CHAPTER 10:
BREAKING OUT: BRINGING NEW LIFE TO AN OLD BUSINESS
When I started my studio in 1988, I shot only small children with their pets and families. I offered only black and white, sepia-toned, and hand-colored images to my portraits clients. Not being a big fan of direct color film, I shot color transparencies for commercial clients only (and only shot for commercial clients when the project included kids).
Congratulations! Your photography business has survived the treacherous start-up stage. You've learned how to weather the cash flow roller coaster, you know how to win and keep clients and you've been profitable for several years — more so than you had dared to hope! You're out of the woods, right? Or is there a little voice in the back of your head whispering, “Famous last words?”
DROPPING THE BALL
Oh boy, you've been in business for a while and people seem to know who you are. You call prospects and say, “Hi, I'm Stanley Kowalski,” and they say, “Oh, yes, Stanley, I've seen your work.”You have a solid client base and it's been a long time since you've gotten that fluttering, sick feeling in the pit of your stomach when things are a little slow. Maybe your business has even shown good growth every year since you started. Maybe you're even turning away work. You're enjoying the prime of your business life. So what do you do? You relax a little. You don't send out that spring postcard. And it doesn't matter; spring is just as busy as you expect it to be. Then you skip the newsletter, and you stop sending those thank-you letters to clients who send you referrals. Still no adverse effects. You don't leap at the phone anymore when it rings, and you get a little lax in your costumer service. You stop putting new work in your book. A year of this and still no ill effects. Two years, and your gross isn't up anymore, but it's stable. Three years: You're not turning away jobs anymore, but you're not worried. But the four-year mark comes, and suddenly you're wondering where everybody went. Where are your loyal clients?
When you're not on top of your game, you won't see an immediate drop in business. It's gradual erosion that often is not apparent until it's too late. You'll be like Wile E. Coyote when he chases the roadrunner off the edge of a cliff, but he doesn't realize he's already doomed to plummet to earth until he looks down.
When I embraced digital capture and learned image editing, I was finally able to offer color prints that I felt looked beautiful enough to hang on a wall. This was stimulating for me creatively, and it gave me a new product to introduce to my clients helping me maintain an edge in my marketplace.
By the time you look down, you'll be scrambling to get a marketing plan back in place, freshen up your portfolio, renew acquaintances with old clients and glad hand a few new ones, and brush up those customer service skills, all just in the name of damage control.
If only you hadn't dropped the ball, you'd still be growing your business right now instead of trying to build it back up again.
Avoid the mistakes complacency breeds.
• KEEP MARKETING — even McDonalds still advertises. As successful stock photographer Jim Zuckerman says, “You have to market constantly. Perpetually. You never stop moving.”
• KEEP YOUR WEBSITE UP TO DATE — you still need to show the world the best face you possibly can. And if you're a commercial or fashion shooter, your portfolio needs to be up to date as well, even if you don't show it much anymore. You never know when someone is going to ask for it.
• ANSWERYOUR PHONE AND REPLY TO E-MAIL PROMPTLY — they are still your most powerful sales and marketing tools.
• KEEP UP THE CUSTOMER RELATIONS — they're still the reason you're in business.
• REMEMBER, YOU'RE ONE OF THE LUCKY ONES — you're living your dream.
DISILLUSIONMENT
Another pitfall the owner of a newer studio can encounter is disillusionment, and even bitterness. The honeymoon is over; you're living with the day-to-day reality of a photography business. The work isn't always as creative has you'd hoped it would be. You're working in the studio and in the office more than you'd anticipated. Some of your clients have proven to be less loyal than you thought they were. The paperwork is a pain in the backside. It's sometimes hard to collect payment. You're still shooting solid, technically excellent pictures, but some of the market has moved onto the next new thing. The new thing isn't as good as your thing, and it'll only be a flash in the pan. You know this, you've seen it before, but it still insults your integrity. Other shooters are leapfrogging past you and snapping up some of “your” market. You aren't in touch with the beautiful parts of the business anymore. You can't remember what made you want to get into this. You are disillusioned.
