Thoughts on Setting up a Video Production Business (Part Two)

Some thoughts and ideas on setting up a new video production business. This is Part Two.

In Part One we looked at how you can transform yourself from layperson to businessperson, and what you should expect along the way. In this part, we’ll look at some tangibles that you can do to ensure a smooth take-off.The 4 Ps of marketingThere are many variations to the Ps – 4 Ps, 7 Ps, 700 Ps…I like the smaller number. There’s enough problems as it is. The 4 Ps of marketing are also called the marketing mix. Don’t worry, you don’t have to remember any of this.The 4 Ps of marketing are:

  • Product
  • Price
  • Promotion
  • Place

It doesn’t matter what business you’re in, these four are in some way linked inextricably to your future. It’s your job to find out how, and what you can do about it.Red ManProductThe product is what you’re selling. It could be a service too, or it could be Jurassic Park. It is something so valuable that people are willing to shell out money for the privilege.In the case of a video production business, what is your product? It’s video of course. Even if you’re in the post production business, you are still selling some video content on a hard drive.Some people feel every second of their life is a product, but that’s just their ego talking. You might feel like your time is valuable, and you are right. But it is valuable to you, not to another person. In a video production business, there are many activities you have to perform before the finished video magically appears. Not all of these activities are justifiable as a product.E.g., you might edit on an ABCD, which costs about $999, say, while another person edits on EFGH, which is about a third of the price. You might feel you are entitled for more, but whom are you kidding? The market doesn’t care what you’re editing on, as long as the job is done. Even if you do have clients who demand an ABCD, they are just sitting ducks to hunters who are one day going to convince them to change.This is not a reflection on any software, mind you. That is the wrong way to think about this problem. Sometimes there are added benefits to a technology, and it’s not as cut and dried as comparing prices. Your evaluation of the tools you use is not as important as the market’s evaluation of the same tools. Do you care about a carpenter’s hammer? But I bet the carpenter does.The generalized point I’m making is that the market decides what the product is, and no matter how much time you spend worrying about the wrapping, if the product isn’t what is wanted, you won’t sell (at least not as well as you could have).PriceTo a lay person, the price is the price. To a businessperson, the price is a complicated figure arrived at after considering expenses, loans, investments, liabilities, assets, income, future extrapolations, taxes, miscellaneous or unpredictable expenses, market demands, competition and profits.What you earn at the end of the day better be in the black. The reason why many youngsters start out by undercutting the competition is because they don’t see the hidden expenses down the line. For today’s beer and gear you might lose tomorrows profits.Fixing the right price is critical.PromotionHow are you going to tell your market that you exist? E.g., if you’re into making music videos, how will the bands and the artists find you? And when they do, how will they recognize you?The traditional rule of thumb of marketing is: Be seen where your market hangs out.Promotion includes:

  • Advertising
  • Press releases
  • Business cards
  • Emails
  • Messages
  • Word-of-mouth
  • Exhibitions and trade shows
  • Cold calling
  • Networking
  • Websites and publishing
  • Charity
  • Yellow pages, or its equivalent directories
  • Seminars
  • Agencies
  • Referrals

All this sounds boring, and it is. That’s why it’s hard. You could fill books (or even libraries) with ideas, strategies and tactics on marketing your products and services.This is one lesson that never ends, and there’s a test every day.PlacePlace is where your product will be visible. In the case of a video, you will obviously be putting your showreel and your shiny self in front of your prospects. In the video business, you go where your client is.This includes having:

  • A web presence
  • Means of travel
  • Business cards and brochures
  • A showreel

If you are a post facility, you will need to find ways to get close to your client. This is one instance where they might (and probably will, from time to time) come to you. Think about this: Is your post facility always selling?Even a regular client will need to be reassured every time he or she steps into your temple.┬áIt’s astonishing how quickly people lose faith. Oh wait, business is not about faith is it? Then you better get your post facility selling too.Business GraphThe business plan and budgetingOnce you know what you’re going to sell and how you’re going to sell it, you will sit down and see if you should sell it. Sometimes, a great idea or product is exactly what people need, but not what they want.Being good or great isn’t enough. It has to be in demand. If your video production business cannot churn out the videos your clients want, you are doomed. You might have an intransigent artistic mindset, but if you’re like that, you shouldn’t be surprised if your clients are like that too. Why should they change for you?Sometimes, it isn’t clear if a business proposition or idea will float. For this reason, people make business plans and budgets. A business plan covers these basic points:

