Recorded: Welcome to The ReWork with Allison Tyler Jones, a podcast dedicated to inspiring portrait photographers to uniquely brand, profitably price, and confidently sell their best work. Allison has been doing just that for the last 15 years, and she’s proven that it’s possible to create unforgettable art and run a portrait business that supports your family and your dreams. All it takes is a little rework. Episodes will include interviews with experts from in and outside of the photo industry, mini-workshops and behind-the-scenes secrets that Allison uses in her portrait studio every single day. She will challenge your thinking and inspire your confidence to create a profitable, sustainable portrait business you love through continually refining and reworking your business. Let’s do The ReWork.
Allison Tyler Jones: Hi, friends, and welcome back to The ReWork. Now, today’s podcast, I don’t want you to get scared, because it does involve math and talking about money, a little bit about pricing, a little bit about profit, profit and loss, et cetera. Today’s guest is Venus Michael, the author of Profit First for Photographers. And she has taken Mike Michalowicz’s book, Profit First, and the concepts taught in that book.
Allison Tyler Jones: And she’s also a friend of Mike Michalowicz and she also is a Profit First Professional, in accounting and all those good things, she has amazing expertise. And she has joined us to help us overcome the big mistakes that photographers make in taking money from our clients and just handing it straight to our vendors without any of that money sticking in our pockets.
Allison Tyler Jones: She talks about some of the biggest obstacles to profitability for photographers, and where to begin to take more control of your money and be able to really build wealth in your business. And how you do that without just wanting to go take a nap. Because we’re creatives, and so the spreadsheet thing could be really hard and we sometimes don’t want to deal with it.
Allison Tyler Jones: So we talk all about all of those things and I think this will be really valuable to you. So join me for my conversation with Venus Michael, author of Profit First for Photographers. Let’s do it.
Allison Tyler Jones: Okay. Well, I am really excited to have Venus Michael here today with us and to talk about one of my favorite topics. But we have not planned anything that we’re going to talk about, we’re just doing this, so thank you for being here.
Venus Michael: Yes, let’s do it.
Allison Tyler Jones: Okay, so tell our listeners a little bit. I’ve read your bio and have your book and everything. But give somebody that doesn’t know you, give us the rundown on who you are and what you’re doing.
Venus Michael: So my name is Venus Michael, I’m in central Texas, and I decided to do the crazy thing of opening my own business. In 2004, I took a skill I had and became a full-charge bookkeeper.
Allison Tyler Jones: Okay.
Venus Michael: In 2017 is when I started working with my first photographer. I absolutely fell in love with the industry. Photographers are so much fun to work with, their challenges keep me engaged, I don’t get bored. And after working with her, I started looking for more photographers to work with, and just naturally went into that being my niche.
Venus Michael: And my clients would always tell me that I needed to write a book, and I was like, “No, I don’t.” And they’re like, “Yes, you do.” And one photographer, she finally told me, she’s like, “Look, you have all this knowledge in your head and you can only talk to so many people during a day, and there’s all these other photographers who need your knowledge. You need to write a book.” So that’s when I bit the bullet and wrote the book.
Allison Tyler Jones: So the book is Profit First for Photographers, right? And it’s what you co-authored with Mike Michalowicz.
Venus Michael: So it’s not co-authored.
Allison Tyler Jones: Okay.
Venus Michael: It is a derivative of Mike Michalowicz’s book, Profit First. He did write the foreword, he is a friend of mine, a legit friend. He’s a great guy. I just adore him. But the book that he wrote, when he wrote his book, he was talking to the general public.
Allison Tyler Jones: Sure.
Venus Michael: He wasn’t talking to specific industries with their challenges that they face. And so when that was noticed by the Profit First Professionals, we went to him and we were like, “Hey, well, this industry does it a little different. This industry does a it little different, so birth the derivative books.”
Venus Michael: What I like to tell people about his book is number one read it, it’s amazing. And he’s super funny. He’s really funny in person too, that’s legitly who he is. But also, his book is the foundation, so it’s the solid rock base that we’re going to build your house on. So we take his foundation and then we build on it.
Venus Michael: And one thing, for instance, in Mike’s book, he suggests that the way you work the program is five bank accounts. In my book, I suggest we take his five and add three. So that’s what I mean by how we’re taking his foundation and we’re building on it to make it-
Allison Tyler Jones: Customizing it for photographers. Yeah. Okay, I love that. So I am a huge fan of Profit First. I have the book, I had it for a lot longer, and then it took me a while to read it. Because as a photographer, I only want to do math as related to lighting ratios, and lens length and all that kind of thing.
Allison Tyler Jones: I don’t really want to do it about money because like most people, I like to stick my head in the sand and be an ostrich and not have that happen. So I read it, but I agree with you, and I love, I have all of Mike’s books. I love all of his stuff, but it was very general and I kept coming up against like, “How do I apply this exactly for my business?”
Allison Tyler Jones: So when I saw you and I saw your book, I was like, “Finally, somebody basically went and read it and then said, ‘Okay, here’s how you apply it specifically to photographers.'” So with that, what I would love, can I just ask you some questions?
Venus Michael: Of course.
Allison Tyler Jones: I love it. Okay. So what do you see, now that you’ve been working with photographers for years now, what are the biggest mistakes that photographers in particular are making in their businesses when it comes to money, profit? Yeah, I’m going to turn to a new, empty page right here, I got my notebook. Okay, go.
Venus Michael: Okay. Mistake number one, if they’re a portrait photographer of any type, they tend to do what we call “Sparkly Dress Syndrome”, and they buy way too many dresses. And maybe somebody that you photograph wears that dress once, maybe not. Now, I’m not saying you don’t have anything in your arsenal or your closet.
Venus Michael: But at the same time, you do not need to have a whole department store, because a lot of times, the clients will have their own dresses they want anyway, just have a few. So that’s the first mistake. And they justify it saying, “Oh, it’s a business write off,” and then it sits there and collects dust.
Allison Tyler Jones: Right. And that can also go for props, even if you’re not doing props and stools and furniture. Yeah, okay.
Venus Michael: Yeah, it can also go for props. The second mistake that I see a lot of people when they are dealing with their money, is they don’t reverse engineer the numbers in order to make sure their pricing is correct. They’ll just hear, “Well, this is what my price should be because this is what all the other photographers are doing.”
