If you’re like me, and most other creatives, you just want to bury your head in the sand and not have to deal with the numbers when it comes to business. Don’t worry, Courtney Zerizef has you covered! Her incredible Homeroom helps you become financially wiser when it comes to pricing, profitability, and preparing for your taxes.
“If your business isn’t making money, you just have an expensive hobby.” I’ve been through an audit personally, and the biggest thing that the IRS was concerned about was that my business was profitable. You can’t run your business in the negative for years according to the IRS.
Courtney points out that if you don’t understand your finances, you might actually be PAYING to do all of the work that you do! You may not be making money at all! What is the point of doing all that hard work if you’re not making any money?
Are you paying for the privilege of calling yourself a professional photographer?
Courtney shares with us three main money points that you need to consider.
Are You Defining Profit Correctly?
You have to make sure you’re defining PROFIT correctly, and understand what it means.
– Revenue – When someone pays you, this is the money that shows up in your bank account.
– Margin – Revenue less the cost of doing the work, the expenses that are involved. Outsourcing, gear rental, paying an assistant, all are deducted here. (There are two types of margins, which Courtney explains more in-depth in the show.)
– Profit – After EVERYTHING is paid out, all is said and done, your profit is what is left, and what you pay taxes on. You may not want to have six figures of profit at the end of the year!
The number that people toss around a lot in the industry is the Revenue number, NOT the profit number. When someone is talking about their numbers, it is essential to know which number they mean! I’ve brought in over 6-figures in Revenue every year in my photography business, but that is not all going straight into my checking account.
Should you just copy someone else’s prices?
If you lift up someone else’s prices, you have no idea about anything behind the numbers. You don’t know how much their costs are, how much they are paying themselves, or how they even like to live.
You must run your numbers for yourself so that you make sure you are profitable.
You can’t just guess at the numbers. If you copy someone else? You don’t know if they are guessing, if they can cover their costs, or anything else. They may be making different choices in their business than you would make in yours.
You have to do your math!
Courtney & I discuss outsourcing your work, and from a higher level – finding the joy in YOUR life matters! If you measure yourself by the stick of someone else who is bringing in $100,000 a year, but they are constantly working at a level that you don’t want to live? It’s not an accurate measure.
Make sure that the work you’re doing allows you to love your LIFE.
Tips to consider to help your business grow
– Know your expenses! Make a list of all of your expenses, and organize them by the costs for the full year, and your costs per job. That way you know your margins, and you can strategize for the full year.
– Courtney is a huge fan of renting lenses. Did you know that you can rent a lens for 67 times before you buy a lens! Who knew?! If you’re first starting out, you may want to rent while you find what works for you, because reselling a lens won’t get you the value back.
– Should you buy gear, or buy other things that your business needs?
– Know your market, and your specific target market! That informs a lot of other things, including your pricing. If your target market is not going to pay premium pricing, you need to consider that into your strategy. If your target market is a premium client, and you have a low price option on your price sheet? You’re confusing people. The confused mind doesn’t buy! Your pricing needs to align with your messaging and the voice of your brand.
– The target market is not just about the people, but the section of the market. You are competing for a tiny segment of the market of clients in your area every year. If you can identify where your brand fits in the broader market, and what makes you different than everyone else, you’ve sectioned it off. Doing this makes your marketing time & money go MUCH further.
– If you’re going after the broad market of “ALL,” it becomes hard to get ONE. If you define specifics? Your marketing dollars go so much further because you’re able to book a more significant portion of your smaller section. (Courtney left me speechless as she talked about this!)
Learn More About Courtney
You can go to CreativeHomeroom.com, where she offers intensive workshops to help you build your business, study hours that are shorter to touch on specific topics, and she also offers one-on-one coaching, customized to your needs. You can also find Courtney on Instagram at @creativehomeroom and Facebook at creativehomeroom.
You can build a beautiful house, but if it isn’t built on a solid foundation? It can all come crashing down. Make sure your business is built on solid ground!
Here is what’s current/upcoming at Homeroom:
– Just launched a new Product Pricing Tracker! More digital goods are coming soon to help creatives with their own financial strategy.
– Monthly Portland Study Hours
– Upcoming Denver Study Hours (June 6th & 7th)
– Possible Houston multi-day workshop!
– September workshop at the Oregon Coast: Streamline Your Benjamins
– Speaking at Real Life Conference in Canmore, Alberta, Canada (Nov 5th – 8th)