How We Did It - Jeff & Carolle Dachowski
Jeff and Carolle Dachowski had plenty of business but never enough time.
By Jeff Kent
Business seemed to be going well for Dachowski Photography, the portrait and wedding studio in Manchester, N.H., that Jeff and Carolle Dachowski launched in 2003. Strong marketing at the outset quickly built their clientele, and the business continued to grow steadily.
Then there’s the story behind the story. With their studio open for business from 9 a.m. to 9 p.m., six days a week, the Dachowskis were working all the time. Growth brought even more responsibilities and less time off. The couple felt they were constantly playing catch-up.
Early in 2007, the Dachowskis began working with PPA Studio Management Services (SMS). Scott Kurkian, who heads SMS, helped them identify the problem. “Our first analysis showed that Dachowski Photography had made good money in 2006—in fact, doubled the 2005 profits,” says Kurkian. But there was a fatal flaw in the system. The Dachowskis used QuickBooks for accounting, but their profit and loss statement was useless. “I nicknamed it ‘The Never-Ending Story,’” says Kurkian. Four pages long, it told them nothing about how to improve their business.
The SMS analysis was the first true picture of how the business was doing financially. For one thing, the analysis showed the Dachowskis the numbers they’d been tracking for the last three years were misleading. In order to generate their profits, Jeff worked 80 hours a week. Because his labor was not factored into the studio’s cost of sales, those robust profits weren’t so impressive.
Jeff’s long hours had come at a personal cost as well, leaving him only one night a week to be at home with his children. Yet putting in more hours seemed to be the only way to increase revenues.
“Our goal with Jeff and Carolle wasn’t an easy one,” says Kurkian. “We needed to reduce their workload substantially while maintaining profits close to those they achieved in 2006. We asked them what they needed to decrease their workload.” They decided they’d need two employees to take over some administrative and editing work. They realized adding two employees without increasing sales would dramatically cut into their profits.
To get the help they needed, they’d have to increase sales revenue. Stepping up marketing and adding clients wasn’t the answer. There was no guarantee they could do that, and besides, the goal was to lighten the Dachowskis’ workload.
So Kurkian and the Dachowskis focused on the studio’s sales averages, which the SMS analysis clearly showed were far too low for the amount of time they put into their images. Part of the problem was the pricing.
“We figured our prices should be based on the cost of outputting a print on our printer, multiplied by some magic number,” says Jeff. “We knew we should factor in expenses, but we thought that magic number should cover everything.”
Kurkian advised the Dachowskis to reevaluate their pricing based on all the actual costs of producing the work, including the cost of their labor. “This increased their prices significantly, which of course made them nervous,” says Kurkian.
The next step they took was examining the studio’s operating expenses to find areas that could be better managed, and thus help pay for the additional employees. They found they could lower their administrative costs by 3 percent, halve the percentage of marketing costs per average sale, and reduce equipment costs by two-thirds from 2006.
The SMS analysis also revealed that the Dachowskis’ studio overhead costs were exceptionally low, about one-third the maximum amount SMS recommends. This showed they could better afford the new employees without sacrificing profits.
Another problem behind the Dachowskis’ low sales averages was their ineffective sales techniques. The solution: They invested in sales training for their one sales associate, and added some new sales tools. The effect was almost immediate. The Dachowskis’ 2007 sales increased by $60,000.
“When we did the 2007 projection, we budgeted for a slight increase in profits for the year, with the goal of helping the Dachowskis work less and make the same amount of money,” says Kurkian. “But with all the changes they made, not only does Jeff get to spend evenings with the kids, but they also managed to increase the studio’s profits by more than $50,000! They achieved a net profit plus owner’s compensation rate of 50 percent, which is unheard of for a photography business operating out of a retail space.”
Now the Dachowskis’ work week is Tuesday through Friday, plus one Saturday a month. The schedule is much more forgiving, allowing time for the couple to recharge, get away from the studio, and focus on their personal lives.
“It’s never easy when someone tells you to change,” says Jeff. “But our big goal was to have more balance in our life, and we have that now. SMS helped us turn our focus to our young family, and create a better work atmosphere with better systems in place.”