Show Me The Money

The American dream is often interpreted as being able to live life on your own terms, the pursuit of personal happiness, and the ability to become rich. The ability to become rich in America is achieved by creating ownership through starting a business, investing in stocks, bonds, or real estate. The American economy is based on capitalism, which is an economic system where by goods and services are exchanged on a for-profit basis. The concept of capitalism, if implemented correctly, can make any individual who owns a business that operates on a for-profit basis extremely wealthy. However, there are thousands of individuals who attempt to open a small business to achieve wealth. Many small businesses fail within the first five years of operation. When starting a small business, an individual must be able to obtain suitable startup capital. There are a number of ways to obtain startup capital, which includes loans, family and friends, credit cards, and angel investors.

The most common and widely used method to obtain capital for a small business is to obtain some type of loan. The small business administration (SBA) is a great place to apply for a startup business loan. The application requirements for a SBA loan are a business plan, loan request amount, collateral, personal financial or business financial statements. A personal loan from the bank is another type of loan obtained for startup capital. The personal loan is usually considered an unsecured loan, therefore the bank may limit the loan to a maximum of $5000.00. The individual applying for the loan must have a good credit rating, show proof of income, and tax statements for at least two years. When applying for a personal loan, do not state you are using the money for the purposes other than personal use.

Family and friends are a great resource to obtain startup capital for your business. This method is often taboo in terms of mixing family and business. If the terms are structured right, the family and friends’ method can be a win-win solution for both parties. Creative financing can play a major role in which the family member loaning the capital may give you a great payment schedule to repay the loan. This payment schedule may allow a person to borrow $25,000.00 and make small payments at the end of each year for a time period of ten years.

Credit cards are certainly a risky way to start a small business, however many people have been successful. Credit cards are risky because credit card companies allow you to get a cash advance. The payments must be on time to avoid late fees and high interest rates being charged. If the business fails to make suitable capital to operate then not only does the business fail but also the owner is now responsible to pay off the debt. This method is not recommended to start a business. A small business loan or bank loan is less risky.

New business owners commonly seek after angel investors or equity investors. The angel investor is an individual with a large excess of capital that is looking to invest in businesses and ideas that will make them additional money. The angel investor will invest a certain amount of money for an equity share in your business. The angel investor may also have specialized expertise in your business in which he/she may offer more startup capital for a 50% partnership with the business owner. A rule of thumb when dealing with angel investors is to know how much of the business you are willing to give up before negotiating with them. Lastly, confidence is key. Know your business and your target market.

Reading the Numbers

The only thing that matters in any business is knowing how to read the numbers. Financial income statements tell the story of how any business is operating in terms of cash flow.  This income statement is the lifeline for any business that is looking for long-term success.  The income statement is also what determines if a business will receive funding for operation. This funding can be in the form of a bank loan or from a group of investors. There are some important factors that can affect the outcome of a company receiving money. These factors are net sales, gross profit, total expenses, and net profit.

The net sales on an income statement are the total amount of revenue made from sales minus the amount of returns and allowances. Net sales are important because it shows that the business has the ability to make some money. Net sales also show that the company may have a chance of growing in the future. In any business you are going to have some customers who are not going to be pleased with the product. So these customers will return the product. In terms of the film industry an example of a return would be a producer who is not pleased with the final cut of the film. In order to compensate the producer you would discount the original amount you billed to the producer to make the movie and pay a refund for the difference.

The gross profit is the amount made after you subtract the cost of goods sold. The cost of goods sold is merely the amount the business paid to actually produce the product. For example if a company was selling tennis shoes the cost of goods sold would be the raw materials, wages paid to the employees making the shoes, and other costs associated with production of the shoe.  Once the cost of goods sold is subtracted from the net sales you have the gross profit of the company.

Another important factor is the total expenses category. Total expenses is the brick and mortar of the company in which you breakdown each component necessary to conduct your daily operations. Total expenses will vary according to each type of company. These components will include salaries and wages, rent, insurance, employee benefits, etc. In order to establish an effective business, the business owner must have a clear understanding of what he/she needs to conduct the business as a whole. This is the purpose of the total expenses category.

Net profit is the one category that means the most to any business. Net profit is defined as the total revenue a company has earned over a period of time. This is calculated by subtracting the gross profit from the total expense category (minus the interest of long term loans). Net profit is also called the bottom line. The net profit shows the bank or initial investors whether your company is worth investing in.

 

If you are an aspiring business owner, you must master learning how to read an income statement. Many companies fail because the CEO entrust the reading of the numbers to other people. If you a CEO of a company can’t read the numbers then your company will fail or even worse be accused of ethical violations. The moral of the story is know your business financially or have no business at all.

