Life is a classroom that offers us the tools we need to create our own beautiful outcome.
We get to be the designer of our life, including both our home and work life.
I resonate with what New York Times best-selling author Michael Hyatt says about that:
I used to determine my life, and that put me in the hospital with anxiety issues and a near heart attack. I didn’t want that, so I did the opposite or drifted; that got me nowhere but disappointed with the outcome. I then learned to design my life, and I have never been more fulfilled.
I’ve found that creating an annual business plan provides a significant tool for designing my life. It starts with my concept of what I want and need as a woman, a wife, a mother, and of things that fill me up, like sunsets, cooking for my family, and hiking. The more filled up I am, the happier I am, which spills over to everyone around me.
From an artistic standpoint, creating a business plan is a lot like creating a beautiful picture from an image you envision; both require you to decide which tools you’ll need to achieve the desired outcome.
The first step in your business plan can be as simple as identifying your annual goals for the sales you desire and the limits of the necessary expenses for achieving it. If you find yourself struggling to make sense of the following tools, principles and formulas, believe me: 1) you are hardly alone; and 2) you can nonetheless use them immediately to your full advantage.
Honestly, take it on faith!
Setting sales goals is something like choosing the scenery for a picture. You get to decide what kinds of sessions you want to photograph, how much income you’d like to make from each session, and how many sessions you’d like to capture that year. In a business plan, the expense budget is something like the exact tools you’d use to capture scenery.
Here is a HYPOTHETICAL EXAMPLE that might help make it more realistic.
Let’s say Jennifer has a home-based photography studio and she decides she can contribute 24 hours a week to her portrait business. She knows an average session requires 8 hours of her time, from the initial contact with the client to the pickup of the finished order. She knows she needs to spend about 8 hours a week of those 24 doing things like bookkeeping, marketing, management and so on. That leaves 16 hours for the sessions and the work that goes into creating the finished product, so Jennifer can photograph two sessions a week, or about 100 sessions a year.
As a salary, she would like to take home $50,000 this year. For a home-based photography business model, the industry standards researched by Professional Photographers of America say that if she is profitably priced and properly managing her expenses, she can expect her salary to be 45 percent of her gross sales. For her target take-home salary, she multiplies $50,000 by 2.25 to find that she needs to generate $112,500 in gross sales to achieve it.
DESIRED SALARY
X 2.25
NEEDED GROSS SALES
NOW SHE HAS THREE GOAL NUMBERS TO WORK WITH: sessions = 100; salary = $50,000; gross sales = $112,000. She can use those last two figures to find her average sales goal for each session (some sessions will probably generate more, some a bit less). So $112,000 divided by 100 equals $1,120 per session.
Needed gross sales
÷ Number of sessions for the year
SALES AVERAGE PER SESSION
Jennifer especially loves doing family and children sessions. A family session should produce a higher sale than a child/children session, so her sales goals for the year could look like this:
40 CHILDREN SESSIONS x $850 = $34,000
60 FAMILY SESSIONS x $1,310 = $78,600
TOTAL GROSS SALES = $112,600
The last part of Jennifer’s business plan is the expense side. The most important components on the expense side are her cost of sales (COS): the total cost of what is required to produce the products she sells.
For example, her own costs for an 8×10 print from her lab is made up of the chosen medium (paper, canvas, wood, etc.), finishing spray, mounting, shipping from the lab to her, and her own packaging costs; there will also be costs for retouching/corrections and/or enhancements, whether Jennifer does it herself or outsources it. In this business model, for Jennifer to achieve her goals, her COS total for all products sold per session must be no greater than 25 percent of the amount she charges the client. There’s more to individual product COS and pricing, but the important part is the total 25 percent COS per session.
Of course, there are other expenses to account for in operating a business, called general expenses, including employee expenses, insurance, rent, utilities, advertising, accounting, auto, education, postage, telephone and equipment. For Jennifer’s home-based business model, these cannot exceed 30 percent of her total sales. (You might need to apply a bit of faith here, at least for now!) If your business were a whole pie (100 percent), and so far you have cut a slice for COS (25 percent), and a slice for general expenses (30 percent), that leaves a little less than half the pie (45 percent). Now you cut a slice the size of your salary ($50,000); whatever remains is a lovely little slice called net profit.
Your own specific goals, preferences and expenses will be different from Jennifer’s hypothetical ones, but slice your “pie” into the same portions as hers in your own business plan.
What would it look like if you could design your life? What steps do you need to take this year to stride toward your vision?
