043: Peter Eastway – Photography Business Success With Advice From A Creative Accountant

043: Peter Eastway – Photography Business Success With Advice From A Creative Accountant

Andrew Hellmich:
Alrighty, I'm super excited to have today's guest, Peter Eastway on the line. Now I was going to start this intro by saying that Peter is an amazing landscape photographer, but you know what? He's simply an amazing photographer, and he's so incredibly talented. He's been published in books and magazines that go worldwide, and he was selected by Lonely Planet to write their international photography guidebook on landscape photography. He's a grand master of photography. He was awarded the AIPP Australian Professional Photographer of the Year in 1996 and 1998. His prints are exhibited in galleries around the world. He's anything but boring, and who would ever have guessed that he's an accountant originally. Peter, welcome to the podcast.

Peter Eastway:
Oh, that sounds pretty good, Andrew, I'll give you that $50 later on. That was very nice. Thanks, mate.

Andrew Hellmich:
An absolute pleasure. Mate, I can't, well, first of all, I can't believe that you are an accountant, and the caliber of photographer that you are is just incredible. So maybe you want to start by giving the listener an idea of your background and how the two sort of fit together.

Peter Eastway:
Well, I failed English in high school. I was going to do art teaching, by the time I got my conceded third level pass for English, which isn't very good for someone who's now a magazine editor. But anyway, that's another story. I was too late to do the course. So I asked my friend who I'd been at school with since kindergarten. I said, "What are you doing? He said, "I'm doing Economics at Sydney Uni." And I said, "Okay, so I had enough marks to do that." I said, "What subjects?" And he said, "Accounting, Commercial Law and Economics." And I said, "Right, oh.", so I signed up. So that's how I became an accountant. And apart from sitting in constitutional law seminars with Tony Abbott, it was quite a good experience. I enjoy that side of it, but all the way through university and all the way through my first years as a young budding auditor with Pete Mark and Mitchell, I just, you know, I love photography. I was right into surfing. Used to really understand why people would photograph anything other than surfing and rock concerts and stuff. I used to follow a few bands around and take photos. That's why I can't hear anything these days, because my head was too close to the speakers. And after a couple of years, well, actually, after a year, I think I lasted about 10 months, two weeks, three days, five hours and seven minutes, not that I was counting. I moved out and basically packed shelves at Woolworths and went skiing and enjoyed life for a while, but photography was always a part of it, and doing a little bit of advertising work, a little bit of portraiture, few weddings, all that sort of stuff. And I got into magazines and still kept the accounting going, because I just like that balance. I mean, as we spoke before, a lot of people find it odd that you can do multiple things, whereas I love the balance. I look at some of my friends who have got to the ends of their careers as photographers only, and they don't love photography. I look at other friends of mine who got to the ends of their careers as doctors or lawyers or accounts or whatever, and they don't like what they're doing either. Whereas I really enjoy the balance of what I do now, because a change is as good as a holiday. So I'm all for diversity. And I think if you can run your life doing something that you enjoy doing, or doing some things that you enjoy doing, it's that, life is not a dress rehearsal. You should try and make that happen.

Andrew Hellmich:
That's a great point there. Life isn't a dress rehearsal. We only do get one chance at it. And one thing that has struck me about you, you and your photography, is you do seem to have loved it every step of the way. And I mean, I've only been following you since I've been a member of the AIPP, which I think is around 12 or 13 years. But you know, your work never ceases to amaze me. And do you think you're like that because of the balance, or would you have been the same if you just did one, you know, just photography?

Peter Eastway:
I don't know. I think, yeah, I'd like to think I'd still be doing the same sort of stuff. I mean, whether you're doing accounting or whether you're doing a catalog shoot, not that there's so many catalogs to be shot these days, or whether you're doing your 250th portrait sitting for the year, or your 5,000th wedding in your lifetime. In every profession, there's a certain amount of repetition, and I think it's a repetition that can be a struggle. I was talking to George last night. He does advertising work, and he's 57, I'm 55 and he's saying, you know, he's never been busier. And he does advertising, but he also does travel, he does architecture, and every job he does is different. So I figured if I'd followed maybe along George's path and done just photography, hopefully I would be doing stuff like him, whereas I actually enjoyed doing the business side of things, you know, I get people who come along with, you know, new business ventures, and, you know, we have to work through things, ways to invest in stuff. And that, to me, is just as exciting as a client coming in with a project, with it, got a building to be photographed. Or they say, "Look, you know, we need a calendar shot. Go around the world and take some photos in these four countries and give us as a result", they're both exciting. And I suppose it depends on your own individual makeup. I know that probably 99.5% of the people listening to this will never, ever think that accounting could be exciting or interesting. And that's quite understandable, whatever it is, you know, do brain surgery and photography, or we'll just do photography and photography, but do different sorts, and separate what you do for your clients with what you do personally. Over the years, a lot of photographers said, "Oh, my client, you know, they just don't know what taste is, and they want this down that way, and I've got no idea", and the photographer tries to enforce their way of thinking on their client, and that's important up to a point, but at the end of the day, the client's paying you to produce a result that they're happy with. And so if you can separate your prima donna tendencies when you're working for your clients, and basically just produce something for them, which is what they want. By all means, shoot it the way you want to shoot it as well. Offer them the option, but do it their way. Do it to their brief exactly. Give them more. But if they just want what they want, they've got it. And then you keep that client. They come back to you because you're listening to them. And I think that sometimes in this, in the aim to have an exciting life, to keep your career interesting, to make the next shoot really exciting, we try to do stuff differently. So I want to do a new portrait. I want to do a new wedding shot, because we're the ones that are bored, not our clients. Our clients it's the first time they've had their wedding shot. Well, maybe their second or third. Who knows? You know, it's the first or second time for the family portrait. So although it might be boring and repetitive for us, it's new and exciting for them. And I sometimes think that, you know, we forget that now, because you know it's us who's doing the shoot, for us to perform well, it's got to be exciting. Because if you work, turn up to a shoot and you're not particularly into it, that shows, and I think that shows in your work as well. Where was I going with all of that? Andrew, am I still on track?

