The future of the business of photography is all about mixing media.
My number one piece of business advice for photographers is to become a better writer. How? Practice every day. How about a blog?
BLOG WARNING: THE INTENDED AUDIENCE FOR THIS PARTICULAR BLOG IS THE GROUP OF STUDENTS I'LL BE SPEAKING TO. ESTABLISHED PROFESSIONALS SHOULD FIND THIS BORING.....
I have the lofty responsibility of talking to some advanced students who are near completion of their degrees in commercial photography. I have been asked to speak to them because of my hoary and enormously long tenure in the local photography market. And, probably, in no small part, because I am on the advisory board for their discipline at the college. I've done this every semester for as long as I can remember. Every semester I give a slightly ( or greatly ) different presentation.
This year I'll be stressing the changing nature of what constitutes the photography industry. I maintain that we've left that traditional and narrow niche behind and that the key to success in the current economy is to embrace the role of "creative content creator" by learning a collections of inter-related skills, like film making, programming and marketing. These are skills that can be bundled for more potency and sold to a wide variety of end users.
But mostly I'll talk about pure business. Supply and demand. Marketing. Positioning. Even branding. And the place I'll start my talk is about conservation of resources. I submit that most photographers who fail to thrive are victims of ignorance about money. The making of it; and more importantly, the conservation of it.
The key to success in photography is to: (a) find clients who will pay you what you are worth. (b) do the job. (c) market the mutual success you shared with your client. (d) get paid by the client. (e) find the next client (or better yet, do more jobs for the original client). But the primary key for long term success isn't the photography part at all, it's what you do with the money you get for doing the work.
I hear over and over again, from younger photographers mostly, that they are re-investing in their own businesses. From what I've distilled, based a life spent in photography, this may be one of the worst investments you can make.
Sure, you need to spend some money, regularly, on marketing; and every once in a while it's probably a good idea to upgrade your camera gear, but the long game calls for a much more disciplined, and much less fun (in the short term) strategy. That strategy would call for putting money in investments that are totally outside your business. Maybe even outside your industry.
I have a partner/spouse/mentor who is much smarter than me about the big picture. It's because of her that, many years ago, I started an SEPP (single employee pension plan) and put a set amount of money into it every month. Rain or shine. If you look at the meager balance back in the early years and then look at today's balance you'd think I was a genius but it's just the power of compound interest. And discipline, combined with the knowledge that, as a freelance business owner, no one else is saving up to provide a pension for you. You have to do it yourself.
At the end of every year my freelance friends will tell me that their accountants have counseled them that they need to spend XXXX amount before the end of the fiscal year on equipment. In this way they'll be able to take an accelerated cost recovery (depreciation) and avoid paying taxes on this money. But the weak spot of this argument is that the gear they buy (especially in the digital age) begins a quick and somewhat sickening depreciation in resale value the minute they pull it out of the boxes and charge the batteries.
My people have always told me that it's best to figure out how much "extra" money you have at the end of the year and to stick that into a tax advantaged retirement account, or to bite the tax bullet and put some of the money into an (after tax) Roth IRA account. After all, once the cameras grow old you can't sell them for much, or eat them, but the money you stick in an SEPP or traditional IRA is money that: A. You get to keep. B. That appreciates in value. and, C. Reduces your total income tax liability for the year in which you save it. OMG!!! You get to keep the money and, if you can keep your hands off of it then it also grows in value.
My investments seem to follow the basics of investing. Nothing dramatic and nothing too risky. Most experts advise sticking to mutual funds (bundles of stocks) or, at worst, stocks in companies whose products and strategies you really, really understand. For instance, if you have been an Apple Computer user since 1984, and understand their products and their strategic value, then you might want to invest a modest percentage of your savings in that stock. Had you invested in Apple stock back in the late 1980's, say to the tune of about $10,000, you would not be reading this right now because you'd be trying to figure out how to spend the enormous amount of money you've accrued. Hint: It's millions and millions of dollars. What is your stock photography library worth just about now?
