What would you do with $20,000 to start a video business?

D

dustinstoneband

Member
Hi. I want to start my own production company, offering music videos, corporate stuff / commercials, and short films. I am a producer and editor and I have a potential business partner who is a director.

I also have a very good (and rich) friend who said they'd be willing to give me $20,000 to start up this business.

I just have to tell them exactly what I'd do with the money.

My question is, what is the best way to delegate these funds when starting a new video production business? A certain amount to advertising? A certain amount on equipment? Use it all to rent a studio to have a place of business and basically cover my first year of rent expenses?

It is my dream to have a studio that would be a live / work situation, where people can come and maybe have a green screen studio in there that I rent out as well to help bring in some cash. But I don't want to waste all that money.

Basic start up costs like logo design, business cards, etc, isn't really going to put a big dent in things.. so when that's out of the way, do you guys recommend?

What would YOU do? I'd really like to hear!!!! Thanks!!

Dustin
 
BEFORE you do anything. Make a business plan. And not some one page summary that just has a basic outline of your business. You need to do market research, in addition to advertising research, equipment research, etc. Why would you need a green screen studio if no one in your area needs/wants to rent one out? Same with buying too many cameras.
 
Mainstreetcm is giving some good advice there - what anyone would do with investment capital like that is going to depend on the market they're in. Research your market - see what you think the needs of the market are. If there are already 10 other greenscreen studios what will make yours different? (for example)

Find what organizations are in your area that might be able to help - chamber of commerce, any industry groups in your market, etc... these place may have some valuable information for you.

Also, talk to as many other people in your market as you can - what do they have to say about what might be missing, or what is already oversaturated? Getting ideas from here is great for brainstorming - but with every suggestion you should ask yourself...will that work here?

I realize these probably aren't the responses you wanted at first... but business isn't always fun and sexy.
:)
 
I agree with the previous two, without a doubt. Develop a plan, and stick to it.

I have a similar situation in the fact I started a production company in 2007, started writing our first script, spent about $20-25k in equipment to go along with what I already had, and shot our first feature. We're in a remote area too in regards to rental houses, other crew, etc. so it was pretty much starting with a script, some dough, and an empty room. Now we're in post-production, have the support of the majority of the faith-based market that knows about our film, and we're in beginning talks with larger distributors like Affirm Films (Sony), Fox Faith (20th Century), etc.

I can be done...so develop the proper plan, and get out there and make it happen! :)
 
wow thanks guys, I wasnt expecting to get advice so fast! And Luis, that is the best advice from a wookie I think I've ever received. :)

I will be honest, I don't know too much about market research. I live in Vancouver, Canada, so there is definitely a lot of films being made here, small and big, so I didn't think it would be a problem to find people to rent a green screen studio from me. There are a couple other studios for sure, but I don't know how to find out if there's 'too many'. Also that was just an idea to help bring in some cash, not really my MAIN goal. which is to have a respected media company.

I kinda picture having a studio that has an awesome editing bay, an office area, a lounge area for meeting with clients (maybe a pool table and some couches, you know, that kind of set up), and to be in a large enough room that i can actually set up backdrops (such as a green screen) or other kinds of backdrops that even photographers could rent for the day.. plus we could do some filming there for different corp style gigs.

I imagine corporate gigs is the main way to get money, but whats the best way to bring in / find these clients? Advertising? I've been making music videos and films for the past few years and it seems to all come from word of mouth. But I haven't been making money really, that's why I want to get into the corp stuff and really changes things.

I'm always spending money on gear and my own films, it seems like it goes so fast and there's always another project right away, waiting for more money to be spent on... I just dont wan't to spend this 20 grand in the blink of an eye..i don't want to waste such a generous gift from my friend. this could really be my chance to turn my passion into a way of making a living!

I will start researching business plans for now. any other opinions, on how YOU would spend the money?
 
Honestly, spend it on the things you need to create your first products. Don't get all focused on the "big time" right now. Concentrate on the hardware and the things that you will need to do your job. A couch isn't needed to complete a project, neither is an office or anything of the sort. With 20k, start it out of your bedroom. Put all the money into things that will bring you money back, especially when starting.

Computers, Cameras, etc. those will make you money. You'll have to start small like everyone does and create something that shows off what you can do, then someday after a few bigger and better jobs, maybe have a building or employees or larger spaces to use.

My 2 cents.
 
i do have a lot of that stuff already.. the computers, several cameras, a steadicam, some lights, stuff like that. combine that with the equipment my director friend has and a sound engineer and we have basically everything we need.

creating something that really shows off what we do is exactly what I was thinking tho. perhaps patience is the key here.. i could put this money into a commercial or a film, and cross my fingers that brings some good paying jobs.

i think my mindset was that working out of my apartment was hindering my business. that having an actual 'place of business' would bring credibility and more clients as a result.
 
