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PPA Today: Benchmark Financial Survey: August 2011 Archives

Benchmark Financial Survey: August 2011 Archives

Dear PPA Member,

Lemonade stands--does that phrase bring back memories? They are often the first entrepreneurial adventure for many a kid. On a hot day, you could make a quick buck or two (or more than that if you were lucky!) and then head out to the corner store to grab an ice cream cup. You didn't have to worry about pricing for profit. Or expenses. Or factoring in your labor costs. (How much do you charge for stirring way too much sugar into a pitcher of weak lemon water?)

But you're not running a lemonade stand anymore. You're running a photography business. If you want to be successful, you've got to be profitable. This week's Vital Signs will have you dropping your wooden spoon and picking up a calculator, so you can afford more than ice cream at the end of the day.

Cheers!
Christel Aprigliano
Director of Member Value & Experience

P.S. We've got a new Extreme Deal from ImageQuix: PPA members get one year of Unlimited Uploads with ImageQuix for only $99 when they sign up by September 9 (a $249 savings).

Dear PPA Member,

What's your idea of making it to the "big time"? For some of you, it's having a retail studio and all the fixings (employees, cool gadgets, cappuccino machine). This may be your dream, but the reality is often different if you aren't being financially savvy. The first time I read PPA's Financial Benchmark Survey, I was surprised to learn that participating retail studio owners didn't hit the important goals as often as the home studio owners.

While there are benefits to being a retail studio owner, if it's not helping you reach your financial goals, you've got some decisions to make. This week's Vital Signs can help you with those, including some ideas for keeping your head above water in a retail space. As for what kind of cappuccino maker to buy? Well, you're on your own there.

Cheers!
Christel Aprigliano
Director of Member Value & Experience

Over the last few weeks, we've listed the steps to better understanding your business numbers, from organizing your sales to tracking your expenses. After all this work, though, you can't forget to be careful when considering your bottom line.

Step 4: Calculate your owner's compensation + net profit.
In order to accurately see how your photography business is doing, you need to calculate your owner's compensation + net profit (also known as bottom line profit). Measuring your bottom line in this way combines the amount that you have taken out of the business as personal compensation (salary, draw or distributions) with the amount of the business's profit or loss.

Viewing these amounts together helps you understand the reality of said bottom line, making it easier to recognize the dangerous practice of writing personal compensation checks above and beyond the ability of the business to support it. For example, if a photographer draws a salary of $60,000, but the business suffers an $80,000 loss, the photographer's bottom line "profit" is actually a loss of $20,000.

You can make even more sense of this calculation by comparing your owner's compensation + net profit number to the PPA benchmark (from PPA's Benchmark Survey). By doing so, you'll see where you should be aiming for a healthy bottom line!

Dear PPA Member,

If the stock market was a theme park, this week would be described as a haunted horror roller coaster. Stomachs across the world churned in unison with the dips and drops, and though I loathe saying it, it's not over. Please keep your seatbelts on, and your hands on the safety bar in front of you. It's going to be a long ride.

How will this tumultuous week impact the economy and our industry? More importantly, how will it impact you and your bottom line in the long run?

If you don't know what your true "bottom line" is, now is the time to find out.  In our continuing series on the PPA Benchmark Survey, this week we'll discuss how using the tools from said survey can help show you the real numbers and percentages of a profitable studio...and the goals you need to set for your own business.

While I love roller coasters in the real world, I'll stand in line for the kiddie choo-choo train when it comes to my own financial bottom line.  It's less scary on that ride (and you can eat cotton candy while you enjoy the scenery).

Cheers!
Christel Aprigliano
Director of Member Value & Experience

P.S. Don't forget to participate in the 2011 Benchmark Survey now. Do it by August 31, and you could win an iPad!

