Before we get started with today’s episode, have you heard about my upcoming 3 part workshop just around the corner in October? No? Well, let me tell you about it! The Road To CEO starts October 19th and this is something you definitely want to be a part of if you are ready to get serious about your senior photography business. You’ll hear a little more about it at the end of this podcast, but if you wanted to pause to go ahead & register, that wouldn’t be a bad idea. You can do that at www.seniorstudiosuccess.com/ceo. I can’t wait to go on this little adventure with you guys!

Ok, on to the topic at hand - money and expenses. My gosh! It’s never ending, right? It seems like the minute we get it in, well, there it goes out the door. And sometimes we really don’t even know where it went. There’s just not near as much in the account as we thought there should be.

So today I want to talk to you very specifically about how much it’s really costing you to run your photography business. Sometimes these expenses go unnoticed until we look at profit and loss statements or do our taxes. I want to help you understand these numbers and hopefully get control of them before that time. This is one of the big things I harp on with my coaching students - knowing your numbers & being proactive instead of reactive so that we can make better business decisions.

Here’s the thing. When you started this business you did it because you felt like it could be a good income producing thing for you and your family. You started charging what you felt like was a fair price, and then you realized how much time and effort you put into this business. And what seemed to be a fair price at one time is quite possibly a thorn in your side now.

I did that. I think we all do that. But you don’t know what you don’t know. And that’s ok. Nobody said you have to start a business knowing all the things. So let’s get into helping you with one of those things - the cost of running your business.

“Without understanding how much it actually costs you to run your business you are going to have a tough time making enough to bring home a paycheck, let alone save for retirement.”

So what is the cost of doing business?

This is one of those terms that gets thrown around, and it can seem kinda vague. So let me break it down for you a little bit.

Simply put, the cost of doing business is everything it takes to keep your doors open (whether you have a physical studio or not) & to pay yourself. This includes things like your salary, retirement, health insurance, income taxes, mortgage / rent, liability insurance, utilities, mileage, vehicle maintenance, phone, internet, equipment, software and subscriptions, etc. It adds up you guys and you HAVE to know these numbers if you want to run a profitable business!

Those first four I mentioned - salary, retirement, health insurance & taxes - those are all things that you would have with a normal job, right? And then there are all those other expenses that it takes to run the business.

So this is where the hard part starts. Grab some snacks, caffeine, kleenex & ibuprofen. The fun is about to begin. Woohoo!!

Do you really know how much it costs every month to run your senior photography business? In this episode of the Senior Studio Success Podcast I break down the big expenses and the smaller hidden costs to put you on track for a more sustainable and …

Let’s talk about the cost of running your business.

Like I said, your paycheck is a cost of doing business. It comes from the bank account, so it is an expense to the business every month. Or at least it should be. The problem is that photographers don’t even think to take this into consideration when pricing their products.

“You are doing this to get paid, right?”

Now I get it. The first few years are going to be tight. We all start somewhere and usually any profits are put right back into the business for more equipment, props and marketing. But at some point, you have to pay yourself. What is the point of working so hard if you don't? You might as well go work for someone else & actually get paid for the hours you put in, right? The best thing you can do is to just pay yourself on a schedule. This might be weekly, bi-weekly or monthly. And it can be a very small amount if needed at first. The important thing is that you are setting up the habit of paying yourself and you are subconsciously getting that message repeatedly that you are worth getting paid for what you provide in the marketplace.

While we are on the topic of paying ourselves, let's talk about retirement.

I'll use the same thought process here as with paying yourself. It might be $50 a week or $150 a month to start, but start somewhere. Every little bit that you can put away will help further on down the road when you can't do this very physical job anymore. And there are added tax benefits for setting up an IRA or 401k too. My goal is to max mine out at the end of each year. Be sure you talk to your accountant or investment advisor to know which direction you should go with your investments.

Ok, let’s talk about taxes. Yay!

