Use these two reports to ensure you are remaining profitable!
As a photographer and business owner, you might be nervous about the economic changes impacting every business and family in your community. It's hard not to be anxious during an economic downturn. These downturn cycles are a reality of life, and you can survive them if you make tailored adjustments to your business.
Before you make any adjustments, take a hard look at your numbers for the year. How is the downturn impacting you, and what areas can you adjust to? Get a clear picture of where your finances currently stand. Reviewing your revenue and profit will give you the best view of your finances. So start looking at your profit and loss reports from your previous two quarters to see what revenues, costs, and expenses you've incurred. What's changed from then to now? Are your expenses up and profits down?
Reduced profit margins are a key indicator that your business may not be performing as well as expected. Let me explain:
If you sell a mounted 8x10 print for $100 and your costs to produce this print last year were $30, your profit margin is $70 or 70%. This year the lab you use raised its prices, and shipping costs increased due to supply chain shortages. You are still selling the mounted 8x10 print for $100, but your costs to produce it have increased to $40. Your profit margin is now $60 or 60% - a 10% loss in revenue and profit!
To combat this loss, you need to raise your prices or find a cheaper way to produce the mounted 8x10 print.
Now, look at your cash flow statement. How are your receivables performing? Have you seen any slowdowns or an increase in the number of overdue receivables? Is your target market scheduling sessions at the same pace as last year? How does your marketing budget compare to what you spent in the past? What about your payables - are you able to pay your bills on schedule, or do you often find yourself waiting until the due date to pay? Your cash flow statement is an excellent indicator of where your business will be financially in the next 30-45 days.
As a business owner, you need to strategically decide which indicators you want to watch weekly to prompt decisions in your financial planning so your photography business can stay profitable in a changing environment.
What sustainable changes can you make to position your business for future growth?
Here are a few ACTION STEPS:
Sit down with your calendar, a fresh legal pad, and a favorite pen to map out the rest of the year. Consider any marketing and promotions you want to implement before the end of the year. Consider meeting with your tax preparer to review your financial reports to understand better what you need to do to finish the year strong.
If you need assistance with this, I can help. Schedule a no-cost or obligation "STARTUP DISCOVERY CALL" with me. I will help you assess your finances and give you steps you can take to improve your business this quarter.
What more tips? Read "The 5 Ways to Keep Your Business Running Smoothly."
