I spent some time with Jerry Weiner at Skip’s Summer School and he’s got an amazing business head and a lot of good information to share, but you guys are photographers and most photographers are artists.  That means you’re better at creating than you are at implementing and managing.   Today’s post is one of his best yet and definitely points out some lessons we can all learn with Annie Leibowitz in the news lately.

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.

If you haven’t seen the news lately, famous photographer Annie Leibowitz is reported to be in deep financial trouble. Though she earned tens of millions of dollars during her career, she is said to be at least $24 million in debt and in danger of losing the rights to her own work forever. How could this be? Was Ms. Leibowitz affected by the current recession? Maybe she was a victim of a Ponzi scheme?

This story isn’t new; Annie Leibowitz’s financial problems started long before the current recession and years before anyone heard of Bernie Madoff. Her story is a sad but familiar one which provides valuable lessons for all of us. It has nothing to do with not having made enough money and everything to do with not being financially responsible. Annie Leibowitz’s specific problems are reported to relate to the purchases and renovations of a number of expensive pieces of real estate as well as her out-of-control personal spending.

Despite this famous artist’s considerable annual earnings, the debt-service, staff and upkeep of her properties, along with a free-spending life style, outstripped her ability to have a positive cash flow. The only solution when that happens is to take on even more debt to feed the negative cash flow, using whatever assets you have not yet pledged as collateral. It is a vicious cycle that usually ends in disaster.

The lessons of Annie Leibowitz, obvious as they may seem, are worth reviewing. Clearly, not everyone grasps them fully.

It’s Not About How Much You Make…
…it’s about how much you keep. Some stars end up poor while some schleppers retire comfortably. The math is pretty easy to do: the less you spend, the more you keep. Making more certainly helps you keep more (again, only if you don’t spend it all). Of course, that doesn’t mean a photographer shouldn’t spend at all. New equipment needs to be purchased, marketing efforts deployed, and employees rewarded for their contributions. Building a business to be successful over a long-period of time requires as much of an investment in your employees (assistants, second shooters) and products as it does in your cameras and other equipment – maybe more.

Don’t forget about your business plan. Surpassing expectations is a wonderful thing, but make sure you know what to do when that happens. Many small business owners consider any earnings above their annual expectation to be a bonus that should be saved for those years when things are not as good as expected. “Catch a falling star and put it in your pocket. Save it for a rainy day.” When you have an unexpected increase in the amounts you bring in, thank your employees appropriately and then do what your plan suggests. If you don’t have a plan, put the excess in the bank and develop one.

Debt is a Four-Letter Word
Without debt, most people would not be able to buy a car or a house, among other things. This type of debt is understandable. What is not understandable is spending more than you need to when you buy on credit. If you pay cash and want to “buy up,” that’s one thing; however, doing so when you borrow money for the purchase makes no sense. Buy only what you need. Finance only what you can’t pay for with cash. Pay off your debts as quickly as you can. When you owe someone for something, it is that much easier for them to take it away from you. Being debt-free should be a goal everyone works toward.

What about credit cards? Credit cards and direct vendor accounts should be used for transactional purposes, not financing. These balances should be paid off in full every month. Owing large amounts of transactional debt, especially if the amounts are going up, is not good. Vendors, banks and other lenders have limits to the amounts they will lend to any one customer. Once you reach that limit, then what will you do? One of the abject lessons of the Annie Leibowitz story is that there is a wall out there somewhere for each one of us, no matter how rich or famous.

Get ‘em While They’re Hot
Annie Leibowitz reportedly regrets not doing more when she was in her prime to sell her work. She always took a very long time to deliver to clients– years in some cases – even after receiving payment. Doing what it takes to put together prints for sale was something with which she reportedly didn’t want to be bothered, and now she regrets missing out on the extra income.

The artistic, right-brained talent, when mixed with a healthy overdose of perfectionism, can result in what appears to the rest of us as rank procrastination. Truly famous photographers can get away with it – maybe, – but reputations are made and broken based on an ability to deliver within a reasonable amount of time. Fortunes are made by capitalizing on a good name while it’s hot. Waiting to do so later is a gamble not worth taking. Why wait to market and promote yourself? No matter how well your work is doing, you can always sell it to more people in more places.

Annie Leibowitz is one of the great photographers of all time, so, regardless of how she got to this difficult spot, it is a painful thing to watch. It remains to be seen how this chapter in the on-going saga of the financial trials and tribulations of Annie Leibowitz will resolve itself, but things don’t look good for our heroine at the moment. No matter how this turns out, however, the lessons to be learned are clear and real: pay attention to what you make AND what you spend, use debt only when necessary and sell what you can when you can – you don’t know if you’ll get another chance to do so later.