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Starting a Video Production Business

Advice on how to go from Amateur to Pro

If you're thinking about getting into the video business, think hard.

This month's column is for folks who make videos for fun, but feel that it might be more fun to make videos for money. Making the jump from hobbyist to pro can be fun, rewarding, and more than a little scary, depending in which direction you jump.

You could work for someone else who has an established video business. This is how I got into video. While still in college, I went to the public TV station and said, "I'll work for peanuts, I'll work any time you need me, I'll come in to work on a moment's notice and I'll work my tail off when I'm here." And I did.

It's an unfortunate truth that video and television production is viewed as a "glamorous" endeavor. It isn't, really, but this warped view supplies a never-ending stream of hard-working youngsters (as I was) to the video mills. Economics 101 (supply and demand) tells us the inevitable result of this high supply: low demand and low wages.

To make good money from a video business, you have to control the video business. So even if you start your journey to professional video by working for someone else, you'll eventually get the urge to be your own boss. Now the question is: are you cut out to be a video entrepreneur?

Dog Eat Dog

The professional video business is tough. Competition is fierce. Potential customers expect the quality they see on network TV, and yet have no clue as to what those programs cost. And from my experience, the video business has weird and unpredictable rhythms. You can be up to your neck in work one week and sitting on your hands the next.

Are you discouraged yet? No? Good, you'll need a thick skin if you want to go into business for yourself. More than half of all new businesses fail within the first five years.

If that failure represents the loss of all your savings, and depletes the loans you took from friends, relatives and banks, it's going to make a dent in your lifestyle. I don't want to be the voice of doom and gloom, I just want you to go into this process with your eyes wide open. I wouldn't be doing you any favors by making it sound easy.

Can You Do It?

There are a lot of factors to starting a successful business, but a big piece of the puzzle is your personality. Can you take the mental stress that comes with owning a business? If not, you don't want to find out a year from now as the bank is repossessing your car--you want to know now.

Are you the person who is usually put in charge at your present job? Can the boss leave for the day and know that the project you are working on will get done even when no one is looking over your shoulder? Do you have the drive to see a job through to its conclusion?

These are personality traits of a business owner. In your business, the bills will continue to come in even if you put off finishing a project until next week. That's negative cash flow--your money going down the drain. It's not a good thing.

Do you really think you can run a business? No fooling, now. If you have any guppy-sized doubts now, you can expect them to come back as big blue-whale-sized doubts if the business has a couple of bad months. You must have the confidence to believe that everything will be fine if you keep working hard. This is the attitude that will help you make it in business.

If you want to own a video production business, you've got to be a gambler. You'll be putting your security on the line and rolling the dice. You can count on skipped paychecks from time to time, long hours and weekend work with no guarantees of compensation. And no matter how hard you work, you can still lose everything. Sound like fun? Yeah? You're made of stern stuff. Continue.

Do you have an aptitude for the accounting side of the business? Here's an old joke. A businessman is selling finished widgets for less money than it takes him to buy the raw materials that make up the widgets. A friend asks how he can do this. The businessman replies, "I make it up in volume." If you don't see the humor in this, business may not be the place for you.

Quality Control

Now we come to the question that you might have thought would be the first on the list: can you produce professional -quality video? Sadly, you have a better chance to stay in business if you are a good business-person and a so-so videomaker than if you are a great videomaker but a poor business person.

Is your work at a professional level? To answer this question you have to step back and look at your videos with the eye of a customer. Would you pay to have a similar video produced? How much? Are there weak links in your production chain that would turn away customers (such as substandard audio from the lack of an external microphone)? What will it cost to upgrade your equipment?

You not only have to be able to create professional video, you have to satisfy the demands of the client and you have to do so on time and within budget.

Let's say you've done great work on your own videos. Can you do just as well on someone else's? To find out, it might be a good idea to do a couple of projects for demanding friends to see if you can adapt your creativity to their ideas. See if you can do this within a certain time frame. Give yourself two weeks. Can you meet the deadline? Business is all about deadlines, so you should get used to that as well.

