It’s the height of tax season, and an odd thing just happened to me. I was at my accountant’s office filing my business taxes for 2018 last week, and she said to me, “Wow. I have a lot of photographers as clients, but most of them aren’t making a living. What are you doing differently?”My answer to that question in the moment was something rambling along the lines of, “I have no idea.” But, sitting down to think about it later, here are a few things that I’ve come up with. I still have no idea, really, but maybe these things help.
Nickels & Dimes
The biggest thing I can think of that helps any business turn a profit — even a photography business — is being mindful of costs, and counting the nickels and dimes. The small stuff. Sometimes, we think to ourselves, “Oh, it’s only a couple of dollars for these lens wipes,” or “only a dime for the parking meter,” and don’t bother documenting the expense because it would be too much trouble. But in reality, the small expenses for the year can really add up to a large number that, if written off properly, you won’t have to pay taxes on. Even the mile or two I drive to get to the post office to mail something, even though it’s just a dollar or two when I’m writing it off, gets counted. Adding up the nickels and dimes, the small stuff, can add dollars to your bottom line.
It’s also a mindset. When you realize that it all adds up at the end of the year, and that it’s all important, it puts you in a mindset of trying to minimize your expenses — consolidating those trips to the post office, for example — which will, in turn, help maximize your profits. The largest corporations run a tight ship regarding expenses, and so should you.
Buy the Good Stuff
I’ve gotten to the point in my career where I’ve stopped purchasing cheaper versions of items when I can. By “cheap,” I don’t necessarily mean monetarily cheap. I mean “cheap” in the sense of something that is poorly made, of bad quality — and, usually, that means a lower price. These days, I’m much more likely to spend the few extra dollars and get something that will last me longer, have fewer issues, need to be repaired less often, etc. Be it a lens, a computer, name-brand batteries, you name it. I’ve gone the third-party road, and found it full of potholes. I spend more up front, but usually spend less in the long run, which is another way in which I control my expenses.
I try to only buy photo equipment when I find it’s either necessary or a worthwhile upgrade what will improve my work. I’ve written before about how to avoid GAS, and I stand by those tactics for the long haul. It’s easy to drop money on photo equipment, so staying on top of your spending is key to keeping expenses low and ending the year with more of a profit. And when I feel like something is getting towards the end of its useful life, I don't just set it on a shelf until it becomes obsolete. I sell it, and recoup some of the costs from it before I buy the new version. Do I buy a new camera every year? No. Do I buy it when I feel like it's worthwhile for my business? Yes.
Use Physical Payments
I only had about $300 in credit card / online payment fees last year (via PayPal, Agree.com, Square, etc.). The reason? Unless a client specifically asks for it, I try and get most of my payments via checks. Keeping an additional 3% of my sales seems like a no brainer, when it’s just as easy on my end for clients to pay me with a check. Sure, it’s sometimes more convenient for them to pay online, but I’d rather go the old fashioned way on this one. If they request to use a credit card and the cost is over $500, I also tell them I’ll be adding a credit card fee of about 3% to make up for that cost. Nine times out of ten, they’re fine with that. My volume is low and I don’t need the speed of payments, so this works for me. Having a solid cash flow helps deal with the longer-term payments that come from larger businesses, so I don’t really have to worry if a client takes 30 or 45 days, or sometimes even longer, to pay me. Would it be nice to have it in my account via a credit card the next day? Sure. Is it nicer to have an extra 3% at the end of the year? Absolutely it is!
Follow Up on Invoices
Speaking of payments, it's essential to have a piece of software or some way to keep track of invoices you have out. Every month or so, I go back through my outstanding invoices and check in with clients that haven't paid in a month. Usually, the response is that they forgot to get it in the system, and thank me for the reminder. I may have to wait a couple of weeks after that, but the money always (or at least almost always) comes. Making sure you get paid what you're owed seems like an obvious thing, but I know people who don't keep track of their invoices quite like they should.
Save Time, Save Money
One thing I'm a huge proponent of is minimizing time spent on a task in order to maximizing profit from it. I'll pay extra for a faster computer processor, faster internet to have great upload speeds, faster memory cards to download photos from, etc., any day of the week. Anything I can do to minimize time spent in the office working on client work is a valuable achievement. The less time I have to spend waiting for Lightroom to export, the more time I can spend editing the next client's shoot, and so on. This also fits in with the "Buy the Good Stuff" section above
Basically, the gist of my answer is to keep your expenses as low as you can while still turning out a viable product and keeping your clients happy. Otherwise, I don’t know what I’m doing differently than my accountant’s other clients, other than maybe the types of clients I have. If only I had a magic telescope to see the books of my competitors and see what they're doing differently, for better or worse!
For those of you that are running a profitable photography business: what do you think you’re doing that some of your competitors aren’t?