, after answering the first four questions, I'm confident you have realized that the barrier is misleading. It requires an investment of money and time to set up a photography business to achieve profitability. Prepare a conservative five-year projection of income and expenses, and re-evaluate yearly to confirm you are on track as most businesses are to show a profit in the in the first year of business.
6). What will be the source of the funds needed for start-up and sustainability?
Consider how much you are willing to invest and potentially lose, how much is needed from outside sources and how much you can generate in profits to reinvest in the business. Clearly identify these sources and include in your five-year projection a plan to pay back yourself and anyone else.
7). What type of business structure will you choose?
What forms do you need to file, and which licenses do you need to obtain to assure compliance? The type of business structure you have will depend on two factors: liability and taxation. PPA recommends when you are just starting out and you have substantial personal assets to be a LLC.
Your business can also benefit from business advisors and mentors. You should develop relationships with a banker, an accountant and an attorney before you start. Additionally, as a PPA member, you can get malpractice insurance, up to $15,000 of free equipment insurance, free education, connections to industry mentors, certification and other vital resources to help you run a profitable business. The Benchmark Survey and its principles are also helpful when setting up prices and measuring your business' growth.
There are no assurances that a business will succeed, let alone be profitable, but setting yourself up for success through planning certainly can help.
It's a shameless plug, but after all, we're here to help: Join instructor Jen Basford, Cr.Photog., November 15-16 in Atlanta for PPA's Business Basics Workshop. You'll learn strong business principles that will help you create a solid foundation for your business. The class will give you the information and confidence you need as you plan for a profitable and sustainable business.
Need a little help boosting your numbers? Have you considered PPA's Studio Management Services (SMS)? You should.
We could tell you all about SMS, but why not hear it from someone who has actually been through the process? Arkansas photographer Clark Sanders, CPP, knows well the benefits of SMS and shares his experience below. It's the first in our new PPA Member Story series.
How was your business doing prior to signing-up for SMS?
attended Imaging USA in Atlanta in January and visited the SMS booth. I had
already been interested in a consultation for a while. I knew that many
profitable studios in the country had already benefitted from an SMS
consultation and knew if I didn't seek the advice/counsel of SMS my studio
might wind up being less than profitable and I didn't want that to happen.
What were your emotions going into the consultation?
was excited and nervous all wrapped in one!
Can you take us through your mentoring experience?
Prior to visiting on the phone with Bridget Jackson, CPA, and Allison Rodgers, Cr.Photog., CPP, I completed a comprehensive list of items they needed to better help me out. Just going through that task alone really opened my eyes! I thought I had all my numbers in my head, like the number of sessions, average sale of those sessions, who I photographed the most, was I really pricing my work to make a better profit, etc. Boy was I wrong!
Seeing the numbers on paper (actually in excel) really took me back! WOW. Bridget helped me set up a budget, set a plan for how many sessions I should book during a month and more. Allison helped me make sense of my price list and gave some amazing suggestions to improve it as well as advice on some of the promotions I was working on.
One big thing I learned is I don't have to photograph everyone in my market! There are lots of prospective clients in my area, and surrounding area, that are who I consider my ideal clients and who aren't afraid to invest both their time and money in me. That's who I want my business to benefit from. The numbers Bridget helped me understand who my ideal client really is, and helped me to make a "road map" of sorts, not only for 2013, but one that will help me be even better and more profitable in 2014 and beyond!
How did you use what you learned?
my consultation with my SMS mentor Allison Rodgers, who I think she's the best
thing since sliced bread, by the way, I made lots of changes to my price menu
and have even more planned for 2014. I love that the Rodgers' provide such an
amazing experience for their clients from the moment they call and have a
session consultation until they come back to pick up their portrait order.
The experience you provide your client with will determine the outcome of your
sales session and will lead to future business with them and their friends that
they're going to talk to you about! We discussed some of the mini-sessions I
had planned and Allison again gave me some amazing advice for them.
How has your business changed since your consultation?
raised my prices after my consultation and will be increasing them again soon!
I had always been scared to death to raise my prices to a point where I would
lose clients, but as a lot of successful studio photographers have said in the
past, you'll attract the clients who value what you do and will make up for the
ones that don't. And that has rang true! I'm able to prequalify clients based
on the price of my session fees and my collections.
Why should someone consider an SMS consultation?
The old saying, "don't reinvent the wheel," comes to mind when seeking the services from SMS. If you're currently operating a studio or thinking of starting one, there is a wealth of knowledge from the SMS mentors that can help get your business off on the right track. My SMS mentor was able to take a look at my pricing and other aspects of my business during my consultation. The suggestions she made have helped steer my business down the right path. If anyone is struggling with their business and don't know what they should do to turn it around, an SMS consultation is a no-brainer!
So what's your number? Do consider PPA's Studio Management Services (SMS) if you need help finding it.
PPA Member Stories:
This series serves as an opportunity for you PPA members to tell your story. How has PPA membership helped you and your business? It could be PPA's Studio Management Services, copyright protection, PhotoCare equipment insurance, the Indemnification Trust, Imaging USA--whatever! We want to hear from you, and so do your fellow members.
Have a story you'd like to share? Shoot John Owens an email at email@example.com.