Venus Michael: So, with Profit First and the way that it works, and we can dive into that too if you want to. But the way that it works, it forces you to reverse engineer your numbers to say, “If I want to have this amount of income from this one photo shoot, my price needs to be five, seven times.” Whatever the math comes out to be specifically for you, but that’s what the price needs to be. So they fall both sides, they buy too much, and then they don’t understand the reversing of the numbers when it comes to pricing.
Allison Tyler Jones: Okay, I love that. Anything else?
Venus Michael: Not really.
Allison Tyler Jones: Those are the two main ones?
Venus Michael: Those are the two big ones, the two big boys.
Allison Tyler Jones: Yeah, okay. So spending too much and not charging enough, basically?
Venus Michael: Yes.
Allison Tyler Jones: Yeah. And so it’s funny, because I obviously teach photographers and talk to a lot of photographers, and when they’re starting, they’re like, “Okay. Well, what’s the main thing that I need to know?” And I’m like, “Well, you have to be convinced that it’s going to be a business and you need to charge more than what it costs you.” And so really that’s what you’re saying is like-
Venus Michael: That’s exactly what I’m saying.
Allison Tyler Jones: … everything can be a business expense. You can take everything as a loss, but it’s not going to give you any money.
Venus Michael: Right, and then don’t buy a bunch of dresses or props or even software. Software is another one that there are so many great softwares out there. But if you’re not using it, it can be the best, most amazing thing, but if you’re not using it and it’s not serving you, then you need to let it go.
Allison Tyler Jones: I love that. Okay. So walk me through, you’ve got a photographer who, I’m just going to give you a person, who they have a business, maybe they’re busy, they’re thriving. They’ve got clients that are coming in, but they’re like, “I just can’t make enough to either quit my job or to support my family. How am I going to make this pay?”
Venus Michael: So the first thing that I do when people come to me with, I get that a lot actually, and when they come to me with that is we sit down and we analyze. I know that’s not a great word to tell creative people, but we analyze the numbers where we will look at the pricing, what’s coming in, what’s going out.
Venus Michael: We will look at all of the different expenses, what do you really, really need? And so we put it in two buckets, I need it, I want it, and then we revolve around that. And then what we do is we jump in, we jump straight into Profit First. Here’s where your percentages should be, not just based on the book Mike wrote or even the book I wrote, but what your goals are.
Venus Michael: So, I got an email yesterday from a reader and she didn’t quite understand the percentages, and that just broke my heart because I’m like, “No.” And I immediately picked up the phone and tried to get her on the phone, because I want to make sure that while you are reading these books, they are guidelines and suggestions. If you’re reading a book and it says, “Well, your operating expense needs to be at 30%,” but you don’t need it at 30% because you’ve got your expenses low and you want to do 28%, then do 28%.
Allison Tyler Jones: Right.
Venus Michael: So I have a lot of those conversations at the beginning of, “Let’s personalize it specifically to your needs,” and then from there, they can grow.
Allison Tyler Jones: Just so our listeners know what we’re talking about when you talk about percentages. So the broad strokes on Profit First, if you haven’t read it, haven’t heard of it, have no idea what we’re talking about. Is that instead of just letting your bookkeeper or your CPA give you a profit and loss at the end of the year so you can see what your expenses were.
Allison Tyler Jones: You’re basically taking control of it and you’re making buckets, envelopes, jars but out of bank accounts saying, “This much is going to stay for my operating expenses. This much is for profit, this much is for taxes, et cetera.” And there are more, but you’re basically hiding the money from yourself. Is that fair?
Venus Michael: Exactly, it’s very fair.
Allison Tyler Jones: Okay. So it’s a psychological, it’s basically like hiding money from yourself, because you’re creative and you can’t handle the truth?
Venus Michael: Yeah. It’s also flipping the script a little bit and the business talking to you in a language you understand.
Allison Tyler Jones: Yeah.
Venus Michael: If it is not in your skill set to read a P&L or to even look at your accounting software, whichever one you’re using, because that’s not your fun thing and you don’t want to do it. Then the business can never tell you, “Oh, we lost a little bit of money over here because we keep paying for that subscription.”
Venus Michael: Or we have this hole over here because the money is going out on this thing you totally forgot about. With the bank accounts, you are always looking at your bank account. You actually started this habit the first time when you were a kid, and you worked around in the neighborhood mowing lawns or babysitting.
Venus Michael: When your parents gave you an allowance, any of that, you learned what bank balance accounting is. You wanted to buy something, you looked, “Do I have enough money?” And you bought it or you didn’t based on that. What Profit First does, is because you are divvying up by percentages, but you are divvying up and you’re saying, “This is the amount for operating.”
Venus Michael: Or we have all these photography conferences that are popping everywhere and people are like, “Well, can I go to the conference? I want to go to this one or I want to go to that one,” and that can get expensive very fast.
Allison Tyler Jones: Yeah.
Venus Michael: So one of the things I tell the people that I work with, is create an account for that for conferences. Put 1% or 2% of every sale you have into that bank account. Then when it comes time to purchase the ticket and the plane, and figure out the room and make sure that you have money to eat on. If that money’s not in that account, then your business is telling you, “You can’t afford to go to that conference and you need to slow it down.”
Venus Michael: But if you have all of your money in one, you’ve got your owner’s pay in there because you do have to pay yourself. Nobody starts a business to be broke. You have your taxes in there, because believe it or not, having to pay taxes is a good thing. I know it sounds counterproductive. You have your operating because you do have to operate, you have cost of goods and everything that happens there.
Venus Michael: If all of that’s in one bucket, and let’s say you have $100,000 in one bucket, well, then you’re like, “Yeah, I can go to this conference,” because you didn’t remember you had this amount and that amount earmarked for those other things. But if you have it in a different account where it’s earmarked, I call it Business Growth, and you say, “Okay, can I go to this conference?” I have enough money in here, or I don’t have enough money in here.
Venus Michael: I need to get on the phone with my accounting professional and figure out how can we move things around so I can go to the conference? It just slows you down a little bit more to make sure that you’re not just blindly spending. So that’s why I say it’s the business that talks to you in a language you understand. Maybe you don’t understand the P&L, but you understand bank balancing.
Allison Tyler Jones: Right. And an experience that I was continually having early in my business, that I know people are no stranger to this, was every year we’d get to the beginning of first quarter and start looking at the taxes. And then I would realize, “Okay. We had this gangbuster holiday season, had all this money at the end of the year, spending like a fiend.”
