10 Tips For How To Build A Photo Booth Business Emergency Fund
Part 4 of 10 Valuable Lessons I Was Reminded Of While Running a Six-Figure Photo Booth Business This Spring
This spring I had a few pieces of my own equipment break, which always stinks but is expected. This happens every year typically from normal wear-and-tear, sometimes from misuse at events and other times for no explainable reason at all. Instead of running up my business credit card debt and spending more than I’m able to pay off by the due date (checkout my previous blog about how to use credit cards wisely here!) I was able to easily tap into my business emergency fund and cover the costs, then immediately build it back up within a short period of time! No stress and no debt as a result of this!
That said, as a seasoned photo booth owner running a thriving six-figure photo booth business, I can't stress enough the importance of having a robust emergency fund in place. But believe it or not, most photo booth owners (including myself up until two years ago) don’t have one!
While owning a photo booth business can be incredibly rewarding and fun, we all know unexpected challenges and expenses can arise at any moment. And these can cause a lot of stress and financial hardship if you don’t plan accordingly for them.
Having a financial safety net like a photo booth business emergency fund can make all the difference between weathering the storm vs. facing setbacks that result in a lot of stress and financial debt, which is why my emergency fund has brought immense peace of mind for me knowing no matter what unexpected expense pops up I’m covered, and I want that for you too!
Because I’ve had so much success with not only building but maintaining a 6-month emergency fund for my own photo booth business over the years, I want to share my expert tips for how you too can build one! Let’s get into it!
Create a Budget and Stick to It: The first step is to develop a comprehensive photo booth business budget that outlines all of your business's monthly expenses and revenue projections. Pro Tip: If you aren’t sure how to project your revenue, take a look at past years and conservatively estimate what’s the average and then minimum amount of gross revenue and net profits you can reasonably expect to make. If you aren’t sure how to do this, you can review your tax returns and check with your CPA! By creating and adhering to a budget, you'll have a clearer understanding of exactly how much of your business profits (money the business earns after all expenses are deducted) you can allocate towards your emergency fund each month.
Establish a Clear Goal: Determine exactly how much you want to save in your business emergency fund. Best practice is to aim for at least three to six months' worth of your photo booth business operating expenses. This allows you to comfortably cover any unexpected costs that may arise. For example, if you determine your monthly overhead (photo booth business operating expenses) is $3,000 then start with saving $9,000 ($3,000 per month x 3 months). Work backwards from here to figure out the exact amount you are realistically able to set aside for your emergency fund each month. Some quick math shows us that if you set aside $500 per month for your emergency fund it would only take you 1.5 years to save up $9,000! Now that’s doable, especially if you’re charging a premium for your services that’s over $1,000 per photo booth rental! Pro Tip: Don’t stop at 3 months! Once you hit your 3 month goal, start saving toward your 6 month goal ($3,000 per month x 6 months = $18,000.)
Set Aside Funds Regularly: Treat your photo booth business emergency fund as a non-negotiable expense and prioritize setting aside funds regularly. Consider automating transfers from your business account to your emergency fund to ensure consistency so you meet your goal and have something to celebrate about! Pro Tip: Don’t leave your business emergency fund in a checking or savings account that doesn’t earn you money! Make sure you move it to a High Yield Savings Account (HYSA) (checkout my previous blog here about which HYSA’s I personally use and love) or consider investing it in a CD ak certificate of deposit at your business bank, or the bank you have business credit cards from (learn more here about the two business credit cards I personally use and recommend.)
Cut Unnecessary Expenses: Review your photo booth business expenses regularly and identify areas where you can cut costs. This is literally one of the best things you can do and stay on top of for your business. By reducing unnecessary expenditures, you'll free up more funds to contribute to your emergency fund and stop wasting money on things you don’t need or that don’t generate ROI for your business. Pro Tip: The cost of equipment can add up! Checkout some of my favorite affordable photo booth equipment that I love and that makes my event workflows super easy.
