How to be profitable from today forward
“Profitability” is not a word that gets a lot of love in the creative or photography world.
Large instagram followings, promises of “how you can make 6 figures in 10 easy steps”, mini-celebrities who shoot weddings in Paris doing webinars promising their ‘secrets’ and then pitching you a $5,000 class…(that is only $147 if you buy in the next 10 minutes!!!), those are the things that tend to get the most attention in these spaces.
Even though I may speak of these things a little tongue in cheek, I don’t necessarily think they are bad. There are some very smart people out there trying to help educate others and there is nothing wrong with that.
The issue comes in when our attention is misguided and spent on things that ultimately won’t help your profitability. And any person who calls him/herself a business owner should be concerned with their profitability.
Do you make more than you spend?
The word profitability can sound a little corporate-y and official and complicated, but ultimately it all comes down to if your business brings in more money than goes out.
Why should you care? Well hopefully it’s obvious, but I think we all would prefer for our businesses to leave us with some extra money. I don’t know many people who go into business to lose money, but if you can think of a reason why someone would want to do that, please...I’m all ears!!
Did you know that it is possible to guarantee your business is profitable from today going forward?
Now I know you might be thinking, “Cinnamon...it costs a lot of money to start and run a business. There is no way that I’ll be able to make enough money to cover my expenses...have you seen how much lenses cost?”
And I get it. Believe me I do. I’ve been there and there is a lot of equipment to be bought in the early days of starting a business (especially a photography business). But the beauty of running your own business is that you are the one in charge of making the decisions about what gets purchased and when, and you also have control over how much you charge and ultimately how much money you bring in.
Lil’ ‘ol you!
Also know that when I say the word “profitable” that doesn’t equate to LARGE amounts of profit. Even if you only make $100 more income than you spend, you are still profitable. You’d be surprised however how many small business owners have absolutely NO idea how much money they make (if any) because they are fearful of knowing the amount OR they feel like “dealing with the money” is too complicated. So they ignore it and they try to wing it and when they are constantly worried about having enough money they just figure they are failing.
I don’t know about you but that doesn’t sound like a great way to run a business.
I propose a different solution.
Profit first, expenses second
Every time you make some money...put a small portion of it aside. Maybe in a place that’s hard to get too (an account that is difficult to log into etc…).
You can’t touch it.
If you can’t touch it, you can’t spend it.
You know when you go to the movies and you get a large popcorn to share and by the end of the movie you think, “how in the world did we finish all that popcorn?” Welp, you did because it was there.
Think if you got a small popcorn to share. You likely wouldn’t think in the middle of the movie, “man...I need more popcorn so I’m going to go all the way back out to the concession stand to get another one”. You’d enjoy your small popcorn and be done with it. Maybe you might think about getting more but the discomfort of actually going and doing it causes you to restrain yourself.
You can do the same thing with your money.
Parkinson’s law states that “work expands so as to fill the time available for its completion”. The same goes with our money. If we look in our account and see $4,000, we will maybe do a little quick math in our heads and figure we have around that much to spend on what we need. But if we look at our account and see $3,200, we will do the same thing. Even if we know we have a little bit stashed away somewhere else.
I didn’t make this stuff up on my own. This entire system and theory behind maintaining a profitable business from today forward comes from Profit First by Mike Michalowicz, and while the entire process behind it is slightly more built out than what I’m mentioning here in this post...you can start with this one simple step:
Every time you make some money, but a % of it aside in a special account and that account you can’t touch. That is your profit. Profit first, expenses second.
If this is something that interests you as a business owner (and it should!) I would highly recommend picking up this book and putting the practices into place. It’s not a bunch of finance mumbo jumbo..it’s easy to read and understand.
And it will probably be one of the best decisions you ever make for your business.
Ready to take your Hobby to a legit Business? I’ve got the perfect mini-course just for you!
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