Why I Closed My Service Business to Start an Internet-Based Business
This is a guest post from Jackie Beck, an entrepreneur who started her first “business” in the 2nd grade. Jackie writes about learning to love your financial life and reaching your goals at MoneyCrush.
A few years ago I started a wedding photography business. It felt like a natural thing to pursue — I loved photographing people, loved weddings, and wanted to be my own boss. It seemed to have the potential to morph into a full time business that would free me from the 9 to 5.
So for a little more than 2 years, I had a wedding photography business on the side while I worked a full time job. Here’s why I closed the business, and how I decided that an internet-based business was everything I wanted instead.
The Facts
In some respects wedding photography was everything I had expected: fun, creative, and exhausting. But I quickly realized that the only part of it that I actually enjoyed was shooting the photos. That was the easy part.
The hard parts?
Getting customers and making money.
I barely shot any weddings. The ones I did shoot were nice, but there just weren’t very many of them. For 2006, my gross receipts were $16,942. After expenses and costs of goods sold (wedding albums and prints), my profit was $3,108.
That profit of $3,108 was my entire pre-tax payfrom the business. I wasn’t taking a salary, despite working an average of 12-18 hours shooting each wedding, and spending 30-40 hours color-correcting photos and designing an album after each wedding. My husband helped me out too at the weddings themselves, so there was also his time to consider.
In addition to those hours, I spent a significant amount of time meeting with potential and existing clients, participating in bridal shows, following up on leads, creating sample albums to display at the bridal shows, filling out sales tax forms, picking up albums from UPS, getting prints made, taking continuing education classes, attending association events, updating the web site I’d created for the business, etc.
I figured it up one day and discovered that I was making less than $3 an hour. I’d give you an exact figure here, but I was so depressed at the number that I blocked it out.
The next year was even worse. My gross receipts for 2007 were $6,120. My before-tax profit for 2007 was $234. (No, there isn’t a zero missing.) I spent part of 2007 winding down the business, and closed it in 2008.
Lack of Customers
I had no idea just how hard getting customers was going to be for me. Naively, I thought people would look at my photos, like them, and hire me. What really happened though was that people would look at my photos, like them, meet with me, and…not hire me.
I was not a good salesperson, probably due to the fact that I had social anxiety. Thankfully, I got treated and am now completely over it. But trying to run a business that is dependent on a constant stream of new clients when you’re afraid to make phone calls or talk to people you don’t know was hard. It was also a bit off-putting for the potential clients, because I was a nervous wreck. The ones who hired me probably just focused on my photos.
Plenty of Expenses
There was also the matter of overhead. Luckily, I didn’t even consider renting out a space to meet clients in. I was bootstrapping the business, so I met clients at our home and shot bridal portraits, engagement photos, and the wedding photos on location. But expenses were still extremely high. Advertising is key when you’re just getting started in that kind of business, and it’s not cheap. There are ads in bridal magazines, mailers, and bridal shows to pay for, at the bare minimum. Advertising is especially important when you are in a saturated market like I was. I also used Google Adwords, submitted my business to every directory I could think of, and optimized my web site.
Other expenses included web hosting, my cell phone, international calls & shipping costs (one of the album companies was in Italy), errors & omissions insurance, dues to professional organizations, the prints and albums themselves, equipment rentals, a new higher-resolution camera, software, etc.
Misconceptions
The worst part for me (other than the ridiculously low pay and the lack of clients) was that people have this idea that wedding photography is an easy job, and that you get paid a small fortune for just a few hours of work. They couldn’t be more wrong. It’s physically exhausting work, takes long hours, and you don’t make a fortune unless you are one of the top people in the world.
You CAN make a decent living, but you have to really love what you’re doing and be very good at getting clients. One or the other is not enough. You also need to outsource parts of the business, or become much faster than I was at things like creating albums.
Even then, you’re committed to a schedule that is pretty much set in stone. After all, people aren’t usually flexible about the dates and times of their weddings. This means things like taking a vacation must be planned out anywhere from 6 months to a year in advance — and every time you’re gone, you’re potentially losing money.
