Three. The Business Plan

Now that you know you want to be in business, it’s time to put an actual plan together so that you can start implementing the various tasks that lie ahead. Starting a business without a plan is like walking into a dark room and aimlessly looking for a light switch. You might find it in 10 seconds or you might never find it. Your business plan is your blueprint, and it will ensure you’re on the right path to success.

It Doesn’t Have to Be Painful

Don’t overcomplicate things. It doesn’t have to be hard to put this together. Business plans come in all shapes and sizes. They can be as simple as bullets on a whiteboard or as complex as a Fortune 500 company diving into a new venture. Whatever you decide, it’s more important that you document your goals and vision than wander around aimlessly.

And for the record, we’ve done both. In some years, we’re very detailed in our plan; in other years, we use a whiteboard to track objectives.

Now you might be thinking to yourselves, “Wait, Sal, are you saying I have to do this every year?” The short answer is a resounding yes!

Although you don’t want to reinvent your business every year, I think there’s a certain part of your plan that should be a living document. This ensures your company remains nimble and relevant. I’ve watched companies in all industries die a painful death because they refused to change direction—a direction, I will highlight, that was being driven by a faulty and outdated business plan.

You don’t have to look far to see the graveyard of companies in our own industry that refused to change direction. Kodak is one of the first companies that comes to mind. They blatantly—and I would argue irresponsibly—ignored the digital revolution that was coming and kept executing on an obsolete business plan. By the time they started to react, it was too late. Smaller and nimbler companies stole massive amounts of market share from them or established themselves as leaders in their respective segments. This forced the one-time industry leader to play catch-up for the first time in their history. And the rest is, well, history.

The question is, what can you do to ensure this doesn’t happen to you or your business? There are a lot of lessons to be learned from the world of corporate America. Don’t ever underestimate these scenarios or think that it can’t happen to you. It has happened to small businesses all over the world and it can happen to you!

For our business, we want to make sure we’re always leaders in our industry, both on the consumer side and on the educational side. In order for that to happen, we have to consistently reevaluate our business plan and ensure we’re heading down the right path. We treat our business plan as a living document that can and should evolve over time.

Let’s start with some basic definitions to establish key terms.

Key Terms and Definitions

Business Plan

A business plan is a formal set of business goals, data to support how they’re attainable, and the plan for reaching those goals. It can contain information about the team working toward achieving those goals. The plan should also identify the target demographic, branding, and needed financing.

The business plan can be targeted toward an internal audience or an external audience. If you’re looking to raise capital to jump-start your business, you’ll need to put together a plan targeting an external audience. This plan should highlight the team and their qualifications that will make executing this plan possible. In addition, you’ll have to identify your target market, how you’ll market to them, change perceptions, create an IT plan, and so on. Remember, these are people investing in your business, so they’re going to want to see all the information needed to make a decision.

For an internal audience—that’s you, by the way—you need a similar plan, but you won’t have to establish your qualifications since you shouldn’t be trying to impress yourself. The goal here is to ensure you understand your product/service and your plan for achieving your goals and objectives.

Mission Statement

A mission statement is a statement of the fundamental purpose of the company or organization. The mission statement should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision making. It provides the structure for the company to guide and formulate its strategies moving forward.

Vision Statement

The vision statement outlines what the organization wants to be. It can be emotive in nature and based on ideals. It’s a long-term view and serves as a source of inspiration for the organization.

Critical Success Factors

These are the factors or elements that are vital to ensure that your strategy is successful. This is what’s important in order for you to execute your business plan.

Strategic Planning

Strategic planning is an organization’s process of defining its strategy, direction, and decision-making process. To determine the direction of the organization, you must understand its current position and the possible opportunities available to the business. Typically, strategic planning addresses these questions. What do we do? Who do we do it for? And what is our competitive advantage?

Putting It into Practice

Now that you have an overview of some high-level definitions, let’s put some of these concepts into practice with some real-world exercises and examples. Our goal here is to show you how to put some of these concepts into motion with your own business. So, get out a pen and pad and start working this into your own business. Do not take these exercises lightly. Even if you have been in business for the last 20 years, you can always retune and reinvent your business. This should become part of the culture of your organization.

