Video Production Business Tips – Surviving Economic Downturns and Thriving in the Upswings

When business is slow, people often blame it on “the economy.” When I was younger, I used to think this was a load of crap. How can “the economy” be directly responsible for why my clients aren’t hiring us for more video projects?

How can “the economy” be responsible for ME losing contract opportunities? Well, after years of fighting tooth and nail to have a successful video production business, I can tell you that even though I still don’t understand exactly how it works, the state of “the economy” definitely impacts my business.

In this article, I’ll attempt to give you a quick lesson on how, why, and what you can do to weather the storms.

I had an interesting conversation with a client about how the high price of oil impacts his business. He owns a multi-million dollar plastics manufacturing company (I mean MULTI-MILLION dollar business!)

This guy is big time and I’m doing everything I can to quickly learn how to replicate his success. The odds are good that I won’t reach that level with my video production business, but perhaps the collective efforts of all my business endeavors will resemble an inkling of what he has accomplished some day.

In a moment of ignorance, I asked him why the price of oil was making such a difference to his profit margins and he proceeded to instruct me in Business Economics 101. He mass produces products like medical waste trash bags, bags designed to keep frozen foods fresh for so many weeks/months, the liners of helium balloons, etc. which are made from plastic raw materials. These plastic raw materials are derived from oil.

Since oil is a lot more expensive these days, his raw materials cost a lot more which means that in order to maintain profit margins, he has to raise prices. Well, this isn’t fairing well because he has been successful due to his reputation of being the best quality at the lowest price.

Now that he is having to raise his prices, he is merely the best quality at an average price. Part of his frustration is that his competitors aren’t raising their prices to protect their margins. Instead, they are consciously losing money by keeping their prices the same.

So, as of right now, he can either join his competitors by not raising his prices and lose money or he can raise his prices to protect his profit margins but get less volume.

At this point in the conversation, I realized that I was running late for another meeting so we broke it off and I hauled tail out of there. Regardless of what he decides, I’m sure it will be a decision that continues to make him wealthier down the road. He didn’t get where he is by not understanding how to maneuver through good and bad economies.

So, how does the example I gave above regarding economic downturn impact us as videographers?

It’s pretty simple. Let’s say that this plastics manufacturer was a client of yours. If the high price of oil is leading him to raise prices which results in less sales volume, then it’s safe to assume that he will tighten up the purse strings when it comes to the “nice to have” services (videos, websites, breakfast in the middle of the Serengeti with 50 armed guards to keep the animals away… true story) and will only spend money on the “must have” services (raw materials, paper, pens, maintenance on his machines, etc.)

If he is a customer that does repeat business with you but hasn’t called in a while, this is most likely the reason. Or, if you submitted a proposal a few weeks/months ago and he hasn’t responded, this again could be the problem.

You have to keep in mind that when a business owner (or decision maker) is in survival mode, they aren’t thinking about anything else but how to get through this economic downturn. They know that if they can just get through the storm, great things will be on the other side when the economy bounces back.

As a service provider, YOU MUST RESPECT THIS! To not will result in extreme frustration for both you and the client/prospect. Plus, your client/prospect is giving you signs that the economic downturn is coming your way as well. If high oil prices impacts your clients’ profit, they won’t have extra money to spend on your services, which, you guessed it, means that you too will soon face a crisis.

So now that you’ve “seen on the news that the hurricane is coming,” what do you do?

You start boarding up your house and potentially think about leaving town.

I’m not suggesting you leave town but you should definitely start thinking about how you will weather the economic storm that will soon hit you like a ton of bricks.

What are your options?

My experience has been that when a client/prospect is facing a cash shortage due to an economic downturn, there isn’t any type of incentive that will result in them signing a video production contract.

They “freeze” their spending on anything that isn’t directly related to the operations of their business. So, you will feel like a hamster spinning the wheel without getting anywhere if you attempt to find a way to get your client/prospect to move forward with a project during this time. Embrace this fact and start collecting nuts… it’s going to be a long winter!

When your clients/prospects stop purchasing the “nice to haves” and only focus on the “must haves,” YOU MUST FOLLOW SUIT IMMEDIATELY! Put off the software upgrade or the expensive trip to the big industry conference you love to attend each year.

This is also the time to put off personal vacations and the kitchen renovation. If you don’t preserve your cash, you will be caught in the worst part of the storm without a lot of options for survival.

