As much as you may like creating video, it just isn’t the same if you don’t make money while doing so. In
fact, they have a name for such a venture. It’s called a hobby. Nothing wrong with that. Just don’t
confuse it with business.

Having your own business sounds like a great deal. You get to be your own boss, set your own hours
and take home all the profit. On the other hand, you get to pay all the bills, convince people to pay for your
services and work evenings and weekends for free. That’s the tradeoff.

There are plenty of things to worry about when it’s your name on the door. This small business
stuff is not an exact science. Should you send a thousand postcards to a list of potential clients in town or
put an ad in the newspaper? Should you hire a full-time assistant or pay more per hour to get the same
person freelance, but just for the hours that you have work?

But for the video professional, one of the most pressing (and potentially expensive) concerns is
equipment. Where should you get cameras, lights, audio gear? And when you do get them, should
you buy, lease or rent?

Read on, video entrepreneur, and we’ll give you some tips on how to equip yourself for success.

Buy, Buy Birdie

As human beings, we have pride of ownership. There’s nothing wrong with that, of course. Most of
the world economy is based on acquiring stuff. But it’s probably not the best reason to make a business
decision. There are plenty of other reasons to tip the scales in favor of ownership, however.

Convenience. Let’s say you’re a video producer and you don’t own any gear. When you know
you have a job coming up, you go to an equipment rental house and get what you need. But when your best
client calls with an emergency, you could be in trouble. "Get over here right now," Mr. Big of
Amalgamated Inc. says to you on the phone. "We just got the Universal Widget Stretcher working
perfectly and we have to ship it out to the customer in the morning. We must shoot some video
immediately." You can’t say no to your best client, but the rental house has already closed for the day.
Your only option might be to hire your competition to fulfill your obligation. Boy, is your face red.

When you own the gear, you can shoot when you like and edit at your own convenience. Want to put
your client’s show together in the middle of the night? Go ahead. Do you want to push those buttons
wearing nothing but your ratty jockey shorts? I don’t want to hear about it.

What You See Is What You Get

Client perception. To your clients (both real and potential), the perception they have of you and
your business is your business. You may be the greatest videographer who ever pulled a focus, but
if you drive up for your shoot in a beaten-up station wagon filled with barking Rottweilers, they may view
you as less than professional.

If, on the other hand, you show up in a nice van with your logo on the side, and each shiny piece of
equipment you pull out also has your logo, they’re going to see you as a force to be reckoned with.
You haven’t changed from the first scenario to the next. Only the client’s mind has changed. But
the client is paying the bills.

Cost effectiveness. As a purely business decision, the following may be the only legitimate
reason for buying your own equipment–if it pays for itself and makes you a profit. If you’re
shooting several times a week and editing as fast as you can push the buttons, then you’ll probably make
more money if you don’t have to rent the gear every time you need it.

Also, you can write off some of your expenses for equipment purchases each year on your taxes. This
write off must be for direct video production equipment only. You can’t claim vehicles, for example. Since
you may not be able to write it all off at once, it may be a good idea to spread your purchases out over
several years.

There are several scenarios where renting gear only when you need it may make more sense than
buying. But, as is true with all these examples, only you can decide what method best suits your
needs. I can’t recommend buying in all cases or renting in all cases. That choice is yours.

Versatility. When you rent a shooter’s package, you can set it up to suit the job. You can also
put it together with whatever gear the client may think is necessary. Have you ever received a Request For
Proposal from the government? They can be pretty specific about what equipment they want you to
use.

If a client wants Betacam and all your equipment is Hi8, then you have two choices. You can: 1.) try to
talk the client into using Hi8 instead, which may have the desired effect, or may end with the client going
to someone who already uses Betacam…or you can 2.) go out and rent the Betacam equipment for the
shoot. Meanwhile, your Hi8 gear sits back at the shop, depreciating, unused. You’re basically paying twice
to shoot once.

But if you rent when the need arises, you can put together any package you like. If the client doesn’t
have a preference, you can use whatever you’re most comfortable with, be it S-VHS, Hi8 or 3/4-inch. If the
client demands Digital Betacam, all they have to do is reach into a pocket and pull out a large check. No
problem.


It’s All Economics

Cash flow. When you buy video equipment, you’re likely to shell out a substantial amount of
money. You may have pockets that are deep enough to pay for that in a lump, but it’s more likely that
you’ll put your purchase on a payment plan. That means that you have to pay for your equipment every
month, rain or shine. If you have a business slowdown, that payment still comes due. You may have to dip
into your savings to cover it. And if you want to take a vacation for a couple of weeks, you have to think
about the fact that your equipment is sitting back at your office, costing you money and making you
none.

When you wait to book a job before you secure the equipment, you know in advance that the client is
paying for the rental. Your profit margin may not seem to be as wide on the job as a project where you use
equipment you own yourself, but you need to take other costs into account.

When you own equipment, you have to insure it. Actually, you don’t have to, but it’s wise to do
so. If you have a long-term lease, the lease company will probably require you to carry insurance on that
leased equipment.

Also, there’s wear and tear to consider. When your equipment breaks down, you have to fix it. If you
can do it yourself, that’s great (although repairs take time and your time is worth money), and if you can’t
fix it yourself, you will have to pay someone else to do it for you.

So the difference between the costs of renting and owning may not be as great as they first appear. And
if you live in an area where there are several rental houses (any large city, for example), you may be able to
find some bargains.

Some rental houses offer "producer discounts," which could be as much as 20 percent. You can then
turn around and charge the client the rental house’s book rate and still make money.

Remember, you’re charging them for the time it takes to go to the rental house and pick up the
equipment as well. And if the client calls the rental house to see what the equipment rents for, it’s the same
price that you’re charging.

