$7000 investment video production - need advice

Zvi
Member

Hi!

I am starting a video production company after a few years of video editing for a hobby. Even though filming wasn't my main focus, it will of course be a main factor in the business and I have been training with a professional and studying for the past 2 months.

The time has come and I'm opening a production company. I did lots of research and came to a conclusion that I can get started with $7000, that would get me stuff like a camera, lights, mics, headsets, tripod, and all the other main equipment that I will want to start with.

Next week I have meetings with 3 different potential investers that are interested to invest the sum that I have come up for me to get this business on the road.

My question to you guys is the deal I should propose to these investers. Of course, there are many ways to do this so both sides benifit, but I wanted to hear from someone with experience.

I want to present different aspects of the deals and different deals as well so that they can start negotiating from. I will go over one thought real quick, to give you an idea where I'm at. Of course I'm not posting ALL the details of a deal and of course a lawyer will look it over, but I want some general direction. Again, I'm just throwing out general numbers and percentages. I want to hear from you guys what you think.

1. Invester gives me $7000. His overal profit from the deal will be $7000 (%100) He will get %50 of every event I do until I pay off in total $14000. ($7000 for his investment and $7000 profit). Once the $14,000 is paid, the deal is over. He has no partnershipin the business.

2. If I hadn't paid the invester at least $7000 in the first year, his profit from the deal will go up to %150. (saying that we agreed at first to %100 profit). If I pay him $7000 within the first year, his profit goes down to %80.

More can be added like what happens after 2 years and so on...

Thanks!

Posted 5 years ago #
compusolver
Member

That's a recipe for disaster, for several reasons.

First, you won't get a lawyer to sign off on the deal because all states have usury laws and none will allow that kind of percentage. That means no law-abiding business man will be backing you with those rates - you'll be dealing with the local mafia.

Second, 7m isn't enough to start up a real production company. I've got more than that in cameras alone, and we're just a husband and wife team.

Third, I don't know where you are, but in places I'm familar with, getting business is tough. We work for hamburgers and fries - and work long, hard hours for them. Not enough quarter pounders with cheese to be splitting fifty-fifty that first year.

Fourth, you seem to be allowing for some gear (a minimal amount, at that) but what about advertising? How long do you figure to get things rolling? How will you survive until then? Have you put together a business plan? Have you checked out the market ? Have you done your branding? (there's a link on our site where you can get reports on exactly how much wedding business there is in YOUR area)

You might be better off taking a consumer cam and no other gear and shooting low-budget weddings, parties and other events and build yourself up. Or farm yourself out to anoter firm and save your pennies.

Posted 5 years ago #
Zvi
Member

Hank, thanks for the fast reply.

please allow me to ask some questions:

1. When you say, "no one will back this up" are saying that the percent I mentioned is too much or too little? (I really have no idea). Like I said, I was throwing out numbers. Of course the deal can be %10, %20, %30... anything. That's why I'm asking you.

2. I live in Israel and the laws here are different. For that reason I also don't think the links on your site will help my case, but I HAVE done research on the market and it's pretty good here. In the past few years, more and more people are doing video for events and occasions. There aren't very much good video productions here (only top-notch or not good at all).

3. I was planning to start with the Panasonic AG-DVX100B ($2600 roughly) because the HD cameras were a little too pricy and I think I can produce fine quality for now with that. What I can incluse here for $7000 is the camera, tripod, two light stands with lights, extera batteries for camera, gun mic, external mic, headsets, ladder and cords, better computer with 2 screens, some advertising, and I'll still be left with some money. Am I leaving out something critical that I'll still need to start?

4. Advertising IS an issue. I have already spoken with some photographers and we might work together by reffering people to each other. I am also planning on going from hall to hall and meeting with photographers to give them a disk\card and trying to make deals with them. I made a website which I will promote when I'm ready. I will do some ads in the papers and of course, I will spread the word to my many friends. I am a hard worker and I'm sure I'll be able to start this.

5. What kind of percentages were YOU thinking of when talking to an invester?

Thanks again for your reply.

Posted 5 years ago #
compusolver
Member

If you can get a 100% a year in Israel, I'm bringing my life savings of $813.42 and I'll be a millionaire in a decade. (Seriously - grab your calculator and check it out) To heck with videography, I'll become an investor! X-D

You've got people over there who are a lot meaner than our mafia!

Earn, learn and save.