Disillusionment is a very dangerous place. If you don't change your attitude, your business will fizzle away.
• TAKE A BREAK. If you're like most entrepreneurs I know, the word vacation isn't in your vocabulary. Your work is your life. You find relaxing more tiring than working. You worry that if you leave town one big client is going to up and leave you. Or that you'll miss out on the mother of all jobs because you weren't there to answer the phone. Or some competitor is going to spring up across the street while you're gone. Probably you believe your studio will burn down if you're not there to protect it by sheer force of will. Get over it. The burnout you'll suffer from working without a break will be worse than anything that could happen to your business in your absence.
I speak from experience. I worked five to seven days a week with almost no reprieve for the first five years after I opened my studio. I loved my job. I had boundless energy. But then, during Christmas season number five, I suddenly hated everybody. My clients, myself, my neighbors, the person in line ahead of me at the supermarket, the other drivers on the road, my friends and family — everybody! I hated going to work. I started to fantasize about going back to waiting tables, marrying rich and winning the lottery. I'd had it with photography.
I really thought that my work was my problem. But a conversation with a friend who was a Pediatric ICU nurse — a woman who, needless to say, knew a lot about stress and job burnout — told me what was really going on.
“You need a vacation,” she said. “You've got job burnout. You go away, you come back, you like your work again.”
I thought she was nuts — and right at that moment I didn't like her too much, either. I didn't take her advice until six months later. By then I didn't care if the studio burned down while I was away.
She was right! I went to central Mexico for two weeks to visit friends who lived there. I saw original works by Freda Kahlo and Diego Rivera; I visited pyramids and artists' colonies and ate fruit my friends called “snot grenades.” It was a very exciting and intriguing trip, but in reality it probably wouldn't have mattered if I'd been holed up in a Motel 6 with nothing else to do. The point was taking a break from work. When I came back, I loved my clients, I loved myself, I loved my work — although I still didn't love the other drivers on the road.
• VOLUNTEER. We experience disillusionment when we reach a point in our careers in which we feel our business isn't giving us enough. Ironically, one surefire way to overcome this feeling is to give more to the community and the world. Volunteer to teach photography to low-income kids or physically challenged people and see how fast you're reminded of the magic and the beauty of the darkroom, of the view through your lens. You needn't limit your volunteer efforts to photography-oriented work. If you need a total break from your regular grind, do something totally unrelated. Join an adult literacy program; become a Guardian Ad Litem; read to the blind. Are you missing the chaos and action you experienced when your business was new?
• TEST SHOOT. Part of your disillusionment may stem from one of the paradoxes with which the photo business is fraught; you open your studio because you want to do creative work but as you become more successful you do less and less of what you really love. So take some time for yourself and do some personal work. It may be hard to motivate yourself at first, since you're used to being driven by the client and by the almighty buck. Shooting something for pleasure will seem alien at first. But do it. It'll breathe life back into your drudgery.
As my client base aged and their kids grew up, I wound up shooting senior pictures for the kids that I had worked with since they were babies. I found that direct color images really appeal to teenagers.
• COUNT YOUR BLESSINGS. Sure, it sounds trite, simplistic and vaguely religious. But it works. Make a written list of all the things you're thankful for that your business has brought you: a good income, the freedom to be your own boss, job stability (you're not likely to lay yourself off, are you?), some creative expression, the satisfaction of knowing that people are willing to pay you for your creative vision … I bet you can think of a few more. Save the list and consult it from time to time.
• EXPLORE ALTERNATIVES. Go career shopping and see what's out there. You may find a totally different field that you'll be even happier in. Or, more likely, you'll come back to your list of blessings with a few more to add.
• HAVE A GOOD OLD-FASHIONED GRIPE SESSION. For years, I used to meet with a group of photographers for happy hour on Fridays after work. Inevitably the conversation would turn to all the aggravations we'd encountered at work that week. It always started out negative, but by the time we'd complained a little bit, we'd all wind up laughing and jocular, and ready to face another week of business. It's not a matter of dwelling on the negative; it's a matter of letting the negative pass through you so you don't wind up carrying it around.
