It usually starts with an inner voice. You might work a 9-5 to pay the bills; but with each passing day, that little voice gets louder and louder… telling you that photography just has to be a bigger part of your life. Taking the plunge and diving full-time into photography can be really exciting. But as creative artists, the idea of managing finances and getting a new business off the ground can be completely nerve-wracking. Here are 5 helpful hints for managing the finances of your new business.
1. Initial investments. One of the most important steps in getting started with a full-time photography business is knowing what some of your initial investments will need to be. Not only does this include things like the initial purchase of photo equipment, but other business-related investments such as the cost of establishing a legal business identity, opening a business bank account, securing business/equipment insurance and hiring professional help such as a bookkeeper or accountant. You may also need to make creative investments in a new website, blog and/or business cards. When it comes to the creative investments (such as your website, business cards and marketing), don’t spend more than you can afford. You can always improve and upgrade as your budget allows.
2. Build a cash reserve. If you’re still working a part-time or 9-5 job, use your steady income as a means to save, save, save! Not only do you want to consider saving up enough money to cover your initial business investments, but also think about saving up to 6-9 months of your personal living expenses. Having this financial cushion is a huge jump-start to running a debt-free business.
3. Know your costs. This sounds like a no-brainer, but it’s imperative to know what it’s costing you to be in business. Break down your costs into two broad categories: fixed and variable. Fixed costs remain constant, regardless of how much work you take on. This includes things like photo equipment, software, computers, association fees, seminars/conventions, insurance and hired help. Be smart about controlling your fixed costs. While it’s certainly tempting to have latest and greatest technology, and to attend every conference and seminar that you can get your hands on, pick and choose wisely. Variable costs fluctuate depending on the type and volume of work you take on. This includes things like the cost of an assistant/second shooter, travel, renting equipment, albums, discs and even postage. Be thorough, and really take into consideration every single cost you’ll incur from end-to-end.
4. Keep track. It doesn’t have to be fancy, but remember that you need to keep track of the numbers. Once you establish a legal business identity, you’ll be responsible for all income, expenses and taxes related to the business. An easy way to record expenses is by getting a separate credit/debit card for the business. With a business credit card, you’ll be able to track expenditures more accurately, build business credit and have an easy reference when filing taxes. The same applies on the income side. At minimum, consider creating a basic filing system or investing in basic bookkeeping software to track any income that the business generates.
5. Business should fund itself. There’s always a sense of excitement and urgency when starting a new business. It’s easy to get carried away, spend more than you need to and suddenly find yourself in a stressful financial situation. Remember: there’s no rush! Let your business to grow at its own pace. Making investments only as the cash is available and staying debt-free will help ensure long-term financial health of your business.
It may have started with an inner voice, but we hope that you’ll scream from the hilltops when you achieve success.
Written by Binita Patel
Binita Patel is a Boston-based wedding photographer specializing in weddings for fun & stylish couples. She holds a bachelor’s degree in Economics & Finance, as well as an MBA in Marketing. Binita is passionate about sharing her love for photography and business knowledge with photographers across the country.