Wednesday, January 28, 2009

Business: Growing Debt-Free

I was on a forum today where someone mentioned that in order to get into the wedding photography business, they will need to spend $2,000-3,000. Their reasoning was that they needed cameras, lenses, lighting, backdrops and more to get started. I took some exception to that.

I have been following a debt-free business growth plan for the last four years. I believe that you can grow a solid home-based photography business without incurring any debt, and you can have the gear that you need - but it may take some time.

I started out with a high-end prosumer camera, added lights and other stuff over the years, and ended up with a great gear setup. It took several years, but I am satisfied that my equipment is sufficient to support my business needs.

Here's a rough summary of my growth over 5 years:

Year 1:
Bought Minolta Dimage A2 - advanced prosumer camera. Bought (2) Alien Bees AB400 and umbrellas. Paid for these with profits from dance and one Catholic School graduation.

Year 2:
Made a backdrop stand out of PVC. Rolled my own white muslin backdrop (fabric store), black fabric and a couple other neat fabrics when a store went out of business. Added an AB800 light, heavy duty stand and some light modifiers.

Year 3:
Bought my Canon D30 and a Tamron f/2.8 28-75 lens. Picked up also an inexpensive telephoto (Canon F4.0-5.6). Got a monopod and some good reflectors. Picked up a DRebel from a neighbor who didn't want it - added a flash bracket and a Canon speedlight. Got a Dell laptop. Added three backdrops purchased at the PPA convention. All funded from business income, and still cleared a good profit.

Year 4:
Added a fourth AB400 light, more modifiers, two new f/2.8 lenses, a Dell desktop, my CD painter and some more neat stuff such as backdrops and a new backdrop stand and a lightsphere. I also purchased portable power for my Alien Bees. Profitability continued to increase, and the purchases were funded completely from sales.

Year 5: (this year)
Planning to add another Canon body (40D or 50D), better tripod, a couple more backdrops and some close-up lens attachments.

Each year, I also purchase an external hard drive to back up my photos. I also cashflow insurance, professional fees, memberships and all of the online and software costs needed to keep the business running. I also set up a specific bank account for the business, and do not intermix personal spending with that account. If I want to spend earnings on personal stuff (my right as a sole proprietor), I write checks from that account. That way the business earnings and expenses always flow from that account, and the balance is a pretty good representation of the business' position.

From my history above, you can see a couple things. First, I'm not a gearhound. I try to buy those items that will meet my needs but not cost too much. I then work hard to get the most value from them. Second, I'm patient. I try to see the longer term, and work to add just the right items each year to fill out an area of weakness or position me for growth. For example, in year 4 I added a good f/2.8 zoom when I knew I had a job shooting sports outdoors. I didn't even break even on that job given the lens purchase, but it now is a great tool in my camera bag. Third, I'm cheap. I buy what I need, but I never buy top of the line. When I was a professional musician, I followed the same line. Only when I have totally used up or outgrown an item will I replace it. Remember, it's not the brand of painbrush, it's the artist!

Annually I spend far less than 10% of sales on new equipment. By laying out a multi-year growth plan for cameras, lighting, computing, lenses, accessories and other items, I can gradually build a great stock of photography equipment without going broke in the first couple of years.

If you are just starting out, I recommend that you write up a 5 year plan. Don't be specific about model numbers, but try to list those categories of items and determine when you can afford them without going into debt. One trick I used was to set savings goals for revenue. When I hit a specific goal in the bank account, I allowed myself to order the next item on my growth/wishlist. This keeps your acquisitions in pace with your sales, and still allows you to be profitable, and keep the account healthy for future spending needs.

Don't be impatient.
Have a plan. Buy the right gear for your stage of development. You too can run a profitable, debt-free photography business!

PS - Listening to Dave Ramsey once a week or so helps as well. It keeps your debt-free attitude charged up. If you are new to Dave, pull down an archive (try Fridays for starters) and give it a listen.

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