Should I look for investors?

[tsouri]

Hi Guys

I'll introduce myself first, my name is Tsour Lee Adato, the owner of Pro Photo Studio, a Commercial Product Photography Studio.

About 5 years ago I started my Product Photography business in New York basically from nothing and grow the business today to where I believe I need some help getting to the next level.
Basically with a $2000 investment, I grow the business in 5 years to $370k+ Year with 2 employees plus myself and 3 outsourced teams ( still not where I want to be ).

At my core I am more entrepreneur than a photographer, however, I believe because of my marketing skills ( over 15 years ) I managed to get my business from the ground up.
Lately, I was playing with the idea of getting investors in, I believe a 3-5 million investment will help increase brand awareness, build customized software for the business, which will streamline the work, hire more people and open additional branches. At the moment we have a branch in Florida, and opening an additional one in Dallas TX in September 2021.
One of my competitors just received a 10million investment from venture capital, and I can see how they are growing insanely.

Now, I have few questions and I am hoping someone can help me with some feedback
1. Would you recommend looking for investors? or do you think I should keep the slow growth ( but positive) and do it by myself and be ok with whatever I have?
2. How about decision-making when you have someone to answer to? will that be an issue?
3. Where should I look for investors? I already have a business plan and had a company create my business 5 years forecast without investment and it looked promising, still far from where I want to be.

Any feedback will be great, and let me know if you have any questions to help you help me.

Tsour Lee Adato
Pro Photo Studio
My company web

 

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[Antifragile]

Congrats on growing the business to this stage in the past 5 years!
I clicked on your link and photos are indeed stunning.

As a service business, even if you had investors, how are you scaling it? Is there a way to franchise it? What are your options?

 

[tsouri]

Congrats on growing the business to this stage in the past 5 years!
I clicked on your link and photos are indeed stunning.

As a service business, even if you had investors, how are you scaling it? Is there a way to franchise it? What are your options?

Hi
First, Thanks so much for the feedback.
Yes, there is absolutely a way to scale this. First, I can definitely bring more work, and I can replicate what I did here into major cities in the US. More than that, I have some ideas regarding a customized software that will make the client transaction and workflow much easier, and some ideas on how to capture existing clients with a subscription-based model ( that I already implemented, however, there is a better way to do it ). I am a one-person that is doing advertising and marketing, general business managing, some aspects of photography as well and trying to keep growing the business. It's a lot I am trying to find help as much as possible, but some things, I rather do myself

I am not only thinking about investment as a money solution but also as help to take me to the next level.

 

[SunnyN]

Your website and portfolio are indeed stunning. My queries are: What's your customer acquisition plan if you go for investment? You are at that stage where you are turning almost all the wheels yourself.
You will be overwhelmed once you take on other people's money and you will be answerable to them. As far as I hv inferred, Tsouri, you are doing pretty great by yourself but you are getting distracted by that one competitor who is moving way far ahead after getting funded.
Have you done research what resources did they have, what was their business model, etc.? If you are positive you can replicate your competitors strategy after getting funded and after thorough market analysis, you too will be able to acquire customers within stipulated time periods as agreed with the investors, then it would be a move worthwhile.

 

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[tsouri]

Your website and portfolio are indeed stunning. My queries are: What's your customer acquisition plan if you go for investment? You are at that stage where you are turning almost all the wheels yourself.
You will be overwhelmed once you take on other people's money and you will be answerable to them. As far as I hv inferred, Tsouri, you are doing pretty great by yourself but you are getting distracted by that one competitor who is moving way far ahead after getting funded.
Have you done research what resources did they have, what was their business model, etc.? If you are positive you can replicate your competitors strategy after getting funded and after thorough market analysis, you too will be able to acquire customers within stipulated time periods as agreed with the investors, then it would be a move worthwhile.

SunnyN​

My customer acquisition plan is very similar to what I am doing now, which I can't disclose on this form. I also would say that majority of my big clients started with us and stayed with us. The business model of my competitor is something I can replicate indeed with the right budget, it's fairly simple. They are going on the more simple day-to-day more casual product photography and not as close to the quality we provide in our studio.