Coming to My Senses
Around the same time I was getting my wedding photography business off the ground, I started a blog for fun. I wanted to get focused on my finances and practice writing something every single day, and I thought a personal finance blog would accomplish both goals.
A funny thing happened with that blog. People started contacting me out of the blue and buying advertising. I made about $3,000 from blogging in 2006 without even trying to make money. Let me repeat that: I literally did not try to make money with the blog at all. The only costs I had for blogging were the domain name and hosting. (Less than $80 total for the entire year.)
So, let’s see…I could work insane hours and have a ridiculous schedule for about $3,000 before taxes, or I could spend a little time each day writing an article on a money-related topic and earn that same $3,000.
What would you do?
Yeah, it was a no-brainer. Freedom + money + helping others + improving my own personal finances + plus having a life won hands down.
I’ve seen the light, and internet-based businesses are it.
The Present
Since then, in addition to continuing to blog, I’ve designed a debt snowball app called Pay Off Debt for the iPhone and Android. I did some of the work on the app myself (writing the spec, creating some graphics & testing the app) and paid to have the programming done.
For the first time, the money that arrived (and stayed!) in my bank account last month was more than the take-home pay from my job. Admittedly, the take-home pay from my job is very low because I have so much taxes and retirement taken out, but this is absolutely a step in the right direction. I’m excited about the future, because I believe the rewards will increase exponentially – especially now that I’m actually putting in the time to work at making money with an internet-based business.
It’s a toss up as to what my favorite thing is about internet-based business. I’m not sure whether it’s waking up and seeing money just appear in my account, being able to work from ANYWHERE there’s an internet connection, or interacting with readers, customers and other entrepreneurs. I guess I don’t have to pick a favorite.
The Takeaway
What can you learn from my experience? No matter what type of business you may have or be interested in, it’s critical to do your homework. Get a good idea of exactly what will be required to be successful in the business, and make sure that you have (or can get or pay others for) the necessary skills to make that happen. Don’t let excitement and a desire to make things work blind you to clear warning signs that the business might not be right for you.
Analyze how the business will fit into your lifestyle. Whether or not you’re into “lifestyle design” a la the Four Hour Work Week, you still have a life, and it should be the style of life that suits you. Lifestyle design doesn’t have to mean planning mini-retirements and learning foreign languages. It can mean having the freedom to spend time with your family or to do other things that you enjoy on a regular basis. Think about how your business will impact your life. (If you love to travel on a whim, don’t start a business that requires you to have a schedule that’s set in stone.)
Pay attention to the numbers. Track your expenses and your income. It might be nice to have $2700 or $3500 pay days, but if you’re constantly paying a steady stream of smaller expenses out at the same time, you might not actually be making any money. (Or worse, you might be losing money). Keeping track of the totals on a regular (and frequent) basis will help to avoid that. Tracking and analyzing any other relevant metrics is important too. Make sure to charge enough for your time and effort.
Since your time is valuable, fail fast. I believe that most entrepreneurs are serial entrepreneurs for two reasons: our brains are constantly coming up with new ideas, and not all of the ideas are workable. In fact, many of them are not. Focus on one idea at a time. Persist in the idea you choose to implement long enough to really give it a chance to work, but move on to the next thing if it becomes apparent that they aren’t.
Not every business will be a success, but you can learn something from each one. Analyze what worked and what didn’t work, and use that knowledge to improve the next one.
The ones that are successful will be worth it.
I’d like to thank Jackie once again for sharing her valuable and motivational story, and I encourage you to visit her website, MoneyCrush, for more about loving your financial life and reaching your goals.
Posted on : February 22nd, 2010
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60 Comments (Click Here to Leave a Comment Below)
Great post Jakie, so honest and the info is realy easy to follow, i sometimes have trouble with big words, lol.
“Fail Fast” great advise.
Regards
Tammy
Thanks, glad you liked it.
Hey Jackie,
Thanks for sharing your real life experiences. Most of the people will share their successful stories but the good one will also share their failures or mistakes they make from the past or during their entrepreneur journey.
