As I wrote last week – I’m not suggesting you become accountants, but Jerry’s got some really good points to pay attention to…

This series of articles, written by Jerry Weiner – CEO and owner of PWD Labs – provides tips and insight into the business end of professional photography. Feedback, questions, and ideas for future articles are all welcome.

The wonderful thing about professional photography is the ability to earn a living doing something you love. However, most photographers work as sole proprietors or partners in a small business, and as such they are responsible for a lot more than just photography. To effectively use detailed tools like the cash flow analysis discussed in the last article, it is important to have appropriate perceptions of and attitudes toward your numbers. Think of the following as the left-brained approach to numbers.

Separate Your Numbers
Business is business and personal is personal. You may nod emphatically in agreement, but in a small business it can be difficult to keep things separate. Still, this is absolutely necessary in order to really get a handle on your business. Think of the business as a separate entity with its own assets which you cannot touch for personal reasons. Keep separate bank accounts and accounting records for your business and your personal life. Your numbers may wish to co-mingle, but stand firm.

Plan Your Numbers
We talked earlier about creating a business plan. Your plan is how you translate your dreams into tangible results. You should have a plan with just enough numbers so that when you compare your actual results to them, you will know whether or not you are on track to where you want to be.

Of course, a plan only lasts so long before it is out-of-date. The value of having a plan results from the process required to develop it, so revising the plan should be just as valuable. At least once a year, review your short- and long-term plans and update them as necessary. If circumstances change so drastically during the year that the current plan no longer makes sense, a new plan should be developed as soon as enough is known to be able to do so.

Know Your Numbers
Accountants love playing with numbers and reports as much as photographers love playing with f-stops and poses. You may not get excited about numbers, but it is important for all business owners to at least keep an eye on the basics.

As detailed in the previous article, you should update your cash flow report each month. We mentioned keeping two reports – one for planning and one for actual data, – but here’s a tip to combine them into one spreadsheet: Start your sheet with nothing but planning data, then begin to fill it with actual data as the months pass. You will overwrite the predicted data with actual data for the month, then go to the end of the report and extend the projection one month further. Using this method, you’ll have your past history while still keeping a set of projections running well into the future. Save each month’s file under a different name.

Another thing worth keeping track of is customer activity. Who bought what and for how much? This will help you understand which customers are worth a little more attention. Knowing what products sell best and bring in the most profit also lets you know which products to push the hardest.

Use Your Numbers
Don’t just blindly update your numbers – look at the various components, think about what causes them to go up and down, and compare them to your overall business plan. Remember, numbers tell a story. If your cash flow projections are very different from your actual numbers, you need to understand why. What caused the differences, and, more importantly, what impact will that have on other plans you made? If necessary, adjust your projections going forward. If you are not meeting your pre-set goals, then you need to take actions toward doing so or change your goals. Keeping up with numbers is not an end in itself – it’s what you do with those numbers that matters.

Don’t Sweat Your Numbers
My uncle Manny – a CPA – said, “If you’re paying too much tax then you must be making too much money. Don’t worry about the tax. Make the money.” There isn’t much I can add to that.

Love Your Numbers
Okay, that’s taking it too far. How about “respect your numbers” instead? You may not be an accountant, but when you combine hard numbers with the hard work you already bring to your business, you’ll be amazed where you can go.