Allison Tyler Jones: Go to Imaging USA at the beginning of the year, buy all the things and then sit down with my… And then the first quarter tends to be a little bit slower business-wise. And so then I sit down with my tax professionals and they’re like, “Okay, you owe all this money.” And I’m like, “Wait, I don’t have that money to pay that taxes,” and I’m so mad at them.
Allison Tyler Jones: And every year, I was like, “Okay. How can I never be in this situation again? I don’t want to be owing this amount of money. It shouldn’t be like this,” and they could never figure it out for me. And it wasn’t until I instituted Profit First that now the money’s there, the money is always there for taxes. It’s always there.
Allison Tyler Jones: So I’ve never, ever had that happen again, because I’m pulling it out, so it’s not in my bucket, it’s not in my big slush fund. It’s out in a way that I don’t see it. I can see it if I want to see it, but I know that it’s there to pay my taxes.
Venus Michael: Yeah. And so when the CPA or accounting professional’s telling you, “Hey, this is the amount due,” it’s another event. It’s not a punch to the gut, it’s not a big deal. You’re like, “Okay. Well, here it is,” and then you move on with your day. And so many times I see this time of year where the whole tax return event is just a major disrupter, not only in business but in personal, and then it weighs on you.
Venus Michael: And then we go into a lot of mindset too because if you are weighed down, then that actually affects your business because it’ll affect your sales, it’ll affect your networking. People pick up on all of that, and so you don’t want that. And I sometimes suspect for some photographers in the way that they photograph when their quarter one is going down, I suspect it’s because of the extra weight of what’s going on in tax season. So if we can eliminate that and help. Now other ones, their quarter ones go down just because that’s the seasonality of the type of photography they do, but it’s not all of that.
Allison Tyler Jones: I take that to heart because there was a book called, I think it’s called The Power of Full Engagement, and they talk about the most valuable asset in your business is your mental and emotional energy. And anything that impacts that or takes that down, is taking down the main asset in your business.
Allison Tyler Jones: And so whether that’s being worried about money, being worried about taxes, not charging enough, that you hate your clients because they’re all cheap. Well, they’re cheap because you’re not charging enough. So anything that impacts you negatively and that impacts that emotional and mental energy.
Allison Tyler Jones: When you know that you have your taxes in the bank, when you know that your profit, you’re pulling that profit out first and paying yourself first, it’s a completely different way of looking at money. It’s rather than hiding your eyes and like, “Oh my gosh, I hope I have money at the end of the year.” You know what you have.
Venus Michael: Yes.
Allison Tyler Jones: Ahead of time, you know it. And talk to me about when I first started to do this, my CPA gave me big pushback on it. He didn’t like the different accounts. Is that common?
Venus Michael: Yes, that’s very common. In the accounting world, we are not taught really, we are not taught to think like that. We are taught to be very analytical, very number driven. And when you start putting in more bank accounts and moving money, I’ve had CPAs at networking events get a little rude, and raise their voice and say that this was committing fraud.
Venus Michael: They would go that far and they’d get really rude with me. But you just have to take it with a grain of salt and smile, and remember that in order for most CPAs to be good at their job, they’re why you’re different. So they see it and they’re like, “No, this is either going to add more work. This is going to look funny on the balance sheet. You are doing something wrong.” You don’t need to do this. You just need to look at this Excel sheet or this P&L that I send you once a year, and that’s not working for people.
Allison Tyler Jones: Right, exactly. And so that’s what he was saying to me. He’s like, “Okay. Well, why would you need?” He’s looking at me like I have three heads. He’s like, “Why do you need multiple accounts? You just would look at the Excel spreadsheet.”
Allison Tyler Jones: I’m like, “Okay. If I could look at the Excel spreadsheet, we wouldn’t be having this conversation. I need the buckets and I need it to be hidden from me so that I won’t spend it.” And so he pushed back a little bit, he’s like, “Let’s try it.”
Allison Tyler Jones: And then after a year, he’s like, “Absolutely, this is the only way you should be doing it.” Now, I don’t know that he’s selling it to his other clients, but for us, he knows, “Allison, this is the first time you’ve had the tax money every single year.” And so it’s been years now and it works.
Venus Michael: Yeah. And that’s usually what happens is that they’ll have a client who read the book and says, “Okay, I’m going to try this.” And they’ll push back, and then after they see, “Oh, well, their client is doing better, the taxes are getting paid.” We haven’t even talked about owner’s pay or profit, money that’s going back into your pocket.
Venus Michael: They see all of that, and then the weight that’s being lifted off of your shoulders, so business is better. All the numbers are going in the right direction, and that’s when they’re like, “Okay, let’s do this,” and they’ll either pick up and read the book. Maybe they’ll reach out to Mike and become a Profit First Professional themselves.
Venus Michael: Or maybe they’ll just say, “Hey, I want to team up with a professional.” They’ll have a professional they refer out to to help other clients. I do see that quite a bit.
Allison Tyler Jones: I love that. Okay. So let’s back up and talk about owner’s compensation and profit and break that down for our…Because that is something I have a really hard time trying to talk to students about, is that, “Okay. The business needs to get paid and you need to get paid for working in the business, and you need to get the profit from the business.”
Allison Tyler Jones: So there’s like three things, the business needs to get paid, you need to get paid, and there needs to be profit.
Venus Michael: So there’s actually, I call them three different hats. There’s the hat of the business, and it does, it needs to get paid. It needs to run and function and do everything that it needs to do. It needs its oxygen in order to feed you. But then there is, you’re doing the work and in corporate America, you would not go and work for somebody else and not receive a paycheck.
Venus Michael: That would be totally unacceptable. So why would you accept it from a business you own? So that business needs to give you a paycheck, and it needs to be a reasonable paycheck for you to live the life that you want to live. And I’m not talking about having four mansions and 10 Ferraris, but whatever lifestyle that is, that’s comfortable for you.
Venus Michael: Then there’s the hat of the business owner, because you are the business owner and you put all the equity into it, the business needs to pay you a profit. So the owner’s compensation account, that is your salary and it needs to be paid to you on a rhythm. Whether you want to be paid every week, bi-weekly, monthly, something, whatever rhythm you decide is good for you, that comes from that bucket or that account.
Venus Michael: The profit account, that money accumulates in there, and once a quarter, you take a distribution as a business owner. So if you are in a partnership and there are two business owners, then the two of you take a distribution as business owners. That account can be called a bunch of things. I hear people call it their fun account. They don’t want to call it profit, they call it fun, but you can nickname it whatever you want.
