At the start of 2016, I made it a personal goal to get truly organized in my business. I was praying for a big change, and I knew if I were going to convince my husband that a significant change wouldn’t sink our marriage, I would need numbers to back it up.
If I’m 100% real here, I LOVE crunching numbers. I’m the nerd in our marriage (Dave Ramsey fans know what I’m talking about here). Sitting down with a glass of sweet tea creating an excel file is total bliss for me! Needless to say, I had an absolute blast creating this yearly budget to “show” Josh I could quit my teaching job and we wouldn’t go broke!
What is a Yearly Budget
If you’ve never created a yearly budget for your business before, that’s okay! But 2016 was the LAST year without one. You may have never created a budget because you didn’t know how to. Or you didn’t think you needed one. A yearly budget is necessary for successful businesses. It breaks down your expenses, and you’ll be able to see your profit (and hopefully not a loss) for the year.
Reasons Why You Need a Yearly Budget
- A yearly budget gives you vision for the future. You can see how much money you could make based on your wedding collections and how much you charge on average.
- You can plan for the year. There will be slow months, and busy months! You’ll be able to see what those busy months look like and set money aside during your slower months.
- You will be able to budget for education, marketing, equipment upgrades, and even retirement! (YAY baby step number four!)
- A yearly budget gives you direction in your business. You will be able to (rather quickly maybe) see if you charge enough for your time and talent.
- You can predict how much you’ll owe for income tax
Categories in Loren’s Yearly Budget
When I created my simplified yearly budget, I started first with my weddings. I broke it down two ways. 1 – the number of booked weddings – 20, 25, 30, 35. The second way that I organized, bookings was by average booking price. In the template, you’ll see collections for $2,000 and 3,000. Having this breakdown allows you to see the significant change in income when you raise your prices and allows you to plan for the future.
Next are expenses for every wedding that are guaranteed – second photographer and editor. I budget $200 for each, but for reasons I can explain later, I also wanted to project what my net income would look like if I budgeted for $250. Again, I broke it down with how many weddings I could have booked for the year.
I then looked at my gifting for couples. I try to gift back 3-5% of what couples pay. In the template you will see a breakdown of the cost of each gift, those costs added together, and then multiplied for projected bookings.
After looking at what my expense for editor and second photographer would be and gift giving, I analyzed my fixed expenses. To make sure that I didn’t miss anything, I reviewed my previous years Pixifi account.
Flexible expenses came next. For me, I decided to go with three categories – marketing, education, and equipment. I choose these for flexible expenses because I’m not sure how much I want to spend each year. But I figured the amounts I allotted for would be plenty for the year.
Math Behind the Categories
If you’re not familiar with excel/google sheets, this section may confuse you. Likewise, if you’re terrible at math, this section will confusion you. You may find yourself getting frustrated, take a deep breath and maybe step away for a couple of minutes. The last thing I want to do is overwhelm you with the data.
When I set up this yearly budget, I did so in a manner that if I changed a few numbers, the whole sheet would update and my net income would reflect the changes. This makes it easy for me to update my numbers when I update my Business Plan. (If you would like a free business plan template, click here!)
A Free Yearly Budget Template for Wedding Photographers
When I created my yearly budget a couple of months ago, I never foresaw myself sharing it with other wedding photographers. I wish I could provide an adequate budget for portrait photographers. The truth is, I’m not a portrait photographer, so I don’t know all the expenses that portrait photographers have with each session.
You’ll quickly learn that I like to keep my wedding collections simple and straight forward. My smallest collection doesn’t include any product; it’s all service. Lack of product means that aside from a second photographer and an editor, I don’t have out of pocket expenses for products that I need to calculate. My yearly budget works for me. That doesn’t mean that it’ll be a perfect system for you. However, if you like simple and straight forward, then I bet you’ll love the way I set up my budget.
**If you’re not familiar with finance terms used in this post:
gross income – the income you make before expenses and taxes
net income – the income you make after expenses and taxes are paid
fixed expenses – expenses that don’t change based on the number of bookings.