As a friend, you should be responsible enough and care for your friendship enough to not take the money. For you to have to come online and ask a general professional forum advice on how to use the investment already shows that you are not nearly developed enough for someone to risk 20G on. It'll be smarter for your friend - or any person - to invest 20G's on a safer company - one that hasn't already shut down once, one that has somewhat of a proven track record, and one that already has a well established business (1, 3, 5, and 10 year).
If you do take the investment, hire PROFESSIONALS - from accountants to a lawyer - to make sure EVERYTHING is considered and dealt with in a legit manner. This "investment" can easily turn into a broken friendship and lawsuit.
jdben622 wrote:
As an investor, I'd want my $$ returned in 2-3 years. There is a very high risk involved with this venture. Most of your money is going to initial marketing which will be worthless if the venture fails. There is a small amount of money going into highly depreciating physical assets that could be liquidated if you fail. I'd want a 20% return minimum. So the question is...will your fresh-start photo business generate enough income that you will have $32K profit left over to pay me after 36 months? If you're planting your seeds in 2010 and working towards 10 weddings in 2011, you'd better blow up in 2012!!...Show more →
Thank you I think this is a very strong response.
2-3 years does seem like a reasonable and also difficult time frame but I'm still in the early stages of developement and I think with some thought I can write a detailed plan.
I agree it is a high risk thing. I think it's going to take some work...a lot of work actually.
I AM planting seeds in 2010, doing few weddings in 2011 and planning on blowing up in 2012. I think that is a good strategy: plant seeds, don't start too fast, the rip it up!
Saad Syed wrote:
As a friend, you should be responsible enough and care for your friendship enough to not take the money. For you to have to come online and ask a general professional forum advice on how to use the investment already shows that you are not nearly developed enough for someone to risk 20G on. It'll be smarter for your friend - or any person - to invest 20G's on a safer company - one that hasn't already shut down once, one that has somewhat of a proven track record, and one that already has a well established business (1, 3, 5, and 10 year).
If you do take the investment, hire PROFESSIONALS - from accountants to a lawyer - to make sure EVERYTHING is considered and dealt with in a legit manner. This "investment" can easily turn into a broken friendship and lawsuit.
I have been considering this since before I posted this thread. The thing is, I'm not coming here to learn what I need to do, but rather I'm doing something more akin to having a critique on my strategy from business owners with more experience.
I have a great accountant who gives great advice. I know a couple of attorneys but don't have any on retainer.
I'll definitely keep this recurring advice with me and bring it up at our meeting.
First, I would take some of your own money and invest it in an SMS seminar and consultation. Learn a lot more about your numbers, about your plan and the ramifications of owing that kind of money to an investor. Then they will tell you exactly why this is probably a terrible idea.
First, is this friend someone who can afford to give you $20,000 and never see a cent back? If not, don't do this under any circumstances. Second, I'd like to think I know something about the business side of this industry, and I've done a ton of research on profitability and I've worked with the people who have done the most research on profitability in photography. I want to say this upfront, not to be mean, but as a get check before you go forward - Photography is NOT an incredibly profitable industry and I can think of several 1000 other businesses I would invest in before a photography studio. I'm not trying to rain on your parade but a savvy investor wouldn't sink money into an unproven studio and a savvy entrepreneur wouldn't take $20,000 that they would have to pay back in a 2-3 year time span.
The biggest problem I see facing the industry is that people don't get into photography to be business owners. You have a very large number of people running businesses far below profitability because they just don't know any better. I can't tell you how many people tell me they are doing really well in business, then get a little business education and figure out how to actually see how they are doing and then freak out over how little they are making and how much they are losing. Its a really sad and grueling process to get to profitability. I don't know any startups that could afford to pay back $20,000 over 2-3 years. I don't want to be mean at all, but by the sound of the background here I wouldn't give this venture much chance of paying off.
I don't say that to be mean, please understand that I say that from a stance of having been in the situation and having helped a number of studios get through this type of circumstance. Please (!) learn more about business and the structure you would need to success going forward before you think further about spending someone else's money. The last thing you should be thinking about is gear.
sorry to be the stick in the mud, but I have seen many studios fall prey to this line of thinking, and I'm way more concerned about the damage this will do to the friendship in question here. Until you have a solid understanding of the managerial accounting necessary to make this work and a proven track record of running a profitable business that is actively booking jobs and effectively selling your work you should NOT go into a lending situation. The good news is that there are avenues to get the info that you need. Start here:
You might ask Spencer B about the program as I know he just went through the 3-day seminar in January. I work with SMS quarterly and couldn't run my business without it.
