I suspect I have a lot of people following me who are not here for just the cute dog photos, Madison shenanigans, and pretty photos where you say “Oh that light!”. If you are great, I’m happy to have you on this journey, but I also think there is a subset of folks here who are trying to run a business, a side hustle, or just trying to understand financially what the heck it is I’m doing.
Look, I love photography and dance and art. It’s been my jam since I was very young, and the older I get and the more I work out what my “life’s purpose” is, I know those things are very much a part of it. However, when I take a step back and look at what has made me the most money, and has made the things like dance and photography a success, and frankly what I’m just pretty darn good at is my background in finance.
I’m very good at numbers. Not crazy algorithm mathematician and engineering numbers, but basic how do I make a profit, what does cash mean, and how do I turn a profit, type numbers.
I think artists, small business owners, and just people in general who don’t have a background in finance and accounting can get scared off by digging in and understanding what’s really going on in the background of their life. You shouldn’t. Instead here are five things to get you started in evaluating where you stand financially. I follow these principles in my businesses, my work life, and in my personal life. It’s all the same at the end of the day, we want to come out in the black, not the red.
- There is good debt, and there is bad debt know the difference – Look we all go into debt. Unless you have a strict cash only life style (which good for you! It’s hard to do in our society), it’s very hard not to. Understanding what debt is good and what is bad is very important. Things like a mortgage and a car are things I would classify as good debt. Though cars could have their own subset here for me, as I think if you can buy and not lease, and pay cash if possible is ideal. Bad debt is really anything that looks, walks, or talks like credit card debt. High interest rates should be avoided, and other financing options should be evaluated if you find your self owing money you can’t afford.
- If you’re strapped for cash, look for an alternative then going in to debt – Back in my early/mid twenties, I had no money. I had student debt (still do), a car payment, living at home and wasn’t able to comfortably pay for my portion of the group lunch we had at work every week without going into an anxiety attack. What’s interesting about society is that there is what we’re “supposed to do” and then there is everything else. We tend to not look into the everything else bucket, which can be a great place to find creative solutions to financial problems. For example we couldn’t afford when we started one of my dance companies to rent a space full time, so we sublet for specific hours of the week in a space that was utilized for Jazzercise classes. Thinking outside the box like this can help you keep your budget on track and not overspend in the beginning.
- Crunch your numbers ahead of time – If you’re offering a class, you should know the minimum amount of students you need in order to cover fixed and variable expenses. Fixed expense is anything that people call “overhead”, electric, rent, you, etc. variable is anything needed for just that one class, say you’re paying a teacher or need a specific prop or tool (paint, brushes) etc. during the class. Take all those expenses and add them up, and divide by the amount of tuition you are charging. That will tell you how many students you need to just break even. This formula works for products as well.
(Fixed + Variable = Expense)/Cost of class or product = How many classes/products you need to sell to break even
- Value your time – One of the things I regret doing is taking my time for granted. I should have compensated myself more to begin with. Burnout, especially if you’re side hustling, is a real thing. If you aren’t compensating yourself, there is no way you’ll every feel valued in your business, because you literally are not putting any value on your skills and talent. When calculating cost of a class or product you should always build the cost of your time into that equation. I get that when you’re starting maybe you won’t get paid as much, or maybe you choose to let a class go without valuing your time, BUT this should be short lived and minimal. If this goes on for too long, it’s time to reevaluate from and cost and profit perspective.
- Just because they’re your friends and family, doesn’t mean they get it for free – I charge everyone. It’s less for friends and family, but I do charge. I do this for a variety of reasons mainly bullets 3 and 4 above. However, I also do it because it keeps expectations and assumptions in check. All friends and family go through the same contracts, process, and systems. They know how many photos they get, and when they get them, and how they will get them. They know the restrictions and terms and conditions (in therapy they call these boundaries). Also, in my past I have offered classes, products, and photos for free to students, friends, and those who are strapped for cash. The harsh reality is that 8 times out of 10, the people with discounted classes over an extended period of time will be the most difficult to deal with. Why? Because they don’t value your time or your talents as much as someone who is paying full price.