prof_fate
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 p.2 #12 · Business Basics (Pricing) | |
BrianO wrote:
We, as photographers, create our own value by creating demand for our services.
We do not create demand. Demand is there with you or without you. You enter the market and unless you can bring in additional people by say offering a new product/service that has not existed before, all you can do is shift clients from another busniess to yours. Assuming the market is not changing in some way (like a new development is being built with 1000 new homes that will increase the market size, etc)
BrianO wrote:
A new photographer who simply copies the price sheet of a competitor ("charging market rate") is unlikely to survive in the business except by sheer luck. The vast majority of new businesses, and photo businesses in particular, will fail in their first year...not due to improper pricing, but due to undercapitalization.
It can take a year or more before one's profit and loss statements are in the black; and if one's balance sheet is also in the red, bankruptcy is inevitable.
If you are truly starting a business, as in investing $100k and opening a storefront then yes, I would agree that undercap is a primary reason for failure as it can indeed take a few years to turn a profit.
But most wedding photogs don't start that way. They go out of business for other reasons - it's a lot more work and less money than they thought it would be, it's not as much fun, there is stress and if they have a day job that can be a huge factor - get transfered, a raise/promotion, etc will both likely end the wedding business.
BrianO wrote:
To start a successful business you must first determine how much money you will need to survive for one fiscal year (including not only current liabilities, but also new liabilities from starting and running the business), then project how much income there will be during the year (by running "what if" scenarios with a spreadsheet, and setting business practices based on those scenarios), and then finally add the projected income to the current and projected assets...savings, equity, etc. (A volunteer from SCORE -- the Service Corps of Retired Executives -- or a similar organization can help one make realistic projections.)
Most of what you say is correct, but first you have to determine is there a demand for your product? If all the current photogs are starving, leaving the business, etc then it's unwise to open a photography business. Simple example is a local camera store. Regardless of your pricing, business practices or capiitalization I don't think you'll succeed. Location matters too - gonna open you store across the street from B&H? You're gonna fail.
You can want to sell anything, but you need buyers to succeed. Are there enough buyers of the product, in general, that you want to sell? Next is to narrow that to your specific product, since it's not a commodity. Gonna sell $5500 weddings? Are there buyers at that price range? Enough buyers? Who's currently serving that market and what will they do when you enter the market?
How many weddings are there in your county is easy - call the courthouse and ask about marriage licenses. Get 3 years data and you'll know the trends. But what about photogs? How many are there, at what price? What is their style, product lineup? Even if you attend bridal shows you won't really know how many are out there, and at what price and all that stuff you need to know.
BrianO wrote:
A good camera and a good eye are essential to success, but they are not enough.
Very true. What most folks don't realize is that 75% of running a business is exaclty that - running a business. Doesn't matter if it's photography, a coffee shop or a laundramat. Only 25% of your time will spent on photography. The rest will be sales, accounting, cleaning the floors, learning and shopping (CS4 or a new lab or marketing materials, etc). Filing and paying bills isn't glamourous but it's part of owning your own business.
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