Good or Guild?

In any industry there is always a group of people who desire to become advocates for the professionals that work with in a particular trade. Actors have the Screen Actors Guild, grips have a union, and the list goes on and on. While some may think that being a member of these various groups is a good thing, many do not.  These groups have been the center of scrutiny since the early 1900’s.  Film studios today still manage to have a love hate relationship with its employees who belong to guild or union.  In the world of movie production there is an intense battle going on that could affect all new and upcoming producers in the film industry.  The Producers Guild of America is pushing for a new standard of credentialing for film producers. The new designation would call for the “producers mark” p.g.a in lower case to be listed behind the name of producers who worked on a film that met the producing standards set forth by the guild.  The Producers Guild of America is not a union but rather an association that provides a membership to become apart of the organization.  According to the New York Times in a recent article The Producers Guild of America has been in a long dispute with the major Hollywood film studios through arbitration that will allow them to oversee the producer credits that are applied to each film.  What does this mean for a new film producer? It means that you can work your hardest to produce a film and receive no producers credit for your efforts. This is the reason why major film studios will not consent to this new designation. The designation will cut out those individuals who work on a film as a producer in one aspect and performed editing work as well. The new designation will also cut out film financiers from receiving a producers credit because the guild believes that film financiers did not actually work on the film as a producer but mere provided the monetary backing.  The Producers Guild of America may have help producers in the industry to obtain certain rights but now it seems as if the trade of producing a film is returning to the days of the mafia where you have to be “protected” by paying money and adhering to the guilds rules. Organizations such as the PGOA have affected not only the film industry but also many industries in America. You determine whether the changes made by these groups have benefited you over the years. As an aspiring film producer the verdict is still out on this matter.

The Power Of Having Mentors

The desire to fulfill your goals and dreams is often an arduous path to follow.  Many people have often heard that the best way to be successful in the field of your choice is to copy someone who is already successful and do what they do. This idea is noble but not always as simple as it may seem. Your particular business idol may be Donald Trump; do you really think that you’re going to land a large commercial real estate deal by copying his techniques on TV? It is highly unlikely.  What you can do is take on Donald Trump as a mentor.   In fact, many successful people can mentor you without having to be in the same place geographically.  The Internet is full of great tools to find a mentor.  TED.com is one of them. Ted.com is a website dedicated to spreading ideas that are worth something.   I had the pleasure of recently learning about TED.com. Ted.com is a virtual host of mentors in a number of disciplines.  If you’re looking for a mentor then TED.com is the place!  As an aspiring film producer and director, I wanted to see what TED.com provided in the area of film and entertainment. Upon searching a few famous film directors I know by name, the great James Cameron was among the speakers featured on TED.com. 

 James Cameron was featured as a speaker at a TED.com event, which can be viewed as an online video.  His story is short of amazing.  James attributed his natural curiosity of things as a child, his love for science, art, and science fiction which led to his success as a film director. As film directors and screenwriters creativity is our lifeblood, without it we would die.  James articulates how his creativity as a child needed an outlet.  This outlet came in form of drawing and painting, exploring nature, and even becoming a certified scuba diver.  These outlets combined help James to create some of the most famous movies in Hollywood.  Aliens, Avatar, Titanic, and Terminator 2 just to name a few.

Listening to James Cameron speak is compared to listening to an audio book that never bores you.  His stories are captivating and inspiring. His calm voice is trusting and commanding at the same time.  He takes you’re very being through an evaluation of where you are presently and what are you doing to get where you want to be.  James Cameron teaches aspiring filmmakers to never stop being creative, never stop being curious, embrace failure, give no place to fear, and take risks.  He tells the story of how he took a step back from making movies to spend time as an ocean explorer because he was “curious” about the alien life in the sea.  His obsessive curiosity of the ocean taught him that there are unlimited universes that you can create in you mind as it relates to film. He used this experience in the making of the movie Avatar.  While exploring on the ocean James spoke of how he learned the true meaning of leadership.  Each team member depends on each other for survival while performing the dangerous job of deep ocean exploration.  James said that the respect of the team is more important to the project and that was the essence of true leadership.  Every story he told was apart of the whole.  I understand now what makes James Cameron a great film director and my perception of the film industry is forever changed.  I understand now that great films are made if you stay true to telling your own unique story in your own unique way.