The same thing applies to financing your kid's college education. Every other thing I read today is about the impending student loan crisis. But, if the average college educated and professionally employed parent of twenty one years ago started saving about $250 a month in a 529 college savings plan they would have an ample supply of money today to cover the cost of in-state tuition, as well as room and board, for their current college student. Add $100 more per month and you'd pretty much have the $65,000 per year you'll need to pay full pop at a prestigious, private, four year university.
Sure, sure, this is long term, old guy advice. But what if you are planning to live fast and die young and leave behind a beautiful corpse? Why would you bother to save anything in that scenario? Good question. I'll answer it with another question: When is the last time you felt like you needed to settle for a lower fee and a crappy assignment because you had your back up against the wall to pay rent? How many annoying, low budget clients have you accrued along the way because you couldn't afford the risk of not having their (meager) check by the end of the month to pay bills that you knew were coming? How poorly have you leveraged your artistic freedom (and your free time) by having to service an ever growing debt in your business?
That new medium format camera sounded like a good idea when you put it on that credit card but it really didn't increase your business much, did it? And you keep making payments on that credit card so you can eventually "own" the camera, and by then you may have paid a quarter to a third more than the original purchase price just in interest. On a depreciating asset which will probably be obsolete by the time you pay it off. Make the minimum payments on that credit card and you may NEVER pay off that camera completely---even long after it's gone.
The over-riding plan? Earn money, save money, and make the money work for you. If you start early enough, and keep yourself debt free, at some point you'll be able turn down all "stinky" jobs and still sleep well at night because your investments will keep growing and (best case scenario) pay regular dividends that can either be reinvested or enjoyed. You'll get to pick and choose the projects you work on and the clients you work with. You get to set, and stand by, your rates. By being a disciplined saver you buy back your own freedom and can give yourself the "bonus" of free time to work on your art. Or you can just lie on the couch and read novels. Being a good steward of your money is a smart business strategy.
Freelance businesses are not for everyone. If I didn't have a smart, frugal and strategic partner I'd be a dead man by now. Or at least dead broke. Yep, that's what I'm thinking about telling the class of college commercial photography students.
Glad someone told me.
Studio Dog can count the treats in the jar on the counter. When we're running low she comes by and scratches me on the leg. I refill the jar. Her investment strategy pays off.
the lavish bokeh of a micro four thirds camera and a Leica 25mm Summilux lens.
Expensive gear is meaningless and its value is fleeting. Learn to use good, inexpensive gear.... or rent.
More good investment advice: If you smoke cigarettes give up the habit for two years and save enough to travel through Europe taking photographs with the proceeds. It's a win/win.
Always marry someone who is much smarter than you are.
Don't spend a fortune on a rented space. I was paying $1,800 a month for downtown studio space from 1988 to 1997 then I bought a house and built a studio on the property. My mortgage for the house and the studio space cost less than my previous studio alone. We've done about 2,000 jobs and five book projects out of this 675 square foot space since 1997. And the coffee machine is just through that red door and 12 steps into the house beyond it.
A total non-sequitur. I just happen to love big scrims.
It is possible to raise a child, from infancy to college, with a freelancer's income. If you are disciplined, and not addicted to the unnecessary trappings of a complete consumer lifestyle. Cook at home more. Watch free TV. Always choose necessities over wants.
Surround yourself with people who value art, creativity and camaraderie over trendy, expensive stuff.
choose wise friends.
And finally, never go out without your camera.
17 comments:
My father was an accountant for over 40 years. He would wholeheartedly agree with you about the need for fiscal discipline. One thing he told me numerous times was that people who started businesses that ultimately failed often spent a lot of money on unnecessary things, like luxury cars, overly-expensive furniture, unnecessary equipment, etc. They were often more concerned with looking successful than doing what it took to actually be successful. I think it would be a good thing to drive home the point that unnecessary spending should be avoided as much as possible. Just my $0.02 CDN.