What you have to offer (the quality of your products) will mean more to a paying client than what kind of building/room/what computer, NLE, OS/etc. you created it in.
 
Yup

Yup

That's good you already have a lot of the equipment, then, because $20,000 is almost nothing to start a business in full. But if you already have some equipment, that helps. I wouldn't go buying a bunch more. I'd put it into things that will have a direct return, and that means things like a quality Website, make sure you have good work to show off, maybe a few business listings or simple ads, but don't waste much money on advertising. It doesn't work very well at all in my experience. It's a lot more about person-to-person contact with local businesses and whatnot.

For me, I have probably about $80,000 in equipment. A lot of stuff I got I would now describe as not necessary, I may end up selling some pieces to get other stuff I want.

I spent a few thousand on the Website. It costs $8,000 annually just for production insurance (there goes about half of your money, since you absolutely must have insurance to operate anywhere as a professional company otherwise good luck getting hired to go into people's places of work UNINSURED, lol), $3,000 annually for equipment storage, and I pay a sales professional full-time at a few thousand a month plus commission plus worker's comp expenses plus payroll expenses. Even just my annual operating expenses, besides equipment and other things involved in startup, it's about $40,000 per year. But the hope is of course that it is worthwhile and works out.

You have to start smaller and try to save money wherever you can. I don't know if you're targeting larger work or smaller work, but you of course have to go with your skills. I'm not a videographer or a sound guy or any other low-level position. I'm a director / producer. So I have no choice but to reach for larger work (thus the sales employee) and hire videographers and crew, etc. I have no interest in being a one-man crew. So you have to decide if that's the path for you, because there is more work for one-man crew type of people, but there's not much money in that at all. You'll be competing with tons of other people who can all do the same quality of work. We just sell ourselves as a boutique company that offers a far higher standard of work and does far superior work with a real professional crew, rather than one guy with a tripod and a camera, since that market is oversaturated anyway.
 
The office could very well bankrupt you, most people I know work out of thier house, it is accepted.

If you MUST get an office think about spliting it with 3 or 4 other guys in your situation. If your going to pay $2k a month for it then sublease it to 3 others for $700 a month each. Maybe try to find a night owl type for a 4th or 5th person that pays $500ish a month to come in after 6pm and is out by 6am. I would never count on making money off the green screen rental, it could bring in a small amount on a hit and miss basis but doubt it will ever be enough to pay your rent.

Networking with 3 or 4 other guys to share the space / sublease who have equiptment you do NOT have could also be very helpful. Make sure they sign a sublease with you for 2 years minumum, pay first and last months rent up front and get a deposit. Charge them so the space cost you nothing, try to make money on it if you can.

Negotiate T.I money when you sign a lease to build your green screen, edit rooms with etc. I know people who have gotten as much as $20k T.I. (improvment) money for a $48k ($2k x 24 month) lease.

If you can't work a deal like that I'd keep working out of your house or apt. an office is a major expense, have it pay for itself or don't do it.
 
Dont know any other guys in a financial position to go in on a studio with me.. i'm sure I could find people, but I wouldn't know them personally, and wouldnt want to trust them with my space or gear.

So maybe I'll put the whole studio idea on the backburner for a bit longer while I establish my new company.

So if I don't put my money into that.. should I just be putting it into a few quality projects to showcase my work and a decent reel?

Maybe an agent to bring in clients after said reel is ready?
 
If you buy gear I'd buy it used, avoid as much deprecation as you can. $10k worth of cameras will be worth $5k in a year or two. Certain things hold value fairly well like used senn 416 shotgun mics, they have been holding around $600 for several years. Lights, buy used. Lot's of production comapnies went broke in the last year so deals are everywhere. Don't buy anything just to buy it, make sure you really need it. Just because you have $20k doesn't mean you should spend it, cash reserves are a must, so is marketing.

I personally would not buy anything untl you get 5 or 6 corporate gigs under your belt, rent for now or borrow from friends.

I'm not sure if agents are good for finding corporate gigs, I just don't know on that one. I would contact marketing companies who market products for corporations, tell them you pay a 10%-20% referal fee, make sure something is in it for them to sell your service to thier clients.
 
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yeah for sure. i read the sticky on not buying gear.. luckily we have a lot of gear already so that's not really an issue, altho I would eventually like to invest in something like the red cam but thats a long term goal....

i will do some research on how to find corporate gigs, i'm sure this forum alone has a few threads on the subject.. thanks guys...
 
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