Venus Michael: Ultimately, it’s a profit account. What happens with that account is let’s say in the first quarter, January, February, March, you have accumulated $1,000 in that balance of that profit account. April 1st, you are going to take your first quarterly distribution of 50% of whatever the balance is. So you’re going to pull out $500, you’re going to stick that in the pocket. You’re going to do whatever makes you happy.
Venus Michael: You’re not going to reinvest it in the company. If it makes you happy to have the cash at your house, you’re going to do that. If it makes you happy to go on a shopping spree, if it makes you happy to put it into your retirement. It doesn’t matter, it’s got to make you happy. That is a very important piece because what that does is a little dopamine hit, and you want that because then you will keep working the next quarter to have another distribution.
Venus Michael: So you left $500 in the profit account. You went through another quarter, ended up putting another $1,000 in there. Now you have $1,500 in there. You go to take your distribution, it is now half of that, you’re looking at $750. You do something that makes you happy and then so that tends to grow. When, and it has happened, when it goes to the point of your profit distributions are more than you want to take out or are comfortable taking out.
Venus Michael: And your number may be totally different from the photographer down the street. That’s very personal because money is actually a very emotional thing, then we start talking about vaults. And we build vaults in the business and we readjust the percentages, so that we keep your profit distribution where you are happy getting those dopamine hits, but now you’re actually building wealth in the business.
Venus Michael: And that wealth can go to hiring more photographers, expanding, whatever, investing. I have one client, who she’s using hers to learn how to do investing in multiple places, but then she’s also launching an education portal to teach women how to do what she’s learned how to do. And that has nothing to do with photography, but it’s where her heart and her passion were taking her.
Venus Michael: So we created a vault account to fund that, and now she’s going off and creating a whole other business, while still maintaining her photography. And all of those little power pieces there, that’s what Profit First gives you, because it talks to you in a different language. And because you see it, we literally have a saying in my business that look at your business through a different lens.
Venus Michael: So if you think you’ve got the lens that you can see far away, and then you’ve got the other lens where you can do real wide. You know all the fancy lenses a lot better than I do. But you have all these different lenses, so you literally just change the lens that you’re using to look at your business, and you see a whole different story.
Allison Tyler Jones: Well, the thing I love about it is that I went from having the mindset of like, “Oh, okay, if I move into this new studio and I need tenant improvements, then I need somebody to finance that for me,” to being able to finance that myself.
Allison Tyler Jones: I didn’t have to borrow that money from somebody else and either pay higher rent or pay interest on that. I was able to finance that myself, and so that gives you a level of freedom and confidence that you can’t get, unless you understand those numbers. And I love that you’ve done this.
Allison Tyler Jones: I think it’s such a service for our industry. Because you’re helping creatives be able to look at, like you said, use a different lens, and to see that actually, it doesn’t have to be a really expensive hobby. It can be something that can build a wealth for your family and can support your family.
Venus Michael: Yeah, and your causes too.
Allison Tyler Jones: Yeah.
Venus Michael: So if your heart has been tugged for a certain cause, your business can actually start supporting that too through the power of looking through the different lens, because you see so many different things. And I like that analogy because you can relate to it.
Venus Michael: If you just sit for a minute, you can think of a photo shoot that you did where you were using one lens and you’re like, “Let me try this other lens,” and you created a totally different picture. Well, if you think, and I know every photographer has experienced that.
Allison Tyler Jones: Sure.
Venus Michael: So I try to take them back to that moment and say, “Okay. Now instead of imagining your subject or your person, or whatever you’re photographing, imagine your business. “What does your business look like? Now, let’s change the lens, now what do you see?” That’s the power of it.
Allison Tyler Jones: So you have somebody new, somebody’s called you and they’re either in dire straits or maybe just don’t know what to do. They want to do it, but where should people start?
Venus Michael: They should always start at knowing their numbers, so they need to have accounting software. Not just the accounting that can be done in some of the CRMs, but actual accounting software that will produce a P&L. Once they have that, and I strongly suggest that-
Allison Tyler Jones: What’s a P&L?
Venus Michael: A P&L is a profit and loss statement, so there’s two reports that you really, really need to look at all the time. The first one is the P&L, profit and loss statement, some places call it an income statement. It’s the same thing. It shows you for any given point in time, this is how much money you made, this is how much money you spent, this is where it went.
Venus Michael: The balance sheet is not in any given point in time, it’s an as of date, so that’s the other one you need. So as of today, this is the balance of your bank accounts. This is the balance of your liabilities. Meaning this is what you owe, whether it be that you were financed on something or you have a credit card, and then this is the balance of your assets. That’s everything you own.
Venus Michael: And then this is the balance of your equity, that’s what you put into the business. You need to know those numbers on both sides, in order to sit down and say, “Okay, I have a clear mind. Here is where I’m at right now.” We call that the before picture. So right now, I am making this much in revenue, whatever that number is, whether it’s $10,000 or $100,000 a month, it doesn’t matter.
Venus Michael: It’s this much in revenue, and I am spending this much in expenses. And then you look at the balance sheet, because that’ll tell you what you owe, what’s out there that you still owe on. Once you have those numbers, you literally, we call those the current allocation percentages. That’s how we get those, or they’re called CAPs, current allocation percentages.
Venus Michael: So we can say, “Currently, 85% of every dollar that comes in is going right back out on expenses.” We want to get that down to 50%, and you can’t get down to 50% in a snap. Please don’t try to do it in just a snap, you will kill your studio. But if I tell you you’re spending 85% and I want to get you down to 50%, and you have that punch to the gut and you’re like, “Oh, I can’t do that.”
Venus Michael: I say, “Okay. This first quarter, let’s just shave 2%, just 2%.” So we will look at all of your expenses, where can we cut? We’ll start at subscriptions because that’s usually the biggest culprit, but where can we cut? Maybe we’ll get on the phone and renegotiate with some vendors, maybe we’ll put a freeze on all spending, maybe no more dresses or props. There’s different ways to go about that.
Allison Tyler Jones: You’re so mean, Venus. You’re so mean.
Venus Michael: I can be, I have been told that. And then the other thing that we will do is we will look at your pricing. Is your pricing appropriate? Do you need to raise it? And then how comfortable are you raising it? I had a client a couple of months ago, who she literally had to take a few weeks and just be comfortable with saying her new price, because it was much higher.
