New Studio Part 5: Setting Up the Shop, Part 1

03/03/2005 11:08:05 AM · #1

I promised I'd try to write about what I'm learning as I go from DPC flunkie to studio owner. This is part 5 in the series.

New Studio Part 1: Starting Out
New Studio Part 2: Organization
New Studio Part 3: Plotting a Course
New Studio Part 4: Financing
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Now that we've established your business, gotten organized, plotted our course and found the resources to start us up and running, it's time to do what you'd hoped before - open the business!

Ok, so declare yourself open for business. No, really. Stand up, open the front door and shout it! "I AM OPEN for business." Done? Good. Sit down. Hopefully that was the last time we waster we do!

Your primary concern in opening your studio is "where?" Nearly everyone has heard the real estate adage that the three primary concerns of real estate are location, location and location. How many real estate offices are tucked into corners of a large building or even outsourced to a smaller, nearby local town, though? The TRUE primary concerns of real estate are location, cost and ultimately, value. As value is determined by both cost and location, let's figure out value first.

Value = NB$ - OB$/NBT.

--NB$=new business money - the total money you make by having a studio instead of a home office.
--OB$=old business money - the total money you would have made by staying in a home office.
--NBT=new business time - the time it takes to perform the new business you gained in the studio.

Value is the determination of how much your studio added to the existing business, not just how much your workload increased.

Having a home office has a high value by default. For one, there are no commute costs, parking fees or other associated office costs. You can also save on rent, heat, electricity and even write off a portion of each for your taxes. A home office will likely net you less walk-in clients than a Main St. office, though. Value is the balance.

A home office is the clear choice for a photographer with only a handful of wedding clients a year. The profits do not justify moving downtown if you do no shooting at your office location and will only field a call or two a week. The less business you have (or want), the more likely a home office is fine for you.

On the other hand, if you want to do 20 weddings and 150 portraits a year, you will need to be more visible in the community. The 20 weddings may find you - but will the 150 portraits? You should know from your business plan where you will need to be. If it costs you too much in studio rent, your financial projections could be way off.

So how do you decide? Let's try out a hypothetical example.

Pretend a wedding nets you $1,000. If you get 10 weddings a year from a home office, you're making $10,000. Now pretend a typical Main St. studio costs $1,000 a month for rent, electricity, phone, etc. The simple valuation is that the office must bring in at least $1000 a month to be profitable, right? Ok, so let's say the office brings in one additional wedding a month. You now make $20,000 but pay $10,000 in rent so your net is still $10,000.

So what's the big deal? You just doubled your work for the year. You didn't earn a single penny more than you would have if you'd done half the work. The new studio helped you pick up TEN weddings and did nothing for your bottom line. If you'd stayed at home and found only 2 more weddings, you'd have $12,000 at the end of the year. Capiche?

A studio is not truly profitable for a photographer who does only weddings. Let's pretend you take the above situation, however, and add portraits. If the portraits you do in the office nets you $6,000 and reprints for both weddings and portraits total $2,000 plus you get those additional 10 weddings to cover costs, you'd do 20 weddings instead of 10, but you'd net an additional $8,000. You will need to plug in your own numbers, but you can start to see what creates your value.

Sometimes the answer is easy. If you're booking 35 weddings a year from home and you have no desire to shoot studio portraits, stay at home. Obviously. If your Main St. location is such a boon that for your measley $800-1200 a month you'd bring in 5 or 6 times that, by all means, sign the lease immediately.

For all the in between times, remember value. Your work doesn't only have a dollar figure, it has a time figure. If you throw everything into making your Main St. office beautiful, wonderful, and perfect, it sure better bring in more money than you would get by sitting at home.

Value = NB$ - OB$/NBT.

When NB$ is $15,000 and OB$ is $10,000, NBT of 100 hours means you are averaging $50 dollars per hour net for those hours. NBT of 500 hours, however, means you're averaging $10 dollars per hour net. Not salary, net. If your NB$ is $25,000 and your OB$ is $5,000, you can only imagine that the $20,000 in new business is well worth 500 hours. Look at the numbers though. You'd be making only $40/hr net - less than the first example!

