Number crunching – The vital statistics you need to know | Creative and business resources for photographers

Number crunching – The vital statistics you need to know

September 13th, 2008

This picture was taken for World Pearl and I made the jewelary the star. Taken with a Hasselblad H2/Phase One P25 using natural light.

This picture was taken for World Pearl and I made the jewelery the star of the shot. Taken with a Hasselblad H2/Phase One P25 using natural light.

If you have ever run out of petrol in your car because you ignored the fuel gauge you will know how disastrous taking your eye off the indicators can be. Here are the top 6 stats to track in your business.

When you are in charge of your own business it is vital that you have a hold on the financial numbers that drive it. You need to know and act upon these numbers almost every day. These are the health indicators of your enterprise.

Here are the key business indicators you must have command of. It is best to chart them on a spreadsheet in columns to make it easy to spot areas that need attention. I suggest you use a standard sample of weekly, monthly, quarterly and yearly so that comparisons with previous statistics are easy to do.

1. Number of leads or enquiries generated. This is the key number to test your marketing effort. Your marketing success at a wedding show can be measured by the number of qualified leads you take home to be followed up. A qualified lead in this case would be someone getting married on a date that you are available and who has seen your product and prices and is happy with those.

2. Where did the new leads come from (the marketing sources; e.g. Adverts, referrals, website etc)? It is important to test and measure the effectiveness of all your marketing effort.

3. Lead conversion is the next important number to track. How many of the leads generated by your marketing effort are you actually converting into paying customers?

Can you see the wood for the trees in your vital number tracking?

4. What products did your customers buy? Subtle changes over time from one style of product to another can be spotted in an instant with the right figures. These can then be used to help drive trends. For instance if your clients are tending to buy less prints and albums and are buying more pictures on disk then perhaps you should start developing unique products that deliver your pictures digitally. We have seen a dramatic drop in online print sales and we are currently switching to an online digital image download system as a result.

5. How much did they spend? It sounds obvious but tracking average invoice values is important. Are your clients spend rates increasing faster than inflation or slower?

6. How often are your clients having new photoshoots? Repeat rates are key long term indicators of the value a business has going forward.

It's easy to spot a rising star in your product line if you track your figures carefully.

It's easy to spot a rising star if you track your figures carefully.

The other vital numbers are handled by your accounting package assuming that it is kept updated regularly and that your bank accounts are reconciled. Your bank balance, gross profit, net profit, expenses, tax liability etc. all need to be known in an instant. To track changes using an accounts package use the balance sheet report. This is like a snapshot of your business at any given time. You can input two dates and the report will show the changes in percentage or real terms.

If you want to get to grips with your stats then why not have a 1:1 consultation with Damien Lovegrove. Learn how to take control of your business and achieve financial mastery.

If you found this helpful, you may also like to read Cash flow – 7 steps to check