Andrew Hellmich: You are. I've got, I've got a hundred questions that have popped into my head. I just want to catalog these things. So first of all, you're saying you love the diversity and having the two separate passions is fantastic. What would you say to the photographer that's listening that thinks that, you know, "To be a true photographer, I have to be solely a photographer. I can't really be distracted and be an accountant or a mechanic or, you know, a teacher as well."

Peter Eastway: Well, they probably should read a little bit more about the history of art and photography. You know, you go back all the way through to Da Vinci, Rembrandt, you know, all of the famous artists that we look back on, if you go and look at their biographies, you know, chances are that they weren't just painters, they were painters, sculptors. They were philosophers, writers, some were composers, some were scientists, some were into the old theology, all that sort of stuff. A lot of people have capacity for more than just one thing. And I'm not saying that that's right for everybody, because I can go back into history and find other examples of artists who were solely into one particular thing, and I know a lot of photographers who are really, really good at a particular genre of photography, but they can't see outside of that, and they don't make very good judges, because they only see things one way, but because they are that way, they're really good at what they do. Other people need to have a variety of influences to make them good at what they do. So I'm not judgmental on other people, and hopefully they're not too judgmental on me. I think, you know, some people are vegetarian, some people eat meat, and you know, that's that, isn't that wonderful? If we all like the same girl, we'd all want to marry the same person, and you and I would be in great demand as the males of the species, wouldn't we, Andrew?

Andrew Hellmich: That would be fantastic.

Peter Eastway: I know that would be a problem.

Andrew Hellmich: Now, earlier you mentioned about being repetitive, and it's important for us to be excited and passionate about our work, and you know, although it's not new for the client, sorry, although it's new for the client, it may not be new for us, talking business wise, is it smarter for us as a wedding and a portrait photographer to be a little more repetitive, to be a more profitable business, or should we always be looking for the next new thing to stay excited and motivated?

Peter Eastway: I don't, you know, like it, over the years of interviewing photographers for 30 odd years, international people all around the world, all different sorts of markets, all different sorts of levels, all different genres. The one thing I can say is that there is no single formula to success. I can point to photographers who say, "I just do the same thing, day in, day out. Mission brown background, two lights bolt into position. I'm incredibly successful. I earn lots of money." And then I can go around like see another photographer who ostensibly does exactly the same thing, and they're not getting anywhere. And so, jeez, it's a really thing, hard thing to answer, because there is no single way to make money out of photography. And, you know, I come back and I'll say it again, what works for one person may not work for another, and it could be because it's a difference in the market. It could be in a difference in the way the person presents their work to their clients. You know, some people come across as being really enthusiastic when they're selling their work. Other people come across as almost being apologetic because they don't think it's quite good enough. Clients pick up on this sort of stuff. And, you know, so the question is a good question, but I don't have an answer.

Andrew Hellmich: All right, let me, let me play the, play the part of a family member of yours. I could be your nephew, and I came to you, Peter, as the accountant and the experienced photographer, and I say to you, "I want to be a photographer. I want to be a wedding or a portrait photographer. Is it a good idea, Peter?"