Your Mission Statement

Your mission statement should highlight the fundamental purpose of your business. So, here’s what I want you to do at this point. I want you to think about the following: What type of photography do you want to get into? And your answer cannot be “all of it.” I want and need you to think about what specific type of photography you’re looking to build your business around. When you look out over the next 5–10 years, what do you see yourself doing?

This is a very important step. When I started out, I was doing a little bit of everything and I was miserable! I quickly realized that there was no way I could be everything to everyone. I wanted to do what made me happy, and senior portraits and weddings are my passion. If you look at my website, you’ll see nothing but seniors and weddings. Do we shoot other types of photography? Of course we do. However, it’s on a very limited basis. My business is built on these two types of photography and everything we do has to be tied to that.

Next, I want you to think about why your business will exist. I probably just blew your mind with this. I can hear you now: “What do you mean ‘why do we exist?’ We exist to make money.” If that’s your initial answer or initial thought, you might want to step away from this book for a few moments.

Sure, on a basic level, all businesses have to turn a profit of some sort. The business has to be able to pay its bills, grow, advertise, and so forth. However, I would make the argument that when it comes to your mission statement, there needs to be a bigger motivator than just money. Without it, you will fail! And you will fail because you and your business are, at the core, being driven by the wrong motivator—money.

For us, on the educational side, my business behindtheshutter.com exists to raise the bar of professional photography around the world and help photographers reach their true potential. Notice I didn’t say a word about money. If you run the other aspects of your business correctly, money will ultimately find you and be the reward of a well-executed business plan.

Let’s look at Coca-Cola, one of the world’s most recognizable brands, for some inspiration here. Their mission: to refresh the world, to inspire moments of happiness, to create value, and to make a difference.

See anything in there about money? Their mission statement serves as their foundation for everything the company does.

How about this for a potential mission statement? “At XYZ Studio, our mission is to offer our clients the best wedding and senior portrait photography available, to create artwork and lasting memories for our clients that will be cherished for generations, and to leave a positive and lasting impression with the families we interact with.”

This is something I quickly put together. You should spend time thinking about your ultimate goals. A mission statement will dictate the strategy of your company and serve as a blueprint for you as you grow in the future.

Your Vision Statement

While your mission statement dictates the purpose of your company, your vision statement dictates the actions needed to become the company you want to be. Think of it as a framework.

Don’t get confused by this concept. You might initially look at this and think, “What’s the difference between a mission and vision? They sound the same.”

Think of the vision as a high-level set of tenets that must be adhered to in order to accomplish your mission. You don’t want to get too granular here (for example, “must send out direct mail during the month of June”). You want your vision to focus on a very high level so that as your business evolves and the landscape changes, you can still adhere to your vision yet change your tactics to achieve that vision. This allows your company to be nimble when dealing with the never-ending changes in our industry.

Let’s go back to Coca-Cola for some real-world examples. Their vision statement reads as follows:

One thing that should immediately jump out at you is the fact that their bullets are very generic and high level. They’re trying to create a framework to guide the organization in achieving its goals and objectives. And with Coca-Cola’s history, I would say they’re doing something right.

So, let’s try to apply this to our world:

• People. Be a great place to work where people are inspired to reach their creative potential.

• Partners. Nurture a network of professional relationships, creating enduring value for our clients.

• Productivity. Be a highly effective, lean, and fast-moving team ready to adapt to a quickly changing marketplace.

• Customers. Value the relationship of our customers, making their experience a positive and memorable one.

Again, this is something I spent a little time thinking about, coming up with some real tenets that can help drive the business in the right direction. In addition, think about this: as your business grows and you add new staff, additional shooters, and so forth, how will you communicate with them to ensure they share the same vision as you do for your company? This is how. Document it and make it real for everyone to see, including your clients.

I highly recommend placing your vision and mission statements on your website for the world to see. Today, I see photographers posting what they had for breakfast on their blog—which no one cares about, by the way—but for some reason we’re shy about posting the core beliefs of our company? Think about it. This is what clients care about when they’re selecting a company to document one of the most cherished moments in their lives.