EXPANSION/CONTRACTION
Sooner or later your growing business will come to the point where it's almost unmanageable. You're at a crossroads. Do you take on more employees and a larger studio to accommodate additional business? You're doing well, so you can, but should you? Before you make the commitment, ask yourself the following questions.
Seniors love anything new and different, so working with them allowed me to exploit new artistic treatments in Photoshop that weren't possible before.
WHAT DO I WANT MY ROLE TO BE?
Up till now you've been a photographer: you shoot, you sell, you do the books, you empty the wastebasket, you do what you must to keep your batteries charged. But the bigger you get, the more removed you will become from these day-to-day, hands-on realities of operation. You will become a manager. You will over-see people who will do your shooting, do your books and empty your wastebasket. You will have to help them keep their batteries charged. You will become one step removed from your product and your clients. If this doesn't sound good to you, think twice before expanding.
Not sure if you view a role change from photographer to photographer/manager as a positive or a negative? Answer the following questions true or false.
It's easier to do something myself than to try to explain to someone else how to do it.
No one else will be able to do my work as well as I do.
There's only one way to do things: the right way.
If you answered “true” to any of these statements, you might not be manager material. It's true that in the short-term, it's easier to do things yourself than to shift down a gear and teach someone else how to do it, but ultimately it will save you time to delegate many of your responsibilities.
And while it's true that no one else will do your work exactly the same way you would do it, they may still arrive at an equally good or valid outcome.
There's always more than one way to do anything. If you think there's only one way, you probably shouldn't be a manager; you should keep flying solo. Remember, though, even Batman had Robin.
CAN I MAKE DO WITH CONTRACTORS?
Is it possible for me to take on temporary help in the form of contractors to get through this busy time? Or do I need permanent employees? If your surge in business is thanks to just one or two huge clients, you may be wise to tough it out by hiring temporary help and renting extra temporary space as needed. I've seen many small businesses make the mistake of thinking all they need to justify expansion is that one big client because that client will be theirs forever. Nothing is forever. On the other hand, expansion may be warranted if your business has been growing steadily over time and if your client base is diverse.
AM I MAKING ENOUGH MONEY NOW?
How much money is enough money? Is there ever enough? Human nature dictates that there is not. And yet — are you happy with your lifestyle? Because expansion is a risk. You may or may not increase your income by expanding. It's no sure thing. But what is a sure thing is that you'll be increasing your fixed overhead — the kiss of death for many businesses. If you're happy with your livelihood now, you may want to leave well enough alone, as difficult as that may be to do.
IS THERE SOME OTHER WAY I CAN INCREASE MY PROFITABILITY WITHOUT TAKING ON ADDITIONAL FIXED OVERHEAD?
If you're so busy you're turning away business (you poor thing!)maybe the answer to your problem is not to expand but to raise your prices. That way, the clients who can't or don't want to afford your services will naturally fall away and you'll be doing the same amount of work (possibly even less) and making more money. Or perhaps instead of taking on more staff or a bigger studio you could generate more business by going on location or selling your existing images for stock, greeting cards, fine art or other applications.
WHY BIGGER ISN'T ALWAYS BETTER
“You can be a big small business, cruise along and do fine for years,” says wedding/portrait shooter Bob Dale. “But then say a large corporation comes into your market and they have a billion dollar marketing budget, they can suck up all your business and they don't even have to be profitable to survive.”
Obviously if you have a bigger business and it's operating profitably, you'll realize more income than a smaller one. But when bad times hit — and there will be bad times — the operations with larger fixed overhead can be more vulnerable to failure than the smaller ones.