When the economy is bad, banks don’t like to lend money to people who actually need it and since you will be going to them because you are out of cash, they won’t consider you a good risk. It’s a messed up system but learning to embrace it will result in a healthier life and a more successful video production business.

It will be difficult to do this in the middle of a bad economy but a few ways you can help to off-set some of the impact include:

1. Focus your marketing efforts on industries that aren’t impacted as heavily when the economy is experiencing a downturn.

Some of these industries include health care (people are going to be sick no matter what the economy is doing), higher education (people go to college no matter what the economy is doing), local/state/federal government (the only entities that seem to not be impacted at all by the economy), and church ministries (the larger churches I work with seem to always have cash tucked away no matter what’s going on the business world).

These industries won’t necessarily thrive in a bad economy but they fare better than most which means you won’t be bone dry when the usual corporate clients close their checkbooks.

2. Find ways to improve your cash flow when the economy is good.

This is when banks will loan money or refinance loans for ANYONE! Use this to your advantage to reduce your monthly payments on equipment, vehicles, etc. And remember not to take on any unnecessary expenses that will either eat a large portion of your cash or will tie you in to monthly payments. You’ll need the cash when the economy gets bad and you won’t want extra monthly payments when your revenue drops.

3. Make hay while the sun is shining!

I know this is a cliche and one I’ve used in other articles, but, it’s true in this case as well. When the economy is great and people are buying things left and right, you MUST SELL LIKE THERE IS NO TOMORROW!

I’m serious. Spend all day marketing/selling and produce the videos at night or on weekends. Or, relax your client’s delivery expectations when possible so you can spend more time selling when everyone is buying.

4. Then, when you have a stack of cash and are trying to figure out how you want to spend it… REMEMBER… another storm will be coming soon!

Always has and always will. You can’t deny it. To do so will spell disaster for your video production business.

In conclusion, the economy is a force that is much stronger than you, me and even the largest businesses in the world. In order to make it through the downturns, you must do everything you can to prepare for them when the economy is strong.

Sell more, spend less and make smart financial decisions when it comes to refinancing your long-term and short-term loans. Eventually, the positive things you do in great economies will outrun the worst that bad economies can dish out. This is when your video production business gets stronger and you start to experience true wealth.

As for my client, his personal wealth is already far greater than the value of his multi-million dollar business. So, in reality, it doesn’t matter what happens during this particular economic downturn.

In the worst possible case, his business shuts down for a few months (with all employees continuing to receive paychecks) while he goes on a few lavish vacations. Then, when the economy bounces back, he turns the lights back on and they go back to being the best-quality/lowest price provider of plastics products that will continue to make him millions of dollars each year.

Wouldn’t we all like a piece of that action?

Video Production Business Tips – Starting a Video Production Business

A good friend of mine called some time ago to pick my brain about starting a video production business. He and I graduated from the same college with the same degree but his life and career took him down a much different path than mine. He has done well for his wife and 3 kids but has always had the itch for getting back into video production.

During our phone conversation, I was reminded of how hard it is to start a new business, especially a new video production business when you have a family that depends on your income. The truth of the matter is that you have to be in a position to lose for a while before you will start to win. You have to spend money for a while before you will start to earn enough money to make a living.

Here’s the condensed version of the advice I gave my friend:

1. Research your market. Find the need. Fill the need.

What are the other video production companies in your area? What type of clients do they serve? If there are 10 wedding videographers and 0 corporate video production companies, then you should seriously consider being the first and only corporate production company in your area. If there are 10 corporate video companies and only a few wedding videographers, you should lean more towards wedding videography. If it’s about the same in both categories, consider serving both markets or simply choose the type of work you prefer to do.

I researched online while I was on the phone with my friend. After looking at the competitor’s website, I learned that this company wasn’t producing good work. The quality of their website was poor and their wedding demo was even worse.

With that in mind, I suggested to my friend that all he’d have to do to get out of the gate in a hurry is make sure his site looked better than theirs and that his wedding demo did the same. He is a talented shooter/editor so creating a better demo won’t be a problem.

The other side of the equation is that this competitor doesn’t do any corporate video work so my friend could be the one and only corporate video production company in his town. At this time, the corporate clients get all their production projects done out of a larger city about an hour from there.