My late father always used to say to me: "diversify or die"
Practise, practise, practise your craft, read some books on the subject, talk to other
pros, observe the world around you and be aware of client's needs and wants...
Great advice, some of which I didn't know, and some of which I didn't take. But from this end of a long career which has been far less than it could/should have been, I can testify to the truth of what you're saying.
Lovely portrait of your wife, BTW.
Wonderful preamble heading up to tonights festivities. I am so grateful that you come to my class every semester and share your wisdom. Those that listen and follow increase their chances of success. See you tonight my friend.
Vanguard funds or equivalent.
Look at the costs of owning your investments, always. There's usually a cheaper option, and that 1 percent extra cost you pay for this versus that is enormous in the long run.
Two hours of reading, thinking, poking around, can save you 1 percent or more on every penny you invest, every year, for life. If some guy starts talking A, B, C shares of a mutual fund, run.
(wife is a financial planner, gotta beat the drum!)
Your thoughts are right on the money Kirk if they will just listen and not tune you out. The chairman of the company I retired from after 42 years loved the phrase "back to basics" and he was proud to say that all of our equipment was paid for at purchase with new cranes costing in the millions of dollars. Another tip may be finding a trusted attorney and accountant which is not easy but critical in today's world imho. Just a thought maybe you should tape your presentation....hmmm?
Good luck,
Bruce
Excellent Advice Kirk. Ron (Retired Certified Financial Planner)
This is good advice for anyone, whether you work for yourself or for someone else. I also second Amolitor's comments about costs and doing your research.
Manage client expectations! If the project is going to be late, tell the client as soon as you think that might happen ... the sooner the better. Then, if it subsequently turns out that it will be on time, great, tell the client that too, as soon as you think it is true. All clients are at least part human, so most will understand when problems crop up, the unexpected happens, or, because this is the first this has ever been done by you, or maybe by anyone, it is just taking longer than projected. Most times, most clients will much prefer a job well done but a bit late, rather than some crap on time or, much worse, left sitting there wondering where the project results are. Also, if in the middle of a project, a new and better idea appears, take that "better mouse trap" to the client too. Often, they will be glad to give you more money for an enhanced product, or even fund a second project. These are my first lessons to new staff from my more then 40 years, pre-retirement, in environmental consulting.
Excellent advice Kirk and I'm sure it will help many of your audience achieve success and avoid the many pitfalls they may encounter, but my goodness what a bleak picture of their future you paint for them.
$65,000 a year for four years college for each child they may bring into the world, scrimping and saving to provide a few years in retirement when their best years are behind them, house mortgages, health insurance, life insurance etc. etc. dear oh dear how we've turned ourselves into economic slaves, and these are the fortunate ones!!.
Know their monthly nut. Don't spend a dime they don't have to, especially on equipment upgrades. Someone else said to have good attorney accountant. Find other team members they lke and trust. But still trust and verify.
And that's sorta where using cheaper equipment like the Panny and Sony 1" bridge cameras come into play; especially buying the last "redundant" model rather than the latest..... Cameras are so good now that the majority of folk don't need a big full frame and the latest Zeiss lens.
I mostly do magazine work and now use a FZ1000 whereas before it was a D300 and mostly a 12-24mm lens. So a NZ$1000 camera has replaced a camera costing $3000. And; I still used the D300's up until changing to the Panny.
I've never been a big camera buyer; I reckon something is only obsolete when it doesn't do the job it was originally bought for. It's too easy to buy for the sake of having the latest and greatest with only incremental upgrades. I once read a quote that said fishing flies are made to catch the angler, not the fish..... Shiny camera gear is often the same.... ;-)
Seany, I don't get what you are talking about. I laid out a good savings plan for anyone who wants to accept the responsibility to send a child to either public or private college. Nearly every top private university in America is already at or above $60,000 per year. Some colleges offer grants for families whose income falls below a certain point, and certainly, there are academic grants for high performing students. But no one "must" send their children to college, or have children in the first place. They are a dreadful money pit. By saving over time in a 529 plan I am able to send my child to a good, private school without needing to take out loans. He will graduate debt free. What a great head start.
