Business with no profit...what to do?

Question

I know a friend who has a photo shop, but lately his business hasn't returned any profit...only enough to pay the bills...what should he do?

Answer 1

This is a really complicated question as we don't know the particular situation he is in. He has to do a detailed situation analysis to determine why there is no profit.

1) Is he making a high volume of sales with a margin that is too low?

2) Is his average yield per sale too low?

3) Does he not have enough customers?

4) Is there too much wastage or shrinkage (theft)?

5) Is his rent too high for the potential of the location?

6) Does he have too many/not enough staff

7) Does he have a high level of repeat customers or is he churning too many?

8) Are there overheads he can reduce?

9) What is the competition in the area like?

10) Is there a potential to cross promote with another business? (Wedding photographers, framing shops, modeling agencies)

Once he has identified the problem/s, post a new question and we will be here to help.

Answer 2

I think it is a location problem. He has to relocate to a better location. Nowadays of webcams and electronic cameras people need less professional photographers other than for large functions. This may be one reason, the substitutes are killing the original service. Technology sometimes is a cause for market failure you see. Concentrate on areas that are more profitable like Portraits, group photos, functions photos, marriage photos etc; and try to promote them. Photography is one area where the cost of photographing is going up where the technology is also advancing. This may be a cause which has to be looked into and find means to reduce the cost. Try promoting in areas where high margin delivery can be achieved like churches, universities, corporate world etc;.

Answer 3

sounds like he may need to expand his/her advertising horizons. Maybe atten some trade shows to get the word out there about his service.