2. Plan to Lose Money.

After the research proved that there is plenty of opportunity for another production company in his area, we discussed how he’d handle the cash needs for both his new business and personal obligations. The reality is that it could take as long as two years to generate a large enough client base to reach the salary he makes in his current line of work. Knowing this up front, he has to figure out how he’s going to pay all the business and personal bills until his company can support both.

He can work full-time or part-time for someone else in order to support his income and spend the remaining time to build his video production business. He can also loan from a bank or find an investor to finance his business.

3. Pull The Trigger!

Let’s face it. Starting a video business is probably the hardest thing you’ll ever do. Keeping your head above water is equally as challenging. However, you can’t be successful as a video business owner until you take the first step. If you have decided that this is something you definitely want to do, THEN DO IT!

Don’t waste any more time. Every day that passes is a day that you can either be working towards building your own asset (your business) or working to build someone else’s asset (someone else’s business). I’ll tell you from experience that you will make mistakes – a lot of mistakes. But the only way you can learn from those mistakes is to hurry up and make them.

The advice I gave above isn’t anywhere near the information you need to start and run a successful video production business but it should give you a few things to think about. Find the easiest entry point in your market (wedding, corporate, etc.), figure out how you are going to pay the bills while you are building the business in the first year (full-time job, part-time job, bank loans, investor) and finally, pull the trigger!

Video Production Business Tips – Be An Expert in Your Niche

Even though I’m highly motivated to be successful in my video production business and pretty passionate about my craft, I’ve noticed a lot lately that I don’t seem to have the same zest for what I’m doing as I did back before the economic meltdown in 2008 and 2009.

On the passion scale of 1 to 100, I’m at about a 78 right now. Before 2008, I registered in at about 999 on the same scale. I loved what I was doing and was very excited about my progress in business at that point in time.

After wondering for months where my passion had gone and what it would take to get it back… it hit me after seeing several likes from clients, prospects and referral partners on one of the self-promotional videos I posted on my company’s social media account earlier this week.

For that split moment, I felt the passion start to rush back into my soul and I stopped what I was doing with the determination to understand what made me feel that way.

In one word… vanity.

Before 2008, I was an absolute rock star in my business community. I was winning awards for entrepreneurship and video production left and right and was being interviewed for newspapers, radio shows, etc. I was even featured in the main cover story of Inc. Magazine on how raising my rates enabled me to quadruple the size of my company in less than two years.

I was definitely partying like a rock star and loved every second of it!

Most of you probably know that I’m not a vain person (at least I hope you feel that way about me.) However, I do believe that in order to be successful in business and in life, you do have to have a level of moxie that most others simply don’t have, a confidence level that’s a few notches above everyone else… that special pep in your step or passion in your voice.

In order to become and stay successful in the video production industry, I believe you have to build that rock star status not only for yourself, but for your customers.

Who’s the Rock Star in Your Niche?

I’m not talking about who you and I think are rock stars in our industry. I’m referring to who your community, customers and referral partners think is the rock star corporate or wedding video producer. What do they do differently than you? How do they get all the attention? How do they dress? How do they market themselves, etc.? If you’ve had the opportunity to see them in action, how do they work on-site? How do they treat customers in tough situations, etc.?

Why You MUST Become a Rock Star

Think about it. We as people love rock stars! We practically worship the ground they walk on and a lot of people are willing to pay insane prices just for the privilege of saying they were at a particular concert.

Rock stars get all the attention and with the attention comes money.

Corporate or wedding clients want to do business with the rock star. If they are going to invest thousands of dollars in something, they want to do it with someone who has already won the respect and love of dozens, hundreds or thousands of other similar customers. They want do business with a star!

The other reason (just as important) to become a rock star in your niche is to keep the fire burning in your soul. When you get attention and recognition for what you are doing day in and day out, it’s easy to keep going until you achieve your goals and dreams.

When people pay attention to you and recognize your brilliance, it feels really good and that feeling carries over into your work, your customer service and your overall brand.

How to Become a Rock Star

In all my years of marketing experience, I’ve learned that three things will make you a rock star faster than anything else.

1. Writing

When you take the time to write blog posts about certain aspects of your niche and share that information with your clients, prospects and referral partners, it immediately positions you as the expert… aka ROCK STAR. It can take a while for your posts to gain momentum but while your content is improving your search engine rankings on major sites like Google, your rock star status is growing steadily at the same time.