This is really getting fun, huh? I know. I know. I hate it too, but it’s something we all deal with.

When I first started my business (16 long years ago) I was young and pretty naive when it came to making a profit. I didn’t even think about the money Uncle Sam would get from my measly profits. But wow. He sure did take a lot! I learned my lesson the hard way when I actually did start making a living from my photography business. And now I account for that percentage of income I’ll have to give back to the IRS. If you don’t know what tax bracket you’re in it’s easy to figure out with a simple web search for the current year’s income tax brackets. Be sure to add this percentage to your profit (a la carte price - cost of product) before calculating your final a la carte prices.

That bumps my a la carte price up a little more and gives me more of a buffer. Another mistake I made in the beginning of my business was not making quarterly tax payments - federal and state. Since I am supporting myself and have no withholdings it is very important that I do that so I don't owe a huge amount in taxes all at one time.

Then I set aside about 20% of net profit each month in a separate bank account to handle tax payments. I don’t touch that money. It’s not spent on all the fun stuff us creatives like to buy!

Talk to an accountant & do what is best for your situation when it comes to taxes.

Health Insurance

You may or may not have your own through your business. Everybody is in a different circumstance. You may have yours through a current employer or maybe through your spouse’s employer. But if you sit back & think about it, a benefits package from a normal employer will include health insurance. I’m not going to get into this specifically because of all the different circumstances that we have, but health insurance is one of those things that can absolutely be a cost of doing business. So again, talk to your accountant. If you can write it off, then write it off :)

Other Monthly Expenses

Ok, we’ve talked about the big expenses - payroll, retirement, taxes and insurance. Now what other monthly expenses do we face as senior photographers?

The obvious ones are rent, insurance, internet & phone, utilities if you have a studio space. The ones that I really want to touch on though are the hidden costs - the ones that are smaller numbers that we don’t tend to think of as a big deal but really can add up. They tend to go unnoticed until they are all lumped together for taxes and you yell “I spent how much on subscriptions?”. Am I the only one who’s ever done that?

The best way to figure out what you are really spending is to get out your bank and credit card statements or your accounting software if you are classifying expenses correctly. Dive into those & figure it out.

The Hidden Costs

Pay close attention to some of these items that can go unnoticed.

Cloud storage
Website hosting
Gallery hosting
Sales software
Album design software
Video editing software
Photoshop & Lightroom
Any other software subscriptions
App subscriptions
Education subscriptions
Template subscriptions and purchases
Client management software
Shipping
Packaging
Vehicle: gas, mileage, maintenance
Marketing, ads, swag
Education & travel
New equipment & equipment maintenance
Accounting & legal
Administrative assistant

It’s not always subscriptions. Sometimes we just buy things on a whim from the fear of missing out. You don’t have to have all the apps and all the new cute templates. Now, if it is something that will truly save your time and be a great resource for your business, then go for it. But you’ve got to think about why you are buying something before you just add it to the pile of already unused things you’ve purchased in the past.

That’s a lot you guys! And I’m sure there is more still that I’ve left out. You’re probably thinking about something else to add to that list right now.

But once you get those bank and credit card statements down (or if you’re really awesome & already have all of this info in Quickbooks or another accounting software), I want you to sit down & really figure out what it costs to run your business every month. If you aren’t paying yourself yet, add what you want to be bringing home to that monthly number.

Now, how many clients do you need at your current average sale to cover that and then some? You’re going to need some buffer. Some months are a little more expensive than others.

The Cost Of Goods Sold . . . Oh Yeah

And we haven’t even factored in your cost of goods sold (which is a discussion for another day). But to keep it simple, your cost of goods sold should include everything it takes to produce a product - cost of the materials, the editing, shipping & if there is design work involved, your time to design it. Keep that number 15% or less than the a la carte price & you should be pretty good. I like to stay at 10% cost of goods sold if at all possible.

