How do you know you’re making financial business mistakes? Unfortunately, sometimes you only recognize it in hindset. You might look back and realize money hasn’t gone quite as planned in your business… but by then, it’s too late.
Thankfully, it’s possible to change your course of action and get on a better track moving forward!
The reason it’s so important to understand the money side of your business – especially if you’re a creative – is because you want to continue to do what you love for a living! I love photographing weddings, but I always knew if I couldn’t fund the business, I’d have to pursue something else. So I’ve always been passionate about understanding how to keep a business running… and teaching you to do the same!*
5 Common Financial Business Mistakes
Here are common financial business mistakes I’ve seen:
1. Not Separating Your Finances
A common financial business mistake is to not separate out your business and personal finances. We actually have a separate business account where we deposit and spend money from the business. When we pay ourselves personally, we deposit that into our personal account. That’s the account we use to buy groceries, pay bills, etc.
It’s imperative that there’s no crossover between business and personal finances, so at the end of the tax year, you can find all of your transactions in one place.
2. Not Keeping Track of Business Finances
You have to keep track of your expenses and income. Just knowing how much you spend every month is HUGE! If you know what your expenses are, you can find ways to save money and build up a nest egg – so you’re safe in the slower seasons.
For example, summers are slow here in Louisiana (because it’s so hot ☀️). To combat that, I try to have a bigger business balance during those months because I know we won’t have as much income.
3. Being Unaware of Your Booking Calendar
Burnout is very real. If you’re not keeping track of how many bookings you have and readjust your pricing accordingly, this can cause you to feel burnt out.
Of course, you want to make money. But a huge money mistake is not realizing that you’re making more than enough – which probably means you’re overbooked, burnt out, and not serving your clients well.
4. Not Charging Enough
If you’re in a place of burnout or you have a super full calendar, you’ll want to raise your prices to slow down those bookings.
Not charging enough is HUGE. It affects how people perceive your business, the type of referrals you get, how many bookings you get, and more. Pricing yourself appropriately based on your experience, knowledge, and market really matters.
5. Leaving Your Job Too Soon
Maybe you’re building photography as a side gig outside of your part-time or full-time job, with the goal of turning photography into a full-time career. A big mistake is leaving that job too soon to pursue an entrepreneurial endeavor.
For me, I started my business right after graduating college. I had no other form of income, so I had to take every job I could get just to pay my bills. What I’ve realized now is that if you have another form of income, hold onto that and use that to leverage your business. That’ll let you be more picky in terms of how much (and what type!) of photography work you take. It’ll help you build your business and portfolio sooner!
Avoiding Financial Business Mistakes: Education
Okay, so now you know the most common financial business mistakes. Now on to the big question: how do you avoid making them?
To start off, educating yourself is key – and you’re already doing that, because you’re here! Some outstanding educational podcasts and books (that are free or cost a small price) you can use to continue your education are:
- Money with Katie
- Millennial Money
- Retiring with Enough (my dad’s podcast!)
- Clever Girl Finance
- Broke Millennial Takes On Investing: A Beginner’s Guide to Leveling Up Your Money
You can use these resources (plus so many more out there!) to learn financial basics, like how to get out of debt, how to build an emergency fund, etc. Then, I’d recommend you learn how to build wealth through investments.
Knowledge is power when it comes to the people you surround yourself with as well. Always have an accountant to help you, whether you’re focused on the basics of keeping track of your expenses, or you’re making savvy investments.
It’s also a good idea to have other wedding photographers help you along the way. We have a membership group called the Wedding Photography Society where we share helpful information about insurance, softwares, technique, gear, and more. It’s been amazing to see the connections and education that has happened inside the Society!
Software to Track Business Finances
I highly recommend using Dubsado to help track your business finances. Although Dubsado is a client management system, one of my favorite things about it is that it allows you to set a money goal for the month. You can also see how many invoices you have open as compared to the money goal. If you’re interested in trying Dubsado, the affiliate code CatherineG will get you 20% off your subscription.
I also use Quickbooks, because it helps me reconcile my credit cards and bank account for the business, and decipher how much I need to pay in sales tax. If you want to try Quickbooks, you can use this link to get 50% off your subscription.
On the personal side, I’ve also used Mint, which is great for looking at your accounts and seeing how much you’re spending. Recently, we’ve started using Chase Bank (if you sign up using this affiliate link, you’ll get $200 into your new account!). Chase Bank allows you to look in your online account and see how much you’re spending, broken down into categories.
Certain credit cards (as long as you pay them off!) will allow you to save money on food, gas, travel, or more. Find the credit cards that give you the highest percentage back on points for what makes more sense for you (Chase will break that down so you can figure that out!).
H2 Best Business Financial Practices
If I could give you advice on best practices for your business finances, I’d break it down into these 4 categories:
1. Pricing
Pricing is imperative to having a profitable business. We have a one-hour pricing course that will help you structure your pricing in a way that makes sense – based on a formula.
Pricing isn’t arbitrary. Sometimes people look around and say “I’ll charge x amount because that’s what everyone else is charging.” That’s NOT the way to do things! Make sure you are basing your pricing off of your experience, knowledge, and market.
2. Credit Card Debt is Not Good
Avoid credit card debt at all costs. The interest rates are astronomical, and you can find yourself accruing a LOT of interest. If you’re not ready for them, don’t sign up – even if they offer a great bonus.
Get the gear that you need, and nothing more. Then, as you build money, you can upgrade your gear. Don’t go into debt for it!
3. Protect Your Business with Contracts
Contracts are put in place to protect both you and the client. In 2020, we saw many changes and cancellations during the pandemic. We were SO thankful we had a strong contract to get us through that time.
If you need a lawyer-approved contract, we do sell contracts for weddings, portraits, or both in our education shop. Whether you use ours or another lawyer-approved contract, I highly recommend using strong contracts to protect your money!
4. Understand Your Business
No one loves to sit around and reconcile their accounts. 🙈 But I do it every month because I know it’s important!
I highly recommend you understand the inner workings of your business… so you can continue to do the creative thing you love for a living.
First Steps for Business Finances
Completely overwhelmed? Don’t be! Here’s the first 3 steps I recommend you take to get control of your business finances:
1. Educate Yourself
For our wedding, we were gifted Financial Peace University. Although we don’t follow it exactly to a T, this book truly helped us lay the financial foundation for our marriage.
I also recommend I Will Teach You To Be Rich. I like this book in combination with Financial Peace University because it’s a little more forward-thinking and laid-back, so the combination of the two works well.
2. Understanding Pricing Formulas
As you set your prices for your photography business, you need to understand pricing using a repeatable formula. Download our free pricing guide to understand how to get your base price – and then when you’re ready, you can step into our pricing mini-course, which will teach you how to establish your offers and create custom offers.
3. Know Where You’re At Today
Take some time to look through your income and expenses. Understand where your business finances are today, so you can plan for where to go tomorrow.
*I am not an accountant. Be sure to seek counsel from your financial professionals for your business finances. This information is not meant to be financial advice.
Grab the FREE Pricing Guide
Your pricing can be the difference between having a profitable business and making huge financial business mistakes.
Do you know why you’re charging what you’re charging? Do you know if it’s enough to keep you profitable? I have a free resource that will help you figure it out!
Grab my free Pricing Guide to help you:
- Understand the WHY behind your base prices so you feel more confident in pricing
- Decide WHAT to charge for your photography
- Cover your expenses so you remain profitable and sustainable
Check it out below ⤵️
