Tuesday, April 19, 2011

Exit Strategy - Long term thoughts in a here today, gone tomorrow world.

Exit Strategy ... Such Big Words I’m Hearing Lately!

It’s funny. My world tends to be a largely financial world that sometimes intersects with photography. (I wish it intersected more but I can’t control that!) I forget that the marketplace I serve - a marketplace of professional photographers - is propagated by business people who focus on photography, but who must, on a fairly regular basis, intersect with a world of business and finance. It simply slips my mind.

Every once in a while though it comes crashing through, as it did the other day when I was in a conversation with a photographer who asked me what I thought her exit strategy should be. Huh? Your ‘exit strategy?’ It was kind of funny really. Two things crossed my mind almost simultaneously (I nearly short circuited myself as having actual thoughts is not a common occurrence and having two at once was severe overload!). One. What the hell are you thinking about exit strategy for? Two: That’s really smart that you’re thinking about exit strategy.

As incongruous as this sounds, both thoughts are actually logical. Here’s the thing. An exit strategy is a smart thing to be thinking about. But the term exit strategy is an odd one for a photography business. Are you looking to exit photography and achieve some value or are you looking to build enough personal value that you can retire? See the two things are really completely different. An exit strategy is a financial strategy employed by a company that needs to plan various transactions or events allowing investors to achieve a return on their investment. These can be public or private stock offerings or sales. (the sale of the company in whole or in part). A retirement strategy is a strategy employed by a business person that ensures income at the point at which they are no longer working, either through savings or through annuity.

I hear from a lot of people who have decided that their “exit strategy” (I don’t know where the term is being propagated but it’s out there enough that someone is obviously using it in the sector - probably in a seminar about how to exit your photography business!) is to do seminars and teach stuff to new photographers. When I ask what the role model for that exit strategy is I usually hear about one or two people. So, from the thousands of people who’ve tried it, two have apparently succeeded in getting to a point where some significant portion of their income is from seminars. But how long will this be the case? The back halls of this industry are littered with the has beens whose message is stale and who no longer offer a relevant message to anyone willing to pay. Once that dries up (and it does so with startling rapidity) where are these people to turn? Back to photography?

Here’s the thing. If your exit strategy doesn’t provide a REAL exit then it is not an exit strategy. It’s an alternative, or supplemental business. Here’s the challenge of that. There’s only one of you. If you are spending lots of time on your alternative business (teaching seminars), then your actual business (photography) is going to suffer. When your photography business suffers you will lose relevance in the marketplace. Then you will have no business. That’s a different kind of exit strategy altogether!

In these times that may be a tough message. If you can’t make money in a photography business and you can’t make money selling your knowledge to photographers how are you supposed to make money? Am I not being fair? Or am I actually just telling the truth?

One of the most fascinating dynamics I see in the marketplace is this one. I cross paths with hundreds of photographers every month. There is a loud, frustrated group who are spending a lot of time and energy trying to change the industry to get it to meet their needs. There is another group though. While the maelstrom wails around them they are quietly building businesses that are quite successful. They have no problem getting clients. They have no problem earning a living. Sure, they’ve been stressed by the macro-economic factors that influence the marketplace, but their response has been to double down and focus on the clients they serve and on making sure those clients are extremely happy. And in the middle of all of it, they’re finding success.

Want to build a great exit strategy? Build a successful business. Figure out how to serve your customers for a lifetime. Keep your head down. Keep moving. Innovate. Respond to market dynamics. Understand the macro climate. Be ready when things are hot to take advantage of looser purse strings. Be ready when things are slow to draw on your reserves. Build multiple revenue streams and never let your supplementary business take more than your supplementary time. Find a way through product and service diversification to serve everyone who comes to you for the service you provide. Build a business that is so successful that others want to come and work with you. Build a business that is so successful that you need others to be able to meet consumer demand. When that starts to happen, you’re on your way.

Stuff to think about for a Tuesday afternoon ...



shawnreeder said...

Absolutely love this Jim.

Tim Halberg said...

I think for most the term "exit strategy" is maybe a subconscious realization that they will never truly make a retirement out of photography, and it's a way of admitting that without fully recognizing it.

I may be incorrect by definition, but in my mind, exit strategy is more oriented toward how you will exit your business... and this is in the sense of how will you sell your business someday.

I don't think most photogs will be able to sell their business, there's too much focus on marketing themselves, setting them up to never truly see a retirement from their wedding business. Maybe if they're financially responsible - but we live in America, so that almost guarantees that the majority will not see a true retirement through this work.

I like the point you're making at the end... I've heard some say (rough paraphrase here) that if your businesses only real employees are yourself and/or your spouse, then you don't truly have a business. For me, when you begin employing others and the business is not reliant upon you, you've found some sort of "exit strategy" and possible means to a retirement.

I'm a total noob when it really comes down to it, I've been in business for about 6 years, and have no formal business training though, so I'm pretty sure I'm talking entire out my butt here, but thought I'd share.

Love seeing folks such as yourself with more experience and a different view give insight into these things. I feel like that's all-to-lacking in this industry.

Jim Collins said...

No way Tim! The way you're thinking about it is right on track. And thinking about it is a good idea. My hope here is to get people to think about their chosen "exit path" from a long term rather than short term perspective.

And if you've been in this business for 6 years you're no noob! You're a grizzled veteran man. Time to celebrate that!

Bruce Plotkin said...

superb thoughts, as always jc. thanks for sharing.

sam hurd said...

epic post Jim. thank you for (hopefully) opening the eyes of sooo many photogs.

Mark Higgins said...

Jim, part of the problem is that a very large percentage of the photographer population is under 30 and starting out and an exit strategy is not even something the can remotely relate to.

Paul Eaton said...

Great points Jim! From my own personal observations I noticed that those that refuse to change are the ones standing around wondering where everyone (clients and peers) went. Look at the old school film shooters and matted albums, now they are fads for our more nostalgic clients. I know too many bowtie wearing older photographers struggling to pay rent with no healthcare and/or retirement plans.

Laura and I find that the best businesses come from needs that don't have a readily available solution. You don't like the camera bag or straps available to you, you make one that fits your needs. You don't like the opportunities available to you to meet new clients, create your own like Laura has done and you seem to find that not only will filling these voids become quite rewarding, but if you put the time into them you could make it a full time job.

There are those that will complain and gripe about not making money off their business and blow what little they do have on some workshop of empty promises, then they are the are ones saying "exit strategy" looking for the quickest way to move on to making a buck. Then there's the ones that don't care what others are doing and put their heart into something they know our industry needs. I got real lucky in finding someone like the latter, in fact I married her because I know she's willing to give everything for something she loves. I don't care if wedding photography just ends tomorrow, I know we'll be ok cause we've diversified ourselves enough and our only problem right now is not having enough time to invest in all the different ideas we have.

Gary Fong, Author said...


As always, I love your posts. The phrase “exit strategy” just sounds so greedy. It sounds like a euphemism for “make your fortune”. I think a good “exit strategy” is not to die broke.

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