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.
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.
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. (Full Disclosure: I make a commission through this link.)
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.
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.
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.