The goal of a photography hobby is to make great photographs. The goal of a photography business is to make a profit. It's nice if the goals intersect.

Beth Broderick and Anton Mel rehearse for "33 Variations." 

We've gone far afield from the usual emphasis on this blog which has mostly been about how we work commercially and what works for our goal of making all this fun photographic gear actually pay off...

Recently I've flirted with the idea of just throwing in the towel and retiring from the business but after a couple weeks of "leisure" I decided that was a very bad idea. At least for me. Interestingly, I didn't choose this career (photography) because I thought I would get rich or famous but because it was (and still is) so much fun. Maybe that's a bad reason to enter a business but from my vantage point it was a pretty good way to structure a life. I get to meet new people all the time, solve technical problems (which seems to be good from brain health) and I get to transfer what I learn from solving other people's technical images requirements to my own hobby; which is also the taking of photographs. 

My business goals in the past were similar to those of most for profit companies. I always wanted to keep my schedule full and keep expanding my client base. My target every month was to generate income sufficient to cover my business and my family's "burn rate" while also being able to bank profit from the business into investments outside the industry. The idea of investing outside the industry was pounded into my head by a good friend who was also a brilliant CFO. She pointed out that diversification across different markets made sense as far as financial security goes. She also pounded into my head that compound interest could be either my best friend or my worst enemy --- where financial security is involved. 

To that end I followed (and still follow) the advice of Warren Buffett. He is great at picking companies to invest in but I have neither the time nor the skill to try and compete with his knowledge and skill. But at some point he suggested that if he were to do financial planning for his wife so she would be secure after his death he would instruct her financial advisors to put 90% of her money into an index fund tied to the S&P 500. He also more or less rejected the supposed wisdom of putting a percentage into bonds as a safety move. Buffett suggested that a portfolio for a person with enough wealth to weather ups and downs in the market would do better, over time, being 90% invested in equities. Stocks. And reiterated that the index funds tied to the S&P 500 routinely outperform the vast majority of "stock pickers" and "experts" over time. Math seems to have its own momentum.

Over the years I've met many different kinds of professional photographers. Each seemed to have his or her own ideas about investing. Too many of them kept investing solely in their own businesses but if one is a single person business then, at some point, that model breaks down. You'll have a hard time selling the business to someone else if you are the business. You're pretty much the sole asset. The gear represents, now, just pocket change.

I have friends who invested in real estate. Some in real estate outside their business (houses, condos, investments in commercial properties) and some with a focus on their businesses (buying a building for a studio space). At times I thought the idea of owning the property and building for your own studio would be a good idea until it was pointed out to me that during all the weeks or months during which the photo market is akin to a "dry well" you aren't making any money from that investment while it's sucking money out of your business checking account for repairs, mortgage payments, taxes and utilities. If you buy a building with the idea of renting it out to another business you'll generally have a much more secure and repeatable positive cash flow from it. 

It probably would surprise very few people to know that B. and I are relatively conservative investors but we've been at it long enough for compound interest to give us a nice boost. We made some smart bets over the years and it's been a very rare period in which the business income didn't cover our monthly burn rate. I can recall three or four separate months over the span of 38 years. 

I spent the last several years being a bit lackadaisical about business in general and marketing specifically. Too much time toying around with ideas of retirement or gaming different investments. But recently I've made up my mind to keep my hand in --- but with an eye to just matching our current burn rate instead of reflexively aiming for additional, investible profit as a necessary goal. To that end I've done a few things that always seem to work.

I've been writing occasional posts on LinkedIn, where I have several thousand connections. It's a great resource since nearly everyone on that social media platform who interacts with me has been vetted (invited by me ) and are either former and current clients or friends and acquaintances in the larger industry of advertising, marketing and public relations. No --- I'm sorry. I don't add competing photographers to my "family" of connections. 

It seems like every time I post something on LinkedIn it ends up resulting in at least one project. That's a great return. 

I'm also addicted to using the  U.S. Mail as a marketing tool. I send out post cards just as I did in the 1980s and 1990s. I also write actual, personal letters, printed on nice stationery, and send them to clients. Usually they are sent as a "Thank You" note but sometimes I'm passing along an interesting idea. 

This sort of marketing seems to play to my strengths. Since it is highly targeted I don't waste a lot of time qualifying prospective clients. This keeps me from having to spend a lot of time on the phone or in email turning people down. I also try to "pre-qualify" people with pricing. If there isn't at least a fee of $2,000 for a one day project I am generally not interested in taking a job on. This also keeps people from asking for "half day" shoots or half day pricing. I've never had a job that only takes half a day. Good work just doesn't happen like that. There's always the trip there and back, the post production, the billing and the logistics of administration.

The only benefit of aging that I can see is that you can allow yourself to be pickier if you've made a close friend of compound interest, and had the discipline to lead a frugal past. I imagine that if you haven't figured out how to achieve a modicum of financial independence by your 60s you're pretty much shit out of luck. For those folks I say, "Thank goodness for Social Security." 

