PROFIT…..The Primary Function of Any Business

Without a profit, you don’t have a business!  Profit is the primary function of any business….this is such a basic point and so fundamental you would think that absolutely no one and I repeat no one could argue with this most basic business statement!  But then you have photographers!  While most photographers that are still in business have mastered this basic principle of business, many younger photographers still suffer from the delusion that product is more important than profit.  Time and time again I give the example of great photographers that go out of business or have to work a normal job to pay for their photography business, while mall and department store button pushers sell millions of dollars of shit photography each year.  You can email all your crap about your art, but if someone doesn`t buy what you create at a price that generates a profit, you don`t have a business, but an expensive hobby.

Profit goes way beyond the basics of price charged, compared to price of production.  Every second you work on a file, every penny of utilities that go into producing that image that you sell, as well as every single cost has to be accounted and paid for before a profit is generated.  Accounting for everything is a skill that takes years to master and even longer to control.  We are so accustom to services and products that we often over pay and get so excited about new products that we lower our mark-up just to be able to sell them.  New mounting styles, expensive album products and elaborate framing often has little mark-up potential just to be able to sell it to the average client.  If you don’t profit from selling something, don’t sell it!

Services are another area that we all waste our profits on.  We get so accustom to the cost of certain service we don’t realize how ridiculous they are.  We recently moved from one home to another.  I went to get TV service at our new home, however with all the tall trees, there was no signal.  We had to switch from satellite to cable.  Going through the hassles of trying to get installation, I thought how ridiculous our television service was.  Years ago, cable TV was $12 a month for a nice selection of channels, now I felt like a cheap-skate spending $80 a month on a limit television package and this is for a television I hardly ever watch.  I told my son, we could get a movie every night from the RED BOX and only spend $30 a month and we are spending $80 a month for basic television. This started me on a quest to find all the other useless cost I squander my money on, for no other reason than I always have.  My accountant and I have reviewed every utility and service provided to my home and business.  I was amazed at the hundreds of dollars a month we were able to cut out just by reviewing and comparing services and eliminating unnecessary ones.

Whether you make $5000 this year or $5,000,000, you have a finite amount of money in your business and in your personal bank account and every dollar you don’t spend on an unnecessary service is dollar you have to enjoy.   When you go to trade shows and seminars that have new products, first ask yourself if your business can profit selling this item before you let the creative person inside you dream of how cool it will make your photography look.  Constantly look for new ways to increase your profits by the way you package and merchandise what you sell…example leaving wallets out of packages and creating “wallet packages” allow you to charge the same for a package but have an add`on item for the package upping the total sale (more about this later).  In this market you must get every dollar you can out of each order and then hold on to it as long as possible.

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~ by jeffsmithbooks on May 23, 2011.

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