How A Photographer Should Prepare For An Economical Slowdown
I am no Warren Buffet or can I claim myself to be any kind of finance or economic expert. However, my business has survived over 2 asian economic crisis and I predict a third bubble will burst soon. I used to cross my fingers and say "God please no," but after several years as a freelancer/business, I have learned that it's really nothing to be afraid of and actually some good can come from a slowdown or recession.
CHANGES = OPPORTUNITIES
Some of the greatest opportunities I have had was during a recession. Often during a foreseeable slowdown companies will start planning for changes for a more efficient or cost effective method of making money. This is a great opportunity to sell your services to a client that you have been wanting to add into your portfolio.
SPENDING = RISK
No matter how many times I've tried to convince my G.A.S photographer friends (photographers with Gear Acquisition Syndrome), they end up giving-in and buying the latest gadgets or 50mp camera. I have been down this road early in my career and quite frankly it's a mistake most of us go through. Just go through it quickly. The longer you spend in this industry, you will understand that the success of your business has quite frankly nothing to do with your gear. Let me raise an example. For most Real Estate Photographers, you can still probably get away with shooting with a 5D Mark II, 17-40mm Lens, CamRanger (the Camranger a necessity but lets just include that in for the example sake), set of inexpensive aluminium tripod, and a couple cheap Yongnuo flashes and a trigger. If you had purchased these brand new back in 2009, it would have costed you about $6000-$7000 (depending on where you are). It's now 2020 but quite frankly where has several generations of Canon camera upgrades, new lights over the year, and things like carbon fiber tripod replacements or overly expensive gear heads brought to your business?
Sure, purchasing a GFX100 sure does look cool and probably fulfils your inner desire to buy something like that for yourself, but the client doesn't care. I've had times where I had a shitty job and I didn't want to use my expensive camera, so I brought my old trusted 6D Mark I out and the client ended up saying "hey I got one of those for my wife. Wow, I did not know it can take pictures like that. I guess it does matter who takes the photo." Talk about a compliment right? Better yet, what's better than letting a client know it is your style and experience (which is unique and irreplaceable) that they are paying for and not the latest camera or gadget they can easily purchase from Best Buy or Amazon.
It's easy to buy a lot of things thinking that you think you'll need it sometime in the future when the economy is booming. Let's get this simple, buy it when you actually need it for a confirmed job. Better yet, if you can rent, rent. I have heard so many people say "well, renting ain't cheap." True, but buy the time you come to the point where you need to debate wether the rental income is being a burden to your business, it won't really be a burden because you will be more bothered about scheduling your busy work schedule and thinking about all that money coming in. Not to mention with purchasing you gotta deal with depreciation yearly comes tax time (which is a pain in the ass), where with rental you just get a receipt and claim it out right.
Don't ever buy on credit. If you can't afford it, find another solution. For example, if you can't afford a Drone, offer your client something else. Perhaps a video done on a gimbal your buddy is willing to lend you, etc...
The less you buy, the more turnover your company makes. Try to spend on things that can generate income for you. For example I wouldn't mind buying a studio where I can
(1) charge my clients studio rental
(2) charge fellow photographers for studio rental
(3) rent it out to other people for other usage like business talks
(4) rent it out permanently if times are slow and I just need more steady income in general.
But basically in the last 20 years, property is king, not cash. What you don't wanna do is get yourself in a 2-3 year contract during the end of a very strong economy and finding out in 6 months that things drastically change and you are now pay double of what your new neighbour is paying for a studio. Sure some may say, "Well, if you buy there is a chance you pay more than you should 6 months or 1 year down the road." Sure, but rent itself or the fees you get from using the space will if help cover the mortgage, or will at least lessen the burden. In general, as long as you aren't living in the abandoned areas of Detroit and have purchased a studio during the great automative boom in that area, after a couple years, property ownership is always a win win situation.
What if I cannot afford property? Well how about stocks? Let's apply the previous 5D Mark II theory and how one could still maintain an efficient RE photography business in 2020 with the same gear purchased since 2009. Imagine putting all that money you would have put into upgrades into stocks as an investment instead? I am just gonna make an assumption here. Since 2009 an average photographer would have upgraded their cameras every time a new model came out (5D3, 5D4, and now either a 5DsR or even an EOS R, 3-4 generations and assuming you only use one camera and stuck with the basic L lenses) which is about 10-12k. Then there are also lighting gear and gadgets and lets just say for the sake of this example, we use 20k as the sum in total you spend throughout the last ten years on upgrades (actually this is quite a conservative number). Imagine if you had spent 20k on Apple (AAPL) stocks in January 2009. The stock price for Apple was at $90 and since then it has had a 7 to 1 stock split. How much would you have now?
