Developing a Financial Plan (Part 1)

In this four part series I will be explaining the steps to develop a financial plan for your business. If you do not have a financial plan template, I have included one here that can be downloaded. In this first article we will discuss how to estimate your monthly sales and expenses and the cost of sales and expenses.

Please note: The information in the article is for informative purposes only and is not financial advice. You should seek appropriate independent professional advice before making any decisions based on material found on this website or any linked sites.

Estimate of Sales and Expenses

Estimating your monthly and annual sales and expenses for the business will help you understand whether you can expect to make a profit, loss, or break even in the first year.

Although many businesses within other industries do not make a profit in the first year, you should generate a profit in the first year assuming that your marketing strategy is executed effectively, and service quality is of a high standard.

To estimate your profit, you must first establish your pricing strategy so that you know how much you will earn from each type of photo shoot and other services booked by your clients. Estimate how many bookings you will receive for each service each week and then multiply this by four to calculate the total monthly revenue. Make an allowance for growth each month as you repeat the calculation for the next twelve months of operation. The total of 12 months will give you your total profit.

Cost of Sales and Expenses
The cost of sales includes transport and editing costs in addition to your time (or contractor’s time) spent traveling and completing the services at the property. Editing or post-production costs will apply to all services you provide so you must ensure these processes are set up before starting your business.

Travel expenses include the fuel/gas used to and from each shoot as well as any parking fees that you may need to pay. If you are doing many inner-city shoots and there is no visitor parking available, the parking fees can be quite significant. Other business expenses are related to equipment purchases and repairs, phone and internet, marketing and advertising costs, vehicle expenses (maintenance, lease repayments, car insurance and registration). Many of these are predictable expenses as they recur on a monthly or yearly basis and some need to have an allowance made for them as they are less predictable (i.e. equipment repairs and vehicle maintenance).

If you complete your profit and loss projections and the results show a loss, it could be due to multiple issues such as your prices being too low, your expenses being too high, the anticipated demand for your services is not strong enough or the results from your marketing plan are not enough to generate business growth.

Note: This article is an extract from the resources on the Education page on this website.

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