3 Smart Money Tips For Your New Photography Business
Q: I’ve been a casual photographer for family and friends years. I’ve decided to take my photography to the next level and start a business. What things do I need to consider when moving from hobby to business?
A: Starting a business is empowering. It’s energizing. It’s about pursuing our passions and the American dream of entrepreneurship. In the excitement, we can sometimes overlook the financial aspect of things. That’s where we need to be careful.
For photographers, starting your own company means switching gears between doing what you love as a hobby to doing it as a business. The difference is significant and requires changes in mindset and practices. Here are some tips to avoid common pitfalls.
1. No More Free Work.
This may be the single biggest shift in transitioning from a hobby and a business. It requires a commitment from you in how you represent yourself in the world, including with friends.
This change can be a challenge to navigate for all involved. It means re-introducing yourself and your work to your network. The new elevator pitch should include something along the lines of, “Love you, mean it, but I’m no longer doing this for free.” If you want people to value your talent in the form of paying for your service, then you need to value your own work. Lead by example and your network will follow your cues.
2. Go Higher with Your Prices.
Pricing is one of the hardest aspects of a business to get right. Your fees should cover your costs of doing business--your equipment and editing tools, for example--as well as your time.
I’ll never forget a story where a photographer told me that she finally tracked how much time she spent for a client, from beginning to end and included email and photo exchanges. Do you know what she found? She had priced her packages so low that she was only getting paid $5 an hour.
That’s right. Five dollars. You earned more than that at your first gig at McDonald’s back in the day.
It’s easy to forget that administrative tasks like email correspondence are part of delivering your service. You spend time understanding your clients’ desires and coordinating schedules. That can’t be for free. Your time is valuable. Come up with a minimum hourly rate and stick to it. This is what you’ll base your package prices around. And know that you will likely need to evaluate and adjust your pricing regularly. Be sure that you are getting paid a fair rate that takes into account the demand for your business.
3. Take the Good with the Bad
When you are doing what you love as your business, it gives new energy to your days. But let’s be real for a second: not all of running a company is sexy. In fact, you may really dislike some of it.
But guess what? You still need to do it.
The two areas I see entrepreneurs trying to skip over because it’s not fun are the most critical for their well-being of their work: the legal underpinning of their business and their finances.
Here Comes the Law
There are tools out there that help business owners feel that they have legal protection without the cost of investing a lawyer. I think you can do better. Yes, finding legal help is expensive. But so is leaving yourself or your business open to liability.
At the very least, work with an attorney to create a client agreement that protects your business and your interests. This is a one-time fee--you can then use that as a template for all of your work.
Status of Your Business
Do you want to establish yourself as a sole proprietor or an LLC? Talk over your particular situation and the pros and cons of these structures with both a lawyer and an accountant. The status of your business has implications on your tax liability, so is both an important legal and financial consideration.
Manage Your Money
The majority of business owners consider working with an accountant only at tax time. Yes, that is very important to do. But what about your money the rest of the year?
You’ll want to be deliberate in setting up systems to track your finances throughout the year to make tax time less of a headache. I’d argue that doing so does something even more important: it shows you where your money is going throughout the year.
This is critical information for a young business. It can help you determine that minimum hourly rate that I mentioned before. It is how you create informed financial goals each quarter and year. We can also provide recommendations for the accounting software that will help you streamline and manage your money.
If you’re not sure where to start, you can set up a consultation with an accountant to find out the areas you should consider for your business. You don’t have to do it alone.
Your mindset and creating some clear strategy around how you’ll price your services are key with making the shift from hobby to business. Also, know where you need help in order to minimize your legal and financial risk.
I’m so excited for you as you embark on this journey.. Best of luck!