To Market To Market

Who will pay you to create videos? It depends on what sort of videos you plan to make. Will you be a wedding videographer? Will you be shooting and editing TV commercials for advertising agencies? Or will you create documentaries for public television? In each of these cases, you would be serving a different market. You can sell to as many markets as you want, and in some cases the markets might overlap, but you'll probably have better results if you focus your attention on one market at a time.

Before you start your business you should research the potential market. You may be the best video producer who ever lived, but if you can't find people who want to pay for your services, you're out of business.

Let's say you want to become a professional wedding videographer. Start with a quick check of the demographics in your area. If ninety percent of the population is of retirement age, then the market may be small for matrimonial service providers. Call a few shops that deal with weddings (florists, tuxedo- rental shops, wedding-gown shops) and find out how business has been and what they forecast for the coming year.

You must also consider the competition. Check the yellow pages in the phone book to see what sort of competition you'll be up against. If you live in a town with 20,000 people and there are already four wedding videographers, then you have a difficult market to break into. However, if there is only one listing in the yellow pages, the market may be ripe for a new supplier--you.

Advice from the Pros

Another way to determine if you should make the jump to professional video is to get advice from folks who already work in video. Check to see if there are any professional organizations in your area such as the International Television Association (ITVA) or a chapter of the Advertising Federation. Find out if you can attend a meeting. If you can, do so and start picking brains.

You may find that there is already more work in your area than these people (your potential competition) can handle. Someone might even hire you to help out on existing jobs. As long as you don't try to steal a client away from your new boss, you can gain excellent experience this way.

On the other hand, you might hear that there isn't enough business for the companies that already work in your area. This could mean that either there really isn't enough work for everyone, or that the video producers haven't been satisfying their clients. How can you tell the difference? Ask a lot of questions and read between the lines.

The Business of America is Business

If there are no organizations in your area specific to the video business, you can still learn more about business in general through groups like the Chamber of Commerce or the Small Business Administration.

Your local Chamber of Commerce supports all business and works hard to connect people or companies that need a product or service with those who create these products or services. The Chamber will often sponsor events (where I live, they call them Wednesday Friendsday or Monday Funday) where lots of business people get together to shmooze and exchange business cards. This is an example of networking--simple one-on-one conversations with folks who might want to do business with you.

Another good source of information is the Small Business Administration (SBA). If there is an office in your area, you could get help from the SBA management assistance staff. These people can give you guidance on opening a business, marketing, advertising, profit goals, borrowing, accounting, bookkeeping, personnel, customer analysis, forecasting and insurance.

The SBA also provides help through the Service Corps of Retired Executives (SCORE) and the Active Corps of Executives (ACE), groups of volunteers that can help you with advice based on experience in the trenches.

If you prefer to get your information from written material, the SBA offers a wide variety of publications on starting and running a business. They don't cost much and you can get an order form by writing to: Small Business Administration, Washington DC 20417.

Make a Plan

If you do talk to any of these experts, they're likely to ask, "Do you have a business plan?" Bank loan officers, investors, potential partners and others who might have an interest in your success will ask to see this document.

A business plan is a blueprint. In it you answer many of the questions we have explored in this column, but in more concrete terms. After writing a business plan, you'll have a better idea of whether your video business has a real chance for success or is merely a pipe dream. Again, it's better to know this before you sink the family fortune into it.

A business-plan outline has the following 10 sections: Title Page, Table of Contents, Executive Summary, Business Description, Product or Service Description, Organizational Data, Marketing Strategy, Competitive Analysis, Operations Plan and Financial Information.

The Title Page includes the information that bankers or investors need to reach you if they want to throw money at you--your name, address, phone number and so forth.

The Table of Contents helps the reader jump directly to the page where you describe how you will make money. That's what they really want to know.

In the Executive Summary you describe your business quickly, but clearly. This is the grabber. If you can convince the reader that your idea has merit, he might read the rest of your plan.

