In wrapping up my 10 tips series, today’s 10 tips are all about how to make money. Please note that these tips are just based on my humble opinion and past experience:
1. Number one on the list: In order to run a successful business, you need to make at least 40 to 50% profit. For example: your time + materials, etc. is $50. You need to charge $100. This is your goal. Even if your profit is 40% you are doing well, but your goal is still 50%.
2. Be extremely careful about your overhead expenses. Simple rule. For example: Let’s say all your expenses–salary, rent, insurance, everything–are $5000 a month. You need to have at least a $15,000 job or jobs to cover that month. This might be the only way to make a profit after taxes, materials, etc.
3. Making money is also an art. As I did for many years, do not hide behind the excuse, “I am an artist, I cannot be that concerned with profit.” Become an expert in the exciting art form of making a profit.
4. I have no problem investing in my company by giving my time and energy or doing things cheaper if I think it will benefit us in the long run. But PLEASE be very careful with this practice. I have heard people say way too many times, “If you do it for me cheaper, you’ll get my friends as clients. ” This hardly ever happens and if it does, their friends want it cheaper as well. Use good judgment with this one.
5. Clients are folks like us. In order for them to pay for something, they need to first want it and second understand what they are paying for. It’s your job to make this happen. I rely heavily on visual sales. If they can see it, they will pay for it more readily.
6. Analyze each and every job from a financial point of view. What could you have done for less time or money? This is the only way to improve your profit. Gather all the players and discuss a better way.
7. Be realistic with your financial goals. You never want to price yourself out of any market. If, after a job, instead of your desired 50% you make 70% or more, you are in danger of pricing yourself out of your market. Yes folks, this is known as greed.
8. The opposite is also true. If you continue to give away your product by lowering your prices, you are in danger of going out of business. This is always a challenging balance. One that can only be confronted by understanding your true value.
9. Never and I mean EVER, give a price to your clients before completely understanding what you are committing to. Regardless of whether a potential client is pressing you to give them a price on the spot, if you are not sure, tell them you will get back to them. And, of course, do this sooner rather than later.
10. Last but not least, yes folks, at times you are going to have to make the difficult choice of turning down a job, if you will not be making a profit.
How was your year? What did you improve from prior years? What is your number one goal for your business finances in 2011?
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George Bernard Shaw once said: “You see things and say, ‘Why?’ But I dream things that never were and say, ‘Why not?’” That quote embodies how Preston Bailey approaches every event.
Aleah + Nick Valley
December 16, 2010
As always, this is a fantastic post. We’ve experienced #9 before; not knowing the entire picture or scope of a contract and we’ve learned lessons. Really knowing what you’re getting into with a client and knowing when to decline a job are so important financially and for your well-being.
Thank you for the great insight!
Alexander Tulyakov (Floral designer)
December 16, 2010
Thanx, Preston.
It’s very important to know this rules…
Kevin Okeith
December 16, 2010
Thank you Preston, this is excellent and one of the few blogs I always enjoy. I love the spirit of a winner in life, be blessed!
Haute Chocolate
December 16, 2010
For this article Preston – as all of the other ones- bless you! lol
Marine
December 16, 2010
A very inspiring article! Thank you for giving a ‘straight-to-the-point’ list. I’ve printed it out and will make sure I revert back to it from time to time.
Dianna Shitanishi
December 16, 2010
Thank you for a great post! I especially like #7, as I am firm believer and fair and reasonable pricing for the amount of time we devote to our clients’ event and the quality service they will receive. Can’t wait to see you at Event Solutions next year!
Nishaka
December 16, 2010
Great blog. I am continuing to understand the full details of a project before giving a estimate on the job is very critical for me. I have definitely experienced in the past a few events that were not profitable and vowed to not do that again. I also do not want to price myself out of market, so it is definitely a balancing act.
Thanks again for the tips!
Nishaka
Jane Shauck/IRIS Photography
December 17, 2010
I’ve really enjoyed reading your posts…with a biz background coming into a creative field, I’ve noticed a lot of artists can benefit from successful creative companies giving this kind of advice…and I agree that “creating” a business is an art in itself that can be enjoyed. Thanks! Jane PS – Love the card tree!
Catina
December 17, 2010
These tips are great. As a person looking to get into the business of event design, I will remember all of tips because once I start I plan on being around for years to come. These tips will surely help with that goal.
Michelle
December 17, 2010
Thanks for the “10 Tips” series. Do you have any suggestions for setting a rate for services/time? It’s easy to determine how to make a profit on the materials. But a challenge to come up with a rate for time/creativity.
wendy g
December 18, 2010
This is priceless, thanks! I’ve violated a few of these in the past and I’m now conquering #3. I’m actually starting to enjoy the art and science of running a successful business. Hard work; many tasks; but so exhilarating! Business has started to become almost as much fun for me as photographing a wedding. This is a huge change.