Get Your Overhead Under Control in 3 steps!

There is an old story from ancient Greece about a young man, Damocles, who is invited to switch places with the king. He jumps at the opportunity, but as a condition to ruling, he finds a giant sword suspended by a single strand of hair overhead. Needless to say, he quit being king.

What is overhead?

What is overhead? Wikipedia says “in business, overhead, or overhead expense, refers to an ongoing expenseof operating a business.” It doesn’t take a rocket scientist to figure out that you’re a lot better off, if you can remove that sword over your head as often as possible — or at least keep it as small as possible. There is no magic dollar figure for what your perfect overhead should be. I have a colleague that owns a national photo production firm with over 650 employees. He runs a great business, but the dollars he spends on his overhead, vastly outnumber what I spend.

There are certain expenses that all professional businesses require: insurance, advertising, web presence, collateral, branding, etc. All of these are essential to run a business today. On the flip side, our business of creating still and motion photography, lends itself to being rapidly scaleable and (more importantly) it’s easy to rapidly scale down our overhead. You might love to have a full time assistant or office manager, but you can control your overhead by hiring staff only on days that you need them.

Reduce your overhead, by utilizing technology

Take office staff for instance: I can handle all my clients with my cell phone, email and a great CRM (Client Relationship Management) system. This cloud based service sends me an email whenever someone contacts me through my website and also sends them an instant personalized email back. To my clients it makes me look bigger than I am. To my overhead I look like a hero: $99 annually for the software vs $27,000 annually for a office manager. How much less expensive is it to produce a digital file, than it was to shoot polaroid, process film and have the image drum scanned for a client? How do you use technology to minimize your overhead expenses?

Reduce your overhead, by considering renting vs. owning.

This is a very simple calculation. If the cost of an item divided by how often you use it over its lifespan is less than the rental price, buy it. I needed a lens last week for a video job I was shooting last week. If it retails for $1,699 and rents for $73, I would have to use this lens over 24 times to recoup my investment (let’s ignore the maintenance costs). Same goes for a photo studio, lighting gear, props.  It’s often much more cost effective to own gear — I’m just saying don’t go out and buy everything you think you’ll need.

Reduce your overhead, by finding the best deal

It’s easier than ever to find the best price today. However the old adage remains, you get what you pay for. Service from your supplier and your relationship with them is often worth more than a few bucks you save. Like the time the CEO of a company drove to the airport to same-day-airfreight me a piece of kit his employees had forgotten to pack into a rental order I was on set with. Or the half-off sensor cleaning I get from a local camera repair shop because I refer everyone I know to him. I buy some of my equipment refurbished from the manufacturer, I’ve purchased lighting equipment on eBay that needed a little love and care for cents on the dollar… What’s your favorite trick to finding the best deal to cut overhead?

Reducing your overhead takes just a little bit of thought

Think through the whole transaction. If you need to fly to a location for an assignment, how much does it cost to fly with your equipment? How much money does it cost to change that ticket? How easy is it to get ahold of the airline to make a switch? Trust me, when you get stranded in a foreign country where you don’t speak the language, the $50 fare difference becomes the worst savings, if you can’t get ahold of your low budget carrier. Use the discounts and deals that organizations like ASMP are offering their members. And, stay tuned for a blog post on traveling early next month for more tips and tricks.

We all have overhead — but it’s a double edged sword: Much of it is necessary. Some of it you should have cut yesterday. Just remember much of your potential overhead needs to be carefully considered on a case by case, client budget by client budget basis. The short time you’ll invest in doing an informal cost benefit analysis can save you more than just money in the long run; it will help your business to run lean and mean.

Read how to leverage other people’s time and how organization impacts your ability to make money and stops you from wasting your time and while your reading Pascal’s article 3 Steps To Get Your Overhead Under Control! in Strictly Business, the American Society of Media Photographer‘s blog, check out what other bloggers are writing about getting labor saving tips and tricks.

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Pascal Depuhl - 3 years ago Reply

Damocles. Check him out on Wikipedis (trust me I did not make him up …) http://en.wikipedia.org/wiki/Damocles

Gabrielle Depuhl - 3 years ago Reply

damocles? ive read alot of greek mythology but hes not in there…..

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