Wish that your new business ventures will blossom.
Cheers
Thanks, I have plenty of mistakes to share. (But at least that means lots of learning experiences.)
Great Post Jackie.
It’s amazing how much can be spent starting a new business. Tracking expenses is critical for keeping you on track but also knowing when enough is enough and cutting your losses.
Thank you for sharing Jackie.
Best.
Marty, you aren’t kidding about how much can be spent. It’s easy to let expenses get out of control if they arent carefully monitored and analyzed. On the other hand, it’s also possible to really keep them to a minimum with some careful planning and creativity.
Thank you for sharing your entrepreneurial journey. I’m currently making the transition from offline to online myself and stories like yours are very helpful. It’s easy to get caught up in the dream, letting valuable time pass and even end up working for so much less than one might realize – online or offline. Your advice to watch the numbers is well founded and timely for me. And much appreciated!
P.S.
You’re the first I’ve heard say that their online advertising came to them out of the blue. I wonder if that still happens nowadays.
I’m glad you found it helpful. How has the transition been going for you so far? I think that the unsolicited advertising offers still are out there, but it probably depends on the type of blog, etc.
Amazing story Jackie!
While I’m not one who believes in only online income, I do believe in owning a passive income source and it seems like you’ve got at least one of those going on.
I consider it more residual income, but yes I’m very happy to have income from the iPhone/Android app. I hope to do more apps in the future too, but am trying to focus on one thing at a time right now. I do think multiple streams of income are critical though — and the more passive, the better!
That is one good article!
Glad you liked it.
Jackie,
Thanks for sharing your story with us. I always did have that outsider’s view that wedding photographers make “some nice money”.
That’s why it’s important to do some research, maybe trail someone for a week or two and see what it’s all about.
I visit Jackie’s blog a couple of times a week and she has great advice there. Great job on the post!
Thanks for the endorsement, Moon. And that’s a pretty common view about wedding photography, so you’re not alone in thinking that.
Hi Jackie,
My wife is actually starting a Wedding Photography business right now also. We have been blessed so far in that we have already booked three wedding and have been able to fund our business with the fees from those weddings. However, like you mentioned, no net income and the pay per hour worked is pretty humbling.
I keep trying to convince her that we need to automate the income more than a photography business, but we’ll see how that goes.
Best of luck with the PF blog!
DJ, good luck to your wife. It sounds like she will have no problem with the sales aspect, so that’s a big plus. I’d encourage her to make sure she is charging enough for her services — maybe check around to see what the long-established folks in the area are charging if she has not already.
I’ve been following this blog since its start and find it interesting that there is a guest post today about my business!
I’ve got a small portrait photography business and I also have a few small weddings booked for this spring. My goal for the business is to make a little extra income for my family (kid’s college fund?) but be able to work from home and do what I love. You are right, people think we make SO much money, but truthfully it is a lot of work! I struggle with pricing…my prices are really REALLY low right now as I am seeking clients and building my portfolio. I’m not sure how it will go raising prices along the way, we shall see. Anyways, your post was very insightful and very important to think about. Passive income is awesome and being a portrait/wedding photographer is definitely not passive income! Good luck to you!!
Sarah, making extra income is always nice. If it were me (and it was me) I would not undercharge (assuming that you do have some nice examples in your portfolio already). I’ve found that typically when you price things below their value people look at it from the mindset of “getting the cheapest deal”, but when you price them for what they are actually worth, people see the value and are willing to pay for it.
I definitely agree with Jackie’s advice here. If you are starting a small business, do not under charge for your services. Be discriminating about the clients you take on. People will pay for value. It is your job to give them the highest value, not the cheapest price.
Thank you both! That’s advice I’ve heard elsewhere as well and I take it seriously. My plan for the 2010 spring/summer season is to keep one of my packages ‘cheap’ (my “loss leader”?) and price my other packages more fairly.