Some of you are thinking right now, “But Kris, I’m a terrible writer and I’d never be good at that.” All I can say to that is, I used to be scared to death to write anything someone else might read but I decided one day to become a good writer and 10 years later I’ve developed a skill that helps me generate a lot of money.

You don’t have to write but I highly suggest you start practicing. It’s a skill set that every successful entrepreneur needs to have in my opinion.

2. Recording

Even though I listed this as number 2, I think it’s actually the number 1 way to generate a rock star status in your niche. The same way you can write about particular things in your realm of expertise, you can and should also record videos of yourself giving similar tips. When you produce and distribute videos to your target market via email or social media, people start to recognize you in public places and they start to talk to others about you. I’ve only recently started experimenting with video marketing and the results have been fantastic.

3. Presenting

This is my least favorite strategy for building a rock star status but mainly because I just don’t like to present the same material over and over to different audiences. However, if you build a presentation about something specific in your niche and you present it to several groups over the course of a year, you will definitely become a rock star in record time. I’ve done this before and it worked very well. I choose not to do it now mainly because I’m lazy and I can execute numbers 1 and 2 above from the comfort of my laptop or studio.

Video Production Business Tips – Reasons NOT to Upgrade Video Production Gear

We can all find reasons to upgrade our video production equipment and software. Industry magazines tell us we should and equipment/software manufacturers advocate we do so we’ll have access to the new features available in the upgrade. There are thousands of people in production forums throughout the world who believe that staying up to date with current upgrades and technology is crucial to being competitive in the video production industry.

To an extent, they are correct. But what people don’t share with you are some of the reasons why you should not upgrade your equipment and software. Or at least not at the speed in which the industry says we should.

The underlying theme here is that upgrading your gear takes money out of your pocket which impacts the overall cash flow of your video production business. If you choose to finance upgrades with debt (loans, credit cards, etc.), then you are also impacting your cash flow because you will add payments to your monthly expenses. I know that upgrading is a necessary component of running a video production business. However, you should think hard about the following reasons NOT to upgrade before you spend the money.

1. If you haven’t mastered the video production equipment and software you have now, you shouldn’t upgrade.

When you start to get the itch for something new, take out the manual and start reading. You’ll be surprised at all the things you didn’t know about the equipment/software and this will re-energize you. Until you can push your gear to its absolute boundary every time you use it, save your money.

2. Rarely will an upgrade result in more profit for your video production business.

Think about it. Did the last piece of gear you purchased improve your bottom line? It probably didn’t. My employees are constantly advocating that I purchase new cameras or software. I respond by telling them that if they can justify on paper how the new gear will result in additional profits for the company, I’ll consider it. Needless to say, most of the new gear doesn’t get purchased.

3. When you finally pay off your car, you want to do your best to drive it as long as you can.

Not having to make payments is a wonderful thing. The same goes for equipment and software in your video business. If you have a camera that is paid for and is still generating revenue for you, think hard before buying another camera. Making money with gear/software that isn’t costing you money substantially increases your profit margins. A couple hundred dollars every quarter or year in maintenance will help that piece of gear be a profit maker for as long as 3 to 5 years, depending on what it is of course.

4. If you had a choice to invest $5,000 into equipment for your video business or invest $5,000 into something that will improve the quality of life for your family, which one would you choose?

If you chose the equipment, you have your priorities all screwed up. If you chose your family, your head is on straight. In my situation, $5,000 will cover several mortgage payments on my house and on my rental properties if/when they are vacant. Instead of sinking the extra cash into a business asset, I use that cash to build personal assets which will directly benefit my family.

5. Upgrades take time away from your revenue generating activities.

If sales are down, upgrades won’t improve that. You have to improve that. If you are in the middle of several projects, upgrades won’t help the situation. They will simply slow you down which will cause you to be less profitable. Purchasing new equipment won’t make a prospect want to do business with you. The quality of your work and reputation is what gets the phone to ring. Ninety-nine percent of the time, your clients won’t give a flip about what kind of cameras or software you use. They’ll only be interested in the formats you can provide them after the project is complete.

Obviously, you can’t run a video production company without upgrading your equipment and software when absolutely necessary. I just hope that this article has given you a reason to only upgrade when you are 100% sure you can no longer squeeze a reasonable profit margin out of the gear you have now. Training yourself to hold off on spending large sums of money for as long as possible will help to increase the financial strength of your video business as well as improve your skills as an entrepreneur. Both of which will accelerate your success!