Allison Tyler Jones: Absolutely.
Venus Michael: So I absolutely suggest if you’re going to raise your prices, keep saying what your new price is, until it rolls off of your tongue.
Allison Tyler Jones: Absolutely, couldn’t agree more with that.
Venus Michael: And then sometimes we will pull in other professionals, who that’s what they do, they teach pricing. And we’ll be like, “Okay. Well, let’s go pull in this person or that person, and go on pricing mindset.” I don’t dive too much into teaching it that much more about the percentage of how it correlates with the expenses.
Venus Michael: Because if we raise your prices, then we raise everything, water goes up, all the ships go up. That’s how we start, that’s our before picture, and that’s how we get our current allocations. Then we want to look at what we want the after picture to be. We call that target allocation percentages.
Venus Michael: And that’s where you take the information that’s either in Mike’s book or my book, where we say, “This is where your target allocation percentages should be,” but you customize it to you. So if I tell you that you need to be at 45% on something, and you’re like, “Well, actually I think 48% is where I need to be,” then that’s where you need to be.
Venus Michael: The only one you don’t want to play with is the tax percentage, because that, believe it or not, that math works out. A lot of people freak out because in my book, in Mike’s book, in all the derivative books, we all say 15% of every dollar needs to go into your tax account.
Venus Michael: People will go back and forth, and I’ve seen this quite a bit in different Facebook groups where they’ll go back and forth and they’ll say, “That’s not enough.” And there’s a whole science behind it, and I actually worked it on multiple tax returns with all kinds of different numbers, and that 15% is usually spot on.
Allison Tyler Jones: Yeah, it’s great. And I find that for us, it usually is a teeny-bit high, but I’d rather. So then when I have my year-end meeting and they’re like, “Okay, this next thing you’re going to owe.” Whatever it is, $20,000, $100,000, whatever the amount is, I have it and then a little.
Allison Tyler Jones: So I’d rather have it and then a little, because then I’m like, “Ooh, I have that little cushion that can get thrown over into the profit or wherever.” But I would much rather have that than, “Okay, I’ve got $1,000 in there and I need $10,000.”
Venus Michael: Yes, that’s not a good feeling.
Allison Tyler Jones: No, that’s not good. Okay. So basically, what they need to do is they need to get your book, they need to read it. And then have, like you say, just that before picture, which is the way in that nobody wants to do. It’s not pretty, nobody wants to do it.
Venus Michael: It’s not fun, but you have to do it because it’s very important.
Allison Tyler Jones: How do you force yourself to do it? What has been helpful for you in seeing photographers? How can you help them get out of their own way on the mindset on this?
Venus Michael: They need to take an hour and block it out and say, “I am going to do this.” There’s a saying of eat the frog. It comes from a book, they literally need to eat the frog.
Allison Tyler Jones: Brian Tracy, yep.
Venus Michael: Because if you don’t have your before picture, if you just say, “Oh well, this is where I should be.” Then you don’t really know, do you need to cut 1% off of your operating or 48% off of your operating?
Venus Michael: And so you’re working blind. The easiest way to get through it is to literally just sit down with a pen and paper and just go through the steps. This is how much I have, this is how much is going out. And then do the math. What is the percentage? If you have accounting of software, you can create the P&L that’ll give you the percentage real quick.
Allison Tyler Jones: Sure. I found for me that I was letting the perfect be the enemy of the good. I was like, “Oh well, I don’t have that perfect number,” but I knew pretty well. So I think even if you just get ballpark-ish in that one hour to at least see, to have that gut check, then you can dig in with your accountant and go even more granular. But just make that first step, just tell yourself just like anything. I think it was super hard to learn lighting. It’s super hard to learn, photography’s hard. It’s hard.
Venus Michael: It is.
Allison Tyler Jones: It’s super hard. You have all of those settings and everything, and so when you first start learning it, you’re like, “Am I ever going to get this down?” And then you do get it down and it’s fine and you love it, and you don’t think about it anymore, and this is no different. You can be financially literate if you just make yourself do it, and it’s absolutely worth it.
Venus Michael: It is absolutely worth it. And photography is hard, so my hat’s off to you guys because I can’t take a picture to save my life. I really can’t.
Allison Tyler Jones: That’s why God invented iPhones, yeah.
Venus Michael: Yes. And even on that, I don’t think my pictures are very good. There’s a lot of my dogs. But if you just say, “Okay, I’m going to do this,” and you get your before picture, and you’re right, it doesn’t have to be perfect. You have to have a good idea of what percentage is going out.
Venus Michael: Mainly, what percentage of every dollar you make is going out to your cost of goods, okay? Because that right there plays into your pricing, but you really need to know. And then also, what percentage is going out into your overhead? So that’s all the other expenses that are not cost of goods. And then what percentage is going into your pocket to put groceries on your table or gas in your car? If you know those three percentages, then you have a very good, non-blurry before picture.
Allison Tyler Jones: Okay. So on cost of goods, because this is a subject of much debate, cost of sale, cost of goods, cost of doing business, I’ve seen it all different ways. What are some of the biggest errors or misnomers that you see when trying to assess what a product costs you? What are we missing most often?
Venus Michael: First of all, defining which one goes into cost of goods and which one goes into operating. When you are thinking about cost of goods, you need to think about the stuff that you spent specifically for that sale. So that is primarily going to be any outsourced editing or printing type of stuff.
Venus Michael: If you buy a prop specifically for that sale, and that’s the only reason you bought it, then it would be a cost of good. If you buy a prop because you’re like, “I could use this prop in multiple things,” then it is not a cost of good, it is just an operating expense. That’s the first thing.
Venus Michael: The second thing is I have seen people where when the sale is finally done and we take all of their numbers, their cost of goods is over 45%. That is bad. So not knowing what your appropriate multiplier needs to be on those cost of goods, and there are wonderful people, who will help them figure that out.
Venus Michael: But I find that even though there’s so much talk and education on the multiplier and the pricing and how to package it all up, there is still a lot of photographers who just the cost alone is, I saw one the other day where it was 75% of the whole sale went right out to the printing company.
Allison Tyler Jones: Yeah. Well, right. What we’re doing is we’re taking the money from our clients and we’re just handing it to our vendors, and none of it is sticking to our palm.
Venus Michael: That’s a big no-no.