Creative Financing For Newbie Filmmakers

The thought of finding financing for a film project can be quite a stressful and daunting task for any would be filmmaker. This experience is especially frightening for new filmmakers. Thoughts like “where can I find someone to invest in my film”, “can I really sell the idea before the finish product?” and “what if I run out of money?’ are just some of the thoughts that comes to mind.  As a CEO and overall project manager of your film project, your pre-production planning and budget is critical to the success of your film project. In fact you may want to consider taking an “out of the box” approach to obtain financing for your project. These “out of the box” methods include network marketing and investing in real estate.

The word network marketing has a love/hate reaction to those who hear it. Often misunderstood to those who fail to actually research the subject will be quick to label the industry as a “scam” or “pyramid scheme.”  After attending a seminar for one particular company, I quickly learned that for a newbie filmmaker, this is a hidden jewel to finding investors to finance their film project.  I met Mr. Sam Orum a gentleman who founded his own network company after having success in another network work marketing company as a medical student. (http://cutlergultry.1voiceinc.com) Needless to say that Mr. Orum’s stay in medical was short lived. Before leaving medical school Mr. Orum was already making more than most doctors would make in their lifetime. After a brief conversation with Mr. Orum I learned that he also had a silent role in the marketing and production in many theatrical plays and movies.  The conversation was like a light bulb exploding in my head! Any newbie filmmaker could find a network marketing company, become a representative and earn money to finance their own film. Another alternative is to network with the top earners of the company and form a partnership.  I suggest this method because once you start earning a residual cash flow from your network marketing business you can keep your film project going because you can have some money to back your project if investors decide to pull out. Please keep in mind that this technique is for small film projects.

Newbie filmmakers who are trying to get films produce must consider the time and budget of the project. The timeline for shooting the project and how much it’s going to cost to shoot the film per location can become expensive. The financial spreadsheet alone will cause the faint of heart to rethink becoming a filmmaker. While researching ways to find money to produce I stumbled upon yet another seminar or should I say webinar. A young and successful real estate investor named Chris Bruce hosted this webinar. On this webinar Chris taught everyday people how to make 10,000-20,000.00 with 30-90 days of getting started in investing in real estate. Now let me clarify Chris was not a bunch of hype and fluff! (http://www.c-bruce.com) Chris is the real deal, what most so-called gurus charge for the information Chris teaches would be in the thousands! On the webinar I quickly realized that a newbie filmmaker could actually facilitate a few real estate deals to earn money and finance their own projects. Another method is to network with other real estate investors to form a partnership. In a recent article Curtis “50-Cent” Jackson just launched his own Film Company called Cheetah Vision with a group of investors. One the investors is none other than real estate investor Gary Sawka. 50 Cent’s film company was able to secure $200 Million in funding and a distribution deal with Lionsgate films (http://www.mtv.co.uk/artists/50-cent/news/242006-50-cent-gets-200-million-film-fund).

I know what you’re thinking; you are not 50 Cent! But let’s look on a smaller scale, within your circle of influence and right under your nose in your city, you can do some research and find a few real estate investors who want to diversify their income. So think outside of the box!

Remember that you are the CEO and overall project manager of your film company. There are no rules in obtaining funding for your projects! Before you go into preproduction and planning for your project, you should have some financing if not all of it secured. If you don’t then I advise you to consider implementing some of the above techniques. It just might save your project from going bust! 

The Project Management Aspect Of Film

In the world of film making the art of team management is a skill that is necessary in order to be successful. At the movie theaters the general public sees a polished and finished product. Let’s delve deeper behind the scenes and take a look at what it takes to assemble a production team to produce a film.  To produce a film means not only financing the film but also finding a scriptwriter with a good screenplay, a director to bring the script to life, a director of photography to create the shots that creates a compelling story through the camera lens, a sound engineer to oversee the sound, a casting director to cast actors for the script and an editor to “fully lock“ in the finish product.  

When a production is placed into the project management process, the breakdown of making a movie will fall into the same project management workflow.  The project breakdown will have an initiation phase, a planning phase, a budgeting phase, execution phase, and the closing phase.  The process in the film industry is similar but the terminology is different. The initial phase in called the development stage, the planning stage and budgeting stage is called the pre-production stage, the execution stage is called the production stage, and the closing stage is called the post production stage.  “Keep in mind that a film is a form of project that needs to meet stated deadlines and should not exceed expected costs, while not compromising any of its content. But as each film is not the exact same, the steps in production are performed differently every time a film is made. The basic processes of any project are initiating, planning, executing, monitoring and controlling, and closing. So, they can be used to manage the production of a film (http://knol.google.com).” 

