4th Quarter Pitfalls

By Mary Fisk-Taylor, M. Photog., Cr., CPP, ABI, API

Summer is over and we are now in the glorious months of autumn. Personally, this is my favorite season. I love the colors, the weather, the opportunity to wear boots and sweaters and the  loveliness of the 4th quarter. Those of us who work in or own a small business LOVE the “er”  months of September, October, November and December. These months generally mean family portraits, school pictures, fall weddings, holiday cards and the almighty sentence in the sales room “wouldn’t this make a great holiday gift for friends and family?”

Typically these months build our self-esteem and bank accounts. Those of us in the southeast get to embrace and enjoy gorgeous weather and the ringing of our studio telephones. We are super
busy and spend the next 90 to 120 days with December 24th highlighted in bold red on our calendars praying to hang in there and deliver everything before the bewitching hour.

So what is the problem with this? Nothing really, all of it is great and welcomed. However, I have  found out the hard way that these months can also bring a false sense of security. By that I mean extra money in the bank. All of a sudden we are out of the red, into the green and coincidentally it’s holiday time and those are the fabulous colors of gift giving. I have found myself overspending and taking larger draws or paychecks in these months. Treating myself as well as friends and family to retail love. Why not? I have worked so hard and the money is finally there.

Flash forward to January of the next year and guess what? All of a sudden your lab bill is triple and your album bills are piling up. Retouching artists need to be paid and the framer would really like to run your credit card. Gulp! What happened? Then you look over and see broken toys in the  playroom or the new camera you just had to have gathering dust in the cold corner of the 1st quarter. This is typically the time of year we are more likely to hear paint dry than the phone ring.

Obviously, this is not my first rodeo and I have fallen into all of the traps and pitfalls. I have shamefully made these mistakes more than once! Now we keep a reserve account that will guarantee 1st quarter success. Whenever we receive a wedding retainer it goes directly into a secondary account that is reserved strictly for fulfilling and paying for that particular wedding order. We also keep up to 30% of our revenue in this account during the entire year, especially
in the last quarter. This insures that we have enough money set aside for vendors, sales tax and overall expenses.

It seems like a simple idea, right? Perhaps I’m not very efficient with money managing and those who know me understand I may have a spending problem. This keeps my funds separated and  there is no question about “extra” money. As we close out the new year, we often find ourselves with a gain and then we can decide to invest it in the company with a capital expense or take a bonus, etc.

So, enjoy this beautiful time of year and peace of mind of knowing that you have avoided any and all of the 4th Quarter pitfalls.