Peter Eastway: Is it a good idea? It's, I'm at the wrong end of my career to answer that in some ways. Well, the reason? The short answer is yes, it's a damn good idea. If you are passionate about something, then money isn't everything. I remember with my accounts hat on, working with a photographer, and he rarely paid tax. When someone tells me that they don't pay any tax, I just look at them and say, "You poor, unfortunate person", because if you're not paying tax, you're obviously not earning much money either. And so he said to me, "How do I make money?" I said, "Well, have you got a business plan?" And it's funny, how many successful photographers have a business plan, and yet most photographers, 95% probably don't have a plan, and they're scared of it. And, you know, have it, not having a plan is planning to fail. Anyway, I said to him, you know, "Have you got a plan? No." We worked through it. We created a plan. Year one, he succeeded. Year two, he succeeded. His business was getting from going from strength to strength. Year three, he went backwards. And I said, "What happened?" And he said, "Well, as you know, I'm having a few problems at home, and my wife and I have separated. It's all very amicable. But the daughter, my daughters are going up to Queensland, and I'm following them. Thank you for showing me. I realized with the business plan, I can make my business work at any time, but my daughters are 13 and 14 at the moment, I will never get a second chance to spend this time with them, and that is my priority." And that was a fantastic lesson for me as a bean counter, because there is so much more to life than money. There is all about looking at, when you're in the old folks home and you're on the rocking chair, you know, you don't want to look back and say, "I wish I'd given that a go." So someone out there who's passionate about photography, you've got to go and give it a shake. Now, when you go and talk to gray haired old bastards like me up the back of the room who were saying, "Well, it's not like it was in the old days." That's right. I mean, we can go back to times prior to, when I was in the game, that's the photography game, where, you know, the money was huge. I mean, we used to have a dark room. Photographers used to do secret stuff in this place that our clients didn't know, and we produced a result that they were prepared to pay big money for. These days, that mystery has basically gone for most of the market. There are so many people, I mean, the reason that your website and your, what you're doing is successful is because there are so many people who are looking for ways to come into the industry, come into the profession. That's fantastic. We all started the same way. You didn't have to get a license to become a photographer like you do to become a solicitor, an accountant or whatever. It's free. It's open. Anybody can get into it. And that side is fantastic. The difference is that 30 years ago, I could go into that with an expectation of maybe eventually earning $5,000 a wedding, averaging two, $3,000 of portrait sitting, going and working for between 1500 and $2500 per day, shooting advertising work or commercial work, etc. Editorial rates were always crap. They're even worse today. That was a certain expectation that I had when I got into it. Today, those expectations are much, much lower, but compared to, you know, what you might be doing elsewhere. And if you also take the idea of diversifying and going into other areas, it's fantastic what you can do. I don't think the days of being just a photographer are going to be the most profitable ways. If you love photography, make it a part of what you do. And so the photography might be a part of photography and web design, or photography and video production. I mean, these areas are just booming. And you know, if you know how to basically do movies, you know do videos, do stills, do writing, do web design, or you can get people that can work with you. There's a huge area in commercial photography for you to move into. It's never, it's never going to pay as much as it did 20, 30, years ago. So ignore all the old bastards. It doesn't matter. It's what's available today. And that's probably damn site better than working at Woolies packing shelves, which is what I did for a while to keep things going. Mind you, that wasn't too bad either, because you worked at night. You got to surf during the morning. When it comes to, you know, weddings and portraiture, there will be a market there, but maybe you've got to do other things as well to supplement it. Because, you know, in the old days where, I mean, here on the northern beaches in Sydney, where I am, now, 20 years ago, when I started, I don't think there was, well, there might have been one. There are two or three wedding photographers, but there was probably nobody who was really doing portrait photography. Today, there are probably 20 people up here who are doing it, probably more than but, you know, 20 main players, it's so much more competitive, and that's the challenge. So if you're going to get into photography, they're only, you know, my daughter's doing photography at school, you know, so years nine and 10, they're teaching a photography and I said to her, I said "If you want to be successful as a photographer, you've got to remember that there are two words. There's Professional Photography." Everybody thinks, "Ah, I just want to be a photographer. Just walk down and I can pull up my camera, press the button a few times, and I'm a professional." But how much money you're going to make from that? How many people are going to pay you for doing that when everybody can do it these days? So I suggested to my daughter that maybe she should do business as well, because if you can do the professional side as well as the photography side, you've got a future. If you're just here for the photography, you're not going to make it. It's, you know, I'm sorry, blunt, you are not going to make it. You are never going to have enough money just to do photography, unless you understand the business, it's professional photography. It always has been. There have always been a lot of photographers who have not got a lot of money. They might have the lifestyle, they might enjoy life, and if that's what they're after, there's no criticism for me to do that. But my view is that if you're going to work 40 hours or 60 hours a week doing something, and isn't it, isn't it worthwhile spending a little bit of time to develop the skills to do those 40 to 60 hours that you're going to do in a way that might also generate you a good living? And photography has been great to me, you know, I've, so is accounting, so is publishing. All the things that I do, that everything that I do revolves around photography. And you know, there are things, there's not much that I don't like doing, I must admit, but there are certain things that are repetitive, but in the background there is this, is this idea of a business plan, of being a professional, of needing to earn some money and being prepared to say, "No, sorry, I can't sell you that print for that price, or I can't do that job for that price because it's never going to work. I'm better off not doing the job than doing it for that money, because it one, it's devaluing the profession. But two, I can never make ends meet doing that job for that price."

Andrew Hellmich: I mean, you've touched on a lot of things there, but the underlying theme was business and the business plan. So for the photographer listening that doesn't have the business plan, and I think you're talking to 95% of my listeners, what do we need to have in this business plan? How do we get started with a business plan?

