How to Make More Money—and Keep More of It with Vanessa Joy
It’s one of the great mysteries. Somehow, no matter how much money we make, there doesn’t seem to be any in the bank, and the majority of us live paycheck to paycheck. Money has a way of slipping through our fingers more quickly than a handful of sand.
As business owners, we see this happening more so than nine-to-fivers because a lot more money comes in and out of our bank accounts than we’re responsible for handling. We collect sales tax, have to save up for income tax, hold money for product fulfillment and much more. We’re stewards of most of the money that’s handed to us, not owners of it. This can be very tricky sometimes, leading a lot of photographers into pretty deep holes they can’t get themselves out of. I’ve known photographers who didn’t know how to handle money, so they couldn’t pay their income tax or sales tax, or print albums for clients, because they already spent the money they technically never had. But I digress….
What we really want to address in this article is how to make more money that is yours, and how to make sure you keep the money that is coming your way instead of watch it disappear. There are really only two ways to make this happen: Earn more or spend less. Seems simple enough, but it’s incredible how hard it can be. Here are some tips for doing both in your business and life.
Most people think that money solves money problems and the way to do that is to make more money. This couldn’t be farther from the truth, which is why you’ll notice I have fewer tips for earning more money than for saving more.
- Do After-Session Sales
Here’s the thing: I hate selling. I mean hate it. I live in New Jersey, which adopts the New York attitude, and we pick up on being sold anything and loathe anyone who is trying to do it. When I first decided to start doing after-session sales, I was petrified. I didn’t think I’d be good at it and I didn’t think it’d work. Guess what? It worked. It worked despite my lack of experience and knowledge on sales because when it comes down to it, just offering products for sale will lead to people buying them. If you don’t offer it, they can’t buy it. My first year of doing after-session sales, mostly in person, led to a $20,000 increase in sales. Not too shabby.
- Offer Packages That Profit
If you feel like you’re not making enough to sustain your business and lifestyle, then it may be time to take a hard look at your packages to make sure you’re making a profit on each of them. Too often I see photographers create packages from thin air and hope that they’ll make money off them. The math behind creating packages can be a bit complicated, but here’s a quick way to figure things out from a wedding photographer’s point of view.
- Figure out how much it costs to run your business and then divide that by how many weddings you shoot per year. Things like insurance, studio space, subscriptions of any kind, etc. We’ll call that number X.
- Figure out how much it costs you to produce a wedding. This includes what you pay your second photographer and assistant, the cost of printing an album, etc. We’ll call this number Y.
- Decide how much you’d like to make per hour and multiply that by 40 since you probably spend about 40 hours working per wedding from initial contact to final product delivery. We’ll call this number Z.
- Add up X, Y and Z, and that’s how much your basic package should cost.
That’s grossly oversimplified, but you get the picture. If you want to simplify it even more, you should be charging roughly three to five times the cost of X + Y. However you figure it out, just make sure you’re getting paid to photograph weddings and not the other way around.
Here’s where the real secrets lie. Americans are known around the world for being materialistic consumers. And you know what? The world is right. We consume and spend more than anyone else, and most of what we buy is complete garbage. Half the time we can’t even remember the things we spent money on when we look at our credit card and bank statements at the end of the month, if we even do that. To top it off, a lot of us just aren’t good at keeping track of our books or finding loopholes in the system, and that causes us to lose money on the back end as well.
- Never Finance Anything. Ever.
Some may disagree with me on this one, but the way I see it is if I buy a new lens for $2,000, I intend on spending $2,000 on it, not $3,000 after interest, late fees and penalties. Before you even think about investing in anything new for your business to begin with, you first have to ask yourself, “Will this purchase make me more money?” If the answer is no, then maybe it’s not a purchase you should be making. Sometimes we get caught up in buying equipment we don’t need or spending on marketing that isn’t working, and if we take a step back from that, we’ll notice we’re not getting the return on investment that we need to justify the purchase. If you can, use cash. Cold, hard, physical cash. As Dave Ramsey suggests, spending cash hurts more than using plastic, and spending money you can’t see will make you spend money differently.
- Track Your Spending
It’s amazing how much you’ll spend on things like coffee each month. Though you may need it to run your business well, seeing the numbers may inspire you to change some expensive habits. Do yourself a favor and categorize your spending for just one month. You’ll be surprised where you throw your money, and, better yet, it’ll make you realize your priorities in life. Like the Bible says, “Where your money goes, there your heart is also.”
Instead, try to tell your money where to go each month instead of it sprouting wings and flying where it pleases. Even if you’re not super strict with budgets, create one anyway so you can at least guide yourself toward good spending habits and have an overall view of your income versus expenses.
- Beat the System
The United States is, unfortunately, not so kind to small business owners. There are, however, some ways we can take advantage of things that do help us not pay as much in taxes every year. Why pay more to the government if we can find ways to keep the money instead?
First, know how tax deductions work in your state and federally. This is where a good accountant comes in. I constantly email my accountant (if you’re in New Jersey, I highly recommend Chris Cowan, at CCowan@cgteam.com) asking whether or not items are tax deductible—work clothes are not, but the dry-cleaning bill for them is, for example. Make sure you’re keeping track of your tax-deductible purchases once you know what they are. It’s one of the easiest ways to lower your tax liability at the end of every year.
Secondly, look into investing. This always sounded scary to me, but if you sit down with a financial adviser, they’ll usually be able to recommend things you can do to start saving money for retirement or college. While doing that, you can take advantage of some investments that will be tax-deferred or benefit you come April in other ways. For some investments, like an SEP IRA, you can actually contribute through March the following tax year and still get a tax break from them for the previous year.
Looking at our finances isn’t the most glamorous thing to do, but it is one of the smartest. Everyone has their own tips and tricks for pinching pennies and stretching a dollar. Check out this video to hear a few of my favorites.