Get financial control over your business! This month’s Finance for Photographers article will help you gain creative freedom.
Since launching a bookkeeping business 5 years ago, I’ve talked to so many professional photographers who feel stuck – or even paralyzed – by financial stress. Maybe debt has accrued, or your taxes are behind, or you simply feel that your finances are out of control.
It’s hard to dream and create when there is a nagging sense of despair over finances.
On the flip side, when your business finances are orderly, up to date, and under control, there is the freedom to focus on your craft, which reignites that energy and passion.
“But how do I get there? I don’t even know where to start.”
You’re NOT alone if you feel this way. If you feel stuck or paralyzed, or you can’t overcome a financial barrier, here are some quick tips to get your finances in order and attain the creative freedom you deserve:
#1: Face the truth
For a profitable business, ignorance is not bliss. Even if the truth is hard to face, you need to know your numbers and learn from them. It’s like stepping on the scale after a week of vacation.
You might not like what you see, but it’s hard to make progress if you’re not living in reality.
This may require catching up on back tax payments, getting your books in order, or figuring out sales tax. You may need to bring in a professional to help you assess where you are at financially.
Regardless of your situation, you need to know your starting point in order to move forward. Ignoring the state of your finances has the potential to drain your creative energy and pull you down instead of releasing you to create.
#2: Get the right people on your team
Let’s face it, we have all had toxic people in our lives at one time or another. I worked with a client who had overcome a major life struggle in recent years, but a few colleagues and relationships still regarded him as the “old” Robert (name changed for privacy). He decided to make a clean break with a couple of professional relationships that were unsupportive.
Instead, he surrounded himself with a team of loyal, honest, and supportive people so that he could move forward with hope and vision. It’s important to have a financial cheerleader on your team; someone who is empathetic and empowering.
This could mean hiring a business coach, a bookkeeper, or a CPA. It’s also good to have a go-to business networking partner who can keep you accountable but also provide a fresh perspective on your business.
Sometimes your best ideas come from other photographers (or other business owners) who have been in your shoes.
Encouragement and networking can give you the push you need to get to the next level.
#3: Look to the future
Once you have a clear picture of your present financial position, it’s time to look forward.
Set aside a planning session; block out two hours to dream and plan about the future of your business.
- Where do you want to see your business this year, next year, and three years from now?
- What is your revenue goal for the next 1-3 years?
- Ideal take-home pay?
- Long-term goals for yourself and your family?
An important part of this activity is inviting your loved ones into this conversation. Who are the people that will be most affected by these goals?
They will be your biggest cheerleader or your biggest obstacle, and it’s important to be on the same page. Knowing your why and setting specific, actionable goals for the future is very freeing. Set realistic goals, but also dream big!
#4: Take action on your goals
Once you have a realistic picture of your finances and clear goals, it’s time to get to work. Here are some items to consider:
- Taxes: start with getting up to date. If you are behind on taxes, contact a CPA to get a checklist of exactly what is needed to file your taxes. Set a deadline for yourself. Reach out to a bookkeeper to help check off the items on that list. Or ask a friend or colleague to keep you accountable for getting the information to your CPA by the deadline. If you are current with taxes, start being proactive for next year. Be proactive and consistent with your finances instead of letting them get put on the back burner.
- Tidy up: If you feel that things are a mess, take some time to come up with a clean, simple system. A few tasks you’ll need to do regularly are track all expenses and income, make sure you are getting all of your deductions, calculate mileage and manage receipts. Many of these things can be automated and streamlined. As with many things in life, lots of time and effort at the beginning will set you up for long-term success.
- Consistency: if you keep your financial records up to date throughout the year, you won’t be scrambling at tax time. Set aside time each month to catch up on the bookkeeping tasks for your business. Make sure all of your expenses and income are recorded and reconcile your bank accounts. Then review your reports to get a good handle on where you are financially.
- Cash flow: If you feel that you make a lot of money but your bank account is always low, you have a cash flow problem. Map out your income and expenses for the coming year and make sure you are on track to make a profit. Figure out your average monthly expenses and make sure that you can cover each month, especially on lower revenue months. You may need to trim the fat and cut expenses or raise your monthly sales goals. We recommend that clients start funding their savings account with 1-3 months’ worth of average expenses.
Don’t forget that tidy finances aren’t the goal; they are the foundation that will help you build your business and give you the freedom to do what you love.
You are preparing yourself for the real joy that is to come in your work. While every business owner has to be aware of finances, I rarely meet photographers who enjoy the behind-the-scenes financial details.
But I DO hear them consistently talk about how much more they enjoy the real work of photography when they feel relief from the burdensome task of bookkeeping and taxes.
If you want to gain creative freedom through getting financial control, don’t let overwhelm or shame hold you back from your passion. Start small and take it step-by-step.
Slight forward progress is still progress. It’s never too late to move in the right direction!
Written by TANYA HIRSCHY who owns TIDY BOOKS, a professional bookkeeping firm focused on helping photographers shoulder the burden of financial details | Photographs by SAMANTHA DAVIS via Two Bright Lights