Increase Revenue & Streams: Now the you have plan and action steps to save for your business emergency fund, start exploring opportunities to increase as well as diversify your revenue streams within your photo booth business. Are your packages priced under $1,000 currently? Then it’s always a good time to consider increasing your package prices, especially if you’re providing high-quality services for corporate events. You also can look at offering add-on services, such as custom branding or themed props or new photo booth/event packages, to generate additional income that can be allocated towards your emergency fund. Pro Tip: As the CEO of your photo booth business, remember…your time is best spent on revenue-generating activities! Click here to learn more about how to delegate wisely to maximize your profits so you can do this.
Monitor Cash Flow: Stay vigilant about monitoring your cash flow and identify any potential cash shortages early on. Remember when I talked about creating a business budget and being able to project revenue above? Knowing your expenses and being able to identify your slower seasons vs. busier seasons helps you develop your business and financial strategy which is key, not only to running a profitable six-figure photo booth business but building up an emergency fund. For example, if you know you have to shell out a lot of money each year for software licenses then plan accordingly! By addressing and planning for financial challenges proactively, you can prevent them from escalating into emergencies that deplete your emergency fund, or ability to build it. Pro Tips: 1) I plan most of my photo booth software and equipment purchases around Black Friday and during PBX when there are deep discounts on products I use regularly. This is a great strategy and way to save money. 2) I love using this online CRM and this online accounting tool for tracking cash flow.
Invest in Insurance Coverage: If you’re a photo booth owner, then odds are you have insurance, especially if you service corporate events which require it. That said, investing in insurance coverage tailored to your photo booth business, such as liability insurance and equipment insurance, isn’t always the norm in our industry…but it should be! While insurance premiums may seem like a crappy additional expense, they are 1) a business write-off and 2) necessary in order to provide invaluable protection in the event of unforeseen circumstances out of your control (checkout my protective Master Series Agreement written by an expert attorney and edited personally by me to include my 7+ years of corporate event experience for even more robust protection.) Not only is insurance helpful for reducing financial stress and debt, remember it’s also a business write off. Pro Tip: Make sure you shop insurance rates regularly to get the best deals, and update your contracts to keep yourself covered!
Build Relationships with Suppliers and Vendors: Cultivating strong relationships with your suppliers and vendors (e.g., companies that sell you props, backdrops, photo booths, software, etc.) usually results in them being more willing to extend payment terms or offer discounts during challenging times like when products break, your purchasing products in bulk, etc. These cost-saving measures can help preserve your emergency fund. Always keep positive relationships with the people who help your business stay in business, including your team!
Review and Adjust Your Emergency Fund Regularly: Periodically review your photo booth business emergency fund goals and assess whether any adjustments are necessary based on changes in your business's financial landscape. Be prepared to increase your savings target as your business grows, and definitely if your business overhead (expenses) grow. Pro Tip: I set a reminder for myself on my Google Calendar to review my business financials and savings goals once a month. This ensures I’m always staying on top of my numbers.
Stay Disciplined and Be Patient: Building an emergency fund requires discipline and patience. Stay committed to your savings goals, even during periods of financial stability, to ensure you're adequately prepared for any future challenges. Remember, hard work pays off and results take time - stay the course.
By following these above tips and making financial preparedness a priority for your photo booth business, you'll be better equipped to navigate unexpected financial setbacks and safeguard the long-term success of your business. Remember, it's not just about weathering the storm – it's about thriving in the face of adversity…and as a photo booth owner you can absolutely expect challenges to arise, trust me! Be prepared with a photo booth business emergency fund!
Stayed tuned for Part 5 that includes photo booth business Lesson #5 (Charge A Premium.) I’ll be sharing my favorite tips for how to price your photo booth packages strategically and fairly (specifically for corporate events) to give your clients great options and maximize profits for your business.
Friendly reminder: Affiliate links were shared in the above blog. That said, I do not believe in sharing affiliate links for the sake of making money alone; rest assured, all of the links are to resources I personally use and love. I may receive compensation for these things should you choose to purchase them, so I thank you in advance for this.