The Business Plan

Okay, so you have your vision and mission statements. Now you have to start drilling into the business plan. Remember, this doesn’t have to be a 30-page document. It can be as simple or as complex as you like. And since you’re more than likely not looking for venture capital for your business, we’re going to focus on an internal document versus an external one (for a bank, for example). This becomes your living document that should drive your one-year, two-year, and five-year goals. And I strongly emphasize that this is a “living document” because my five-year plan today looks nothing like it did when I first started my business. And that’s to be expected. It’s a sign that our business is dynamic and responsive to changing market conditions.

First let’s identify the key elements of the business plan you’ll be putting together:

• Executive summary

• Market analysis

• Company description

• Organization and management

• Marketing and sales strategies

• Service or Product Line

• Financial Projections

This is a great starting point, and thought some of these might seem complicated or overkill for your business, I promise you once you get through this, you’ll see how priceless this document will be for your business, especially if you’re just starting out. I do a lot of consulting for businesses, and the number of businesses that have not taken this step forever dumbfounds me. It’s vital to the success of your venture.

Executive Summary

The executive summary is widely considered the most important part of your business plan. Think of it as the who, what, when, where, and why of your business. It’s the one place you can look to define most aspects of your business. The executive summary should highlight the overall strengths of your plan, and it’s usually the last piece that you write. However, it’s the first in your final document. Here’s what’s included.

If you’re an established business, you should include the following information in your executive summary:

• The mission statement. This should already be completed.

• Company information. This is a short statement that covers when the business was formed, the names of the founders and their roles, number of employees, location information, and so forth.

• Growth highlights. This includes information about the company, when it was founded, year-over-year growth using graphs, your market share, and so on.

• Your products or services. Describe the products or services you provide and who you’re targeting with them.

• Summarize future plans. Where are you going with the business? What are the ultimate goals over the next 12 months?

If you are a new business, you might not have some of the financial information as of yet. That’s okay. Use forecasted numbers based on market data. It’s a best guess and should be based on a somewhat realistic assessment of your market, but it serves as a checkpoint for your business moving forward.

Market Analysis

Your market analysis should contain information about the industry and market research. For example, if you’re going to be a wedding photographer in New York City, what does that market look like? How many weddings per year are there in your defined market? What is the average spend on wedding photography in your market?

What’s included in the market analysis:

• Industry description and outlook. Describe your industry, including the current size and any historical and projected growth numbers.

• Information about your target market. Here you’ll have to do some thinking about the target you’re going after. If you’re talking weddings, every couple getting married wouldn’t be your defined target. That’s completely unmanageable. Who is your target? That can be defined by demographic data like religion, income level, geography, and similar factors. If you’re talking about families, you face the same challenges. You can’t possibly go after every single family out there. You have to narrow this down to a manageable number. This is an exercise for you to consider on your own.

• Competitive analysis. This is where you identify your competition in the market segment you’re going after. What market share do they have? What are their strengths and weaknesses? What barriers to entry are there to getting started in this segment?

Regarding the target market, for us, we focus on mid- to high-end weddings—people willing to spend $5,000–12,000 on wedding photography. If we were to drop that number to $3,000, we’d place our studio within an entirely different competitive range and within a completely different client base.

Once you narrow this down, what is the size of your target market? What are some of the behavior characteristics of that market—average spend, for example? What are the demographics of that target? Income level, geography?

Some of this data is easier to find than other data. I recommend working with local event planners and venues in addition to doing your research online.

Company Description

The company description provides a high-level overview of your business and the various elements of your business. This is where you define the goals of your business and the unique value proposition you offer the market segment you’re targeting. Here’s how you should tackle the company description:

• Describe the nature of your business and the needs you are trying to satisfy.

• Explain how your products or services meet those needs.

• List the specific consumers and target market that your business will serve.

• Explain and list your competitive advantages.