The next section, Business Description, explains exactly what your business is. You can describe the legal structure (sole proprietor, partnership, corporation) and show how your company is similar to or different from existing business ventures. And you can point out how this similarity or difference will make you successful.

If your primary business is to be wedding videography, you don't have to go into a lot of detail in your Service Description, because most people have an understanding of this type of business. If you want to create videos of dogs and cats, however, you might need some explanation.

If you are the only owner and employee of your company, then you can put your resume into the Organization Data section. If you'll have partners, you describe their duties--mom will be keeping the books, dad is an excellent salesman, Little Joe will be acting as a grip during shoots, and you'll produce the videos.

What's your Marketing Strategy? This section will prove that you have given some thought to your target market, the market size, market share and so forth. Potential investors like to know that you've done your homework.

Who is already doing what you want to do? Nobody? Great. Otherwise you need to show a Competitive Analysis. Can you go up against the established video companies and win? What makes you think so? Luck? Remember that hard facts are more impressive (and essential) than statements like, "I feel that I will do well because I have excellent potential." Pardon me?

You may now go into detail about how you'll produce your videos. The Operations Plan explains how you'll actually deliver a product after a client asks for it. You have thought this through carefully, haven't you? Prove it.

And of course, after doing this much work you should know that a lot of places (banks, for example) don't like to loan you money unless you can prove you don't need it. The Financial Information section is where you list your assets and liabilities, with special emphasis on possessions that the bank can sell later if you miss a few payments. Reality is a harsh place.

Books on creating a business plan are available, and there are even computer programs that will let you fill in the blanks. However, these tools can't think for you or do your homework.

What if you don't need money from a bank or venture capitalist to get your business started? It's still a good idea to write a business plan. Why? Because if you can't write a plan that would convince someone else to risk money in your business, then why should you risk your own money in it? Don't be foolish about starting a company--it's not fun and games--it's serious business.

Should you make the jump from hobbyist to pro? If your research and planning say you shouldn't, then think about it very carefully. If you still believe you can do it, then do it. As long as you understand the consequences. There is nothing more satisfying than making a business run. Just make sure that you really do mean business.

Tags:  August 1996
William
Ronat
Thu, 08/01/1996 - 12:00am

Comments

Anonymous's picture

Video production can be a tough industry. However, if you get a few solid clients, you can develop a portfolio and build your business. If you are looking to feed your family on day 1, you may have bitten off more (or less) than you can chew. For more information about video for business, visit http://www.youtubeadagency.com/pricing.html

As a video producer since 2007 and an entrepreneur/business-school student since 2012, I recognize there is a large gap between business skills and video knowledge. The gap is clearly shown in this article. The unfortunate thing about this article is the lack of enlightened, successful perspective on small-business creation. It is truly a doom-and-gloom article, and even I, with my knowledge of successful entrepreneurship, was feeling discouraged just reading this, Fortunately, none of this has to be true.

Business doesn't have to be so darn hard. This article shows a lack of understanding and perspective on business plans and financing, marketing and product/service development (video production in this case), but the largest problem is looking at small-business with a big-business perspective, which will pretty much always lead to failure in a new venture.

To illustrate my point: business plans and financing from investors are often the wrong way to go about starting a business (which leads to the depressing statistics), in part because your new-found riches often go to your head and cause you to do stupid things with the money you raised. The successful entrepreneurs get money from clients, making product using whatever resources they have, and slowly build as they go along. This article recommends a business plan. My advice: run from formal "business plans". There is a better way.

I just want all unsuspecting would-be small-business owners to know: there is an enlightened path to entrepreneurship, with less risk/gambling of life savings, but more work and smarts is required. I recommend you put in the time to get the smarts on small-business that you did to get the smarts about video production. There is a reason universities have majors in both areas: there is a ton of info about both areas.

Since this comment is already too long, I'll just end with 2 definite truths from this article: 1) "Don't be foolish about starting a company...it's serious business", and 2) "you have a better chance to stay in business if you are a good business-person and a so-so videomaker than if you are a great videomaker but a poor business person." 

Well put. Nuf said.