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The Error of Your Ways: Correcting Financial Management Transgressions - PPA Today

The Error of Your Ways: Correcting Financial Management Transgressions

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iStock_000008590305XSmall_250.jpgOf course, Pope Gregory the Great wasn't thinking of running a successful photography business when he called out the worst of the worst in the seven deadly sins. Still, there are a few vices that can create holy havoc with your bottom line unless you're committed to changing your ways. Over the next few weeks, we'll break down the "Seven Deadly Sins of Financial Management," and give you some easy steps toward reclaiming the high ground of a pious passion for profitability.
 
#1: You can ignore it, but it won't go away.

Oh, we know you. You pursue your artistic goals with a vengeance, always looking to improve your skills and perfect your photography. But when it comes to facing the numbers, you'll find all kinds of reasons to put it off to another day. 
 
Come on now--it's time to man (or woman) up. Ignoring the math just because you're afraid you're not going to like what you see is not going to get you to business management heaven. "Just because you put off facing a problem doesn't mean it will go away, and those numbers are not going to get better on their own," says Scott Kurkian, PPA chief financial officer and founder of Studio Management Services (SMS), PPA's business and financial management practice for photographers. 
 
Kurkian also points out that you might even be in for a pleasant surprise. "Oftentimes, our members' finances just need a few tweaks and the application of some of the tried-and-true principles we use in SMS, like getting a grip on exactly what's coming in and what's going out." 
 
So what should you do? Pull that comforter away from your head and cozy up to your balance sheets. "It's always better to know what's wrong than to ignore reality," says Kurkian. Once you've faced your numerical nemeses, you can get started on taking control and making changes that improve your profitability.
Michelle Waters of Parkersburg, W.V., reports that's one of the most important benefits she got out of her SMS class: "Without knowing the basics, I could never truly set my rules and boundaries. Now, my business is more structured, and I've tripled my sales in four months."
 
#2: Failing to plan is just planning to fail.
Financial management planning has many benefits, but probably one of the most powerful is giving you a forward view of your business. In other words, you're never going to reach your destination (a profitable, successful photography business) if you don't have a roadmap for how to get there.

"For seven years, I ran my business out of my checkbook," says SMS client Carla Nelms, M.Photog.Cr., of Midlothian, Va. "It was like driving around with a bag over my head."
 
Developing a business plan helps photographers map out where they need to go with an eye to objectivity and a focus on the unique selling propositions that can set your business apart from the competition. "This planning process lets you think through your business and develop a strategy to take advantage of your strengths," says Bridget Jackson, SMS manager. "If you don't do anything else to improve your business management skills this year, do that one thing. It will save you time, serious money and a lot of heartache." 
 
Kurkian says that failing to plan is one of the cardinal sins of most photography studios. "Ninety-nine percent of our SMS clients have never prepared a plan or budget for their business...and almost without exception, they all benefit financially by going through that process." As a matter of fact, some of the stories are astounding. 

"We've seen studios on the brink of bankruptcy turn themselves around and become highly profitable in a matter of months, once they get control of their numbers and implement a sound business plan," Jackson adds.
 
SMS or Do It Yourself--Just Make Sure You Do It
Do you have to go to an SMS class to create a business plan? No. There are many business planning resources out there, including do-it-yourself software, online classes and other hands-on workshops; however, SMS is the only class of its kind designed specifically for photographers.
 
Waters says her SMS class helped her set a budget and understand the facets of her own, unique business. "I could never truly set my rules before. Now, I've adopted an entirely new business model and I feel more in control," she explains.

"Planning is somewhat intimidating and can be a stressful exercise for photographers to go through," says Kurkian. "That's why we walk photography businesses through a step-by-step process and build their plans with them."
 
Jackson suggests the following tips for starting the planning process:

  1. Determine your sales and sessions. Write down the total number of sessions you do by product line (children, family, seniors, weddings, etc.) and the average you make per session.
  2. Understand what your Cost of Sales is...and what it should be. Cost of Sales are the costs associated with producing photography.
  3. Identify monthly overhead costs, including administrative costs, employee costs (non-production employees), marketing, capital expenditures and building overhead.
  4. Determine how much you need to make and are currently making from the business. 
Jackson says the last point is critical, but often overlooked. "A client once said to me, 'I only need to do one more children's session per month (her per-session average was $2,000) to afford a $2,000/month rent payment,'" she recalls. "Unfortunately, only 10 percent of the $2,000 can be allocated to building overhead per PPA's Benchmark Survey. 
 
The Truth Will Set You Free
Next week, we'll shine the light on more misguided misdeeds, including failing to have an accountability partner or group and not thinking like what you are--a small business owner.

In the Meantime...
If you'd like more information about SMS, you can read all about a typical two- or three-day class on PPA.com. You can also sign up for those upcoming workshops in November in Atlanta, or at Imaging USA in San Antonio this January. 
 
Not ready to register for a class yet, but intrigued? PPA members can also check out a variety of resources, including the Financial Benchmark survey, templates and other tools in the SMS section of the PPA website.
 
In addition to SMS resources, PPA members can also glean a wealth of ideas from the Resources section of the PPA website, including archives of Vital Signs, the weekly newsletter focused on business and marketing information for PPA members. Plus, if you'd like to learn more about business planning in addition to the information available through PPA, a great place to start is the Small Business Administration.
 
Do you have financial management success stories of your own that you'd like to share? We're all ears--just e-mail Angela Wijesinghe. You may be an inspiration to others as well!


About this Entry

This page contains a single entry by Professional Photographers of America (PPA) published on August 17, 2010 9:05 PM.

Imaging USA: Cook up Something Special was the previous entry in this blog.

Announcing David Ziser's brand new, 20-city "Captured by the Light" 2010 Tour is the next entry in this blog.

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