Peter Eastway: A business plan is scary for some people, and yet it's really, really easy. A lot of people are scared of business plan because they think it's lots of numbers, and they imagine a spreadsheet with, you know, each month and the money coming in, the money going out, and that's a cash flow statement or a budget station statement. It's really just a guess as to what you might earn and what you might spend on a month by month basis for 12 months. That is essential, but it's not something you have to do. You can get a bookkeeper or an accountant to do that for you. What's far more important is the thing that photographers are really good at, and that's imagining what it is you want to do, where you want to be. And yeah, there are all sorts of things that business plan is, funny you mentioned that, I have a little business plan that I flogged to unsuspecting photographers, etc. I have it on the website there for $49.95 and I don't discount it. Because people who go and spend money on something, if they get it for free, or they get it for a discount, doesn't cost too much money, they don't value it, and then they don't do it. And that's the big thing that I'm on about, is that you've just got to write it down. Two things I'll come back to is one that, you know, if some people have come along to workshops that I've done, and I've given them away the business plan for free, because they've already come along and all that said, "Look, here, have it for free. But there's a condition. The condition is that if you use it, you have to give your favorite charity $100." So, I'm not out to make money out of every little bit here and there, although obviously I need to earn a living as well. But more importantly, you need to value the thing that you're doing. So that business plan, to me, is fundamental that you spend a little money, bit of money, or you put a little bit of effort into creating that business plan so that it becomes something of value for you. So when you do a business plan, you and your partner, if you have one, should put aside a weekend, go and spend some money, go away from home, get a nice hotel room somewhere, have a nice meal here and there, a walk in the park, go for a surf, and then spend the other half planning what you want to do for the rest of your life. And when you do that, this is what is good for you. It's visualizing what you want to do. Sit down and say, "Well, what am I doing today? All right, today I work in a bank. I take a couple of weddings on the weekend. And what do you want to do? I want to be shooting photography full time." Okay, so there's the nub of your plan. You want to go from A to Z, so how do we get there? It's a big jump to go from employed to self-employed. So what we need to do is we need to set up a plan where we can do more and more work photographically, and then gradually we might go part time. We'll get another job that's part time to supplement photography as we build it up. So we look at breaking down that business plan into affordable steps, and you just do the first step first. Don't worry, the 10 steps, don't worry about steps two to eight or two to 10. Just do step one, and by focusing on the small steps, gradually, as you get better and better, those next steps, which look so big today, become much more achievable as you go further and further along. So at the end of the day, what that business plan has to look like is where you are today, where you want to go to, and what you're going to do to get there. And the workshop templates that I have, it's basically 12 sheets of paper that summarize all of this. Yes, there are a few numbers in there. And when you get to the numbers bit, if it's hard for you, that's where you go and talk to your bookkeeper or an accountant, and you just got, even another photographer who is good at business. It's not rocket science. It's just, it's the hardest thing is adding up and subtraction, really, but it's the fact that you've actually done it, and this is the big trick, too. It's writing it down. Now, as you've introduced me as a bean counter and, you know, university degree and a smart ass and all that sort of stuff, I used to think I don't need to write a business plan down because, you know, I'm smart. I know all of this stuff. I know where I'm going. But for Kodak, years ago, and some of your readers or your listeners might even know who Kodak is, because that was in the days of film. But I went around Australia doing business plan seminars for Kodak, and I thought I developed the same program, which I still use today. And I thought, you know, I'm talking to a thousand people over the five or six weeks. Someone's going to ask me, "Peter, have you got a written down business plan?" And I'm not good at lying, so I thought, bugger. I better go and do it, because I'll go down and I'll write it down. So I went did my own business plan, and what I noticed in doing it was that my business was getting bigger and bigger, and I wasn't making an equivalent amount of extra money. I still wasn't paying enough tax. I was doing better. My sales were great. I was busy as hell. I came in, I was, you know, from sun up to sunrise, sunset. I was going flat out, but I wasn't making more money. And I figured..

Andrew Hellmich: How can you, how can you not be making more money if you're doing more work and working?

Peter Eastway: Let me rephrase that good question, Andrew, I wasn't keeping more money, so I was charging more out, but I wasn't making the profit that I wanted. And as soon as I realized that, I said, "Right, I need to increase my profitability." So when someone would come in and say, "Oh, how much is that?" "It's $100." "Oh, that's a bit much. Can you do it for 80?" And you'd sort of say, I want the job. "Yeah, I'll do it for 80.", and you realize that you just lost 20%, whereas maybe, instead of saying, "Look, no, I can't do it for 80, the price is 100, but I'll throw in an extra print, or I'll do an extra photo", where you adding something in that's not costing you money. Every day, we make from 100 to 500 decisions about our business. So that's, you know, 3000 to 10,000 decisions every week. That's 50,000 decisions every year you are making about your business. Now, if at the base of every one of those decisions is a little piece of paper called a business plan that says, "One of the things I've got to do this year is be more profitable", that, just writing that down, that becoming a part of who you are, that becomes a part of your decision making process. Before that, it wasn't part of my decision making process, and in that following 12 months, after having done that, having written it down, having made it part of my subconscious, I doubled my profitability. So I didn't double my sales, but I doubled my profitability, and that was fantastic. And that was such a big lesson for me, you know. So something in the fact that we spend the time, we invest in it, we, you know, it's an investment, and you actually write the stuff down, it becomes a part of you. Now, the big thing that people worry about is, "Ah, what happens if I say I'm earning $50,000 a year now, and my aim is that I want to earn $200,000 a year. What happens if I don't get there?", and I say, "Well, $50,000 to $200,000 in a year? I don't reckon I could do that in the business." I mean, most businesses aren't overnight successes. Most businesses take five to 10 years. I remember Anne Geddes doing a seminar when she became famous 20 years ago. And yeah, we're all down in Melbourne listening to her, and she was earning millions out of photography. And the first thing she said is, "I know you all think I'm an overnight success, but it's taken me 20 years to get to this point." So first thing we got to know is that we're not going to go from $50,000 to $200,000 straight away. It might take us five years. So let's say at the end of five years, we've gone from $50,000 to $120,000 you say "I haven't got up to that $200,000. I'm a failure." I'd say, "No, you started at 50. You've got to 120 in five years. That's fantastic. Go another five years, you might get to that 200, maybe it's a little bit tougher than you originally thought, but the fact that you've gone somewhere, it's better than not having a plan at all." And after five years, still doing 50,000 still spending that 40 to 60 hours a week and going around in circles, because you have no plan, no direction, you have nothing written down, I'm starting to sound like an evangelist.

