Calculating personal and business finanaces is one of the hardest parts of being a small business owner. It can be tedious and time-consuming. Finances serve as the foundation to any successful business and it’s important to take the time out to gather the information and put in the work. Here are five tips that we give our clients when helping them achieve financial success for their photography businesses.
- Know your Numbers: The first step to financial success is knowing the basic numbers that keep your home and business running each month. Set up a spreadsheet and add up all your household and business expenses (such as equipment, supplies, software, marketing, etc.) Knowing and tracking expenses is powerful information for your business and will set you up for success longterm.
- Set Financial Goals: Setting financial goals is key to running a profitable business. If you don’t have clear goals, then you’ll never fully reach your financial potential. Think big and set goals that can help you achieve financial freedom. Make sure to include savings, retirement funds, debt payments, vacations or personal goals you need to save for.
- Put Yourself on a Payroll: When you get paid by a client, do you run to the bank (does anyone go to the bank anymore?), deposit your money and then spend it all on bills and such? Setting a monthly budget and keeping only what you need in your bank account to cover your monthly expenses can start building your savings and keep your income stable during the off season. Keep additional funds in a separate interest-bearing savings account and only remove it when it’s time to pay yourself.
- Evaluate Your Pricing: Do you feel like you come up short every month and never seem to have what you need to cover your expenses? The truth is your probably not charging enough. Your pricing is directly related to the amount you need to make to cover your monthly household bills, business expenses and taxes (EEK!). Once you know your costs you can adjust your pricing to make sure you are charging enough to cover all your expenses.
- Know Your Monthly Client Target: Knowing how much you need to make per month is a powerful number. Understanding what your target sale is per client can help you determine HOW many clients you need to book each month. Wouldn’t that be a wonderful thing? To KNOW how many clients you need to book! It’s all basic math. Simply divide your monthly income goal by your average sale target and this will calculate how many clients you need to target each month.
Making some small tweaks in the way you run your business can really help set you up for success and set the foundation for a profitable business. Need help in pulling all this together? Simply email us at tammy@reddoormentoring and we can help!