State-of-the-Art

Upgrades. Have you been working in the video field for a while? Have you noticed that it’s
a little tricky to pick a format that will still be considered state-of-the-art seven years (or even five years)
from now? And yet that may be how long it takes you to pay off a large investment in equipment. People
run into the same thing with computers. It’s kinda crazy.

Let’s say you buy all Hi8 or S-VHS equipment. You get a shooter’s package with camcorder, lights,
microphones, etc. and a three-deck editing system with A/B-roll capabilities. You dropped some money,
but you’re feeling good.

Suddenly, two weeks after you sign the check, a Japanese manufacturer introduces a camcorder that
captures High Definition TV images digitally onto a molecular memory array. It’s amazing, it’s incredible,
it’s the only format that your clients want to use. It’s totally incompatible with the gear that you own.

Obviously, this is a worst-case scenario. Manufacturers are not likely to do this to you. They want you
to succeed so that later you’ll buy more equipment from them. But until everybody uses the same format
and this format cannot be improved upon, you will always have to play a little catch-up when it comes to
equipment.

Who Will Buy?

Now let’s say that business is booming and it makes the most sense for you to have equipment on hand all
the time. You can either buy or lease, but you want to know where you should acquire the
equipment.

You’ll have to choose between buying through mail order or buying locally. As with every other option
that we’ve looked at, I can’t tell you which path you should choose. But I can help you with your thinking
process so you can become even more confused. (No need to thank me.)

Mail Order. If you want to buy equipment through the mail, you should do your homework.
Get on the Internet, or call other videomakers you know to try and find out which companies have the best
reputation. Look through old copies of video magazines to see which companies have been in business for
a long time. These aspects of a business can be more important than who is offering the lowest price.

Once you decide on the company, you still have some questions to ask the sales representative. See if
the piece of equipment that you want to buy is in stock and available at the time of your order. Otherwise,
you could be on a waiting list of people who will have the order filled when the next shipment comes in.
Most likely, if you are ready to buy, you want your gear now.

What is the company’s policy on returned merchandise? Is there a 30-day free trial
period or will they not take it back under any circumstances? Is there a restocking fee? Ask for a written
copy of their return policy and read the fine print before you sign.

Did you know that manufacturers put warranties on equipment for their own protection? If they didn’t,
they might be responsible for repairing your gear for as long as you own it. But check to see how warranty
work is handled. Are you responsible for shipping a defective piece back to Japan? How long will
that take?

If you get most of the right answers, you shouldn’t be afraid of mail order. I’ve bought several expensive
pieces of equipment this way over the years and I’ve had good luck with all of them. But I did my
homework–thoroughly.

Local vendors. If the equipment you want is available locally, there are some advantages to
going this route. The vendor might have a working piece of gear out on display. You could "test drive" an
editor or a camcorder to see how you like it before you shell out the cash. But if you take a salesman’s time
walking you through a system, please be serious about buying from that vendor. I’ve heard stories of
people doing this in one store and then going down the street to the discount chain to actually make their
purchase. Not nice.

Find out if your local vendor offers service contracts on the equipment sold. If you will have the gear
for a while, this can be a good deal. At first, when the equipment is new, it won’t have any problems, so the
contract will seem to cost more than it’s worth. But if you continue to pay until your equipment begins to
fail, that service contract will start to feel like a return on investment.


Used Equipment?

There are certain elements of your shooting and editing packages that will probably never become
obsolete. The basics of lighting haven’t changed much since the days of the silent movies. And a good
microphone should last far into the future. If you need to supplement this part of your equipment list, you
may want to look into buying used equipment.

Check the classifieds in the back of video magazines to see who needs to get rid of what. Keep your wits
about you. Ask the person selling why they are doing so. If they say, "That darn thing never worked right
from day one," you may not want it. But if the reason is "we’re buying all new stuff and although this one
has never been out of the case, we just don’t need it any more," you may want that one. Of course, they
could all be lying through their teeth. There’s no way to know.

O.K., what have we learned? First, you have to spend money to make money. Second, a penny saved is
a penny earned. Contradictory messages? What’s strange is, they’re both true. That’s what makes owning a
business so much fun.

1 COMMENT

  1. It seems to be inevitable when someone mentions running a business they also mention the old worn out axiom that “you are your own boss,” however nothing could be further from the truth, when one is a self employed entrepreneur, the client becomes the boss and as you gain clients you gain additional boss’s and just like the boss you walked away from when you ventured into self employment, they all have their own idea of how to do your job and like so many boss’s they are clueless as to how you do it.

     

    To understand where I am coming from think back to the good ole days when you worked for that mega firm which cut you a weakly check and no that is not a spelling error…

     

    Do you remember the days when the boss would arrive with his administrative assistant in tow spewing the latest and greatest corporate policy or efficiency idea which he usually brainstormed the night before after downing a few cocktails over at O’Malleys?

     

    Do you also remember after he and his left how you and your co-workers would spin your index fingers near your temples while commenting “that chit ain’t gonna work” and how you-all came up with a plan to work around it while still keeping your jobs?  

     

    Well now it’s just you and the boss aka the client with the checkbook and you need to make it work or go hungry, talk about jumping from the frying pan into the fire eh?

     

    Self employment is not for the weak minded or self doubters, you need to have a combination of experience, self confidence and the ability to sell snowballs to an Eskimo to make it, but if you do have those traits, you will soon discover you have the best job on the planet.

     

    Now go forth and make content.

     

    And be glad I am not your boss. 😉

     

    Wayne   

LEAVE A REPLY

Please enter your comment!
Please enter your name here