Peter Eastway: That's great. It's great stuff. Let me let me ask you then, Peter, for the listener that wants to be more profitable or to take home more money, are we better to charge more or to do more work? Or there's another one in here, isn't it? I'm missing.

Peter Eastway: A bit of both.

Andrew Hellmich: So, yeah, is that the way to get more profitable?

Peter Eastway: Sure. I mean, that's just mathematics, isn't it? I mean, the retailers have a little formula that says, "How do you increase your net profit by 64% and the answer is, make 5% more sales, put your prices up by 5% and cut your expenses by 5%."

Andrew Hellmich: That's the part I was missing. I was thinking, should I, should I try and reduce my costs, or should I charge more?

Peter Eastway: Yeah, and the short answer is, it, test it. You know, some people might be able to cut their costs, but if you're cutting your costs, are you then providing your clients with inferior product, which means they don't value what you're giving them, and so the price, you know, you don't get the market. It's not, it's not really just a simple one answer. And I know, you know the purposes for an interview like this, you know people are listening and they're wanting, they're trying to get some value out of this interview, so that they go away with a solution. And my solution is that you need to go and test. So, for instance, double your prices. I remember a friend of mine over in Western Australia, he was charging, I forget what the figures were, but it was around about $25 for an eight by 10 print. And I'm going back 20 years or so now. It's a long time. And he did actually the business planning workshop with me, but he also went and talked, and he did a little bit of coaching with a couple of other people. And one of the coaches said to him, "Put your prices up for those prints. He said, double your prices." He said, "Well, if I double my prices, you know, people aren't going to hire me." The guy said, with the advisor, said, "How do you know?" He said, "Well, you know, I'm just sure of it." He said, "Well, if you double your prices and it doesn't work in, say, a month, you can put them back afterwards." So what we're doing is we're testing, and that is just so easy to do with the internet these days, and because all your price lists are online and that sort of stuff. Yeah, it's very easy to test. And so he doubled his prices. And not only did no one complain, he ended up with twice as much work. So a lot of us are out there saying, I can only charge this amount without really knowing how elastic the market is, without knowing what people will value the photography that they're creating. Now at the other end, of course, there are people who will say, "I'm gonna double my prices." And they don't get any work, because people go along and they do a search on the internet and they find someone down the road and they're charging the old price, or even less, and they say, "Ah, okay, I'm going to go to the other person. This new bloke is too, you're too expensive because you've doubled your price." So they think, well, doubling my price doesn't work, but that's not really the answer, is it? What are you offering? I mean, if you're a photographer, if you're a client, and you're going out there and you're looking for a photographer, most of, you know, if we're in the domestic area, most of our customers are not sophisticated. All photographers are equal in their mind. Surely, you go to a doctor, you get a good result. You go to an accountant, you get a good result. I mean, they're all professionals. They're all the same. I just want to pay the least, least amount of money and get a good result. Get a good professional result. So unless we can structure our business in a way that shows the people when they come to the website, or when we go and do a one on one with them, when we're selling to them, unless we can tell them why they should hire us, then the only thing that they have got to choose between one photographer and another is what they understand, and that's price. So you've got to have something other than price to differentiate yourself, and that's a part of the business plan. It's quite funny though, don't go and buy that business plan from me because you think I've got an answer there, because that page is blank. It says "What is your unique selling proposition? And you know, what is it that you are going to do that makes, that's going to earn you money?" Now, a business plan isn't something that you do once every five years. It's something that you do and then six months later you come back and you redo, and you go off into a different direction. And then six months later, you come back again. And that business plan is something that changes, and it should set high goals, not impossibly high goals, but goals that are harder than what you think you can do today, because as you continue on, you will get better. In kindergarten, I can remember being in trouble and having to go up to get the feather duster. Corporal punishment was allowed when I was a young boy, and I got whacked with the feather duster across my hand up in second class. But what worried me wasn't getting the feather duster. It was looking at all this arithmetic up on the blackboard and thinking, "How the hell am I going to do all that mathematics? I don't understand that", and that's what scared me more. But two years later, there I was in second class, and yeah, I didn't have too much trouble with mathematics at all, because I had another two years’ worth of education. It wasn't a problem. And you might think, "Jeez, is Eastway, and he can remember what he's thinking about in primary, in infant school?" There are only a few things that are not quite that bad. But the point I'm making is that don't limit yourself by what you know that you can do today, because the fact that you're listening to an interview like this, and you're on the website trying to find more information, means that at least you are a proactive person out there looking for answers, and you'll find lots of answers, and the idea is to distill the answers that work for you. And there'll be some things that I've said today that will definitely not work for you. There are other things that will work for you. It's just a matter of distilling. It's that search, that's the fun bit.