I am very familiar with their business model, funny enough it's actually something I wanted to do myself a few years ago, but I did not have the resources.

Doing this for 5+ years now, and the way eCommerce blow up in the last few years, I am sure
I can bring this business to a multimillion-dollar business, but as it is right now, without a push of serious funding and consultation regarding things that I probably don't know that I don't know, it would take a long time.

 

[BizyDad]

The short answer, no.

You're trying to solve two different problems.

And you want an investment that is approx 10 times your annual revenue. How are you going to give up 300% of your company in exchange? These numbers just don't make any sense.

And you trying to find someone to guide you. To help you improve so you could better run your business.

But the thing is, if you need someone to improve you to better run your business, then why should an investor invest in your business?

Seek out the investment when you have a better idea of the market, the opportunity, and the plan to execute.

Until then, keep working to grow this business, keep bootstrapping, and try and find the right mentor or consultant. Maybe get a mastermind group going?

 

[farmer79]

Bizydad hit the nail on the head your valuation makes no sense. How much equity would you be giving up for say 4million dollars? Angels don’t like to see you giving up too much equity in the first round because you will have to do serious dilution if you give up 50% of your company now, and they’ll never end up getting their money back. I know nothing of photography but I am getting quite involved in angel investing and listened to a pitch last week from a company in a business that is highly scalable in both Canada and the US and had 70,000 monthly recurring revenue and were looking to raise 1 million at an 8 million dollar valuation. Now startups in Canada tend to run under US startups but I think you see where I am going. You would need to show better than Facebook metrics to raise that kind of money you are talking about. I don’t say this to discourage you but encourage you to think of your proposition from the other side of the table. I write you a cheque for 500k, how do I get my money back? When do I get my money back? What investments can people make rather than investing in you, who and what are you competing against when it comes to raising funds: See if you can attend a local angels investment meeting as a guest. Ask yourself honestly how you would stack up against the companies pitching.

Edit
Your competitor raising $10 million was almost certainly not their first raise. I would be quite sure this is their 2nd or 3rd raise. This means they have their legal, accounting, cap table, reporting issues all ironed out and have built and maintained a very high level of confidence with their investors. That does not happen overnight.

Secondly taking 10 million is very two edged. It is unnatural for a business to grow that quickly and at that level. The VC is literally pumping you full of the most toxic unhealthy elephant steroid(unlimited cash) there is and wants you to run 100 meters in 7 seconds. If you pull a hamstring, grow a trunk, or otherwise underperform they are happy to shoot you and move on to the next project. Now if you can do that the benefits are amazing (hello heli skiing in Switzerland, and F1 races in Monaco) but the graveyard is quite full of carcasses.

 

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[Ronak]

It's important to take a step back and think about what you actually want. What are your goals for the business? Do you want a lifestyle business that gives you a very comfortable income and time to enjoy it, or do you want the multimillion dollar 80+ hour a week, high stress, but scalable enterprise?

You can still expand what you currently have without needing a 7 figure investment, but it might warrant a change in strategy.

 

[tsouri]

Bizydad hit the nail on the head your valuation makes no sense. How much equity would you be giving up for say 4million dollars? Angels don’t like to see you giving up too much equity in the first round because you will have to do serious dilution if you give up 50% of your company now, and they’ll never end up getting their money back. I know nothing of photography but I am getting quite involved in angel investing and listened to a pitch last week from a company in a business that is highly scalable in both Canada and the US and had 70,000 monthly recurring revenue and were looking to raise 1 million at an 8 million dollar valuation. Now startups in Canada tend to run under US startups but I think you see where I am going. You would need to show better than Facebook metrics to raise that kind of money you are talking about. I don’t say this to discourage you but encourage you to think of your proposition from the other side of the table. I write you a cheque for 500k, how do I get my money back? When do I get my money back? What investments can people make rather than investing in you, who and what are you competing against when it comes to raising funds: See if you can attend a local angels investment meeting as a guest. Ask yourself honestly how you would stack up against the companies pitching.

Edit
Your competitor raising $10 million was almost certainly not their first raise. I would be quite sure this is their 2nd or 3rd raise. This means they have their legal, accounting, cap table, reporting issues all ironed out and have built and maintained a very high level of confidence with their investors. That does not happen overnight.