Yeah wow, this does not sound safe for either party. It's just odd - almost like it's too good to be true, which probably means it IS too good to be true. For the life of me I cannot fathom why any investor would sink money into a business that had already failed once and has yet to present a business plan that will counter his substantial risk. My advice would not start with the gear, it would start with RUN! If you want to get back into business, why not just do it like the rest of us? Take your classes, buy your gear as you get your feet on the ground, work a steady job to pay for everything until it really takes off. I do NOT like the idea of taking someone's money, friend or no friend, investment or no investment. With the limited information I have from your posts, it smells fishy to me. Your accountant should be saying the same thing unless he knows something we don't...
This is a guy who I've known for half of my life. We've been in and out of trouble together as teenagers, sheltered each other when we needed it, paid each others bills when it was needed, etc. This isn't just an acquaintance. That being said. I'm going to definitely give him the information about the difficulties in running a photography biz and the risk and the possibility of no return.
There was a part of our first phone conversation when I told him that it is quite a difficult business and making a return in a short term would be very difficult. He responded with 'I'm going to be with you on this for the long term, you have a problem with that?' So I'm thinking that the 2-3 years will be extendible, and in return I would have no problem giving him a higher return.
We aren't talking about someone looking to invest in my business purely for profit. We are talking about one friend investing in another friend as a support. And of course the return will be my responsibilty as well.
Todd
Thank you for some very sound advice. I will be looking into some seminars and checking the links that have gathered in this thread as well as making a point to emphasize the risk in the venture. I believe I'll be talking to some other photographers about the impact that a 20K loan/investment would have on their business and the pressures that might befall them.
Also, no need to worry about raining on your parade or being a stick in the mud. These kinds of answers are exactly what I was looking for when I started this thread. (not 'how do i use my 20k) I'm not trying to jump the gun here. This just happens to be a source of knowledge for me and I'm tapping in.
It sounds like you're pretty excited about it, so I say follow your heart and go for it. We will be following your story with great interest and of course be here for support along the way.
Could your friend invest 10K then after 6 months or a year decide wether to invest further? Essentially split th whole deal (his investment and your purchases etc) in half, and so reduce the risk.
200231786 wrote:
Could your friend invest 10K then after 6 months or a year decide wether to invest further? Essentially split th whole deal (his investment and your purchases etc) in half, and so reduce the risk.
sboerup wrote:
$20k in debt isn't small, especially if you have already shut down previously.
I agree on the Pentax, why even look at it?
Atleast you are dropping some good cash on Bridal Shows. Instead of signing up for a bunch of bridal shows at once, do 2 of them and see if its a viable way to market yourself before committing to others. Get all over facebook, new branding, new website. You have a fresh start here.
As an investor, a reasonable rate of return is probably going to be in excess of 15%.
Best of luck to whatever you do.
pentax = Trashhhhh
I used to work for pentax and shot the 645 for years, but their digital system has always been a day late and a dollar short with everything they do. From development to marketing and sales, they don't have the resouces to play with the big boys. That said, they still come out with good products with inovative features. The K7 has some cool featues i wish my canon had, but there are too many holes in the overall system and support structure to make it a viable option for my needs. i'm sure the K7 will do fine for him because he is tied into the system.
perfectly put and that is exactly how i feel about pentax.
i know the digital pentaxes arent as space age as everyone else, but they are coming along and i like them. ive got thousands in the system already and really i just love my cameras.
how's that saying? it's the photographer not the...... 8)
I mentioned in an earlier post that I've shot on nearly every digital Canon camera there is. The fact is that at the end of a wedding with Canon, I feel they are too heavy (1Ds mark2 + custom bracket + 70-200 IS 2.8 + 550 flash + pocket wizard + battery pack = 12 POUNDS!), also my hand starts to hurt after a day of using the vertical rear dial on the camera as opposed to the rear e-dial of the pentax (or nikon)
The nikon F5 was WAY too heavy as well, but I never tried the F6 and the D1 and D2 werent too bad.
The image quality on canon and nikon, however, is great although I prefer the color control of the pentax over the canon. I have never really utilized the color control features in a nikon so i cant speak for that.
The fact is, that after experience with different cameras I prefer pentax. It's better for me and much more comfortable in my hands.
And, since this thread is about money, I should add that for the 1200 bucks that the K7 costs, it's very good for my business because it does perform very well.
I would rather drop 1200 on the K7 than 2500 on the 5D2