Andrew Hellmich: Nice. So let me ask you, Pete, if you walk into a business as an accountant, how do you, how do you tell if it's a good business? What numbers are you looking at? Or is there just one number?

Peter Eastway: Oh, no, no. Well, I went when I, I suppose 1996 - 1998 when I won the photography awards, I made certain decisions about what I wanted to do, and one was that I didn't want to do more accounting. So I really haven't taken on new account, new clients for nearly 20 years or so. And a lot of the clients that I have I've had for 20 or 30 years. So I don't sort of go in and see a lot of new businesses these days. But when I was out there getting new clients, one of my lines that I would say to them was, "My aim is to have you paying $100,000 a year in tax." And I remember one client ringing me back and saying that, a prospective client, they said, "Look, you know, we like the interview." And that was quite interesting is that I am not the world's best accountant. In fact, I consider myself to be a GP. I'm just, you know, if you need a specialist, and I've got a lot of specialists that I know. So someone comes to me with a complicated question, I simply turn around and I say, "I don't know the answer to that. I'll go and find out for you", because I don't know everything, and I'm just a GP, but what I'm good at, I think, is I've got the gift of the gab. I can communicate. And I think that if you are photographer, you have to be able to communicate. You have to instill in your client a sense of confidence, because when they come to you, they are buying something that hasn't yet been produced. So if it's a portrait or a wedding or a commercial shoot, they're hiring you and they're committing to pay you money, but you haven't shown them anything, so you need to be able to communicate with them. So I suppose that when I'm going around to the businesses, I'll get back, I'll bring this back. When I'm looking at the businesses, yes, paying a lot of tax. The client came back to me, said, "We didn't quite understand the 100 grand." And I said, "Well, if you're paying 100 grand a year in tax, it means I'm going to be doing everything I can to minimize the tax. If you're still paying 100 grand, you must be earning $300,000 a year as a turnover. Isn't that a good thing?" And the penny dropped. They thought, "Right." So if your objective in life is to pay as little tax as possible, then that's easy. Don't work. Go on the dole. You won't pay any tax. Very simple. And with digital photography, you don't have to, you don't need film and processing, so it's easy. So when you're walking into a business, though, again, I go back to the top photographer who changed his business plan and decided that family was more important than money. It's not up to me to say whether a business is good or not. I asked the client, "Are you happy with what you're doing?" They'll tell me, that's a personal decision. To me, if the average wage in Australia is, I believe, around the 70 to $80,000 mark. So that means that half of the country who is working is earning more than $80,000 a year, and half that is working is earning less than $80,000 and then, of course, they're all the people who don't work at all, which is possibly another third. So you know, a third of the population earns more than 80,000. And two-thirds earns nothing, or is earning less than so. When I look at photographers, I think that maybe 10% of photographers earn more than $80,000 a year. It's possibly less than that. You know, I would say with certainty it was no more than 10% 10 years ago, but we've probably got three to four times more photographers, or more people out there who are doing some professional photography, part time or whatever, and they're not earning what an average person earns with a wage. And that, to me, is, well, you're taking a lot of risk. You're spending a lot of time. Shouldn't you be? And so therefore you've spent time and effort learning to be a photographer. Perhaps it's time to go out there and learn to be a marketer and a business person as well.

Andrew Hellmich: Let me just ask you, with that $80,000, that figure, when you say earning 80,000 is that take home? Is that before take home?

Peter Eastway: That's take home. So you work in a bank, the bank gives you a salary of $80,000, you pay $15,000 tax. You got $65,000 left over, and you pay all your personal expenses out of that. For a photographer to earn 80 grand, they've got to have at least a turnover of 150 to $200,000 so that's their sales. So, and break that down, you've got to be selling $4,000 a week, 50 weeks a year, to earn $200,000 a year. So if you're doing a wedding for 500 bucks on the weekend, you need to find another $3,500 worth of photography work to get to that 200,000 so that after all of your expenses, you end up with $80,000. Now, that $200,000 is just a rough figure. Some will need 300,000 some might be able to do it with 120, $130,000, but yeah, they're just rough figures.

Andrew Hellmich: Okay, so in future interviews, and I'm talking to photographers, and they tell me that they or their average figures, add up to roughly $200,000 we could extrapolate from that, they're taking home around 80,000. Is that right?

Peter Eastway: Well, I've got, I know businesses that are doing $200,000 a year turnover, and they made no profit because their staff costs were too high, their rent was too high. They didn't charge enough. I've got other, and I do have photographers who are turning over $200,000 and they might end up with $150,000 because they work from home. They happen to have found a really good little niche where their overheads are very low, and then they're just nailing it. But, you know, it's a matter of, averages are difficult things, but I would say that generally speaking, yes, if you're doing a turnover of $200,000 a year, you could be left over with between 60 and $90,000 a year on average.

