General Thoughts on Start up's.

In the last few weeks I have spent a lot of my time doing research into Venture Capital firms and what it is that they do. Mostly what they do in terms of what kinds of projects are they looking to invest their money into and why.

One of the most crucial things I learned is that the term "Start-Up" is an actual level. What I mean by this is that like many people I had believed that a "Small Business" and a "Start-Up" where essentially the same thing. This is actually not the case most of the time. What I learned is that it is very relative.

You search "small business" in wikipedia and you get

http://en.wikipedia.org/wiki/Small_business

The important part of this wiki is

"The legal definition of "small" varies by country and by industry. In the United States the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7 million in annual receipts for most non-manufacturing businesses.^[1] The definition can vary by circumstance – for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the health care reform bill Patient Protection and Affordable Care Act.^[2]"

The "less than $7 million in annual receipts".

The reason this is so important is that all of the "small business tax breaks" and "special financing from the government" you hear about DON'T APPLY TO START UPS!!!

If you start digging through the Small Business Investor Alliance(http://www.nasbic.org/ ), or the National Venture Capital Association(http://www.nvca.org/). You start to find out that if your company is not generating some where in the neighborhood of $3-$4 million dollars in sales every year these groups and programs do not apply to you.

So a non-franchised business (mom and pop, Mel's Diner kinda place) that is basically worth less than $7 million dollars and/or has been in business(with actual proof of income) for less than 5 years is probably still considered a "Start-Up" by most investors,banks, government agency people's.

There is hope though, I have found a few companies that seem to be Venture Capital "Start-Up" friendly for all types of business.

Yes I know you would like a list of these companies but it's not something I am comfortable giving out until I have done my own "Due Diligence". I am not going to recommend an investor unless I know I can trust them.

The caveat to this is that when I do post the list and I will. That you people who are reading this(all 3 of you) will only approach these potential investors with responsible projects.

DO NOT approach an investor with a concept(Unless it's a 3 F investor. Family, Friend, Unfamiliar Financier). Basically any professional business investment firm needs to be approached correctly or you just wasting your precious time and their time.

Have the complete business plan done, have the 4 page investor package done, have a web-site of some sort up. Even if it just says "coming soon" on the site. Also be sure the name's and logo's you want to use are not copyrighted. Yeah you probably will have to contact a patent attorney.

The point is, you can have a great idea and if you just got drunk and though of it with your friends don't spend a couple of hours on it then hit up somebody from my list.

Spend the money on the thing's that you are capable of doing yourself and spend the time and energy to research what you don't know that you need to know.

The good news is that if your reading this your doing just that.

New options enabled

So I now have enabled the texting post and email post options on "The Castle Muse". This should cut down the wait time for new posts.

The Business Plan "Executive Summary".

The first thing when writing a business plan for a media type company would be(or any company for that matter) "what is the point". It may seem obvious but it's a crucial first step and it's harder than it may seem.

Take my company...
What is the point of my company that I have with my two friends? What is that the ACN Network is supposed to do, and how does it make money?

This is what I have had to ask myself and then clearly answer. I have to keep asking myself this question from time to time. Because believe it or not it evolves.

One of the ways that I was able to help myself work through the answer to this quesiton was by doing and Executive Summary which is the first step in my business plan.

My basic outline of my business plan is in the summary and it looks like this.

Executive Summary:

• Introduction (One sentence about who and what you are)

• Products and Services (One Sentence maybe two, no more than three about what you do(mine has one))

• Target Market (General Demographic target)

• Competitive Position (In your market, field how do you stack up against the competition? Is their a gap in the market for what you plan to do?(Two three sentences at most)

• Goals and objectives (Use bullets 3 goals 3 objectives. Give a time frame for each.)

• Management (The structure of your business, who is doing what. Give a little bit as to why, maybe how the word the description of "who".)

• Finaces (Overall day to day cost, overhead before day one and on day 1. Make a cash flow chart and projections. Projections should be monthly quarterly and yearly.)
  

This whole thing should be clear, to the point and no more than two pages. Most of the information up to "Management" will fit onto the first page.

The second page in my report is my financials. Keep in mind the details in the finacial section will be covered in much greater detail later in the plan and the nuts and bolts numbers covered in the Appendix at the end of the business plan. Keep it straight forward and simple, typically an investor won't look at anything else during the pitch. If he has not seen the plan before you pitch, then those are the only two pages the investors will likely look at during your meeting anyway. They should be able to get enough information from that and your pitch to know if they want to buy in.

That's all for now.

PS- Update

Will be putting up some video's of my adventures in Producer land soon, on a youtube page of the same name "TheCastleMuse".

The link to the video youtube deal.

http://www.youtube.com/watch?v=gYFZqY7vNbQ

First Meeting of the New Year

Well it's 2012 and the production company that I started with two of my friends will be one year old at the end of this month. On that note I am about to go downtown to a new office and have a meeting with one of the partners and a Director that did some work with us last year.

We ACN Network had the opportunity to film the 1st ever Chicago Greek Film Fest, we had an amazing time. Michael J. Hauser took over the Director's chair for the show. Rob Rhodes, Bayley Pokorny, Dan Machut, Allisha Lillion, and of course Spiro Frentzas where all on hand for the show.

All of these wonderful people where able to donate their time and equipment to the show. We are still in post but hoping to get some final shots and have something up soon.

The really good news is that a Greek newspaper is doing a piece on Spiro and he of course mentioned the company! Now, Spiro, Rob and myself will all have our pictures in a newspaper in Greece!!

The possibility of having our work internationally distributed is amazing and I am really looking forward to seeing how far this project can take us. Will update more after the meeting. So excited, I didn't sleep last night.