  • Executive summary – think of this as your elevator pitch, to yourself.
  • SWOT analysis – SWOT stands for Strengths, Weaknesses, Opportunities and Threats. You make a cross on a piece of paper, and each column contains one of the above. Write down what strengths you bring to the table, via man, location, price and machine. List your weaknesses. List how you can take advantage of your strengths, and how you can grow, under ‘opportunities’. Then take a good hard look at your competition, and write these down under ‘threats’.
  • Marketing plan – which you’ll have made earlier.
  • Financial plan – your budget, expenditure, break-even analysis, and earnings over a 3-5 year period. There are very few businesses that break even in the first year.
  • Expected milestones – a timeline grounded in reality.

Some business plans are detailed, because they are looking for funding. Your business plan must be lean, and is for yourself. You could (and should) show it to close friends or relatives whom you trust.Take as much time as you need, but you must be convinced your business will work over the long term. Don’t spend a dime until you’ve figured this out.Finding your left and right handYour left and right hand are:

  • Your lawyer, or law firm
  • Your accountant

It is practically suicide to start a business without either of these two, unless you already are one of these two! In my case, I can’t be any more distant to either of these professions, and I find their contributions invaluable.What about their costs? That’s part of doing business, a very sound investment if you ask me. Don’t hire the cheapest accountant or lawyer. If it helps any, think of them as video production folk, and you’re the client. Would you want the cheapest person to form the foundations of your business?These two will advise you on the correct legal and financial structure for your business, how you can best protect your interests, and, possibly, intellectual property rights.Interview as many people as you can. Don’t feel guilty that you’re wasting their time. You’re not. Here are some general rules of thumb I’ve used personally (not legal advice!):

  • Find a person who you can talk to freely, who listens and understands your point of view.
  • Find a person who gives you information even before you ask for it, who has your interests in mind.
  • Find a person who is above board when it comes to pricing, and is very transparent. He or she should give you costing in writing, and expected estimates in case of hourly rates.
  • They should have experience with clients in your field, and the laws particular to your case.
  • They should be honest, and you should feel safe, comfortable and secure in their presence.
  • They must be willing to put everything down in writing, in a contract, including maximum charges, scope of work and estimated turnaround times, etc.
  • They should be friendly. Trust your instincts, but also do your due diligence.

You’re not trying to sign a one-off deal here. A good accountant and lawyer are lifelong partners that will hopefully safeguard your interests. If they are great people, they will also help create opportunities for you, and even find you business.If you’re a good person, they might even end up being your customers! (Some countries frown upon these guys promoting themselves)What about Gear?Read the Comprehensive Guide to Rigging ANY Camera to know how to set up your gear. Obviously, you’ll want to do this while you’re budgeting, but it shouldn’t cloud your judgement.It might be easier to arrive at what you can afford to spend on gear first, and then work your way backwards to the camera you can use to justify your business. Sometimes it’s an Alexa, or sometimes it’s a DSLR. Doesn’t matter. For me, it’s a C300 for now.Every city and country is different. The costs of doing business are different. Don’t ever try to use a template or chart from someone else’s business as substitute for your own. That’s as good as copying someone else’s video because you’re too lazy to make your own.I think I’ve highlighted enough to get you started on your path to a video production business. If I have to explain business in a nutshell, the way I understand it, I’d say it is a ‘Cold War’. Make no mistake, there is a war, but everybody’s smiling.The ones that survive make money and thrive. Others perish, and go down complaining.

Important Disclaimer:

The ideas, thoughts, suggestions, information and advice given in this article shouldn’t be interpreted as legal or business advice or be considered as a substitute for legal counsel from a qualified lawyer or attorney. These are just some of my experiences and ideas, and my video production business isn’t successful yet, so don’t assume I’m right. I’m never right, even on my best day.

Secondly, there’s no way most of what I’m about to say is purely original. It’s a mixture of common sense, educated guesses, bits and pieces I’ve picked up from books, ‘authorities’, ‘gurus’ and whoever else happened to come along my way. Who knows? I might come back to this very text a few years either having forgotten my own advice or shaking my head in disbelief at how wrong I was in writing it.

Please, only look for ideas here. If you want advice, find somebody successful.