Hey Jackie,
Thanks for the story it’s very inspiring to read what you have been through and how you have emerged on top. Well done! I too have struggled to make a profit running my own part time businesses (as well as a 9-5 job) so I can relate to what you are saying. I am now in the process of building my first website and internet business which should be launched in March and I can say it’s very different from conventional offline businesses. Jules
Jules, good luck with your internet business. It can definitely be a struggle to be working full time and having a business on the side, but the rewards are worth it.
Hi Jackie,
How are you? Excellent story, I like your enthusiasm and it seems that your well on your way in escaping the 9-5. I would like to ask how was the process in developing your Iphone application?
Cheers,
-Brian
Brian, the process was pretty straightforward, especially since I didn’t do the programming itself. I basically wrote up the spec (which included the functional requirements, design information, and the way the users would interact with the app) and then hired a programmer. They needed various formulas from me, so I provided those as well. If your app doesn’t involve algebra, that wouldn’t be necessary. They provided the builds and I tested them. I had to sign up as a developer with Apple, and open a business account too. If you have other questions just let me know.
This is great post. Thank you for sharing your story. I think many people have the dream of going into an offline business and do not realize how much of a salesperson that you really need to be.
I was in sales for over 10 years and still prefer the online business method. I am building mine slowly as my daughter sleeps at night. It is great to read success stories like yours.
Yeah sales is a huge part of wedding photography, unfortunately. I guess I didn’t think that it would be because I assumed (and it’s always a mistake to assume anything) that people would choose a photographer based on the same factors I would have.
Jackie,
I’m in the same boat – in terms of doing freelance work that has a real “cap” on how much you can make going solo. Custom work (photography, web design, etc.) is bad becasue you can only charge for it once. Making an “off-the-shelf” product than can be sold endlessly are where the real returns are.
I wrote about this a little when I compared many of our skills to commodities: http://www.betterlearningbetterearning.com/posts/job-market-trends/80-commodity-skills.html
Hm, I think you can make quite a bit doing custom work, depending on what you are doing. The only problem with that is it’s not repeatable. You have to keep working to keep earning. I agree there is a lot more potential in repeat sales.
My BlackBerry is jealous!
Love your guest post! How hard was it to get a worthy programmer?
I can’t believe I didn’t pounce on an idea – a kindle of sorts but as a recipe reader – for us cooks… I saw exactly what I wanted in my Cooking Light magazine. Potential opportunity chucked… perhaps I should do a prototype or make on that fulfills a missing need. Hmmmm…. anyway, rambling.
Very cool app. Curious? How do you make money with your app?
It was pretty easy to get the programmer — I just asked for recommendations. I would start by seeing if there are already apps that do what you want. If there are, you can read comments on them to see what people like or dislike about them and if there aren’t, you can do further research. My app sells for $2.99 so I make 70% of the sales. (Apple and Google each take a 30% share.)
We had a slightly different experience with our service business (we earned in the low six figures) but sold the company because of the stress of managing sixteen employees. “Quality of life” is a phrase that gets thrown around quite a bit these days, but for us it was totally worth it. We aren’t earning as much as we used to, yet, but our days are certainly less stressful than they used to be.
Will that’s great that you were able to earn a nice living at least, but yes doing so with so much stress has got to cut down on quality of life. Hope your new venture turns out to be both stress-free and successful!
Great post. I think through writing about personal experiences, we really can share more information to our readers. My relatives are actually thinking of starting a similar business. I will definitely ask them to take a look at this post.
Don’t get me wrong, people can make a good living doing wedding photography. But there is a lot more to it than meets the eye. I’d recommend that they go to a few Professional Photographers of America meetings and spend a few hours discussing the pros and cons with photographers in the area who have been around for 5+ years.
Jackie,
Thanks for the great post. I have been doing photography for a little bit and I know how exhausting it is to do the sales and the post photography work. I have struggled with anxiety and depression for a long time and find it hard to get the sales part done. I hope that I can learn to do what you have done. Thanks again!
Wendy, maybe you could get a salesperson to help you with the process? Also I recommend getting treatment for the anxiety and depression if you’re not doing that already. Getting treated for social anxiety changed my life. (Although I still would not go back to wedding photography — I did enjoy it but it’s not the kind of lifestyle I hope to have.)
