For those of you who see yourselves as what I call “physique entrepreneurs,” then it is vital for you to know how to determine whether or not your modeling business is succeeding financially. I define "financial success" as generating sufficient income to cover all of your expenses while enjoying enought profits that you re-invest your business or yourself, or spending on something you have long desired.
Regrettably, very few male fitness models know how to determine if their businesses are making a profit or just breaking even, or driving them into debt. (Truth be told, very few photographers know how to do so. So don't feel so bad.)
But after reading this post you will know how to do so!
Dig up a pen and some paper (or for the tech-savvy launch your spreadsheet programs on your phones, tablets, or laptops) and put your thinking caps on, and let’s get started:
Step 1: Determine Your General Living Expenses
Itemize all of your basic living expenses (rent/mortgage, utilities, food, auto payments, mobile phone payments, cable television, entertainment, credit card payments, etc.) You can use “best-guess” estimates for right now. But I strongly encourage you to get the accurate dollar amounts for each expense item at a later time. It is very likely that your initial figures, this go-round, will be inaccurate on the low side.
TIP: Most of your living expenses recur on a monthly basis. So, calculate your all expenses for a normal month. Then multiply that total by 12. Then add in the total amount of any less-frequent recurring or once-a-year expenses (ex. certain insurance payments or taxes) for an average calender year. Now you have a more or less accurate picture of what your yearly living expenses are.
Step 2: Determine Your Modeling Business Expenses (Business Overhead)
Itemize all of the costs involved in creating, developing and marketing your modeling business (gym membership, training fees, supplements, tanning/skin care, hair care, special clothing, contest entry fees, travel expenses, web site hosting, business cards/zedcards, photography fees, etc.) on yearly basis.
Similar to your living costs, a number of these business expenses are monthly in nature. So calculate a regular month’s business expenses and multiply that amount by 12.
Identify all of your less-frequent recurring costs (i.e. fitness show entry fees, computer hard- and/or software upgrades, etc.) for a normal year. Again for the present, “ball park” your expenses but verify your estimates later against your records to ensure the most accurate financial picture.
Step 3: Calculate Your Break-Even Point
Take your 2 totals, your annual general living costs and your yearly business overhead costs and add them together:
Annual General Living Costs + Annual Business Overhead Costs = Your Annual Break-Even Point
IMPORTANT NOTE: In order to arrive at a more accurate break-even figure, you would need to calculate the amount of interest you pay, on an annual basis, on your credit cards, student loans, mortgage or the like. Depending on what area these interest costs fall in (general living costs or business overhead), you would add the respective amounts to the appropriate total above.
So, why is knowing this break-even point important?
With this single number, you can now (and fairly quickly) determine if you are actually earning enough money to meet all of your personal and business obligations with the income generated from your modeling business. Calculate how much you have earned from your modeling work for a given year and see if that amount is less than, equal to, or more than your break-even amount.
Just as quickly and easily, you can determine whether or not you are making a profit from your modeling income. Remember: profit is the amount left over after ALL of your expenses have been paid.
If you discover that you spend more money than you than you make (which is easy to do if you are placing your some or all of your expenses on a credit card and only paying the minimum due),
OR
If you find that you are covering your expenses but only making a small amount of profit,
But don’t despair!
You are in the perfect spot to take conscious control of your business and grow it to the level and in the direction you want.
Now having read this far (I am honored if you did), I hope you are now asking yourself, “What if I’m operating in the red? How do I start to grow my business? What direction do I want to take my business? How do I grow my profits?” You are now thinking like a true, blue business owner. By asking these questions, you are beginning to prime your entrereneurial pump.
Over the course of future posts, I will share ideas that I hope will rev you up!
Has this post been helpful to you? Either way, pleas let me know by posting a comment below.
[END NOTE: Many of you who have read this far might be thinking, "Modeling is not my only source of income. I have a regular job that I rely on financially." And I say, no problem. Assuming that your non-modeling income covers all of your general living expenses, then let's compare your modeling business overhead costs with your modeling income. Is your income less than, equal to, or greater than your overhead? Are you earning the level of profits that you want?]