A new year, a new approach. Another entry from Captain Obvious that is somehow ever so easy to ignore.
Around this time of year, two very distinct yet related things tend to happen. One, I review all the financial aspects of my business for the previous year and get everything ready to send to my accountant for tax season. And two, I make my fiscal plan for the year ahead, including everything from financial projections to what I intend to spend on expenses like marketing or new gear. As many of you can surely relate, it’s often that last item, new gear, that requires me to exert my highest level of self-control. If left unchecked, Gear Acquisition Syndrome can quickly go from a fun hobby to a business killer. There’s no point in increasing revenue if all you are going to do is spend the surplus on new cameras trying to keep up with the Joneses. You have to look at your gear purchases strategically and approach each investment from a standpoint of need rather than want. This is easier said than done.
Part of the problem is that building our gear collection is as natural to us as building our skillset. No doubt, as your skills have grown behind the camera, the size of your gear closet has grown right along with them. And, it’s not that you are being frivolous with your purchases. You truly have been acquiring new skills which can legitimately only be exercised with certain tools. So, if you don’t currently own those tools, out comes the credit card.
Planning for these new investments is made more difficult by the fact that it is nearly impossible to predict where your career will take you. What you think you had all figured out a year ago might be completely different by the time you next submit your tax documents. So, that piece of gear you were truly convinced would be a daily worker for your business might, in just a year, find itself collecting dust in a box that used to hold the two thousand dollars you spent to purchase it in the first place.
The problem we face is that none of us possess a crystal ball. We want to purchase gear, get familiar with it, and master it to be ready for any eventual situation. But we have no foolproof way of knowing what those future situations will be. So, how do we go about making sure we have access to all the tools we will need to do our job without overspending to obtain them?
Perhaps the answer is rather than predict the future, we should instead base our future purchases on proven evidence from our past. Even as it is completely against my nature as someone who overprepares for everything from photoshoots to trips to the grocery store, the better financial decision is likely to take more of a wait-and-see approach. By that, I don’t mean that you shouldn’t be unprepared in general. Rather, shifting our perspective just a little bit in the direction of reacting to need rather than anticipating demand might just lead us to make better purchasing decisions and save us money on those items which never seem to produce the productivity increase we imagined.
Here’s an example. As my revenue balance has shifted heavily in the direction of more and more motion work in the last few years, the various options for cinema cameras are never too far from my mind. I already own a small one, but it is often left at home for larger jobs in favor of a more elaborate rental. Having already spent a small fortune on stills photography gear over the years, I’ve only invested a limited amount in video equipment. Not that I wouldn’t want to purchase more video equipment, but as you will likely know, video gear tends to be significantly more expensive than still gear and thus requires a bit more forethought on my end.
Because I come from a stills background where it’s just always seemed second nature to own my camera, lights, and other accessories, my first impulse is to follow the same path on the motion end. The gear I purchase is an investment after all. Not only an investment for my enjoyment but also my business. The photo gear I purchase can then be rented back to my commercial productions, thus offsetting the cost, and, in some cases, making me a profit on the gear itself. So, it can be a source of revenue. But, because the entry point to most video gear is priced at a much higher level, knowing you will have enough business for the investment to pay for itself is a much dicier game. Yet, still, to perform my job, I need access to a certain level of gear that meets my clients' expectations. So, how should I approach it?
One way would be to do what I’ve always done, drop a huge charge onto my credit card (or save up the cash) and purchase the camera I think I’ll need now, with plans to use it on the projects to come. If the current trajectory continues, this could easily pay off. But what if it doesn’t?
So, instead, let me propose a Plan B. Instead of buying gear upfront that you think you will need, let’s consider a different plan. For one year after you’ve identified a certain gear need for your business, commit to only renting that gear on an as-needed basis. You see the need. You see that Camera A would solve that need. But you’re going to hold off purchasing for 12 months. This will add a bit of hassle to your life, needing to continually pick it up and drop it off from the rental house. And, because you don’t own it, you won’t be keeping the full rental amount when you include it as a line item on your invoices. But, on the flip side, your upfront costs will be zero. And, should you find that you don’t get the amount of business you predicted in your forecast, at least your profit margin won’t be further compromised by a large upfront investment.
But don’t fret, fellow gear acquisition lovers, there is a part two to the plan. After that initial year, you run the numbers. If it turns out that you have gotten enough business that required you to rent that piece of equipment frequently enough that it would have paid for itself, then it’s likely safe at this point for you to look into purchasing one of your own. You might even reach that point sooner if business takes off. Remember, it's not the camera getting you to work, it’s the talent and skills you bring to the table. The camera is just the tool you use to express that talent.
The camera will still be expensive, but you now have the hard data to show that you need it and that you can turn a profit on it rather than it just being something that you want. Conversely, if, after that year, you realize that you weren’t able to book nearly enough clients who required that piece of gear, then you continue to rent on an as-needed basis. No harm, no foul. No serious hit to your bank account for something that would ultimately only have been an expense as opposed to a source of income.
This all seems very logical and very obvious. But, for me at least, it requires something of a mental shift from being proactive with my purchases to being more reactive. I’m not leaving myself uncovered. I can pretty much always rent a piece of gear if I need it for an assignment (this may vary if you live in an area with fewer rental options). So, I don’t have to worry about not being able to meet client needs. The only real aggravation is the extra trip to the rental house here and there and the inability to casually play with a piece of gear in your living room when you’re bored on a Friday night.
The result of this approach is less spending on potential and more spending on purpose. It’s not as fun. But it’s way better for my bottom line.