$20000/$90 = 222 shares (January 2009)
222 x 7 x $298.39 (closing price January 8 2020) = $463 698.06
I am not sure what everyone thinks but I could sure use an extra $400K in the bank. Now sure not everyone is so smart that they decide to spend 20k on Apple in 2009. However, being somewhat active in stocks, I can assure you that buying Apple in 2009 was not a risky investment and there was a lot of confidence in the stock at that time. Even if you had not purchased Apple stocks, having purchased other stocks likes facebook or Amazon or Google down the road you would sure have had double or even tripled your investment at least.
A photography business is like any other business. You need to reinvest the money you make. Just depending on your service income is not enough, especially during these times of high inflation.
*Don't buy anything you can't afford
*Take care of your gear (yes it can last longer than you think)
*Don't make unnecessary upgrades
*Don't rent a permanent studio and if you can affor to buy, rent it out and make money from it
*Reinvest at least half the money you make
The only tech related upgrade I see inevitable is basically your computer and hard drives. This is because as the workload increases, having a computer capable of faster processing is quite useful and beneficial to your business. As for hard drives, well you just need more and more as time comes. Even with this said though, I don't really see how an average RE photographer needing a new Apple laptop/desktop more than one in every five years.
YOUR BEAUTIFUL PHOTOS AREN'T WHAT'S SELLING
Believe it or not, your stunning photos is not what is selling your clients. It's your service that is helping your clients make money. Don't give your real estate agent work that should be published in Architectural Digest, when all they really need are clear and precise photos of a home. It doesn't matter if you are giving more than what they pay for or that you think it looks better. We as consumers just want to buy what we need. For example, if someone walked into a McDonald's asking for a Cheeseburger, they would get pretty frustrated if you delivered them a Peter Luger's quality steak. There is a lot of issues when it comes to selling a product or service far from it's appropriate selling price or that you are selling a product a service that was not intended or needed for a particular client/market. It just doesn't work. Try selling a 5th grader a book about better personal finance. Sure somewhere down the road they will thank you for it, but not for another 10-20 years. I have met several struggling photographers and all of them have the same problem. The client wants a simple food shot, nice and clean description of their food and they end up trying to give them something that is Olgivy Advertising grade. Sure, you will come across a client that thinks it's a bargain for what they are paying, but majority will think you are spending way too much time of such a photo and be reluctant to call you again because they find you way too slow or worst yet they just feel you don't get them or the brand.
This is not to say that you won't be that artsy photographer that can also sell a photo for several thousands. But until that day comes your clients won't be paying you $50/$60 for a photo if they wanted Cartier Bresson, or better yet hired you from craigslist.
In a slow down, more clients are looking for efficiency and effective means less than ways to wow their client and make a bigger buck. For them to be efficient and effective means you have to be efficient and effective.
*In Short, a successful photographer, understands his clients and understands the market
IT'S A BUSINESS, NOT ART
Last years, I was so sad to hear two of my fellow photographer friends calling it quits and decided to close shop. If they are reading, I still gotta say it as I see it. It's easy to view ourselves as artists but to majority of our clients we are just a tool for marketing. During a slowdown you will see less precious art being sold because prices either cannot hold or with that said, prices gets pushed down drastically and it's time for bargain shopping. For those egotistical photographers, tough times can be a big hit on your business. The earlier you understand you are not creating art and that it only matters to those that are willing to pay, the earlier you can overcome a recession. You want to be an artist, don't get a business registration and work without the intent to sell. If you plan to price your work, it's a business.
WORD OF MOUTH IS EVERYTHING
You will come across people telling you that you should advertise with this and that but I can tell you the best way to survive especially during a slowdown is having a very good word of mouth reputation. It's free, and all you have to do is show your client you are a sincere responsible vendor that always gets the job done. These traits can even help your clients justify why your rates have not been reduced during a recession. People will pay a premium for conveniences but won't bother with inconveniences even at a discount. It takes time to build a reputation but it can also be destroyed by one client. So even if a working relationship turns bad, don't make it worse than it has to. The world is round and one day you will stumble upon that jackass again and worst of all it may be a job that you cannot do without. Don't burn bridges.
*Rule of thumb if you want a client to stop calling. Don't tell them off. Just raise prices and be polite doing it.
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