Reduced margins are the blessing of small businesses. I enjoy being a manager — I love to motivate, teach and coach. I like interacting with my employees as much as my clients. So it was no hardship for me to evolve in my role as my studios grew. But I discovered a disturbing trend after several years: The bigger my business got, the smaller my profit was. In my first year in business I had one studio and I only grossed $8,000, but I was almost 90 percent profitable. In my twelfth year, I had three studios and grossed $2 million, but my profitability dropped precipitously. It is possible to have a huge business, work really hard and still have a smaller net profit than the other guy who stays small and works half as hard. In my experience, the larger the operation, the higher your fixed overhead (rent for three retail locations instead of one, for instance), and the layers of employees and managers required increases.
I noticed that many of my clients bought pets when their kids were about to go off to college. So when they brought their seniors in for portraits, I recommended that they bring their new family members, as well.
Here's an example: Mom and Pop open a portrait studio in a trendy retail district. They own and operate it, and after two years they are making a net profit of $150,000 each year. It's a huge success! So much so that they decide to open another portrait studio across town. To do this, they need to hire employees to run the old studio and do all the things they used to do themselves. They need a manager, a photographer, an assistant and possibly even more employees. So they wind up with $90,000 worth of extra payroll, and they still have to spend time not only opening up the new studio but overseeing the operations of the old studio. Now they're working more hours than they did before. As it turns out, the new location isn't quite as profitable as the old one. It earns a net profit of only $40,000 each year. Now Mom and Pop are working more hours for $50,000 less a year. If the economy goes through a tough period or a big construction project blocks traffic for a few months at one of their locations — or any number of other unforeseen difficulties arise — their profit margin may go down even further, but they'll still be working just as hard.
Sometimes small businesses wind up contracting rather than expanding. There's no shame in this — and it could make you more profitable. The trick here is to close one of the studios before the situation is desperate. Don't wait until you have to file chapter eleven and crawl away wounded. Make the move before your profitability drops to dangerous levels.
“At one time I had four studios,” says commercial/fine art shooter Doug Beasley. “And I'm a location shooter! Imagine. Now I only shoot on location, I have no studios and I'm much happier.”
LEARNING BY REPETITION
When I became an employer, I had the naïve notion that I would have to train each employee only once, tell them their job description once and send them off to work. Then they'd know what to do and they'd do it. Imagine my surprise when I realized I actually had to train them repeatedly for the same tasks and remind them what their jobs were over and over again.
Then I realized I operate the same way my employees do: I need to retrain myself, relearn lessons I already know and tell myself my job description ad nauseum. We're all human. We need to brush up occasionally. We need continuing education.
It's easy for me to continually educate my employees. I hold meetings or in-service sessions during the slow times of the year. These workshops cover the brass tacks, answering the phone, closing a sale, selling up, customer service — all the basics. At the beginning, I was afraid the employees would rebel. “Why are you telling me all this stuff again?” I thought they'd do what my five-year-old does when I repeat myself. She rolls her eyes, crosses her arms, tips her head, and says, “Mommy, I already know that.” But to my surprise, they seem to enjoy the meetings. I suppose the coffee and doughnuts don't hurt either.
It's harder to reteach yourself. First, you need to realize that you've forgotten to practice some key policy, procedure or philosophy — ideally before your business begins to suffer for it. Then you have to figure out where to go for a refresher course. Can you do it yourself or do you need the inspiration and motivation that a more formal setting, like a seminar, can provide?
• SURF THE NET. This is one time when surfing the Internet isn't a waste of time. Start with an open mind and enter a few pertinent words: photography +business+marketing+sales, for instance. Then go where your search engine leads you. You'll probably find many sites that lead you to classes, seminars, clubs and groups, and books and periodicals.
• WRITE OUT YOUR JOB DESCRIPTION. Sounds silly, doesn't it? Why on earth would you need a job description? You're probably thinking, “I know what I do, and the only person I have to report to is myself.” But do you really know what you do? And since it is yourself to whom you're reporting, how do you hold yourself to a high level of accountability?
Another new product I've been able to offer due to digital technology is press-printed holiday cards and birth announcements. New services give clients yet another reason to come back.
I didn't always know exactly what it was that I did. I found out when I went to apply for disability insurance. The insurance company needed to know, not just what my title was, but what my functions were, in order to determine what it would cost to replace me.