Andrew Hellmich: And that would be considered a good business today, photography business?

Peter Eastway: Define good for me.

Andrew Hellmich: Okay, yeah, yeah.

Peter Eastway: You would be in the top 10, top 10% of photographers, for sure. Would I define that as a good business? I don't mean just, I have to be careful, because this is something that's going to be recorded, and people are going to listen to this. Please don't take this the wrong way. I would not want to work 40 to 60 hours a week and only get an average wage. I would want to be earning more than that. Because, certainly, if I'm starting off in my career, that is a great aim point. So let's say I'm in my early 20s, and I want to get to a point where by the time I'm 30 years of age, I'm earning $80,000 a year. I accept that. Then we go from the age group, 30 to 40, or up to 50, or whatever. You've now got 10 years’ experience. You've sunk a lot into this, and you're only earning the average wage. I think you need to be trying to do a little bit better. Now, we're going to turn around and come back and say, "Is there a market for photography today to do that?" And this goes back to the beginning of the interview if you really listen to me and my diatribe here, me rambling on, if you can put up with it, I think it's tougher to get those figures. So if we've got a population, a 100% of photographers out there, I don't know whether more than 10 to 20% can actually achieve that, because we're going to have to perhaps, I don't know how big the market is, and that's why I think, if you're doing other things, if we can value add by doing video. I mean, video is great, because there are so many things that you've got to do that the average person can't do. I mean, let's look at photography. When we're doing photography, we used to have a dark room that other people didn't have. Now everyone uses a digital camera. So what can we do? Well, we can use studio lighting, because a lot of people don't know how to use studio lighting. We can have a studio because, you know, our average people, they can set something up in the garage, but you know, the average person can't do that. So studio, I see, is making a comeback, because it's something that we do, that our clients don't do. And when they turn up, they see all these lights, and, you know, the brollies and the lights off boxes and maybe a floor pack or something or other. I mean, I often have all that gear. I might even shoot available light, but the fact that stuff is in the studio makes, it's part of the experience of what we're selling. So when it comes to video, to end up with a good video. Not only do you need a camera that does video, you need to have good lighting, because video is problematic. You need to understand lighting. Photographers understand lighting. And you need sound. You need good sound, because otherwise the video sounds like, the video looks crap if the sound is crap. So there are these things that we can do that our clients will struggle to do. So there's a market there for us to expand. And then, you know, why do people want videos? Because everybody's got stuff on Vimeo or YouTube. It's embedded in their website. So there's a huge part of the market. And yeah, I can see our clients wanting to put up on Facebook, if they don't already, a really high quality family portrait, etc. I mean, people are already doing this sort of stuff. Go over to America, go to UK. You can see how the market is already developing with people who've got reasonably fast internet, etc. There's lots of stuff like that. So for someone who's new to the industry, who's happy to look at things that are different to what we have done in the past, yeah, I reckon you can do really, really well out of photography. But most people, fortunately for us perhaps, aren't going to do that because, "Oh, business, that's too hard. I just want to sit down, fluff around Photoshop, go down to the coffee shop, pretend I'm working, and that's me being in business." And I think, I know they're hard words, but you know what, that's great for me, because I'm going to work a little bit harder than that, and that means I'm going to have a little bit more easy little bit more easy access to the market.

Andrew Hellmich: I love it. I love it. Mate, I want to just bring you back to a couple of tax or business related questions or accounting related questions that we've talked about on the show before, and it's sort of been a little bit fluffy here and there. People don't really have a correct answer. Can you explain what cost of sales is?

Peter Eastway: Yeah, okay, so the accountants talk about sales, and sales is really whatever you charge your client. So weddings, portraits, or doing a commercial shoot, that's what you charge your client. Now, if the cost of sales are also called variable costs, so that if I don't do that shoot for the client, so if I don't go up, I don't have to, if I'm doing an aerial photograph for a client, if I don't do the shoot, I don't need to hire the helicopter. So that's a cost of sale, or it's a variable cost. If I don't shoot the wedding, I don't need to get the prints done for the album, or I don't need to pay for, you know, someone to create an online album, or whatever it is I'm selling, or I don't have to pay for the DVD that I'm going to give, the shoot and burn. If I'm doing a portrait sitting, I don't need to pay for the print. So these costs, these cost of sales, don't actually happen so, but that's what a cost of sale is. So you've got sales less your cost of sales, and that equals what they call gross profit. Then out of your gross profit come all of your fixed costs so that, you have your phone, you might have your rent, you have your accounting fees, you might have your advertising, you've got your electricity, you've got your depreciation on your equipment. It doesn't matter whether you do one job or 100 jobs, you have these fixed overhead costs. So fixed costs or overheads, so that, you know, in that example where I said, okay, we've got a business which is doing $200,000 a year turnover, let's say that their variable costs are $50,000. So, they do wedding photography, and they sell albums. They sell $200,000 worth of weddings. They then have variable costs, or cost of sales, of getting the prints made, getting the albums made, and whatever they do $50,000, they're left with $150,000 now they then want to take out all of their costs of rent, driving the car, all of that sort of stuff. And don't be too hard on yourself, because you might say, "Well, if I don't do any jobs, driving the car is going to be more expensive or less expensive, less costly, etc." Don't, don't, don't get down to that level of detail. Just, just think of it in big picture, because it's not a perfect science, but all of those sort of costs, they're overheads, and they might be $70,000 a year, so they come off, so they're overheads, and that leaves you with a net profit, and that's your $80,000 which you take home. Now, accountants listening to this, are going to really have a go at me, because $200,000 sales, less $50,000 of cost of sales, or cost of goods sold, equals $150,000 gross profit. Take away $70,000 worth of our overheads. Take away $80,000 for your wages and your time, which is reasonable, actually leaves you with naught dollars profit.