When you're really ready, understand that having business is more important than having equipment.

Posted 5 years ago #
Zvi
Member

Please understand that I have not spoken to any investers about deals or money yet. I have never made a business deal on my own and that is why I turned here for input.

I just made up the number %100 and I'm glad I wrote it here before I offered that to anyone.

I will be sitting with an invester and he will ask me, "ok, so what do I get out of it?" and I want to offer something in reality. Now I understand from you that %100 is way to high.

I just have no idea what people that invest should get for their investment, no matter what the deal is. so if you say %100 is silly, what WOULD you suggest I tell them I want to give them for the investment?

Thank you.

Posted 5 years ago #
compusolver
Member

Take some of your AE stuf (I just saw your clip on YouTube) and any other good stuff you've got and make yourself a demo DVD. Then go around to all the better video producers and offer to work for peanuts (literally). If you have to, try the martial arts thing of sleeping on their porch (no, not really - you might get arrested) - but do show that your earnest, don't be vain, show that you want to work and learn. Someone will hire you. You'll make peanuts at first, but after six months or so, you should be earning decent money. Continue learning while you save your money. When you're really ready, you'll know it. Then you can go off on your own, but never, ever steal clients from your patron video producer, and never speak ill of them. You can mail me a check ten years from now when all this has paid off for you! X-D

Posted 5 years ago #
Zvi
Member

Actually, that's what I've been doing for the past 2.5 months! I found out who's the best videographer in the area and made contact with him and asked if I can meet him. I made a demo DVD with some work I had done in the past (like you said :-) and he liked my work but wasn't hiring but agreed that I "sleep on his porch".... I did just that. I was at his place every day, all day, and he would show me stuff and teach me and let me do some of his editing work.

At nights, he would take me to be his lightman at events and for that he would pay me $50 for. I wasn't doing it for the money, but to learn the business and he knew that and was happy to help.

After 2.5 months of this, plus the 4 years of video editing that I've done as a hobby, using Premiere Pro and Photoshop, I'm ready to go out there on my own. I feel that I can make it.

Posted 5 years ago #
Zvi
Member

I'm going to sleep now. It's 6:50 AM and I was up all night. My sister came to Israel today from the States for the Passover holiday which is next week, so we were up talking :-)

Thanks again! I'll reply in the "morning" :-)

Posted 5 years ago #
compusolver
Member

Then my last bit of advice is to earn, not borrow, the money. It'll take longer to get started, but be OK with that. I know what it's like to long for a particular piece (or two) of gear. The craving can be nearly as bad as a drug (if that can be said by someone who's only "drug" has been coffee).

Even if you could borrow from the bank at five percent, it wouldn't be a good way to start unless you had a big and recurring client all lined up. Start with a cheaper camera. Earn the money and buy it. Shoot cheaper events, etc. until you earn and save to buy the better gear, but don't go into debt for it.

Posted 5 years ago #
compusolver
Member

At nights, he would take me to be his lightman at events..

I shut down my computer for the night after my previous post, then suddenly noticed that one of my legs seemed a bit longer than the other - I believe it had been pulled on. Have you been pulling my leg?

Among the several things that aren't quite adding up here is the fact that event videographers do not bring "lightmen" to events. The only sort of events that have special lighting are concerts and some parties, but those lights are handled by those setting up the event and lights from a videographer would be frowned upon. In fact, video lights are always frowned upon at events and that is why they are rarely used and when they must be used, small on-camera lighting diffused by glass or barndoors is the way to go.

No, my friend, I don't think he took you along "at nights" to be his "lightman". In fact, event videographers mostly work on weekends, not "nights" in general. The rest of the week is spent editing and trying to line up the next gig.

In light of this, (pun intended), I'm changing my advice on the 100% loan - go for it! Ask specifically to deal directly with "Vinny". X-D

Posted 5 years ago #
Zvi
Member

I am telling you the truth.

This videographer uses 3 stands for lighting the isle, dancing floor and other places at the hall that has poor lighting. (He uses 500, 800 and 1000 WATTS) I've gone to about 15 events with this guy (we don't have one every night) and all halls had poor lighting. He showed me how without setting up lights, the faces have shadows and poor coloring on the faces, due to the different shades of colors the halls lights cast. I have read a lot about setting up lights for video, and I can't understand why you say that it's not done.