What the value formula really comes down to is how much you want to work, what you want to be paid, and what you'll settle for. When you are deciding where to have your office, take into consideration your target market and the time you're going to spend on this new office.
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As always, comments, critique and expansion to this article is greatly appreciated. Or even just "I read it, waiting for the next part." :)

Til next time,
Matt

Canon EF-S 18-55mm f/3.5-5.6

03/03/2005 06:17:42 PM · #2

bump for after work crowd.

bledford

Canon EOS-300D Rebel

03/03/2005 06:32:36 PM · #3

I think you should convert this to the tutorial format. You are providing more of a service to this community than you really know. This information is so important to someone who wants to be serious about a photography based business and it's no accident that you're onto the 5th lesson and have yet to mention what equipment you're using or anything about studio work.

These postings of yours hit the mark in every category to what should be at the top of the new business owner's mind. I just want to thank you for them and really urge you to submit them as a tutorial so that these posts are not lost.

Canon EF 300mm f/2.8L IS USM

03/03/2005 07:35:24 PM · #4

Thanks, I'll talk to D&L about that tonite. :) I'm glad you're enjoying the series thus far. Sometimes they start out pretty slow so I'm never sure if people are really reading. I've actually got an outline of where I'm going with this stuff, so it's not an accident, you're right. :) They started off kind of as an accident, but then I tried to at least know what I was talking about before posting. heh

Anyways, thanks again and I will look into offering these as tutorials.

M

Skip

Canon EOS-1D X

03/03/2005 09:23:57 PM · #5

Originally posted by mavrik:

matt, this really is great stuff! another thing you might consider is putting it in html format and hanging it off your website, but instead of linking to it through your website, link to it from here.

loz1

Canon EOS-450D Rebel XSi

Canon EF-S 18-55mm f/3.5-5.6

03/03/2005 10:36:19 PM · #6

You should post this on a site where you can block any IPs from CNY (except your own) so they don't think about starting their own business and taking your customers ;)

Anyway I thought I would do the nice thing and bump this for you lol

Sigma 105mm f/2.8 EX DG Macro for Canon

03/04/2005 07:04:27 AM · #7

I may think about linking it thru my site, but I don't care to block it from CNY photogs. :) I hope they learn - I have tried contacting them to be friends anyways but they don't want any of it. *shrug*

AllgoodPics

Canon EOS-20D

03/14/2005 03:57:41 PM · #8

Originally posted by mavrik:

Hey Mav,
I'm sure there are many like me who have been reading (and learning, thanks!) these posts but have not commented. I have enjoyed and gained valuable info from these posts and all of the replys. I hope to start my own photo biz someday but I'll have to start slow. I'm filing all of this info away until the right time. If these were in a tutorial I (and others) would have access to them in the future when they would serve us best. Thanks again for your insight and efforts.

Mike

Prof_Fate

03/14/2005 04:23:26 PM · #9

Good series, and I am waiting for the next one...

I like your approach to factoring in time/business/studio income and costs. Three or four things I don't see here:

The intangible of having a 'real' studio. Whether this is in the client's mind, a photo you can use on your website (of the studio), a true business atmosphere (you won't be working in your jammies anymore), etc. You will have a controlled sales atmosphere - that should increase your sales of prints and such.

The fear or force or attitude of having bills to pay - this can be a real motivator, or very depressing and overwhelming.

Hiring help...perhaps you can borrow a friend for those 10 weddings or hire someone cheap (aka cash under the table). Start doing 30 weddings, portraits, and other sundry add ons and your time is limited...so help may be needed and that is a real cost and tie factor (payroll and other HR duties, taxes, etc). With a storefront you usually have hours of operation, and need a body for those 'open' hours. Want to meet the bride at her home? want to preview the church or reception hall? has to be outside of the 'open' hours, so you may end up working more hours than you thought.

I am reading a book on being a wedding photographer...they have a studio and write as if it is expected to do studio shots of the couple and bride, etc. So you may have a great advantage with a studio and offer more services than you could otherwise.

You could also rent out your studio to those photographers that need one...another source of income!