“I'm a photographer — I take pictures,” I told them.
“What else do you do?”
“Well, nothing, really.”
“Who does your marketing?”
“I do.”
“Who does your product development?”
“I do.”
“Who does your sales?”
“I do.” And so on. It suddenly occurred to me that I was doing more than I thought I was. I rushed back to my office and wrote myself a job description. By writing down and categorizing what I did, I was able to figure out what things I could or should be doing more, and what things I needed to start doing that I wasn't currently doing at all.
So take a minute to sit down and list all the functions you perform in your business. Then decide what areas you may be lagging in, and punch 'em hard. I look at my old job description and create a new one once a year.
• TAKE A SEMINAR. Chances are if you've been in business for a number of years, you're not going to learn much that you don't already know by attending a seminar — possibly a few tidbits or possibly nothing. But what a seminar will do for you is reinforce those things you already know, and remind you to practice them. I regularly attend marketing seminars for instance. I have attended the John Hartman Marketing Boot Camp twice. I usually don't leave these meetings saying to myself, “Oh boy, that's news to me!” But I do say to myself, “Oh, yeah! I forgot all about doing that. I should start doing that again.” And I do.
• REVISIT YOUR PAST WORK. Sometimes you can be your own best mentor. Dig out your old promotional material, your old schedule books, your old lighting notes — anything that documents how you've done things over the years. You may be surprised to find that some of the things you used to do were pretty darn good. Maybe even better than the things you're doing now. Reincorporate them into your repertoire.
• TEACH SOMEONE ELSE. Nothing reinforces what you already know better than teaching someone else. I always wind up energized, recharged and on my game after teaching classes on business and creative techniques. I learn — and relearn — as much or more than I impart to my students. If you're not into standing in front of a class full of people, you can take it one student at a time by becoming a mentor, or taking on an apprentice or an intern.
• JOIN BUSINESS AND PROFESSIONAL GROUPS. Becoming involved in business networking and professional groups, you'll find opportunities to both speak and be spoken to on a variety of germane topics, and you may expand your client base in the bargain. I've given talks to groups that focus on women in business, church groups, the Junior League, the Woman's Club of Minneapolis, Kiwanis Club, small business owners and many others.
• READ (OR REREAD) A BOOK OR PERIODICAL. Pick a book or magazine. It could be on sales, marketing, public speaking, motivation, management, general business practices, relationships — anything that you can apply to your business. You can skim, speed read, open up the book and start reading on the page that falls open, or do the whole in-depth, cover to cover thing. All that matters is that you tickle those memory cells enough to refresh your perspective on your day-to-day business.
TRACKING PERSONAL ECONOMY, INDUSTRY ECONOMY AND NATIONAL ECONOMY
In order to really see how your business is doing, you need to separate out the layers of different economic states that are effecting its development. In this way you'll be able to get a clearer picture of where you've been, where you are now and where you're likely to go. Let's say you've been in business five years now. Make yourself a graph. From left to right, start with the year you opened your doors and progress to the present year. From bottom to top, indicate units of measure. Now use a red line to chart your personal economic progression. Use a different color line to indicate what the national economy was doing that year. You can use different factors in determining this: consumer index, unemployment rate, the stock market, etc. Or you can factor them all together and create your own subjective impression of the economy over your years in business. Use a third color to create a line indicating your local industry economy. Did your market lose any major clients in a given year? Did any agencies start shooting out of town?
A pet portrait by Vik Orenstein.
Did a big corporate competitor come to town, or did a big crop of small studios open up near you? When you've finished all three lines, take a good look at them and see how you did. Did your personal economy grow even in years when the national economy was flagging? Did your personal economy flag when your local market was growing? Spot the trends. Adapt accordingly.
PROS AND CONS OF MIDDLE AGE
Just as with anything in life, there's always a trade-off. You give up one thing to get another. The thrill and anxiety of youth gives way to the confidence and boredom of middle age.