Thanks for sharing. Like many other readers, I am thinking about transiting to an online business while I am still on my 9-to-5 full-tome work so that I can spend more quality time w/ two young kids. I am impressed that you move yourself to create an IPhone app w/o programming background. I will definite go to your blog to read more about you..
How has the transition been going for you so far? I think a lot of people do start online businesses in order to spend more time with their kids. As far as creating the app without a programming background goes, my first instinct was to learn to program. I’m very happy that I nipped that idea in the bud, because not only would it have delayed things by a very long time, I just plain didn’t have time! I think it’s good to focus on what you’re good at. (Which isn’t programming for me…)
Very Cool article, Thanks for putting it up on your blog Pat, I enjoyed reading it.
It’s crazy what you can achieve on the internet with relative ease.
Glad you liked the article. I have to second your thanks to Pat for putting it up
Thanks for sharing your story and what you’ve learnt .
Thanks for reading
An interesting read Jackie, i’m off to check out your blog
Thanks, glad you found it interesting.
This is exactly what people need to hear. They need to understand that it is perfectly fine to fail – provided you pick yourself up, dust yourself off and get back at it with a new strategy and a plan that uses the knowledge you picked up from your mistakes and successes.
I’ve gone through two collapses in business ventures with partners who didn’t pull their weight. I’ve taken what I’ve learned from both of those failures and know what NOT to do in the future.
We can all be successful – everyone just needs someone (or something) to kick them in the ass and get going. Birds do it by forcing the young to fly on their own. When you skydive, you get pushed out of a plane. Swimming = jump in head first and get underwater.
Thanks for sharing Jackie! Very enlightening.
I completely agree. We can all be successful, we just need to get started and keep going!
(Love your idrawdigital site btw)
Really nice story. As Pat say story motivates other. Yours story had motivated me and i had digg and stumble your article.
Warm Regards,
Azad Shaikh (The Internet Geek)
Thanks, I’m glad it motivated you!
Excellent article! Thank you! You are inspiring all bloggers for sure. I used to shoot weddings as an assistant photographer and one thing about wedding photography is that it’s everything BUT passive income. It’s fun but a load of work. You work every minute you get paid for.
I’m curious, is most of your income from ads on your blog or from IPhone app?
Thanks
Christian
It’s kind of varied from month to month, anywhere from 1/3 to 1/2 either way.
Thanks so much for sharing your story Jackie. And the advice you gave is very worthwhile. It goes without saying that beginners can get easily disoriented while feeling their way around the online business world, so it’s always a gift to have people share their experiences. It gives me hope that I will be successful in the future. Thanks again!
Thanks, and good luck in your endeavors!
I like the insight of the process you went through to an online based business.
I’m going to pick up that app for my lady, she’ll love it.
Thanks for writing!
Bobby, yeah it was a process. Let me know how she likes the app!
Hi Jackie,
This post taps directly into what I am going through at the moment. I have a concierge business, but a business isn’t really a business unless it is making money. Getting customers that are willing to spend money on luxury services is next to impossible in this current economic environment. I have had to come to the realization that my time, money and efforts need to be more focused on selling my skills and talents online rather than running around town doing errands for a hand full of clients.
Ms. Freeman, where are you looking for your current customers at? Maybe there are people spending more elsewhere? But I agree, focusing your skills and talents where you can benefit from them the most sounds like a good idea.
Hi Jackie,
Great post. Interested to see who you used to program your iPhone/Android app for you?
Great post, Jackie. I spent 10 years learning many of the lessons you outlined here. I will teach my children that the best ways to work are flexible, portable, and scalable!
A couple of years ago, I closed my service businesses to focus online – you bring up some great points, and I wish my ex-wife (who is a wedding photographer as a side job) would be open to this…
Actually, i blame the wedding photography partly for the failure of the marriage – she worked every weekend, 40 weeks a year (from March-October) so I never got to spend time with her on the weekend. Evenings, she spent sorting albums, etc.
Anyway, continued success to you, and I hope you continue your conscious growth!