My job was to keep moving the lights to different locations in the hall (when they would take pictures of the family, the dancing floor, the isle) and sometimes he would want one light as a key light and one as a back light. I also had to stand with the lights so no one should knock them over.

Also, some occations had seperate dancing, so I would stand with a light and keep turning it toward the direction he would be shooting.

So maybe this guy isn't doing what most people do, but I always see videographers set up lights on stands at halls.

Furthermore, he shoots events 2 - 3 times a week. He has an etidor that helps him the rest of the days to get the editing done. Some weeks he doesn't have events at all. He's been in the business for 18 years so I'm sure he knows how to keep his schedule and get the editing done.

Also, most of the events were religious events and here in Israel, weddings and Bar-Mitzvas start at sunset so they are all at nights.

Posted 5 years ago #
mmontgomery
Inactive

Zvi,

Business strategies, advertising channels and budgeting in Israel maybe entirely different than the typical experience here in the States. And when it comes to projecting numbers it's relative to what market you're working in. It sounds like the guy you've been "interning" for has a business model that works for him. Duplicating that is not a bad way to begin your thoughts about starting a business, but you'll probably need to create you own unique value proposition. What seperates your business from the competition?

Finding money and the right investors for you business is also critical-- it takes money to make money-- it's obvious you know that. Network with bankers and private investors and be frank about your venture. Do some fact finding and ask them what kind of a return they'd expect in your type of work. Also network with other small business owners and see what worked for them with financing. Before you commit to a contract, try get an idea of what returns you're looking at, then prepare a formal business plan and hunt down the best investor for your business based on what you've learned.

I'm glad you're starting the dialog of your new business venture at our forums. I hope this community can help support your dreams as a business owner and a videographer. Best of luck to you. Here's something from our January issue that might help: http://www.videomaker.com/article/12918/

Mark

Posted 5 years ago #
Zvi
Member

Thanks for the support. LOVED your article.

Actually, today I have been doing just that for hours... coming up with a written business plan. It seems easy at first but as you get into little details, you realize how much could have gone wrong on the first day, if you hadn't seen it on paper and came up with answers.

So yes, I will come up with a plan and figure out what equipment I need to purchace and what I can rent or borrow. Investers was my initial reson for posting this thread, as you said, they will want to know what deal I'm giving them... what they will get out of an investment, or they might make their own offer... and this is where I wouldn't know what to do. How should I know if their offer is silly and highly unrealistic, or if it's realistic and negotiable?

I'll start with finishing my written business plan... then I'll go to the next phase... until I get a carved duck of my own!! :-)

Posted 5 years ago #
Tom Scratch
Member

Hi,

Interesting set of posts. Example of providing tangible assistance to an international colleague in the Middle East no less. Also, exposure for all to some cultural/infrastructural differences. Very cool.

The image of a light guy (gaffer!) chasing the camera around reminds me of what may have been going on at some of those Ed Wood sets (cheapie horror movies). Could be that some people in the world donÃ¢Â€Â™t light every corner up like Giant and the local national chain department stores here in the US. Wondering though if a VX2100 or PD170 in the mix might cut the need for some of that light or if customers seeing cool atmospheric effects as opposed to everything looking sun blasted might not vote for less bright. Taken a look at any Technicolor films from the 50Ã¢Â€Â™s or 60Ã¢Â€Â™s lately; indoors, outdoors, day or night, they just wallowed in bright. We got away from that and itÃ¢Â€Â™s better. (Should add that I'm still a Standard Def guy; you need those lights for HD!)

The original concept presented of investors and their huge profits reminds me of the situation with loan sharks. A few years ago I got a close hand look at the business etiquette of a prosperous loan shark (high desert country, Arizona) and it was sort of rough on his customers. I wasnÃ¢Â€Â™t a customer myself but my spouse used to walk his German shepherds around until a day when one of these pups decided to play toss ball with one of our cats.

Best of luck on this endeavor!

REGARDS ... TOM 8)

Posted 5 years ago #
Zvi
Member

Hey Tom! Thanks for the reply! Glad to have another "light man" aboard! :-)

Anywho, you might call me international, but actually, I was born and grew up in New York until I was 13 and most of my family still live there, so I still feel American in my blood! :-) Being Jewish and all made my father bring me to Israel where I got married and had kids, so it's not that easy to pick up and move back... even thought I think I might do that one day cause I like it there better. (It's beautiful here, but my roots are there)

I'll still be coming back for more information as my business progresses.

Posted 5 years ago #