Organization and Management

Don’t let this part of the business plan overwhelm you. If you are like most small companies, you are the owner, manager, photographer.... I get it; we all wear different hats. And there is nothing wrong with that. However, if you’re working with your spouse or friend, this becomes a great place to clearly highlight roles and responsibilities so you don’t kill each other during stressful periods.

In this section, you need to include the organizational structure and details about the ownership of the company—basically, who does what for the business. Here’s what’s included:

• Organizational structure. In its simplest form, this is where you create an organizational chart for your business highlighting reporting lines and titles.

• Ownership information. Here’s where you describe the legal structure of your business along with the ownership information. Include names of the owners, percentage ownership, involvement in the company (silent partner or managing partner), etc.

• Management profile. This might seem like a pointless exercise, but it truly is a great way to look at your business and key roles in a way that will quickly show you holes in your structure—holes that could ultimately lead to the failure of your business. As a photographer, it’s an all too often perceived notion that all you need is a camera and you’re ready to go. Sounds good. So now that you have the image, who’s in charge of marketing? Post-production? Sales? This is where most businesses fail. They don’t have the required people or partners to fill the gaps in their management team.

It’s okay to not have all these skills. Very few people do. So, you either hire these people or bring in partners to assist you. But you have to make yourself aware of the problem before you can fix it.

Marketing and Sales Strategies

In its simplest form, marketing is defined as the activities involved in the transfer of goods from the producer to the consumer. This includes advertising and selling. It’s all part of your marketing strategy. A lot of people think of advertising as a separate discipline; however, it’s part of your marketing strategy. And it’s typically the most expensive part of your marketing strategy.

There’s no right or wrong way to approach your marketing strategy. It should, however, be part of a living process and document that’s continuously evaluated and nurtured based on market demands and changes. What worked in the 1990s might not work today. Our philosophy is simple: we will typically try anything once, but if it doesn’t work, we move on.

Your overall marketing strategy should include:

• Market penetration strategy. How are you going to get into the market? There are a lot of photographers out there. What makes you different? Are there relationships you need to initiate to be successful? Who and how will you foster these? For weddings, you might need to partner with some of the wedding planners or the wedding receptions halls. How will you do this? If you are a senior photographer, you might need to get into the schools on the preferred vendor list. How will you do this? Who do you need to contact and work with at the various schools?

• Growth strategy. What is your plan to grow the business? For example, if you shot 5 weddings and 10 seniors in 2012, what is your plan to get to 10 weddings and 50 seniors for 2013? It’s not going to happen by accident or luck. And I sure hope you’re not just using Facebook and referrals to make it happen. Don’t get me wrong, these things are helpful, but you have to have a solid marketing plan in place.

• Communication strategy. How are you going to reach your potential customers? You need a multipronged approach—social media, brochures and flyers, vendor partnerships, advertising, press releases, and so on.

Your overall sales strategy should include a sales force strategy and sales activities. Let’s look at each in turn.

Regarding your sales force strategy, how will you run the sales process for your business? These are big decisions for your company and will ultimately impact your revenue streams. Now, sales strategy in our industry typically refers to two different parts of the process. In the first part, you’re selling them on working with your studio. Maybe it’s a wedding you’re after, and you’re selling the benefits of booking in the studio. Or it could be a portrait session, where you’re selling them on booking a session with your studio. This part of the process can happen on the phone, in the studio, or in a meeting space.

Regarding the initial booking, who will do it? What will the process be? Will it be you as the principal or will you hire someone? If you hire a full-time person, how will they be trained? These are things that you must think about ahead of time.

The second part is focused on the post-event sale. Now that they’ve had their session and it’s time to purchase pictures, what’s your strategy? Will you handle this process online, in-studio, or in the client’s home? Here’s where you need to get a little more granular on the sales process. What does the sales process look like and how is it executed? Let’s break it down by task.

For weddings I shoot, here’s a typical workflow:

1. A phone call or email comes in requesting pricing information.

2. A response email (using our customizable template) goes out with general information, asking the potential client to a meeting in our studio where we can showcase our products and services in a face-to-face meeting.