Back to the topic at hand . . . Let’s use some really simple math here. If it costs $2000 to run your business each month and you want to bring home $3000. That’s $5000 a month or $60,000 a year needed to cover the cost of doing business (which includes a decent paycheck). You are going to need more than that in sales though. This is simply break even and we aren’t in business to break even. I like to double the sales that are actually needed so that there is plenty of wiggle room for operating capital, retirement, profit distributions and lovely income taxes.

”We aren’t in business to break even.”

I know there are lots of photographers out there that are offering their services and images at a fixed price, usually $500 or less for the session fee and digitals. Guys, I love you and this message is for you. Stop it. I don’t care if all you have is a basic $10 Adobe and a $20 website subscription right now. You also have a cell phone and internet at a bare minimum. And equipment and gas and time. Even with just that, your business is easily costing you $8,000 - $10,000 a year. You will have to shoot 20 $500 sessions just to cover those expenses.

“That’s a lot of work, time and stress for no paycheck.”

If I just stepped on your toes, please know it was done because I care. I don’t want to see anymore young women trying to raise babies and juggle clients for pennies. It’s not worth it. You are so valuable and so is your family. I don’t care if it’s just a side hustle or something for you to do because you enjoy it. You will eventually not enjoy it very much at those rates.

So lemme talk to you for a second if any of this hit home for you today. I get it. This used to be me. I used to stay exhausted, stressed and completely burnt out from taking care of my family and my business. It doesn’t have to be that way. I wanna help you if you’re ready. Let’s start here. Come join me in this 3 part workshop called The Road To CEO. You can register over at www.seniorstudiosuccess.com/ceo.

We’re gonna talk about this broken business model a little bit more. We’re gonna talk about getting a system in place to consistently book clients and we are gonna talk about shifting from that employee mindset to the mindset of a CEO.

You have it in you. If you can hear my voice right now, stop and listen to it very intentionally. I believe in you and know that you can do this. And I will continue to stand in that gap for you until you believe it for yourself. Come hang out with me and let’s talk about this some more during this workshop.

And if you happen to hear this podcast after that workshop has long passed, I’m still here. You can work with me one on one for business coaching or you can join Studio Secrets, my 6 month business coaching program. Either way, I’d love to help you.

Thanks for hanging out with me today my friend. Come say hey over in the facebook group or over on Instagram!

Until next time, take care!

DON’T MISS THIS

If you need somebody to come along beside you and help you do business the right way so that you can bring home a paycheck, spend more time with your family and save for retirement then you need Studio Secrets.

The doors open on November 4th for something very special for a handful of photographers who are ready to get laser-focused on their businesses.

Studio Secrets is a 6 month business coaching intensive where we dive deep into your business together. It’s not a DIY course on one or two topics. This is EVERYTHING you could ever need to know (and all the tools & resources) to run a senior photography business - branding, messaging, websites, pricing, sales, marketing, social media, senior model teams, systems, workflow, automation and SO MUCH MORE! And bonus - you get me to lead you through it in our hot seat calls and a private community to bounce ideas around with.

If you’re ready to turn your expensive hobby into a thriving business be sure you are on the waitlist. You can do that at www.seniorstudiosuccess.com/studiosecrets.

Plus everyone on that wait list will save $500 on launch day - November 4th. Woohoo! I can’t wait to work with you!

JOIN MY 6 MONTH BUSINESS COACHING INTENSIVE WAIT LIST - DOORS OPEN NOV 4TH!

If you want to continue this conversation there’s a facebook group dedicated to all the business stuff behind our pretty pictures and I’d love to have you there.

I’d love to connect with you on Instagram as well. Screenshot this episode, tag me and share it to your story! And if you’re the type of person who loves to help other people the biggest and most awesome thing you could do right now is to give this podcast a rating and review on iTunes. That helps it get found by other amazing photographers around the world who want to build their dream businesses too.

Until next time my friends, see ya soon!