Before the First Money meeting:Nuts and Bolts

"Your always two meeting away from the money", that's a little saying that I say to myself so that I don't get too excited when I have an upcoming investor meeting.

This of course begs several questions, mostly what in the world should you do with an investor meeting.

Here is what I know so far.

1. Investment meeting come in layers:

• Introduction


• Pitch and Facts


• Initial Asking


• Counter Offer, Negotiating


• Contracts and Terms


• Due Diligence


• Final Negotiations


• Final Price


• Contract signing


• Cutting Checks

2. The more prepared you are in the first meeting the faster the other meetings can happen

3. Here is what you should have or be working on.

• The script is DONE! (See Treatment VS Script for more on this)


• Initial story boards done, initial production illustration


• Budget top-sheet


• Schedule out line


• List of locations


• List of staff


• List of talent


• Contact info for all of the above(and price quotes if you can get them)


• Distribution projections*

4. I try to have a list of questions in mind for the investor, remember just because you want the money they have does not mean that you want to get into bed with anybody. If you get the wrong investor you can find your self locked into a nightmare and no chance of actually getting your film made.

• What kind of turn around time are you hoping for?


• Have you ever invested in a film before?


• If yes, what kind of experience was it?(much of this may happen naturally in the course of the conversation)


• If this goes well would you be interested in doing more films?

More than anything your trying to create a dialogue with the investor where you get a really solid sense of their expectations. Many times new investor's to film will have no idea what to expect. Be wary of the person who is dropping too much industry slang. It has been my experience that the people who are using waaay to many acronyms and sound like they are trying too hard are trying too hard. That is usually an indicator that they may not be legit and your waisting you time or they could just be a putz. Industry slang is only helpful if it's relevant helpful and used in context with the meeting your having. An example is if someone is saying LOI or using a term you don't understand and they start using the heck out of it they probably caught on that you are not familiar with the term and now they think they have a one-up on you. They don't usually if it's being overused it's suspect. Which means they are compensating for something and that is another clue.

A real money person, is relaxed. They have done this many times and are mildly excited to see another venture work out, if your numbers are right and the project your selling them on is one you believe in you should be relaxed too. Bottom line, you both want to make money and nobody wants to waste the other person's time.

The social investor: This should probably go in a "Pit-falls" section. Basically a social investor is somebody with money but no real interest in dealing with you financially. They want to go to parties and hang out with you and talk about film. They want to be a part of the scene with out taking risk. So you'll hear them from time to time talk about their cash but mostly they just want to be social.

The good part about this type is that they often have massive networks of industry people and it is a good way to meet folks who are higher up on the film food chain. Maybe even actual investors. So keep the contact but don't get your hopes up.

Recap:

• Have your numbers ready ahead of time.


• Be ready to defend your script.


• Don't be afraid to walk away to protect your project.


• Don't lie about what you have in place.


• Don't be intimidated, if they are not gonna invest they are waisting, YOUR TIME!

*Distribution is your most important piece next to the script. If you have distribution in place with actually theaters, include that. ANY theater that you have on paper is a huge step in the right direction. Internet, and Film festival's almost don't count unless your target is a festival. DVD distribution at retail stores and other avenues(ie RedBox) have forms that you can download to submit your project. They want a finished project though, unless you have some special relationship with them. I add the filled forms for the different DVD avenues in the packet at the back of the distribution section. When I say filled out I mean a printed pdf, not filled in with pen.

Downtime...what to do when nothing is happening

Downtime(aka unemployment) is a really good time too________. It's a really good time to WRITE!

Many times when I am on a set or out with other film makers there is a lot of (Set Downtime) in which your basically killing time until your needed to do some specific task(this is usually in between takes). The thing that happens the most is people begin to talk about projects that they would like to do or idea's that they have been thinking of. This is always entertaining and exciting unfortunately even the best idea's usually need a script. So if no one has written anything down(which is usually the case) then your stuck with a good idea and no way to do anything with it. I try to take notes, little one lines that help me remember idea's that people had. I add to the note the persons name, location,ect so I have reference for the conversation.

Now after the job is done, or in my case when it's winter and most of the work has gone to warmer climates . It's when I go back through my notes and get a chance to take a better look at some of the idea's that came up on the show.

As a producer it's important to have a constant bank of concepts and where you got them. Having the reference of where you got an idea/person who helped inspire it can lead to a creative relationship down the road that is beneficial to both parties.

Now to the actually writing, first issue "But J I am a producer not a writer!" Great, you and I both know that if your reading this you have concepts in your head that you want to see come to life. Make script notes, if you think of a really good piece of dialogue put that in there. Then, your task is to make your notes presentable. In other words you idea's for a project should be organized enough so that another human can read them and turn them into 90 pages of gold.

Obviously you need to find somebody who can write.

If you want to learn to write I recommend read "Save the Cat" by the late great Blake Snyder.

Of course the best advice one writer can give another is "just keep writing".

The other thing that is good to do with downtime besides writing is the different parts of "Pre-visualization"

Check out "Film Directing:Shot by Shot" by Steven D. Katz

This is the thing, many and I mean by many almost EVERY SINGLE ONE of any indie project I have ever been apart of that dies does so because of Development/Pre-production.

The bottom line is, if you don't have a script you can't even start. You don't have a good idea that has substance too it you don't have anything to build into a script.

Also DT(downtime) is a great time to expand your film knowledge by reading and taking classes. Of course your watching film, this is also a good time to catch up if your behind on your "gotta see it" list.

So to recap:

• Organize and review notes


• WRITE!!


• Pre-visualization/Pre-production practice(haha PPP)


• Expanding your film IQ (reading, movie list, classes, ect)