You think you know your Expenses, but you don’t really know what your expenses are going to be as your business grows.
It is easy to sit down and look at your current expenses, and say, “I have $20,000 worth of expenses” but what we forget is that as our business grows often times our expenses grow.
Or how do we handle big expenses and upgrades that randomly pop up from time to time like our computer, camera, etc?
Sit down and think about any big purchases that you can see coming up in your future. This may look something like “I know I will upgrade my computer every 4-5 years, that computer will cost me around $6,000, so I need to allocate around $1500/year for my computer.” “I know Nikon is coming out with a new camera next year and I want to upgrade, I need to allocate $3,000 for that.” Or even something like “I plan on upgrading my camera every 2-3 years, and buying new glass every other year so that equates to around $2000/year I need to set aside to be able to do that.”
Don’t forget to plan for big moves, like hiring an employee, or outsourcing social media. If there is something you want to get off of you plate or something you don’t enjoy and would love to have someone else handle…go ahead and plan that into your expenses even though it may be a move you don’t make for a year or two.
You forget to set aside money for Taxes.
Don’t forget to set aside money for your taxes and plan for taxes. The last thing you want to happen is that you think you made money at the end of the year, and you realize that you didn’t set aside enough money for your taxes…and all of your profit goes right out the window.
Make sure to include putting a percentage of your income back for Taxes. The best way to know how much you should be putting back is to talk to your accountant. The industry standard is to put back approximately 30%, however you can adjust this depending on your specific circumstances. *I am in no way a tax professional, so make sure you consult with your tax professional on this topic.*
You don’t prioritize paying yourself
This may be the BIGGEST thing I see happening to photographers. They are making money in their business, but at the end of the day they are spending everything that comes in and end up making minimum wage at the end of the day. As a business owner, when there isn’t money, it ends up coming out of our own paycheck. Making sure that you decide how much money you want to make, or need to make, to make all of your hard work worth it, and planning your business to ensure you are able to put money in your own pocket is vital. It is also incredibly important that you are actually getting paid for your hard work.
If you have ever sat down and asked yourself “Is this worth it?” There is a good chance that you are asking yourself that question because you aren’t getting to enjoy the fruits of your labor via that magical thing we call a paycheck.
You should be taking at least 30% if not more, out of your business in the form of a paycheck, or if you are super efficient you could plan your business to take upwards of 50%.
If this is you, I will challenge yourself to sit down and figure out what you have been paying yourself in your business, decide if this is what you truly want to make, and then make the necessary adjustments to ensure you are prioritizing paying yourself…and I should add, not just paying yourself, but paying yourself well!
You deserve to be paid well for all of your work, you are worth it, and your work is worth it.