3. The client books or requests more time to decide.

4. If we don’t hear from the client, we follow up with an email 24–48 hours after the meeting.

5. Either the client books or we move on to the next opportunity.

You can see in this simple sales process that we have clear activities for each step in the process. This is a process that has been refined over the last four years. It’s simple to execute and not overly sales-y. There’s no right or wrong answer here; just take the time to map out your process and adjust if it’s not working.

Service or Product Line

This part of the business plans involves creating a description of what exactly you’re selling. As simple as this might seem—with an answer like “photography”—you need to drill down and get specific about what you’re selling and the benefits for potential target customers.

Include a description of your product or service. You have to think about the benefits of your product or service from your customer’s perspective—not yours! If there’s no discernible difference to the client between your product or service and that of your competition, then it doesn’t matter what you think. It’s the client’s dollars and desires that should dictate success or failure, not how we feel as artists about our work.

For example, for the senior photography side of our business, I provide the following as a description of our service:

“We offer a once-in-a-lifetime model experience for our high school seniors, complete with hair and makeup and a photography style that screams individuality for our clients. Clients looking for the ultimate in senior portraiture will be treated to larger-than-life imagery that will be shared and enjoyed for years to come with our lifetime warranty and archival products.”

Now, I could expand on this even more if I chose to. That’s up to you, but I’d say—and I hope you agree—I’m very aware of the value proposition we offer our high school senior clients.

Financial Projections

Once you’ve taken a good look at the market and developed your goals and objectives, it’s time to start thinking about financials. This document covers your historical numbers, as well as future projections based on the business landscape. If you’re just starting out, obviously you won’t have much, if any, historical data for your business—and that’s okay.

I’m going to steer away from the typical or more traditional way of completing this section of your overall business plan and offer my own way of doing this. I’ll describe how we approached this step when we started our own company and how I work with other photographers we’re consulting with.

How much money do you want to gross? Basically, how much do you want to make? Sounds crazy, right? However, I firmly believe that we all have this amazing opportunity in front of us and we’re limited by nothing but our own fears. We create the box of limitation. And right now, I want you to think outside that box.

Let’s start with a reasonable number. Because the average photographer grosses about $45,000–$50,000 per year according to most industry numbers, let’s start with $150,000. This is a great place to begin; at three times the average photographer’s take, it’s a huge growth number but it’s most certainly achievable with a solid business plan.

Great. Now, let’s break it down.

Say you can do 25 weddings at $4,000 average and 50 portrait sessions at $1,000 average. And it’s that simple! This is now an achievable financial projection and should be part of your new business plan.

Next, how do you get there? That strategy should be defined in your marketing and sales plans. But these are real numbers that I think are attainable. The average wedding photographer can get about $3,000 contracted average. That leaves you with just $1,000 more to earn per wedding. Can you arrange a $500 engagement sale and a $500 spend after the wedding on features like an album upgrade, framed prints, or canvas? This figure will be tied to your sales strategy.

Everything you do in your sales and marketing plans has to be tied to making these numbers happen. All these documents must work with and “talk to” each other; after all, they all add up to become your comprehensive business plan. For example, looking at these financial projects, you know that you can’t offer a wedding package for $500 and think you’re going to hit a $4,000 average per client.

This is just one example. Try this with your own niche of clients: boudoir, architecture, children, pets, landscape. It works with every style of photography or business.

Next Steps

Where do you go from here? I want to see you lock yourself in a room for an entire day with no access to email, cell phones, and everything and anything that’s shiny and that could ultimately distract you. Create your business plan. The first time you do something like this will be the toughest, but in the end, this document will provide you and your business with some marching orders.

Go through each section of this chapter and put your own dreams and aspirations down on paper. Force it to become real. Seeing the written word is much more powerful than just saying you’re going to do something. Focus on every aspect of this chapter until you complete your plan.

Once completed, the business plan becomes your manifest destiny. Everything you do should be related to your mission, business plan, and marketing strategy. If it’s not, then you are getting sidetracked and need to refocus your energy. That said, keep in mind that it’s not uncommon to revisit your plans yearly. We do.