Advanced planning to prepare for market changes
Joey Ikemoto Photography keeps a record of when weddings book with our studio. I am able to use this to report to forecast financial strength since weddings are a large part of our income as a whole. I project wedding bookings a year in advance. Not many other business have this information to be able to forecast this far in advance.
Here I share an account of how this forecasting worked for my studio in real-world terms. We survived an economic downturn and emerged thriving thanks to planning for the future.
Photo © Joey Ikemoto
At the end of December 2001 we had 66 weddings booked for 2002. A year later, December 2002, we had only 36 weddings booked for 2003.
Forecasting that our weddings would be down in 2003 maybe as much as 45 percent, I did the following at the beginning of 2003 to prepare for this financial downturn:
- Minimized any and all raises
- Cut all Capital Expenditures to absolutely necessity
- Started to slowly cut back employee hours (no panic)
- Looked at every aspect of the business to cut extra “fat”
- Went to the bank and secured bank line of credits just in case we needed it. Negotiated it at the best rate. It’s best to deal with a bank when you don’t need the money.
- Started a bigger campaign directed towards our Kids Club and Senior profit centers
- Revamped all advertisement at the wedding venues to try to keep our name fresh.
- Started to redo web site for a new up to date look (took a year to finish).
- Prayed a lot.
At the end of ’03 we ended up with a profit and never needed the bank loan.
In ’04 we were looking at the same situation. We implemented our Baby Steps program which made up for the lost weddings and quickly built up our Kids Club base.
At the end of December ’04 wedding bookings were back up for ’05.
With the success of the Baby Steps program and so many more sessions, the projection now showed that our weddings were all coming back, too. I was able to make the financial decision to expanded our studio upstairs to include a full digital lab and expanded our camera rooms. A good part of ’05 was dedicated to remodeling the back area of our studio building. Remodeling was completed at the end of ’05 and all Christmas orders were being printed in-house again.
In ’06 our studio is positioned to give our clients even more variety in their sessions. With our digital lab in place, we are able to turn orders over faster at a fraction of the cost of what the lab was charging us. (4x5s at 25¢, 8x10s less than $1.00)
Our projected bookings for weddings in ’06 are back to normal. Our goal for ’06 is to reap the benefits of our actions and pay off as much of the remodeling debt as soon as possible and then prepare for the next downturn in the economy (I hate being in debt).
What I didn’t do was to panic and slash prices or “give away the store.” Many of my competitors did this and are now no longer in business or have moved their business back into their homes. It’s better to take action and prepare for what is coming than react in the midst of the storm. That is where most people make their mistakes.
Photo © Joey Ikemoto