Allison Tyler Jones: Yeah, right. And what I see is very common, and I was just as guilty as anybody, is that I wasn’t counting and factoring in labor, because everybody was like, “Okay. The piece of paper for the lab is this much, the frame is this much.” And everybody wants the sexy stuff, like we want the sexy framing. We want the most amazing album.
Allison Tyler Jones: And we want it to be in a bag that has been rolled between the thighs of virgins, and trekked across the Himalayas and it has gold hanging from it, but then we’re not charging enough for that or charging for our time. So we’ll charge for an outsourced editing, but the three or four hours that I took to do that, I’m not putting that into the cost of sale.
Venus Michael: And I think a lot of times, it’s because you don’t know what your hours’ worth.
Allison Tyler Jones: Girl, preach it.
Venus Michael: And so I take them through an exercise. I take them through an exercise to teach them what their hour is worth. And it starts with, “If you were working for another company, what would you get paid per hour?” But that’s not where it ends, because then we pull in all of the education that you have.
Venus Michael: The fact that you can pop off so many different poses and photos real quick, the connections that you have, but also your experience. Have you been doing this for one year or do you bring 30 years of experience on the table? Guess what? All of that stuff raises what your specific hour is worth.
Venus Michael: And people get confused because they say, “Okay. If I say my hour is worth $200, then I need to pay myself $200 an hour.” That would be great. But if your Profit First percentages are not in line for that right now, that doesn’t change what your hour is worth. And your hour needs to be in there, what your hour is worth.
Venus Michael: If a photo shoot takes you three hours to actually complete the photo shoot, there’s also the prep time that went into it, and then all the stuff that happens after it, and then the delivery. That can be a nine or a 10-hour investment and you only spent three hours with the camera in your hand, and they don’t take that into consideration either.
Allison Tyler Jones: Okay. I want to stop you there, because if you’re listening to this and you’re driving or you’re on a treadmill, you need to stop and you need to rewind. Hit the 30 second and go back and listen to that again because that is so important. Just because you can’t pay yourself whatever that hourly rate is right now, doesn’t mean it shouldn’t be factored into the cost.
Allison Tyler Jones: And the keyword I think you just said is right now, because it took me two years after instituting Profit First, to get to my target allocation percentages. I didn’t start off with that. I started off with, like you said, shaving 1% and 2% off and maybe raising a price here and there.
Allison Tyler Jones: And adjusting and realizing where money was just bleeding out of my studio that I didn’t even realize and wasn’t even getting the benefit of subscriptions, that sort of thing. But now I can get paid the hourly rate that I had targeted before and have been for years, so it’s possible.
Venus Michael: It’s very possible.
Allison Tyler Jones: And I love that you’re not a photographer, but that you’re working with photographers so you can understand where we’re coming from and also do a little handholding. I think you do that in the book very well.
Allison Tyler Jones: There’s a lot of mindset shifts and a lot of like, “Okay. Now I just dumped an ice bucket on you and now you’re feeling really uncomfortable. Now, let’s move to this other thing to make it more comfortable.”
Allison Tyler Jones: So I really appreciate how you have walked photographers through in this book. I highly recommend anybody listening to this. I have it on Kindle. I just ordered the hardcover because I need to write in it, so I just love it.
Venus Michael: Thank you. I appreciate that. That was very important to me when I was writing the book. That the reader felt that I was holding their hand and walking them through it, instead of just, “Oh, go do this and good luck.”
Allison Tyler Jones: Right. From my accountant standpoint of why shouldn’t you just be able to read a spreadsheet? No, that doesn’t work.
Venus Michael: In fact, when I show spreadsheets to my clients, I always apologize, like, “I’m so sorry, but we have to look at this specific thing right here.”
Allison Tyler Jones: Maybe if you use really pretty colored markers and circled it and did like a star.
Venus Michael: So for your listeners, I’m showing you, I have all my color-coded Sharpies right here.
Allison Tyler Jones: I love it. I love a color code. And the thing is, is I think sometimes as a photographer, when you’re starting this, you’re like, “Okay, am I stupid?” And we aren’t stupid. We might be a little ADD.
Venus Michael: Yes.
Allison Tyler Jones: We’re super smart in our area, but we need other people that are super smart that speak a different language, but that can translate for us. And I think that’s what you’ve done with this Profit First for Photographers, is you’ve taken this really hard language and you’ve made it accessible to the creative.
Venus Michael: That was my goal.
Allison Tyler Jones: Well, you succeeded. I love it.
Venus Michael: Thank you. You’re making me choke up a little bit, but thank you.
Allison Tyler Jones: I hope you do feel that, because I can tell you, I loved Profit First. I loved Mike’s book, but it was a mind bender. And I read it once, and then I took a break for a year or so, and did not implement because I just couldn’t figure it out. Those percentages were just knocking my brain around and I just couldn’t make it happen.
Allison Tyler Jones: So finally, I was like, “Okay. I don’t care what it takes, I’ve got to institute this in some way that makes sense for me.” So I just started somewhere. I knew my numbers, but I just felt like with his book, because like you said, it’s general. It’s more general, which it needed to be, because it’s profit first for all businesses, but I just felt like it wasn’t really applying to me.
Allison Tyler Jones: So I just started somewhere and it still worked, but if I had had your book, I could have been so much more targeted and it would’ve made so much more sense earlier on. So I’m really glad that you wrote the book, and I’m really glad that you’re sharing info with us. So just calendar an hour, sit down, do the weigh in, do the hard thing, and then if you feel there are people can contact you.
Venus Michael: Yes, they can contact me through my website. They can email me and call me.
Allison Tyler Jones: Okay, so your website is what?
Venus Michael: I have the profitfirstforphotographers.com website. That’ll give you the freebies that come with the book.
Allison Tyler Jones: Okay, and we’ll link to all this in the show notes.
Venus Michael: And then I have my main website that you can go and learn more about me is venusmichael.com, very easy to remember. That’s the website that was used literally yesterday for another reader to reach out to me.
Venus Michael: I do personally read all of that myself and respond myself. So that’s how you can reach me, or you could just directly email me at Venus@VenusMichael.com.
Allison Tyler Jones: Perfect.
Venus Michael: I’m very reachable.
Allison Tyler Jones: And then there are accountants that have been schooled in the Profit First method. So there could be a referral for that or they could have you help them?