Secondly taking 10 million is very two edged. It is unnatural for a business to grow that quickly and at that level. The VC is literally pumping you full of the most toxic unhealthy elephant steroid(unlimited cash) there is and wants you to run 100 meters in 7 seconds. If you pull a hamstring, grow a trunk, or otherwise underperform they are happy to shoot you and move on to the next project. Now if you can do that the benefits are amazing (hello heli skiing in Switzerland, and F1 races in Monaco) but the graveyard is quite full of carcasses.

Thank you for the detailed and time spent to write it down. Indeed many things to consider. Also my competitor had their 3rd round of investments, they started at 1.5million. Just to mention that I am indeed know how to scale the business, and by saying I need some support the more I think about it is more financial support rather than any other support as I know who to hire how to market well and what I need exactly. It’s a lot to think about, for now I think I’ll keep my slow but steady growth .

 

[tsouri]

It's important to take a step back and think about what you actually want. What are your goals for the business? Do you want a lifestyle business that gives you a very comfortable income and time to enjoy it, or do you want the multimillion dollar 80+ hour a week, high stress, but scalable enterprise?

You can still expand what you currently have without needing a 7 figure investment, but it might warrant a change in strategy.

That’s an excellent point and something I think about as well.

 

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[tsouri]

The short answer, no.

You're trying to solve two different problems.

And you want an investment that is approx 10 times your annual revenue. How are you going to give up 300% of your company in exchange? These numbers just don't make any sense.

And you trying to find someone to guide you. To help you improve so you could better run your business.

But the thing is, if you need someone to improve you to better run your business, then why should an investor invest in your business?

Seek out the investment when you have a better idea of the market, the opportunity, and the plan to execute.

Until then, keep working to grow this business, keep bootstrapping, and try and find the right mentor or consultant. Maybe get a mastermind group going?

Hi.
Thanks for the feedback.
Regarding the investment I did not assume a 10 million would happens in the first round but rather get to it after few rounds, as I see and vision my plan we will need it to get to a fully nationwide locations, manpower, marketing, etc..

what’s a mastermind group?
Thanks
Tsour

 

[BizyDad]

Hi.
Thanks for the feedback.
Regarding the investment I did not assume a 10 million would happens in the first round but rather get to it after few rounds, as I see and vision my plan we will need it to get to a fully nationwide locations, manpower, marketing, etc..

what’s a mastermind group?
Thanks
Tsour

How to Start a Mastermind Group (and 8 Reasons Why You Should)

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www.dailynewyears.com

Thank you for the detailed and time spent to write it down. Indeed many things to consider. Also my competitor had their 3rd round of investments, they started at 1.5million. Just to mention that I am indeed know how to scale the business, and by saying I need some support the more I think about it is more financial support rather than any other support as I know who to hire how to market well and what I need exactly. It’s a lot to think about, for now I think I’ll keep my slow but steady growth .

Hang on, hang on.

Nobody here is saying keep your slow steady growth. If you know these things, if you really know these things, then all you need to do is better communicate this vision for how to get it done, and you need to lower your ask.

Of course if your number is low enough, and your growth plan good enough, then forget the investors who take a portion of your company, and just go get a loan instead. Why do you need an investor at all?

You started this thread because you want to grow faster. That's a good goal.

You don't have to choose between building an insanely large empire that eats your time, and what you have now. Those are not the only two choices.

You can choose what you have now and make it a good bit better.

Put together a plan and a timeline for how this business can open up three new cities a year. (I just pulled that number out of the air. You're the expert, you decide what the right number is.) How much new business can you get from each city? Can't that new revenue fund the opening of more cities?

Lastly, it took you 5 years to grow to $370k. What is your plan to grow new branches to 370k in a lot less time?

Lastly, have you considered a franchise model where people pay to get in, and then they're also using their dollars for marketing? This way you aren't the one that needs to fund the growth of this company.

I'm not in your business, so I don't know if any of this makes sense. I don't know that any of it doesn't make sense either.

I'm just trying to give you some ideas. You decide. Hope that helps.