Have you ever noticed that even in a difficult economy,…
by Bruce and Josh Hudson
Let’s face it, in business it’s all about cash flow. Overhead or your monthly fixed costs relentlessly march on despite your sales volume. You’d think it would be easier – sales minus fixed and variable costs (cost of goods sold) equals profit.
So you must continually generate enough cash flow to maintain overhead and hopefully have some left over for yourself, called profit. I think of this process much like keeping your foot on the car’s gas pedal. Once you take your foot off the gas, you slow down. Once you start to neglect the elements related to cash flow, sales slow down and your studio’s in a position to play catch-up. As I wrote in the title, sometimes cash flow sucks. So what are the elements related to creating continuous cash flow?
Marketing a studio is something that you need to do on a daily basis. If you only market when business is slow it’s like taking your foot off the gas. You lose momentum. I know, how can I be expected to do it all? Marketing, Image Creation, Sales, and Studio Management – trust me I get it! I’ve been a studio owner since 1982, and have gone from six employees to now myself and two contract employees, I sincerely get it. Without marketing, you have no clients. No clients, no cash flow, it’s as simple as that! You must find time to market & discover marketing strategies that are the most effective.
Who owes you money? Have you noticed that it’s getting more challenging to have your clients pick up their orders in a timely manner? We’ve seen it. It’s been more difficult since the fall of 2008 when our nation’s cash flow started its decline. Even our best clients took longer to pay off their balances. It wasn’t totally about money, it was about the mindset of letting loose of the money they have.
What’s your policy on payment? Do you have your clients pay in full at order time or a partial payment? With minimum and smaller orders, we suggest payment in full. With a large order, we will ask for at least 50%. When a client asks, “How would you like me to pay?” I respond, “Whatever you feel comfortable with. Half down or if you want to just take care of it today that would be great too!” 75% of our clients with this option will do the latter.
Keep the Momentum
Try to fill in the gaps of time. Once you’ve done a session, try and be persistent and book your viewing appointment. Once your client has made their order, try to get it processed as soon as possible. The three or four weeks it used to take to complete an order can now be three or four days with many of the color labs. We can literally place an order on Monday and have it back on Wednesday. This type of turnaround will definitely keep the momentum going and cash flow flowing. We try to keep looking at the horizon to see when the next session, next viewing and when the next order will be arriving. We think of it as a pipeline. We always want there to be cash in the pipeline flowing continuously.
What can I do today or at this very moment to create cash flow? This is what we try to do each and every morning when we come into the studio. Stay focused on the immediate tasks needed to put money in the bank today. It might mean returning a call, following up on a lead or delivering portraits to a client that’s been MIA and nowhere to be found. I know as an artist and photographer, this doesn’t sound very sexy, but it’s one of those things that we all need to do to run a successful studio in today’s economy. Put down your camera, close down Photoshop for a moment and focus on what will create consistent cash flow today, and every day.
As you know, many established studios have been dropping like flies over the past few years. It used to be much easier to get the phone to ring and make a substantial living in professional photography. Unfortunately, those days have changed with the new economy, the digital revolution and with the public’s changed perception of what photography really is. There used to be a huge gap between a professional with a medium format and a hobbyist with the 35mm. That huge gap is now nothing more than a tiny sliver. The playing field has definitely been leveled. Now more than ever, as true professionals, we need to be not only photographic artists but business people that understand the need for consistent cash flow. It’s all about cash flow, and sometimes cash flow sucks.