Andrew Hellmich: Okay

Peter Eastway: Okay, so we often mix up profit and paying for our time, and I'm just looking at where we are and all this sort of stuff. We probably don't have time to go into that. But when you're doing your sums, a lot of people mix-up the two is that, if you, an example of a successful business, is that, okay, we've got a business doing $200,000 a year, $50,000 cost of sales, leaves us with $150,000. Let's say that that's your business. You've then got $70,000 worth of overheads, leaves you of $80,000. Now, you're going to go away for a year to Bermuda and put your feet up, and you're going to hire someone in to do all of the work you did for $80,000. So you put them in, how much profit is the business making you? Answer - nothing. So how much profit are you making when you're working in? Nothing, but at least you're earning some money. At least you got that $80,000 but your next step is basically to improve the business so that it's also making a profit. Profit is not a dirty word. Profit is what you need to basically pay for new equipment, to pay for your retirement. And unless you are making profit, you don't have a business. You've got a job. Having a job is the first step. Ending up with a business is what you want to aim to do.

Andrew Hellmich: I've got one last question, and then we're going to slowly wrap this thing up. If, in regard to cost of sales, let's say I'm selling, I'm a portrait photographer, and I'm selling, a print cost me $10, okay? And I also want to offer the same image as a canvas, and that costs me $100, does that mean I just have to sell it for $90 more to have the same outcome?

Peter Eastway: Yes, and no.

Andrew Hellmich: Come on.

Peter Eastway: Well, I mean, you know if, if you're selling, okay, so if you're selling your print for $100 and its cost you $10, you've just made $90 gross profit. If you're selling your canvas for $190 and its cost you $100, you've just made $90 profit. So when you're looking at it on a dollar basis, they're the same. However, the print that you've done, you've sold it for $100, it's cost you 10, your margin is 90%. I'm not going to go into you can do the margins both ways, so your mark ups 90% but when you've gone the canvas, which has cost you $100 and you've sold it for $90, your margin is only 45% or something like that. Don't, don't kill me on the percentages. So on a percentage basis, you haven't done nearly as well. And if you're a retailer, it's all based, generally speaking, on percentages, because it doesn't matter how much money you're earning, well, it does matter how much money you're earning, but you're basically, doesn't matter whether you sell, well, okay, we'll come back to it. If you sell 10 eight by 10s, and you're making $90 each, that's a much better result than selling one big canvas, because you're not making nearly as much profit on it. Now, I don't know if we're feeding back on that. We play that back whether I made an awful lot of sense, but so if I recap on the answer to that, one is a fixed mark-up of dollars. You buy the print for 10 bucks. You sell it for 100 you've got a mark-up of $90. You buy the canvas for $100, you sell it for $190 you've got a mark-up of $90, it's a fixed mark-up. You should not do your business that way, because one the canvas is a nice, big thing. It's probably going to take you a lot more effort. There's also more risk involved. You should try and have a mark-up, but you might have a slightly lower mark up for the higher value products than you do for the smaller ones. If you go into a retail store, you go into your camera store, you're buying a battery for 10 bucks. Chances are the retailer has bought it for $5 or maybe $2.50, they've got a 100 or 200% mark up on it. Then you go and buy a brand new Canon or Nikon DSLR, the mark up might only be 10 or 20%, might be even less than that, you know. So the percentage is different. But when we're looking at our pricing, almost always a percentage basis that you're working on, not a fixed value.

Andrew Hellmich: Great. Peter, where is the best place for people to check out you and your work?

Peter Eastway: I've got petereastway.com for my photography that I would send everybody to, www.betterphotography.com and that's where I run my blog. I'd invite them to sign into the site, and then I'll send them an email once a week or thereabouts, which is more just basically about photography. And on the website, there are things like, I have my landscape photography masterclass. I've got a little eBook called How to Win Photo Competitions, which we talked about, and we can come up with a discount on that for your viewers. Then there are other little bits and pieces on there. I do have a business site as well. Of course, you can subscribe to Better Photography, and we still do that as a paper version as well as an online version, but just encourage everyone to come along and have a look. That's what it's all about, I guess.

Andrew Hellmich: Fantastic. I'll add links to everything you just mentioned and anywhere else that people can find you and your stuff online as well. So Peter, it's been an absolute pleasure. You've been so generous with your time. It's been hard getting you on, but it was well worth, mate. Thank you.

Peter Eastway: Thanks for having me, Andrew.