Unfortunately, I don't live in a country that guarantees a retirement (beyond social security) so if I would like to stop working today, at age 61, the burden of providing future income falls to me alone. You may see it as a few good years in retirement but I'm thinking more like 25 or 35 years of retirement. That costs money. Of course you can drink it all now, or buy a hot car, or splash out for nights at the casino, or have an expensive mistress, or buy a bigger house. It's always your choice. But a little diligence will keep you from eating dog food when your work dries up....
And what do you have against buying a house and having a mortgage? You've got to live somewhere, right? My mortgage is less than half of what it would cost me to rent a smaller, meaner house or apartment anywhere in central Austin. The value of my house has increased by a factor of 5X in the last 21 years. More capital appreciation than I could have made in the stock market.
Moving on....life insurance. Surely, if you have school age children you understand that it would be a good thing to protect their current lifestyle if you happen to fall off that cherry picker onto your head, right? And you know that there are two kinds of life insurance. One of which builds equity in the form of "cash value." If you have a professional put together the right policy you can turn around after your kids matriculate and cash in the cash value of the policy. You get the protection in the earlier years and you get back most of the money you invested in later years.
In spite of what you see as ruinous enslavement I've worked about 80-100 days a year for the last five or so years, made more money than any other time in my life, swam most mornings at a private club, bought new cars when the old ones wore out, paid for my kid's private college and still had time and money to dine well and travel regularly. Between my career and leisure travels I have been to 18 different countries in the past 30 years. It just doesn't seem like enslavement to me....
One enslaves oneself by buying things that are unnecessary and unwise or by not doing the marketing and selling required to generate the income you need. So, ditch the $50,000 car, the bigger house, the premium cable (what a waste of time and money), the "stress relieving" purchases, and the addictive purchases and enjoy a simpler life with more money. Market more diligently and with a good plan. More to follow......
I can find hundreds of $10-$20 bottles of wine that are fun and tasty to drink. I don't often (ever) spend money on Dom Perignon or Stag's Leap. When I buy a new camera I generally sell an old camera. And since I am in the business of imaging the cameras I do purchase are depreciable.
The current mythology is that all photographers have been beaten down and fees are barely on par with minimum wage. Not true for myself and many of the people in the business whom I know personally. We still earn about as much as a decent accountant or engineer. Sometimes more and sometimes less. Smart savings is relaxing, not enslavement. One of the top causes of clinical anxiety (which can lead to death by cardiac event) is unmanageable debt. Savings may be life saving.
Or you can choose to live in a trailer park, do some part time work at Walmart and die broke in your mid-50's. Your choice.
Finally, you do understand that making photographs and producing video can be fun, right? Not the same as standing on a production line or sitting in a call center. I rest my case.
I absolutely loved reading this, while not a graduate anymore I am always thinking about the future, my trajectory in life and my career.
I think everyone needs to chip away at their goals in life, whether it be saving or developing skills... Incrementalism might not be exciting but you are at least heading in the right direction!
Kirk I fully understand where you're coming from and I prefaced my comments by complementing you on your advice.
I've been fortunate in life and managed to retire at 58 yrs in 2002 after educating my 3 kids to 3rd level graduate standard, paying off my mortgage and putting aside enough capital to keep the wolf from the door, and ensure a reasonably comfortable retirement.Perhaps I was fortunate to live in a country with a reasonable welfare system that ensures no one starves and health care is for all irrespective of one's circumstances, also college education although not free is nowhere near as costly as your country.
However I would hate to be starting over again and I don't envy those who are coming out of college and hoping to start their careers.
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