Now that a foundation is laid to the processes of project management as it related to the production of films.  We will now look at the process of forming an actual production team. In the development stage the producer (the person who finances the film) looks for a script that would be worthy of becoming a film. The producer will then seek out a director that will be able to bring the script to fruition.  The director and the producer will then coordinate the hiring of all the technical production staff (ex. Grips, gaffer, sound, etc.).  The producer will then hire casting agents that will hire actors for the film. The way a producer picks his production team can vary from a professional standpoint or by a relationship formed with an old classmate in college. The producer forms a team with supervisors over each department of the film making process. These supervisors, depending of area of expertise will report to the director and the producer.

Project management is a discipline that is applicable to every aspect of business. Anyone looking to be successful in film industry would be wise to learn to become efficient in project management. Making a film is comprised on many departments that are all being coordinated at various times to complete a deliverable, in this case a blockbuster movie.  

Got Gervais!?

In the world of movie producing there are many names that come to mind, famous names like Bruckheimer, Raimi, and Weintraub just to name a few. The name Ricky Gervais may not be known to most of the general public but everyone knows the television shows he’s produced. “The Office” is a television show starring comedic actor Steve Carrell that has won numerous awards which was produced by Gervais. Gervais who is an incredible writer, artists, comedian, and producer has an online blog in which he chronicles his projects, family life, and travels.

Ricky Gervais is a marketing genius! He’s one of the few TV and film producers who actually use blogs to promote and market not only themselves as a personal brand but also the projects they produce. Upon reading Gervais’s blog I found a blend of emotions coming to the surface. Gervais’s blog is entertaining, weird, funny, and just enjoyable! The blog gives its readers a glimpse into the many facets of what producers do on a daily basis. But be warned! Ricky G doesn’t hold back the profanity and does not pull the politically incorrect punch lines.

At first glance this blog seems to be a menagerie of sights, sounds, and foolish banter. For those who truly aspire to become producers in the entertainment industry, this is a blog 2.0 black belt instructors course! The blog format and layout is very K.I.S.S.. Keeping things simple will keep your readers attention. The blog is riddled with RSS feeds that are link to other sites that RICKY ARE FEATURED in(can you say self branding and promotion on steroids!). Pictures are apart of every blog post. Images tell stories and stories SELL! There is a continuous subliminal sales pitch through out the blog, a Jedi mind trick that whispers “remember Gervais”. The reader is forced to remember every upcoming performance and project that Ricky Gervais does.

I’m truly inspired to take notes as I closely follow Ricky Gervais’s career. He’s on the path of greatness and blazing his own trail.

The moral of the story is if you are trying to break into TV and Movie producing you have to be able to create vivid stories. Be a master at selling the IDEA first before it comes to fruition. For those who are able to do this, great success will follow.

Has The Economy Affected The Box Office?

As the unemployment rate ebbs and flows in this wavering economy, most of the American public has been scrambling to find employment.  Jobs are not the only thing the American public is scrambling to find. Believe it or not despite a troubled economy the American public is still headed to the box office. During harsh economic times history has proven that people in America will spend money on great food and a good movie. 

So what's really the situation? Has the economy affected the box office? The reality is that this economy has indeed affected not only the box office but also the film industry as a whole.  This economy has forced independent filmmakers to come up with creative financing just to get their movies produced. In fact states like Georgia and Louisiana passed tax credit incentives to lure Hollywood filmmakers to film movies in their cities. I've personally worked as a stand-in actor and extra in over 15 films in Atlanta, GA and New Orleans, LA. The ability to adapt to this economy by the film industry had been phenomenal. 

So let's look at the box office itself.  Last year in 2009 Tickets sold: 1,419,488,855 at the average ticket price of $7.50.  Total Box Office Gross: $10,646,166,334(www.the-numbers.com).

So far in 2010 Tickets sold: 947,740,354 at the average ticket price of$ 7.90. Total Box Office Gross: $7,487,148,851(www.the-numbers.com).  With only three months left in 2010, these are critical months for the box office. The Christmas season has been known to make or break film producers. The battle for holiday supremacy this year is going to be a telltale indicator if the movie industry can surpass the 2009 total box office gross. 

Well my movie money crunchers the industry we all know and love has always seemed to survive. The film industry survived the first great depression and it's fairing very well in this current depression. Of course in times passed we had the golden years of films where we were fortunate to see blockbuster movies such as Rocky, Rambo, Conan the Barbarian, Predator, Die Hard, etc. Ironically the films of 2009- 2010 such as AVATAR and TOY STORY have broken box office records and made history. I'm going to predict that the 2011 box office year is going to return the film industry to normal