Topping Out
Eventually your business growth will level out. It will have reached maturity, much like a child who enters her young adult years and stops getting taller. I didn't believe this until it happened to me. I had at least 20 percent growth every year for twelve years. No matter what the economy did, no matter what my competition did, no matter what my local market did. I thought that “topping out” was just a nasty little rumor — an urban myth. (But then, there was also a time I believed I was never going to die, either.) Then, in year thirteen, the growth started slowing down. In year fourteen, it stopped altogether. My business had reached maturity. This is good, because I'm stable, I'm secure, I can anticipate what my income will be from month to month and year to year. But it's also bad, because the excitement of watching the growth is over. Gone are the days of looking at quarterly comparisons and saying, “Oh my gosh, look how much we're up over last year!” Ironically, this mature, stable stage was what I eagerly looked forward to when I was a start-up. Now I look back fondly at the start-up stage. There's just no pleasing some people.
Fear and the Lack of It
When you're new in business, everything is scary. There are monsters under your bed. Are you good enough? Is someone else better? Will there be images on the film when it comes back from the lab? How do I file those government forms again? What if the client doesn't like my work? What if the client doesn't pay? What if I can't take the pressure and I wind up in at a nature retreat weaving baskets with my toes? What if I fail and I have to go back to my day job? What if I fail and I can't get another day job? What if I lose my life savings?
The fear is with you all the time. You have to face it down every morning when you get out of bed. You wear it all day and you go to sleep with it at night. And that's the good news!
The fear certainly is a powerful motivator. It's hard to live with but it makes it easy to keep on keeping on. Sometimes I think fear is just another word for enthusiasm. When you've been in business long enough to be really confident in your abilities you need to replace the fear with satisfaction as a motivating factor.
“I was outside a church prior to a wedding, and I watched the photographers shoot it,” says sixteen-year wedding photography veteran Hilary Bullock. “There were two young girls, all dressed very hip and edgy, and they descended in a frenzy on one big floral arrangement and shot it crazily from every possible angle. I would have taken just one shot, because I'd know the shot I got would be ‘the one.’ Enthusiasm or experience, either one will get the job done. But, boy, they sure look different from the outside.”
DEALING WITH LOOK-ALIKES
If you stay in business long enough, eventually someone is going to imitate one of your innovations — whether it be your visual style, how you sell, your fee structure or how you position yourself in the market. Take heart! When this happens to you, you'll know you've arrived. It means someone is impressed enough with your work to want to go out and do it themselves. Imitation is the sincerest form of flattery, and all that. But it can be aggravating, too. Especially if someone swipes your idea, and a little piece of your market goes with it. What can you do to stay ahead of the folks who want to jump on your bandwagon?
• RAISE THE BAR. Refine your art and hone your market to pull yourself above the crowd. Make yourself the best darn photographer in your market.
• KEEP INNOVATING. By the time you've been doing something long enough for a competitor to take notice and knock off your concept, it's probably time to do something else anyway. That way, when you see someone imitating your old visual style or your old marketing methods, you can honestly say, “Oh, that. I was doing that three years ago.”
• STAYTHE COURSE. Almost always, the original of anything is the best. Those who come after can try to re-create your work — and your success — but it will often result in a pale imitation.
• PUT IT IN PERSPECTIVE. As we've often heard it said, “There's nothing new under the sun.” Ideas and inspiration go around and come around. I once thought I was doing something really original and unique by grouping portraits into diptychs, triptychs and other arrangements and framing them together. One day I went to a friend's home and saw a similar grouping hanging on her wall. “Aha! Someone is copying me!” I thought. But upon closer examination I realized I was wrong. It would have been tricky for this photographer to have copied my idea. As it turned out, this was a popular look from the 1930s into the 1960s. Oh well. At least I was in good company.