If you do the math, a couple who own their home outright, have no debt and live a quiet, middle class lifestyle, kids well raised and out of the house,  might have a burn rate of about $5K to $6K per month. I'm sure it's much, much higher if you live in NYC, London, or San Francisco. My target now is to hit a billing rate of about $6K each month. If you bill a minimum fee of $2K per shooting day (plus usage rights, of course) you'll probably end up working to hit that burn rate with three shooting days and three post production days a month. By a certain point in your career you'll hope that your investments work around the clock so you don't have to. And if you've invested somewhat intelligently you can pretty much count on it in the long term...

That leaves you something like 24 or 25 days a month to devote to your hobby. And if your hobby matches your avocation you'll have the lucky intersection that allows you to leverage your learning back and forth, from business to pleasure and back again. You learn to be more and more creative by practicing the fun part of your passion and you get better and better at making everything work well from what you learn, technically, doing complex jobs for clients. What a wonderful mix.

The exit strategy is to politely decline more work once I hit the point where there isn't enough work coming in to cover the burn rate. And it seems, at least for me now, that it's totally up to me. But once I hit that point I'll ditch work altogether and find something equally fun to occupy my time. 

I've watched people who have become wealthy closely. I swim with a bunch of them. To a person the ones with real (not inherited) wealth have so many things in common. They are good at delaying gratification. They scrimp on things that they don't care about. They saved for the long term. They did their due diligence before investing. They consistently lived far below their means. They ignore status symbols. They depend on professional advice. They look for quality and buy for the long term. They don't get sucked into investment fads such as Crypto. They know how to negotiate. I try to learn from them. It's fun and profitable. 

Over the years the only place I can think of where I am less disciplined is in the acquisition of gear. I love a good 50mm lens or a really cool camera body... But even there, if you were to look behind the scenes you would see that nearly every piece of gear gets used extensively and in the production of profitable work as well as fun work. This month I bought yet another 50mm lens. It's the Voigtlander APO-Lanthar and it costs $1,000. The second day I had the lens I photographed five environmental portraits with it and billed twice the cost of the lens to the client. I'll use the lens again and again. In my mind each subsequent  use pays for the lens over and over again. From the perspective of my inner hobbyist it was a silly and unnecessary (though fun) expense. But if I conjoin hobby with business the calculation can be much different. And more emotionally satisfying.

In retrospect one of the smartest investment strategies that we implemented was to minimize the amount we put into tax deferred investment accounts (traditional IRAs, SEPs, etc.) and to maximize our use of Roth IRAs and after tax brokerage accounts. When we were in our highest earning years everyone was tossing as much money as they could into tax deferred retirement accounts on the premise that they'd be in a much lower tax bracket when it was time to pull money out. What a lot of my friends are finding out (if they invested well) is that they are either in exactly the same tax bracket as they were in their high earning years or an even higher one because they invested well, got used to living well and now have to pay regular income taxes on the withdrawals from their deferred accounts. 

They've also discovered that they live in simmering anger about RMDs (required minimum distributions) which require them to take money out of the tax deferred accounts even if they don't need it and to pay taxes on it. A more vexing realization is that the combination of Social Security benefits plus the RMD can, and frequently does, push them into a higher tax bracket --- which also affects their Medicare costs. 

Tax deferred accounts make sense if you decide to stop working altogether at 65 or thereabouts but you don't want to start taking Social Security until you hit 70. Pulling money out of the tax deferred accounts when you aren't generating any income and not accepting Social Security might pull down your cash flow but you also can maintain a much lower tax bracket that way.  The logic is then to only touch the money in your Roth IRAs at the very last ---- all the interest and appreciation in those accounts can be taken out untaxed and isn't subject to RMDs. At that point it becomes pure, tax free income. 

The conventional brokerage accounts are the middle ground. You only pay capital gains tax and only on the appreciation. And, for the foreseeable future it looks to me like capital gains taxes will stay pretty darn low. 

Also, remember that as you near retirement you've probably paid off your house. So there's no mortgage interest deduction anymore. The kids have aged out and moved out so you don't have dependents to write off. If you wind down the business you'll kiss goodbye to depreciation and other tax advantages.

The question I've always heard for decades is: 

Can you make a living as a photographer? I can't speak to someone who is just now entering the market and having to figure out where the profit will be going forward but I do know more than a handful of local photographers who are retiring, or just quitting because the profession has changed so much. To a person they have net worths that surprised me. Can you retire on five or six million USD? It would be fun to find out.

Nearly all well run businesses in big markets can generate significant income. Your eventual success at financial security will depend  not only on how much money you make but on how much you managed to keep.

TLDR: Put away money every month. Don't buy stuff you can't afford. Invest outside your business. Enjoy what you do but always remember to get well paid for it. Marry someone whose financial goals align (closely) with yours. Buy a fun piece of gear from time to time but make it pay for itself. Shiny, fancy cars are a black hole for money. Vacation homes are a galaxy of black holes. Going out to eat at every meal is financial suicide. Invest in happiness, health, family and rock solid index funds. You'll be okay. But I'm not making any guarantees. The world is a chaotic place...

And that's my blog post about business for the month.

disclaimer: I am not a licensed anything. Not a financial advisor. Take my written advice with a grain of salt (or a whole shaker full...). This is just what worked for my business and my family. No promises. No warranty implied or stated. If you are confused then find an advisor who is a fiduciary and ask them for advice. My advice today? Stay cool.