We would like to welcome Pictage Chief Financial Officer Kevin Rubin to the Pictage Blog as he shares his financial advice with the Pictage Community. Whether you have a new photography business or have been in business for many years, the current economic climate makes it difficult for small businesses. In this post Kevin brings it back to the basics, setting a solid foundation for your business to sustain financially in any climate. If you have any follow up questions or suggestions for future topic from Kevin, email them to email@example.com or leave a comment below.
Many of today’s small businesses face the same age-old difficulties of controlling cash flow, justifying expenses, negotiating favorable deals with suppliers and vendors, balancing quality and costs, and predicting or foreseeing market demand. In this discussion, I will offer a few important financial disciplines that will help you run a profitable business.
Successful businesses – large and small – establish clear and measurable goals. In other words, they identify how they define “success” within their business and regularly measure business performance against their “success.” For many small businesses, success is based on how much cash is generated – as opposed to other financial metrics such as expanding your customer base, period-over-period revenue growth, or geographical reach. How does this translate to you? How do you currently measure how well your business is performing? Do you know what tweaks you can make to your business to generate more cash – without negatively affecting your products and services? Regularly measuring your business performance will allow you to fine-tune your business to achieve your financial goals.
Another crucial component to running any successful business is understanding your costs of doing business. While this may sound remedial, often times certain costs are neglected or just ignored. For instance, do you spend late nights “Photoshoping” your photos, but not able to charge that extra time to your client? That is, are you striking a balance between the time you spend editing the photos and the package pricing you sold? Some of the costs of doing business that are overlooked include your time, overhead costs such as costs of your camera equipment, computers and software, business insurance, and other incidentals. Keeping a tight rein on your expenses, having self-control over the personal time invested in each event, and aligning your pricing drives profitability.
Finally, and probably most important, prepare for the unexpected. As we have experienced in the current economic climate, few businesses are immune to the perils of economy – especially small businesses. Many small businesses don’t have the financial resources to survive the depth of contraction. Having appropriate levels of capital reserves, can carry you through dry spells. Consider setting aside reserves each month so that when the next cycle comes – which it always will – you can operate from a position of strength and thrive.
Hopefully this discussion has been helpful and sheds some light on how to effectively manage a small business from a financial point of view. You became a small business owner because you have passion for your craft, want to make an impact in your clients’ lives, and want to work for yourselves. You now have some tools to ensure you have the financial security to outlast.
Written by: Kevin Rubin, CFO