Last week we talked about the importance of knowing your cost of sales and how it factors into better profits and a better understanding of your business numbers. But for the clearest picture of all, you can't stop there:

Step 3: Track your general expenses
For each expense, list the dollar amount of the item and the percentage of total sales it consumes. Sometimes referred to as fixed or indirect costs, these expense items recur throughout the year and don't change in proportion to how much work you do. After all, rent and utilities must be paid every month! (For a longer list of general expenses, read the PPA Business Handbook or the Vital Signs article "PPA Financial Benchmarks: Cut Costs, Improve Profits.")

When reviewed individually, the percentage of most general expense items doesn't reveal much. But when grouped by business function (employee expenses, overhead, marketing, administration, capital expenditures), you can see the impact each expense has on your business as a whole.

In fact, the PPA Benchmark Survey reports let you compare your general expenses to the average studio and best-performers. Are you spending too much on new equipment? On marketing? Is that expense worth it? That's the power of making numbers make sense!

Stay tuned for Step 4 next Tuesday.  

If you haven't already, now is the time to sign up for this year's Benchmark Survey. You can be a part of the only industry survey and analysis that helps photographers run better businesses.

Remember: PPA's Studio Management Services (SMS) can also help you understand general expenses and how to set up your accounts according to managerial standards. 

Dear PPA Member,

Are you a control freak? It can be a good thing...for your business anyways. You don't need to oversee and manage every little detail (that's what outsourcing is for!), but if you can let just a little bit of your inner control freak out, aim it at your studio's numbers.

If you can learn where your money goes and why (and if it was necessary), you're one step closer to better profits. Controlling costs helps determine your profitability. That's what PPA's Benchmark Survey findings and case studies tell us. And who doesn't want to improve their profits? Our latest Vital Signs digs a little deeper into this topic, so read on.

Cheers!
Christel Aprigliano
Director of Member Value & Experience

P.S. Don't forget to participate in the 2011 Benchmark Survey now. Do it by August 31, and you could win an iPad!

Last week we talked about how to start setting up a managerial accounting system to help you use PPA's Benchmark Survey results...and simply make your numbers make more sense. Here's the second step:

Step 2: Track your cost of sales
Cost of sales (COS) is made up of any expenses related to producing the goods you sell to clients, including labor! It's the materials and production costs that go into manufacturing what clients purchase (frames, albums, labs, printing, product freight, music licensing fees, out-of-town job travel, editing, retouching, and so on).

By listing these expenses and tracking them, you can better determine whether your pricing is profitable and your workflow is efficient.

Don't forget to stay tuned for Step 3 next Tuesday.

If you haven't already, now is the time to sign up for this year's Benchmark Survey. You can be a part of the only industry survey and analysis that helps photographers run better businesses.

Remember: PPA's Studio Management Services (SMS) can also help you understand cost of sales and how to set up your accounts according to managerial standards.

With the changing economy, Sean McCarthy of Twisted River Productions felt that participating in the 2011 Benchmark Survey was especially important this year. And doing so already paid off for him--he won the July free iPad giveaway!

This Georgia-based photographer emphasizes the need for others to take part as well. "It's important. It's knowledge," Sean says about the Benchmark Survey, which analyzes real data from real studios, giving PPA members an honest look at where their studios fall in comparison to industry average and best-performing studios. "It can help make your company stronger and give you something to strive for," he adds.

And he's not just paying lip service.  Sean has used the previous Benchmark Survey findings in his own business. "We kind of view it as our New Year's resolution," he explains. "We are still working on how to make lasting changes in this economy, so it's nice to know where you need to improve...and that we aren't alone!"

So, what are you waiting for? With the Benchmark Survey findings, you'll discover not just where you should be, but where you could be (and start learning how to get there).  And if you participate in the survey itself by August 31, you are in the running to win the last free iPad!



About this Archive

This page is a archive of entries in the Benchmark Financial Survey category from August 2011.

Benchmark Financial Survey: July 2011 is the previous archive.

Benchmark Financial Survey: September 2011 is the next archive.

Find recent content on the main index or look in the archives to find all content.

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