Starting a business specializing in portraiture

Started Jan 24, 2014 | Discussions thread
tcg550 Veteran Member • Posts: 7,731
Re: Definitions please

PenguinPhotoCo wrote:

Does the story have a happy ending? Depends where the story ends,huh?

See, the answer isn't a simple YES or NO.

The term profit is very very very broadly defined here - so to illustrate the differences in what one might consider profit I did some SIMPLE MATH.

You seem to want a simple second grade answer to things. And it's not that simple, not by a long shot.

Let me BOLD it for you.

tcg550 wrote:

PenguinPhotoCo wrote:

tcg550 wrote:

Can you answer one question without some poor analogy?

Does profit always mean cash? Yes or no?

And for bonus points can a part time photographer turn a profit? Yes or no?

Perhaps you mean GAIN, as opposed to PROFIT.

If you have a camera and $12 today, work 100 hours shooting models and at the end of the month you have $35 you have GAINED $23. Most would strongly argue you have not made a profit though, as your time has value.

Can a part timer make a profit? Maybe.

A lot depends on your you account for everything. I can have sales of $80,000 and the IRS paperwork says the business lost money - yet I paid bills, went on vacation, bought a car, etc.

The best way IMO is to look at cashflow - not depreciation and home office expenses, etc. Because bottom line, if you have negative cashflow the business won't be around for long.

So what are you CASH expenses? Mine (per year) - Insurance $850, biz license $25, CC machine/account $240 check scanner $600, godaddy $80 I think, phone $250, satelite radio for the studio $200 (ballpark). If I shoot nothing, advertise nothing, I have to pay those bills.

I have no debt and own my camera and computer. I work from home so have internet anyway. So $2250.

If I just wait for the phone to ring and email them the files there would be no other costs.

Lets assume my marketing is FB and it spend an hour a week. I spend an hour a month, on average, on my website. So ~60 hours a year labor.

I shoot 4 seniors at what, $250 each? Each takes 4 hours with editing - 16 hours.

I shoot 2 weddings, 20 hours w/ meetings, prep, travel, shoot, editing at $1200 each.

So SALES for the year are $3400. My expenses $2250. PROFIT! Nope, not profit. Not yet.

I've not accounted for all the costs yet - I worked 116 hours to earn that $3400. But I didn't EARN 3400 did I? I earned $1150.

Now what is my time worth? $10/hour? Then the business LOST $10. 116 hours at $10 is $1160...

Now if I"m paying myself $9/ hour then yes, the business made a profit.

But the IRS accounts all this a bit differently. They let you deduct a portion of your house' costs (utilities, taxes, repairs) since you used a portion of your house for the biz. You get to right off the miles you drove for the business too. So these may well add to $4,000 in additional deductions.

Now your business lost money - $3400 sales, -2250 expenses, -4000 expenses you have a loss of $2850. So no, you did NOT make a profit.

IMO you made money, albeit not much, but yes, you can say you made a profit.

Your investment (money spent on gear, education, computers, etc) returned nothing. These days with interest rates at tenths of a percent that may be OK. But if you spent $10,000 to get camera, lens, flash, computer, ignoring the depreciation and only looking at the CASH value you may have done worse than if you buried the money in a can in the yard.

I know the computer I'm tying this at cost $1000. I know I paid $3200 for my 5D3. I know I can't get that much for either one used. Their value lies is in being used as tools to deliver products and services.

But if you do the math - is all the work and aggravation and education worth $9/hour? If MONEY is what you want or need you can make more waiting tables in most any restaurant.

I'm sorry was there a yes or a no in there somewhere?

I didn't read your reply because it was too complicated for a second grader.

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