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Gene Higa is a destination wedding photographer based in San Francisco, but he’s got great tips for all kinds of photographers. In today’s Tip of the Week, Gene reminds photographers how important it is to meet new people and that helping others always pays off in the long run.

“How do you get someone’s attention and keep it?”

“It helps our business basically come out of nonexistence.”

“You never know if your bags are going to make it to the location.”

“Start tapping into what you already have.”

“We also have a la carte pricing so they can see the value of each package.”

“Shoot A LOT and figure out what you’re really good at.”

From Doug's "Heaven, Earth, Tequila" project, which was a commission as well as a book and exhibition, with prints like this one now for sale on his website. ©Doug Menuez

So far in this column I have touched on general issues of starting a photography business. Now we’ll explore the mystery of profits. If you want to make a profit, stay in business, and retire some day, you need to know your break-even point. Break-even is reached when your income is equal to all your costs: production, marketing, fixed overhead, taxes — everything.

Why is this useful to know? Because every decision you make impacts your costs and/or potential revenue, so you should be evaluating all options in the context of your cash flow and whether you will make a profit. When you print a new portfolio, buy a camera, or advertise in a source book, you are taking a calculated risk that these expenditures will yield jobs and revenue. If you can’t do the math and actually calculate that risk, it’s just risky.

Most of the photographers I know take every job they can, happy to be working and oblivious to the fact that some jobs cost them more money than they will earn. This happens because they don’t know their break-even and are not factoring in all their costs.

You simply must know if you can even afford to take a particular job before you consider it. Sometimes photographers take a loss for a great assignment that will help the portfolio. But if you rationalize a low fee because the job makes you feel better, or think it gives you momentum, think again. Sometimes we are asked to do a job as a favor with the promise that next time we’ll be paid properly. I can pretty much guarantee you that this promise is a lie 99 percent of the time. Especially in this economy.

You can go out of business in a hurry working under the illusion that being busy is the same thing as making a living. More likely you are just churning and burning resources without getting ahead. If things slow down, look out. Instead, be strategic. Your goal should be to make a profit to provide financial security and funding for future creative endeavors. Therefore, each job you accept should fit into what you defined in your business plan.

The next step is to understand your profit margin. This is where you can really refine your goals, focus your mind, and get the business in gear. This often-ignored tool is simple: profit margin equals your net profit after taxes divided by total revenue.

Say your net profit is $30,000 on $300,000 of revenue. Your profit margin is 10%, not so great. Average business margins are around 30%. With that knowledge, you know it’s time to cut overhead, raise your fees to earn more, or both. If you regularly check yourself against an ideal profit margin, you are utilizing a potent tool to analyze your business costs. Now you are starting to take control of your own destiny.

Let’s break it all down another way: Say your total yearly overhead at the moment (Fixed Expenses + estimated Cost of Goods Sold + estimated taxes) is in fact $300,000. That is the minimum amount you have to earn to break even. Now look at your income and how it is billed. If you bill per ad, and you’re getting an average of $10,000 per ad for usage fee, and you shoot about two ads per month, your total annual income is $240,000 — and you are losing money.

Until you do this math you probably think you are skating by because the checks are coming in. You are short and late on some bills, but you are working. But by not making a profit, you are actually way behind and won’t last long. You shot 24 ads at $10K each, but you need to do 30 ads at that rate just to break even. To make a profit you’ll need to significantly cut costs, raise your rate, or both.

Based on your break-even today, and considering your market, forecast a number of jobs for the year that seems conservatively realistic and how much you’ll need to charge to arrive at a 30 percent profit margin. Carve that in stone or on your forehead and aim for it. Now you can be strategic about every job you accept and every dollar you spend. You can keep track of your progress easily and push yourself and your team toward that goal. Profit. Make it part of your plan.

“It lets your clients become evangelists for your business.”

Rachel LaCour Niesen

www.lacourphoto.com

As a photojournalist, I have pursued projects focusing on rural communities in Latin America and the Southeastern United States. My work has appeared in publications such as the New York Times Magazine and the San Francisco Chronicle. I earned a degree in photojournalism from the University of Missouri, where I was named one of the Scripps-Howard Foundation’s Top Ten Young Journalists.

When I stumbled upon wedding photography, I quickly traded my front row seat to world history for a front row seat to family history. Along with Andrew Niesen and Mark Adams, I started a wedding photography company, LaCour, which was named among the “Top Ten Wedding Photographers in the World” by American Photo magazine. I’m also a co-founder of ShootQ, innovative web-based studio management software designed to free photographers from the tedious tasks of managing their business.

Click here for a list of all other “After Staff” posts.

A signature image from LaCour Photo. ©LaCour

You are the enterprise story

Transitioning from full-time staff photographers to business owners is one of the greatest challenges the LaCour team has faced. Mark, Andrew, and I have experience in editorial, where the editorial staff doled out assignments and the road map for our careers was well-defined. But what happens when that road map is ripped out from under you like a rug? Suddenly, you’re faced with an unfamiliar challenge: charting your own course by becoming a business owner.

We viewed this paradigm shift as an opportunity to pursue entrepreneurship.

Since the term “enterprise story” is familiar to photojournalists, it’s a helpful lens through which to see your transition from staff photographer to business owner. Enterprise stories are created by journalists to explain or contextualize issues or events. Enterprise stories require big-picture reporting and the ability to identify and articulate comprehensible patterns. These are also the skills required to build a business.

A successful business owner, like a successful journalist, cannot just be an “order filler” who simply executes someone else’s vision. They must come up with their own ideas. They must be enterprising, big-picture thinkers who have a vision and can strategically implement their own initiatives.

Being an entrepreneur is the ultimate enterprise story, with a twist. The story this time is YOU.

Our personal journey has been filled with epiphanies, many having little to do with the actual process of photography. Most of what we’ve learned involves important business principles. We’d like to share some tips and tools you can use to make a smooth transition into entrepreneurship.

Camaraderie is Critical

As staff photographers, we had the security blanket of teamwork to keep us motivated. If we had a bad day, or a bad assignment, there were fellow staffers who helped rally for the next, better opportunity. Plus, there was a newsroom team, helping generate story ideas and assignments to keep you busy. As a business owner, it’s easy to feel isolated and disconnected. There’s no built-in support network. And there’s nobody telling you what to do. That’s why camaraderie is a critical component of business ownership. More »