# When To Get a Business Loan



## LarissaPhotography (Nov 30, 2009)

I'm just curious what times if any you would consider getting a business loan.  Did you get one for startup, maybe for new equipment?  What about during a slow season?  How much do you usually get the loan for?


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## KmH (Nov 30, 2009)

Never. Bad idea. Cash and carry is the only way to go. 

Start-up is the worst time to be getting a loan.

If you can't afford to replace or upgrade your gear, your pricing isn't effective because that's part of your CODB.

When it gets slow, market to the next higher market demographic.


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## PatrickHMS (Nov 30, 2009)

^^^What he says^^^


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## LarissaPhotography (Nov 30, 2009)

KmH, thanks for the reply.  We're on-board with the philosiphy of debt free business.  Is that pretty standard across the board for photographers?  With your suggestion about when business gets slow, are you saying that when it gets slow to start doing specials or lower prices temporarily?


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## Eco (Nov 30, 2009)

IMHO lowering your pricing is the kiss of death.  Building the value of your goods and services is like climbing a mountain, once you lower them you have an uphill climb.  

Loans..... if it will enable you to get business right away then the idea might be a good one.  For example, let's say you call all of your past clients to see if they have an interest in Christmas/holiday photos and a good share say yes.  You might need $1000 is holiday backdrops, $1000 for renting a studio and $1000 for some new lighting(making up numbers).  Taking out a loan for $3000 that will bring in $$$$ in business would be an excellent business decision.  

If your reason for taking out a loan is to get over your slow season then it's time to get a part time job or to take out a loan for a couple college courses on running a business.


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## KmH (Dec 1, 2009)

LarissaPhotography said:


> KmH, thanks for the reply. We're on-board with the philosiphy of debt free business. Is that pretty standard across the board for photographers? With your suggestion about when business gets slow, are you saying that when it gets slow to start doing specials or lower prices temporarily?


No, I'm saying go the other way: raise your prices and market upscale from your current client base.

At any event your pricing should be routinely increased 5% every 6 months just to stay even.

Eco got in there before me but +1 on business/marketing/planning classes during the slow season.


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## Christie Photo (Dec 2, 2009)

Yeah....  stay away from the banks.

I think offering "specials" is fine, but don't drop prices across the board.  I like to offer _solutions_ as specials....  the perfect Valentine...  something Mom will always cherish...  that sort of thing.

Book your senior portrait by July 15th and get 48 wallets free.  Purchase a 16x20 wall print for Christmas and get two 8x10 prints free.  Mother's Day collage of 4 images, in a special frame for just $$.  That sort of thing.

If you figure it out, let me know!!

-Pete


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## LarissaPhotography (Dec 2, 2009)

Thanks for all the feedback.  Kmh, I'm trying to understand how your suggestion would work out.  It seems like the suggestion to offer promotions would bring in more business and raising prices would bring in less business.  Am I missing something here?


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## Eco (Dec 2, 2009)

Larissa, another approach is offer people a way to lock in your current price structure before your annual price increases.  "Any booked session with a 20% down payment will lock in our 2009 prices before they increase in <month> 2010".


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## KmH (Dec 2, 2009)

LarissaPhotography said:


> Thanks for all the feedback. Kmh, I'm trying to understand how your suggestion would work out. It seems like the suggestion to offer promotions would bring in more business and raising prices would bring in less business. Am I missing something here?


 Why does raising prices have to result in less business?


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## LarissaPhotography (Dec 3, 2009)

Kmh, here's the way I think about it, but you may see it differently.  Imagine a pyramid that has a wide base at the bottom and comes to a point at the top.  That pyramid to me is like the number of customers who are willing to pay a certain price.  At the bottom you have a ton of people who are willing to pay a low price.  As you go up the pyramid by increasing price, there are fewer people willing to pay that price.  Once you get to the top of the pyramid, there are only a few people willing to pay that price, and eventually raising prices high enough, there are no people in that market.
Do you have a different model?


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## Dominantly (Dec 3, 2009)

I think with an increase in prices you have to market to a different client. 
Maybe a commercial market. People sometimes judge your services by you reputation and your pricing. Maybe a bit of the notion that if it is expensive, it must be good.


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## DennyCrane (Dec 3, 2009)

Haagendaz(sp?) raised it's prices and gained a huge market share. Stroh's beer did the same thing and gained enough share to sell out the whole company for a nice profit. Pricing is tricky, no doubt. You don't want to lower your prices and attract bottom feeding coupon clippers who will have no loyalty. They will go to whoever is the cheapest. And next time, if that's not you... c'est la vie. 

Personally, I believe in value-added marketing. Give people more product and service to justify the higher price. Want a special? Don't use sales, give them something more with the same prices... or even slightly higher prices.


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## Christie Photo (Dec 3, 2009)

Dominantly said:


> People sometimes judge your services by you reputation and your pricing. Maybe a bit of the notion that if it is expensive, it must be good.



There is a line.  A lot of folks will walk by your place and think, "Someday, I'll get a portrait done there."  They sort of...  "save it for good," for that special occasion.  After more than 25 years, some of those same people still tell me that one day......

Another thing about "if it is expensive, it must be good," is if you are expensive, you'd better be good.

-Pete


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## Jenna777 (Dec 9, 2009)

Right now today's business loans are competitive.   So it is a good time to take a look at receiving business cash advance that way your cash is ready and in-hand for when you are ready to expand.  My husband and I did this so we are ready to go for the holiday season.  Thank God business has picked up.


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## LarissaPhotography (Dec 9, 2009)

Jenna...are you a photographer?


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