Venus Michael: Yes, so there is a whole thing, it’s called Profit First Professionals. There’s quite a few of us in there. What that means is that we have teamed up with Mike and his business partner, Ron, and said, “Okay, we want to help other entrepreneurs do this.” And then there’s two levels of that, there’s the main core level, and then there’s the mastery level.
Venus Michael: I am in the mastery level. What that translates to is I have more time with Mike. I am learning more. It’s more of a commitment on my end that I have done. I’m very proud to be in that elite group, but if you want to work specifically with me, you would start that conversation on the website and we can work specifically.
Venus Michael: I do own a bookkeeping business called One21 Account-Ability. That is not just me though. We have a team, there’s six people on the team, keep everything moving. So we do help with bookkeeping, but if you maybe wanted to work with someone local, you could go to profitfirstprofessionals.com and ask to be connected to a professional that’s maybe in your area.
Venus Michael: Because you don’t necessarily need to work with me to work with a Profit First Professional. I’d like you to work with me, but maybe you want to work with someone closer to you.
Allison Tyler Jones: A lot of my students tend to have been in business longer, are a little more experienced and have had businesses for a longer period of time, but maybe they’re solopreneurs still. Maybe they’re doing their own books or whatever.
Allison Tyler Jones: Very often I’m asked, one of the first, I think at the first hire you should ever make, if you started your business yesterday, or if you haven’t done this. You need to have somebody, you need to have a bookkeeper or an accountant, and those are two separate things, right?
Venus Michael: Yes.
Allison Tyler Jones: Like the bookkeeper, I do not want to ever open QuickBooks ever in my life. I don’t want to even know the password. I don’t want to know, and I know that’s not right. Venus, I know that that’s wrong.
Venus Michael: Nope, it’s a club.
Allison Tyler Jones: I don’t want to have to be inputting things because I want to be taking pictures. I want to be spending my time with clients. But I need to not go to jail and I need to pay my bills, so I need somebody to help me with that.
Allison Tyler Jones: So when I started my scrapbooking store, when I started this business, the first thing I did was find somebody that can set those accounts up for me so that I have those reports. I look at the reports, I just don’t want to make the reports. I want somebody else to get them to me.
Venus Michael: Yes. So the first thing that you should outsource before you outsource anything else is the books, the bookkeeping. You want a full-charge bookkeeper, not just what I call a baby bookkeeper. It’s someone who actually, while they’re working in the software like QuickBooks. Well, QuickBooks is the big boy, and they know they’re the big boys and they try to help.
Venus Michael: They try so hard to be helpful, and sometimes it’s just not. So you need someone who actually understands if I push this button in QuickBooks, where is it going to land on those two reports I was telling you about, the P&L versus a balance sheet, and what does that mean? So you need a full-charge bookkeeper, someone who understands that.
Venus Michael: An accountant is someone who is a little bit higher level of that. They are going to talk to you more about the tax return or tax savings or tax benefits. They don’t want to do or talk about the day-to-day data entry, bookkeeping, producing a P&L. They want to talk about the year of, “Well, this is where you should be.” So those are the two differences between the two professions.
Venus Michael: But the first thing you want before you even outsource your editing or anything else, is you want to outsource somebody else to handle the bookkeeping. And you want someone who is going to understand everything, not talk down to you. Because I find that a lot of accounting professionals talk down to the creative industry and make them feel stupid.
Allison Tyler Jones: Right.
Venus Michael: And that’s not okay.
Allison Tyler Jones: Well, if that’s happening, then you just need to find somebody else because you’re paying them. You’re their client.
Venus Michael: Exactly, and it’s not okay. And that comes from being wired differently. So if you think about how the brain is wired, in order for you to be really good and make money taking pictures, you’re one side of the brain.
Venus Michael: But in order for me to be really good at translating the numbers and keeping the lines nice and straight, I am on the other side of the brain. And there’s no reason for either side, brain-side person, to put down the other one, and I have seen that quite a bit. So definitely outsource your bookkeeping, but not to someone who talks down to you, because that’s not okay.
Allison Tyler Jones: You said you need a full-pay bookkeeper, not a baby bookkeeper. What’s a baby bookkeeper?
Venus Michael: Full-charge bookkeeper. I call it baby bookkeepers, that’s not an actual term. It’s something I made up. But that’s going to be a person-
Allison Tyler Jones: That’s a made-up term.
Venus Michael: No, but that’s going to be the person who opens up QuickBooks and says, “Oh, it’s just software, I know how to do it. Got it.” The person handling the books needs to know the lingo, needs to know the consequences.
Venus Michael: Needs to know how accounting actually works, because it’s a double-sided system. So that when they push the button in the accounting software that tries so hard to help, they actually know where that number is supposed to land. And if it doesn’t land there, they need to go back and correct it.
Allison Tyler Jones: So can you tell me, and this might vary region to region, but I think sometimes people are surprised at how much a bookkeeper might cost. What does that look like in the world of your clients? What are you seeing? Are there people that are, how often are they dealing with their bookkeeper? How much are they being charged for bookkeeping? Can you give us an idea on that?
Venus Michael: No, I can’t because it varies. It does go region to region, and it does go on skill level. Some bookkeepers are still doing the charge by the hour model. And some bookkeepers are doing the value charge by the month, and here’s what you get for that. Those ranges can go anywhere. I have seen where people are charging as low as $20 an hour for bookkeeping. I would stay away from anybody who is still doing that model.
Allison Tyler Jones: That’s more of a baby bookkeeper?
Venus Michael: Yeah, that’s more of a baby bookkeeper. But then on the other model of where they call it value charging or value pricing and it’s a monthly thing. That is going to average anywhere from, I think, the average is going to be around $800 a month. That’s going to be a good average, but I have seen it as low as $400 and as high as $2,800, $2,900. Now, there’s a lot of variables in there.
Allison Tyler Jones: Of course.
Venus Michael: There’s the variable of how complicated are your books? How many times do you want touches? Some clients that are on my roster, they only want the option for once a month meetings. Other clients want, well, twice a month, I’ve got some people they want once a week.
Venus Michael: It depends on how many times you want to touch that person and talk to that person. Also, how complicated your books are, so that there isn’t a standard, “Oh, look for this price and if it isn’t in this box, walk away.”
Allison Tyler Jones: But I think that even just those ranges are important for people. It is not going to be like your daughter-in-law for 100 bucks. This is we’re running a business and this is a major business expense, and you have to figure out what do you want from that bookkeeper?
