January 8th, 2009 in 
NZ Dairy Farm
In my last post I suggested thinking twice before you cut back on your job costs (albums and printing) to survive the recession. Why? Because, among other reasons, your job costs are very unlikely to be more than 15-25% of your total expenses. Even slashing them in half won’t save the world. So what could you do?
Farmers know more about good times and bad than most of us. New Zealand dairy farmers, for example, know they must expect droughts and floods, not just good weather, and commodity prices that fall as well as rise. When everything conspires to make for a great year they know they can’t bank on it happening again any time soon.
So how do our farmers cope with bad years and diminished incomes? Amongst other things “they put their check books away” (cheque books outside North America). They had a great year in 2007-8, but this year prices are dropping and they face an uncertain world economy.
So, no new tractor, no new car, no house renovations. Those can wait for the good times. But they do look after the farm.
In your case putting your cheque book away might mean no new camera, no new computer, no new car, no house renovations. No new toys.
Here’s an interesting thing. According to my spreadsheet I’m spending about as much on “asset replacement” (new toys) as I am on albums and printing (more if my bookings drop). Also interesting: if you don’t buy that new camera your clients won’t even notice.
Heather and I were having drinks at the beach with two photographers last Tuesday night, and discussing this very issue. Rod’s retired but his mate said that, in his opinion, photographers need to upgrade their cameras every couple of years. “Look at Rod’s,” he said. “It’s aimed at the amateur market and it’s better than mine!”
Then he looked down the beach, put his feet up on the rail and said, “No, I can do without for now. I’d rather be surfing.”
Doing without mightn’t seem like fun, but take a lesson from farmers. Don’t overload the business that supports you and the life you love. It might take some people a while to pay down their debts but racking up new ones will make it worse. The media is getting close to saying it’s our patriotic duty to spend, spend, spend. No it’s not. We know most of us need to tighten our belts, and now’s the time.
More to follow.
Cheers, Ian
PS While you’re at it, take a hard look at your overheads. In my spreadsheet I’m spending more on my overheads than than I am on asset replacement or job costs.
PPS Don’t forget, my figures mean nothing in your case. If you’d like a copy so you can analyse your own business, please email me. It’ll take a couple of days for me to respond, sorry.
People who like this post would also like:
