Archives for November 2015

Starting a Photography Business: From Hobby to Profits

November 27, 2015 by Adam Hoeksema Leave a Comment

You have 140,000 competitors…

According to the US Bureau of Labor and Statistics, there is likely about 140,000 “professional photographers” in the US.

With that level of competition, if you want to turn your photography hobby into a profitable business, you are going to master the financial side of the business. Here is an article by ShootDotEdit that would be helpful as a general overview when starting a photography business, and in the article below I am going to walk you through the process of creating financial projections for your new business. This process will help you get a feel for how many jobs you need in order to breakeven and/or leave your day job.

Step 1 – Sign up for ProjectionHub Photography Financial Model

We have developed a professional service projection template which can be used for your photography businesses

Step 2 – Project Income for the First Year

It seems that most photographers go from hobby to career by taking pictures for friends and family at weddings, engagements, and family photo shoots. This is how you break into the industry because you need to have a portfolio of your work to show off to potential customers. In the financial model that we developed we added 3 default revenue line items:

Charge by the Hour – Sales – Here you can project sales for customers that you bill by the hour. You might not be selling any specific package, rather you are simply charging an hourly rate. So the question is how much to charge per hour? This is an excellent article that talks about how much you should bill based on how much you hope to earn in take home pay per year. As a general rule of thumb you should charge at least 2 times as much per hour as you want to take home for yourself. So if you want to earn $60,000 per year, you should bill $60 per hour so that you can take home $30 per hour X 40 hours per week X 50 weeks = $60,000. One reason is because you will obviously have expenses, but you also won’t be able to bill a client for every single hour you work. Many of your working hours will be non-billable, some suggest that 50% will be non billable. When you are getting started, don’t price your services too low because it is not sustainable, make sure to bill at a sustainable rate as early on as you can.
Services for Individuals – This is probably where you will get your start. By providing packages to friends, family, and acquaintances first you can build a portfolio and improve your skills. As you think about how to structure and price your different packages I recommend this helpful article – “How to Create Photography Packages that Sell” As you are projecting your revenue for packages that you sell, you should be able to break it down to the number of billable hours and your rate per hour.
Services for Businesses – At some point you may expand from services only for individual weddings, family pictures etc, to start serving businesses. In this situation you may just charge by the hour, or offer packages.

Photography Business Cash Flow Considerations

When you book a job you should probably receive a deposit up front. This means your revenue projections should consider this unique aspect of cash flow.
Keep in mind that photography can be quite seasonal depending on your market, so you need to plan accordingly. This is why it is great to receive deposits up front, you can get deposits in the fall and winter for weddings the next spring and summer to even out your cash flow during the slow season.

Assumptions for Expected Revenue Projections

Below I have included the assumptions that you will need to develop for your own specific scenario:

How many weddings do you expect to happen next year in your network of friends and family? Lets assume 10 and that you will be able to convince 5 to use your services.
Let’s assume you charge $2,000 per wedding and get paid 1/2 up front
How many potential portrait sessions are there in your friends and family network? Estimate the number of graduations, engagements, new babies, and other events that might be a good excuse for a portrait session. Let’s assume 40 of these in your extended network and you can close a deal with 12 people (1 per month).
Lets assume you charge $500 per portrait session and get paid at the time of the service.
Finally, let’s assume you secure a couple of freelance corporate projects at $1,000 per project toward the end of the year after you have built up a portfolio.
One nice thing is that you should be able to start booking some weddings for the following year the last few months of the current year which will help your cash flow.

Based on these assumptions you can have a starting place for your revenue forecast

Step 3 – Forecast Expenses

Expenses are a bit easier to project in the first year. Here are expenses that you should expect:

Step 4 – Getting a Loan for a Photography Startup

In addition to these monthly expenses, you will also have several thousand dollars of startup costs to buy a computer, photo editing software such as Picsart to quickly edit images, a camera, and accessories. You will be able to add these in the “Assets” section of ProjectionHub. Once you add those startup costs, you will be able to determine how much of a personal investment you will need to make, or how large of a loan you will need. I added the following startup costs/assets:

Computer – $3,000
Furniture – $500
Camera – $3,000
Camera Accessories – $1,500
Total = $8,000

Then you can add a loan (maybe it is a loan from friends and family) for your startup. I am assuming you will need about $10,000 in startup funds to make the cash flow work.

Step 5 – Transition from your Day Job to your Business

I titled this blog post as a transition from Hobby to Full-time because it will need to be a transition. It is simply a tough business to jump into full time right away. In this projection I assumed you paid yourself $250 per month for the first 3 months and then increased that by $250 every 3 months for the first year. You obviously will need to have another source of income in the first year.

We would love for you to try out ProjectionHub to create your own financial projections and please reach out if you have any questions at all – we are here to help – adam@projectionhub.com

Starting a Dental Practice? How to Build Financial Projections

November 23, 2015 by Adam Hoeksema Leave a Comment

If you are looking to start a Dental Practice you are likely to need some financing, which means you probably need some financial projections. According to a report by Sageworks, Dentist Offices show an average of 14.9% net profit margin. This is great, but as a Dentist, you didn’t go to school for financial modeling, so that is where we come in to help.

We have created a custom dental office financial plan model for a dental practice which you can use here.

Once you sign up and use the Dental Practice financial model, then you can start by projecting your revenue (income):

Step 1 – Dental Practice Revenue Projections

There are a number of services that a dentist can provide, the list of services that we have added to our model is as follows:

Cleaning/Exam
Dental Bridges, Crowns and Implants
Emergency Dental Services
Extraction
Fillings
Oral Surgery

The question is how do you predict how much revenue you will generate for each of these services? In my opinion a good way to model a dentist office is to start with the number of patients you can secure for regular exams and cleanings. That is your customer base, then from your customer base you will be able to predict the percentage of the general population that needs crowns, implants, tooth extraction, cavity fillings, etc. You need to focus on building your customer base and how that business model works, and then simply assume some percentages for all of your other services based on the core customer base.

So here is the exercise I think you will need to go through to build out your revenue projections:

How much advertising will it take to acquire one new patient? Whether you do radio, tv, Google, or direct mail advertising, you will need an advertising budget and will need to assume some cost per acquiring a new patient. This Question and Answer on Quora gives some nice guidelines on how to calculate this. Since you are a new practice let’s assume that you have to spend $200 in advertising to acquire a patient, and initially you are starting with a $5,000 monthly ad budget. This will bring in 25 new patients per month.
Now you need to determine how much revenue you will generate from the first visit of each new patient, then what percentage of patients will you retain to create your patient or customer base, and then finally how much will your patient base spend each month on the various services you provide. I have created a spreadsheet to help model revenue for a dental office that you can use here.
In order to determine how much revenue you can generate from your different services I suggest that you find some stats on the prevalence of various issues like cavities, the need for crowns, root canals, etc. For example the CDC provides data on the prevalence of tooth decay (ie the need for fillings) among the US population.

In this example I created a basic revenue projection for a startup dental office in the first year. Total revenue for the year is only $73,000 which is much less than what you might be hoping to bring home as a first year dentist, but you have to start somewhere. As your customer base grows, revenue and profit can grow substantially.

Step 2 – Expenses for a Dental Practice

Our financial model also has about 20 default expenses related to dental offices. The key expenses I want to point out are:

Advertising is $5,000 per month – this is what you use to acquire new patients
Insurance can get pretty expensive when you include malpractice insurance and liability insurance for the office. This article is a helpful guide and helps me estimate around 1,500 per year for all the insurance you need.
Software – you can price different software packages for dental offices here – I would expect at least a $1,000 set up fee and $300 per month as an average.
Wages – I am assuming that you don’t hire a dental hygienist until month 7, you will just do the cleanings yourself initially. I am also assuming that you don’t take a salary yourself until month 7 at which point you take a small $1,000 per month owner draw. Finally, I assume a part time office manager at $1,500 per month.
Equipment Rental vs. Purchase – You will certainly want to consider the difference between leasing/renting equipment and furniture vs. purchasing with a loan. In this example I am going to assume you purchase with a loan.

There are a number of other common expenses that you will need to estimate.

Step 3 – Equipment Required for a Startup Dental Office

According to an article by DentalTown written in 2013 the average price to open a new dental office can range between $250,000 and $500,000. The primary expenses include:

Equipment and Furniture – $150,000
Leasehold improvements – $200,000 (assuming 2,000 square feet at $100 cost per sq. foot)
Working Capital – $50,000 you are also probably going to need approximately $50,000 in working capital to fund your operating losses during the first year while you get started

This is a total cost of $400,000.

Step 4 – Financing for Dentists

Coming up with $400,000 is not easy, so you are likely going to need a loan or an investor. Banks seem to like dentists, for example Bank of America has an entire program established for new startup dentist practices. The Bank of America program boast 100% financing, so you may be able to secure the full $400,000 in a loan. In this example, I am going to assume you get the $400k from a lender.

Let’s assume you also raise an investment from friends and family for $75,000 just to give you some extra wriggle room in that first year if things don’t go quite as planned.

Step 5 – Example Financial Projections

Starting a new dental practice is not for the faint of heart. You should expect to lose significant money in the first year as you build up your customer base, but as you know once you build a strong customer base this is a very profitable business.

If you would like us to review your projections for your specific situation please don’t hesitate to reach out, we can help. Email adam@projectionhub.com

Top Photo by Anna Shvets from Pexels

Financial Projections that Prove Whether a Food Truck can be Profitable

November 18, 2015 by Adam Hoeksema Leave a Comment

According to an IBISworld Report, the Food Truck Industry has grown an average of 9.3% per year over the last 5 years. If you are considering starting a food truck business you can find many different opinions on whether or not a food truck can be a profitable business for you to start, so the only way to prove it to yourself (and potential lenders and investors) is to create a set of financial projections for your own food truck concept.

Financial projections?!? Don’t hyperventilate, we are here to help you through the process.

So we created a Food Truck Financial Plan Template

Once you choose the Food Truck model you will need to set up your company and then move on to Revenue Projections.

Step 1 – Food Truck Revenue Projections – We have broken revenue projections into 3 segments:

Food sales
Beverage sales
Catering sales

Of course, you can add any custom revenue line items for your business.

Now the hard part is to project how much you are actually going to sell. This Question and Answer on Quora provides some great perspective on what you can expect in terms of revenue for a food truck. The problem is that the Quora answers give a range between $65,000 in monthly sales and $5,000. It should be no surprise that your revenue “depends” on a number of variables. How much competition is there? How big is your potential market (in other words how many people are close enough to walk to your truck location?) How much do you charge per plate? All of these things make a huge difference. You should probably walk through some math like the following:

Sales Assumptions for a Food Truck

# of people within walking distance of my location during lunch – 3,000
% of people who buy lunch – 50%
Equals number of potential customers each day – 3,000 x 50% = 1,500 people
% of market that will choose your food truck each day – 5% or 75 people
Average sale from your menu – $8
Average daily sales on week day – $8 x 75 = $600
Then let’s assume you do some catering or events and you make $1,000 per event 2 times per week = $2,000 in catering/events per week.
Total monthly sales = (($600 per day x 5 work days) + $2,000 in events) x 4 weeks per month = $20,000 per month

Now that we have a monthly sales projection we can split that between Food, Beverage, Catering or any other categories as I have done below.

In this example I assumed the same $20,000 in sales per month for every month of the year, but you will likely need to adjust that if you live in a seasonal climate where people may not eat at a food truck in the winter as often.

Step 2 – Food Truck Cost of Goods Sold – By far the 2 most important costs for your food track are Food Cost and Labor Cost (just like a restaurant). According to Mobile Cuisine, the average food cost for a food truck is between 25% and 38%. For this example I am going to assume 30% food cost which means that $6,000 per month will go between food and beverage cost. Labor cost is likely to be around 33% of sales. For this example I will assume labor cost (which might be your salary) is $6,500 per month.

Step 3 – General and Admin Expenses – You will also have a number of general and admin expenses like:

Accounting
Advertising
Car Washes
Insurance
License and Permit Fees
Event/Parking Fees
Supplies
Telephone
Uniforms

I threw in some estimates for these expenses as displayed below:

Step 4 – Startup Costs for a Food Truck –

There are a number of startup costs for a food truck. At the very least you will likely need the following:

Food Truck
Kitchen Equipment
Generator

For a fully outfitted food truck you can pay between $20,000 and $100,000+. You will need to do some shopping, you can shop around some different pricing for food truck here. In this example I am assuming that you pay $50,000 for a truck, $25,000 for equipment, and $10,000 for a generator for a total startup cost of $85,000.

Step 5 – Food Truck Financing – With $85,000 in startup cost you are likely to need a loan or an investment to get started. I am going to assume that you invest $30,000 personally and get a loan for $55,000 to cover your startup costs. So you will need to add a Loan and a Personal Investment in ProjectionHub as seen below.

Example Financial Model

Get started by choosing the Food Truck Financial Model here. Please let me know if you have any questions at all – adam@projectionhub.com

Photo by James Frid from Pexels

Want to Become an Uber Driver? Create Startup Projections First

November 10, 2015 by Adam Hoeksema 1 Comment

The number of Uber drivers is growing exponentially as seen in the hockey stick graph published by Forbes. So if you are considering becoming an Uber Driver, you should run some numbers first just to ensure that you understand what you are getting yourself into.

So to help you do this, we have created a couple of financial projection models for Uber Drivers:

Uber Driver that Leases a Car
Uber Driver that Owns a Car

Although according to a report released by Uber, 62% of drivers lease their car from Uber, it is likely that the most common reason a driver might need financial projections is when they are applying for a car loan to purchase a car to drive for Uber. That being said I am going to show an example financial projection assuming that you own a car or got a loan to purchase your own car.

Step 1 – Choose the “Uber Driver (Own Car)” Option when signing up here.

Step 2 – Add your business information

Step 3 – Add your projected sales – According to a report issued by Uber the average Uber driver in the US could earn $19 per hour. Obviously this will fluctuate significantly by city and by country, so you will need to try to determine what your hourly rate will be in your city. You might start by asking some other Uber drivers what they earn per hour. In this revenue section of ProjectionHub you will want to enter your total sales for the month before any expenses like gas, or car maintenance. So for this example I am going to assume you are driving full time, 40 hours per week, and earning $19 per hour. So let’s say you work 50 weeks per year x 40 hours x $19 per hour = $38,000. That means you earn $3,167 per month before expenses. In the example I assumed $3,167 as your monthly revenue.

Step 4 – Add projected expenses – Here you will need to add all of your expenses related to driving a car for Uber. This article provides 16 of the most common expenses for Uber drivers. I have taken this list and added these expenses to the Uber financial model in ProjectionHub. Some of the expenses are obvious, you should be able to add on your own, but some of them will take some estimations and calculations. I have included my assumptions and calculations for several expenses below:

How many miles will you drive per year? Before we can even calculate some of the costs you need to estimate how many miles you will be driving per year. According to an Uber Driver from San Francisco, he drives 50,000 miles per year and works 40 to 45 hours per week. Since we said you only work 40 hours per week in this example, let’s assume that you drive 45,000 miles per year. This will help us calculate other expenses.

Fuel – Now let’s assume you have a fuel efficient vehicle that gets 30 miles per gallon and let’s assume gas is $3 per gallon in your city. That means you should budget 45,000 miles / 30 miles per gallon x $3 per gallon = $4,500 per year or $375 per month.

Car Washes – Let’s assume 1 car wash every other week at $10 per wash which amounts to about $20 per month.

Insurance – Car insurance for an Uber driver is likely a bit higher than for a typical driver. MetroMile offers insurance for Uber drivers specifically and they charge $40 per month and 5 cents per mile. So that is an extra $188 per month in addition to the $40 per month for a total insurance cost of $228 per month.

Vehicle Maintenance – According to Triple A the average maintenance cost of a vehicle per mile is right around 5 cents per mile. That is $188 per month in this example.

Then of course you will have other general expenses like license and registration, phone, tolls and parking fees, food and drink for passengers etc.

Step 5 – Add Assets – Here is where you need to add your car. In this example I am assuming that you own the car, or you got a loan to purchase the car. I have added a $30,000 car that will depreciate to $5,000 over 5 years. The depreciation expense will be added automatically to your expenses.

Step 6 – Add your Car Loan – Next you will need to add a loan (if you have one) for the car. In this example I added a $27,000 loan (assuming you put 10% down or $3,000 on the $30,000 car). In this example I added a new Liability/Loan for $27,000 at 7.5% for 48 months. Your payments are added automatically to your projections.

The purpose of this post is simply to walk you through the process of creating some projections for your Uber business. Good luck!

Want to Become a Realtor? Create Financial Projections First

November 10, 2015 by Adam Hoeksema Leave a Comment

So you want to become a real estate agent? Before you jump into the world of real estate you should run some basic financial projections to determine whether this is a good career option for you. Can you really make as much as your filthy rich realtor friends? We have created a basic financial model for you to utilize here at ProjectionHub. Using this model I am going to create a basic set of projections for a new realtor that you can use as a model when you create your own projections.

Step 1 – Purchase the the Realtor Financial Model on ProjectionHub – here.

Step 2 – Add your business and ask us if you have any questions! support@projectionhub.com

ProjectionHub Releases v2 of App to Help Entrepreneurs Conquer Financial Projections

November 8, 2015 by Adam Hoeksema Leave a Comment

ProjectionHub – An app to create and share realistic financial projections with investors, lenders and partners without the pain of Excel.

INDIANAPOLIS, IN – November 8, 2015 – Available today, ProjectionHub launched version 2.0 after 10 months of development. ProjectionHub is a web app that allows entrepreneurs to quickly build and share financial projections that are required by investors and lenders without the hassle of using Excel. Without a degree in accounting, most business owners shudder when they are asked to create a financial forecast for the next 3 years, ProjectionHub helps the non financial whiz look like an expert.

The app offers 20 unique financial models that are developed specifically for many of the most popular businesses including (SaaS, Mobile Apps, Food Trucks, Brewery, Coffee Shops, and Gyms to name a few). Users can sign up for a business model that works for them, enter sales and expense projections, and then download projected financial statements to share with investors or lenders. According to Adam Hoeksema, Co-Founder of ProjectionHub, “Version 2 of ProjectionHub is all about the entrepreneur. Most solutions try to create a template that will work for every business, the problem is that there simply is no one size fits all when it comes to financial projections. So we focused on customizing financial models for dozens of different types of businesses so that ProjectionHub is the perfect solution for every business model.” Entrepreneurs will no longer need to panic when an investor asks for a set of financial projections, ProjectionHub makes it easy.

Small business owners can sign up for a free 7 day trial. After that, satisfied users can subscribe for $25 per month and cancel at any time.

For more information, visit https://projectionhub.com.

About the Company: Founded in 2012 by brothers Adam and Brandon Hoeksema, ProjectionHub has helped over 15,000 business owners create and share financial projections.

###

Media Contact

Adam Hoeksema – adam@projectionhub.com – 765.667.5323 – @AdamHoeksema

Startup Brewery – Financial Projection Model

November 6, 2015 by Adam Hoeksema Leave a Comment

According to stats published by CraftBeer.com the craft beer industry has been booming. In 2014 the industry experienced 18% growth in volume of beer sales, selling over 212 million barrels of craft beer in the US alone. With this explosive growth entrepreneurs everywhere are opening new craft breweries. There are some significant startup costs associated with opening a new craft brewery, so startups are looking for capital to open their doors, and undoubtedly those pesky bankers and investors are asking for financial projections.

So my goal with this post is to walk you through the process of creating projections with our new brewery financial projection model. So crack open a craft brew or two and settle in for a fun hour or two of number crunching.

Let me know if you have any questions, please feel free to reach out at adam@projectionhub.com