Allison Tyler Jones: So for me, what I want is I don’t need to talk to anybody ever or very rarely. I don’t really want a lot of touches. I want you to pay my sales tax and let me know what that is. And then we have them handle our payroll, which is very simple, and just keep the books.
Allison Tyler Jones: Take the stuff out of our CRM and make it legal into the Quicken, not Quicken, QuickBooks, so that we have the reports out of it or whatever. But that, I think we’re probably paying, I think, $1,200 to $1,500 a month for that.
Venus Michael: That’s probably pretty standard.
Allison Tyler Jones: Yeah. But that’s our accounting company has a bookkeeping arm, they do that for us. So it’s not inexpensive, but I’m not in jail, which is so awesome.
Venus Michael: And your sales tax is taken care of.
Allison Tyler Jones: Again, sales tax is taken care of, lights are on, food is being eaten, and still not in jail, so super happy about that.
Venus Michael: Yeah, it does vary. I would shop around, make sure you jive with the person that you are comfortable with them. Hiring a bookkeeper for the first time can be very intimidating, because you are opening up your wallet, literally your bank accounts. They can see everything.
Venus Michael: They can see what your patterns are, where you’ve spent money, how much you’ve spent. So it can be very intimidating. I had one client one time tell me that she felt like she was sitting in front of me naked. It was so uncomfortable for her and I get it. You really want to make sure that that person that you are talking to, you feel comfortable with them and you connect with them.
Venus Michael: And then also don’t be embarrassed, because for us sitting on this side of the desk, accounting professionals, you can’t shock us. We’ve seen it all. Believe it or not, we’ve seen it all and you really can’t shock us.
Allison Tyler Jones: I love that, yeah.
Venus Michael: But a lot of people will hold off doing that, because they don’t want the person to say, “Oh, well, I don’t want you to say that I go get a $7 coffee every morning before work.”
Allison Tyler Jones: Right. It’s just like why do we don’t get on the scale. It’s why we don’t go get a mammogram, it’s like all of those things, but we need to do it. If you want the health of your business to be, if you want to get where you want to go, you got to have a plan to get there, and you’re part of the map building process.
Venus Michael: Exactly.
Allison Tyler Jones: I love that. Well, any advice that you have, anything else that we haven’t discussed that you feel like is important for our listeners to know?
Venus Michael: If you read the books and you decide you want to start Profit First, but maybe it’s too much to bite off right now. Or if you haven’t read the book yet and you’re not sure if you will, you’re still deciding. It doesn’t matter who you are.
Venus Michael: If you are listening to this, go to your bank immediately, open up another account, call it profit and move 1%. That is $1 out of every $100 you make. You will not fill it no matter what your situation is. And let it accumulate for three months, and then look at the balance and say, “Okay. So every time somebody pays you, 1% moves over there.”
Allison Tyler Jones: So 1% of gross, 1% of the top-line revenue?
Venus Michael: The top-line revenue. That if you have a sale for $100, if you have a sale for $50,000, it doesn’t matter what your sale amount is in your business, 1%, move it over, call it profit. After three months, whatever that balance is, remove 50% of it, stick it in your back pocket and go have fun. Do something that makes you happy.
Allison Tyler Jones: I love that. I think that’s something that all of us, anybody can do. And then if that feels good, then I highly recommend, I think you can read Profit First for Photographers. I would actually, this might not be your advice, so I don’t want to countermand your advice, but I think that that actually would be the place to start.
Allison Tyler Jones: And then if you feel like you want to really dig in and get more granular, then well, I think yours is more granular, but more broad and just if you’re gelling with it and you love it, then read Mike’s book also. I think both are good, but I think yours, if you’re scared about it, yours really holds the hand of the photographer.
Venus Michael: Thank you for saying that. There’s a reason mine is so short. It’s about half the length of Mike’s and there’s a reason for that. Because I found that Mike was usually losing people around chapter four, which coincidentally is when he starts getting into the numbers, since they start hearing the Charlie Brown voice.
Allison Tyler Jones: Yeah.
Venus Michael: But if you look at his page count and my page count, mine’s a lot shorter to try and keep the attention.
Allison Tyler Jones: I have to see chapter four, hold on a second. That chapter four starts at page 59. I’m looking because I want to see when they start getting into the spreadsheet.
Venus Michael: Yeah. They start hearing the Charlie voice, the wah, wah, wah, wah.
Allison Tyler Jones: Yeah, I know. I love it. Well, I think you’re doing God’s work and I love it, and I really appreciate you spending the time with us and giving us the benefit of your knowledge. And I highly recommend that you guys go read her book. We’ve linked to your website and everything for on the show notes, and then if they have questions, they can email you.
Venus Michael: Thank you so much for having me.
Allison Tyler Jones: You bet. I really appreciate it. It was really great to speak with Venus about all of these concepts, but I wanted to do a little wrap up at the end of this episode to help you feel more empowered and encouraged moving forward, so that you don’t feel like this is a big, huge load that you’ve got to take on.
Allison Tyler Jones: So I want to encourage you to get the book, Profit First for Photographers, read that. If you don’t have time to read that right now, just do what Venus said, open another account, call it profit. And just every dime that you take in from your business, take 1% of that and put it over into that account for the next three months.
Allison Tyler Jones: And see what that amount is at the end of three months, and see the power of just segmenting, pulling your money apart a little bit so that it’s not all in just one big account. I think one of the best benefits of this method is just the idea of incremental progress. That it doesn’t have to be ripping off this huge band-aid, cutting all of your expenses.
Allison Tyler Jones: That you can no longer have Starbucks every day, you can no longer ever eat out. We’re not going for crazy austerity measures because I don’t live like that myself. I don’t really believe that that’s necessarily how I want to live, but I also do want to be able to pay my bills. I do want to have savings.
Allison Tyler Jones: I do want to be able to have a thriving business that’s going to support my life, so you can do that just with these little, small steps. So I just want to encourage you to, however, whether it’s getting the book, opening the account, or scheduling an hour on your calendar to sit down and look at your numbers, and have that mental, financial weigh in, do it.
Allison Tyler Jones: Schedule it now, commit that you’re going to do it, and I promise you, not a year from now, but three months from now, a month from now, you will feel different. You will look at your business in a different way. It will make a huge difference for your life.
Recorded: You can find more great resources from Allison at dotherework.com, and on Instagram @do.the.rework.