FINDING SATISFACTION AND EXCITEMENT OUTSIDE OF WORK
In the early years of my business, my work was my life and my studios were my babies. It was easy to throw myself into every aspect of photography, because I was hungry, I was passionate, I was energetic — and I was scared. I never really believed I had any images on my film until I got it back from the lab — and then I breathed a huge sigh of relief. At the time I didn't realize it, but I was having the most fun of my life. I never appreciated that early stage when I was in it; all I wanted was to be around long enough to stop being scared, stop feeling like an impostor, stop scrambling and basically be able to say, “Hah! I've arrived. I'm the old kid on the block.” I was like a little kid wanting to grow up too fast.
And let's face it: You can't go home again. You simply can't re-create the excitement and the rewards you derived from your business when you were a upstart and it was a start-up. But you still crave that excitement — I'll even venture to say you need it. So, after you've been around for a while, you need to get it elsewhere — outside of the studio, outside of the office and even outside of the field of photography. It's imperative that you fight boredom at all costs. A bored photographer is a bad photographer; a bored entrepreneur is a bad entrepreneur.
This is a great time to develop a Plan B — a side business or investment that can help build your nest egg or float you through the tough economic times. If you already have a Plan B, now is the time to take it out of the closet, shake it off and fluff it up.
Wedding/portrait photographer Bob Dale knew he wanted to be a photographer since he was in the eighth grade, but he has never limited his entrepreneurial focus to the photography business.
“All along I've been into other things,” he says, “like the stock market and real estate. I'm probably not going to have a salable commodity when I retire. I hope to, but I can't count on it. And I'm not counting on social security for a comfortable lifestyle. So I've always looked at my studio as a way to generate cash to make investments.”
Or perhaps this is the time for you to finally write that novel that's been simmering on your back burner. Or make a sculpture, or dust of that cello — dabble in a complementary creative field and you'll probably feel refreshed.
END GAMES
Typically, middle age is when you start to think seriously about your retirement. Many entrepreneurs in other fields open their businesses with the intent of one day selling them. In fact that's often when they make the big bucks — not when they're actually growing the business. But if you're a photographer, what exactly will you have to sell?
You have a client list. You have goodwill, as its called by those in the legal profession. You either own a building or you hold a lease on a commercial space. You have equipment, props, backdrops, etc. You have an image (also referred to as “corporate identity”), a proven system of operation, a product, and you have your expertise. You also have some big problems.
How do you arrive at a price for your business?
How do you find someone who can afford to buy your business? “Who has fifty, sixty, one hundred K or more lying around?” asks Bob Dale.
How can you convince your potential buyers that your client base will stick around even after you're gone?
There are many different formulas for determining the value of a business. My personal favorite is to figure out your average net for the last four years and multiply that by three to five.
Your accountant, lawyer or a business broker can give you an opinion on how to value your business. Be forewarned: A business appraisal can cost up to several thousand dollars.
Finding a buyer can be another sticky wicket. CPA Jim Orenstein has some suggestions on how a photographer might target a qualified buyer and make the transition between owners successful and beneficial for everyone involved.
He recommends dealing with someone you know. It could be a person you already employ or even one of your clients who may have expressed an interest in learning to do what you do. Chances are you'll need to finance them partially, but don't loan them the entire purchase price. If they have some capital invested up front they'll work harder to make a go of it.
Jim's method of passing on the business takes roughly two years from start to finish. The original owner/photographer brings in the new owner as a sort of partner, maintaining a presence while teaching the newbie the trade and helping him build credibility in the minds of his clients. The new owner earns a livable salary while paying the balance of the profit to the original owner toward the purchase price of the studio. Of course, until it is paid off, the loan from the original owner to the new owner is accruing interest. Commercial/fine art photographer Leo Kim calls this the “someday this will all be yours” approach to selling your business. He has very gradually begun to do this with a protégé who is not yet a photographer but who has business experience and has shown a talent for visual art. “He really wants to be a photographer,” says Kim, “and he already has the business experience. In six or seven years, when I turn it over to him, I think he will do very well.”
Just as the start-up has its hazards, so does the middle age of a small business. But if you apply the same energy and ingenuity to your studio when it's in its prime that you did when it was new, you might just find that this stage has its rewards, too.