Money isn't an obstacle

It's a complicated equation of risk analysis and vision-casting. We have to get past our fear of lack of money as the reason for not moving forward with our projects.

Let’s say you wanted to start a company. How would you go about it? Would you start with the idea and try and do as much as you could on your own dime, until you have an MVP (minimum viable product)? Or would you lay out a business plan and try and get funding off that, then use that funding to build a product?

Photo by Jon Tyson on Unsplash

The smart play, IMO, would be to get funding for you to get off the ground. Yes, that means debt, which equals risk. But the goal of that kind of business debt is to get out of it by selling whatever you make with that debt at a profit.

One thing creative people tend to do (myself included) is think of money as an obstacle, something we lack for something we want or need, and we view getting it as antithetical to our profession (“I’m a creative person, I am not business-minded” or some such line of thought). We ignore the numbers because we’re word people, or image people.

We say we aren’t good at maths. We were probably made to feel that way when we were young; our natural predilections and interests were hopefully encouraged (good!) but our natural disinclination may not have been discouraged; worse, we may have had teachers who didn’t know how to teach the (occasionally complex) material in an engaging and approachable way. (I could go on a whole rant about how maths are taught in public education, but that’d be getting off topic.)

We were turned off of numbers and now we live in a world dictated and ruled by them. And now we are fighting for scraps while Netflix and HBO executives get nine-figure bonuses even as they think they can get away with not paying the collective writing talents making them gobs of money even a fraction of their total yearly salary.

If you wanted to start a production company as a stepping stone to financing film production, here are some options you might have as seed money:

1. Personal savings, friends and family contributions:

   • Use your personal savings or funds from friends and family members to kickstart your film production company. This is often the first source of financing for many small businesses.

2. Business loans:

   • Traditional bank loans: Approach banks or financial institutions for a business loan. You will need a solid business plan, financial projections, and collateral to secure the loan.

   • Small Business Administration (SBA) loans: The U.S. Small Business Administration provides loans to small businesses, including film production companies. These loans typically have favorable terms and lower interest rates.

3. Crowdfunding:

   • Platforms like Kickstarter, Indiegogo, and GoFundMe allow you to raise funds directly from the public. Create a compelling campaign, offer rewards, and promote it extensively through social media and other channels.

4. Grants:

   • Government grants: Research government agencies, both local and national, that offer grants for film production. These grants may have specific criteria, such as supporting local talent or promoting cultural diversity.

   • Private grants: Some private organizations, foundations, and film industry associations provide grants to support independent filmmakers. Research and apply for grants that align with your project's themes and goals.

5. Sponsorship and product placement:

   • Seek sponsorship from companies or brands that align with your film's content. Product placement deals can also generate revenue by featuring specific products within your film.

6. Pre-sales and distribution agreements:

   • Secure pre-sales and distribution agreements with distributors, broadcasters, or streaming platforms. This involves selling the distribution rights in advance, which provides upfront funds for production. This would be difficult without a finished film, of course, but it is possible with the right project.

7. Equity financing:

   • Angel investors: Seek individual investors, known as angel investors, who are interested in financing film projects. They often provide funding in exchange for an ownership stake or return on investment.

   • Venture Capital (VC): Venture capital firms that specialize in the entertainment industry may be interested in financing film production companies. They would provide funding in exchange for equity and actively participate in decision-making. This is very rare.

   • Film financing companies: There are specialized film financing companies that provide funds to independent filmmakers. They may offer loans or take an equity position in your film.

8. Tax incentives and rebates:

   • Research tax incentives and rebates offered by governments or specific regions for filming within their jurisdiction. These incentives can significantly reduce production costs and act as a source of financing. That said, the fine print on this can often reveal why this is a harder option than it might seem on the surface.

9. Co-production and international financing:

   • Explore co-production opportunities with international partners. Co-productions often involve pooling resources and sharing costs, making it an attractive financing option.

Most of these options naturally require legal and financial professionals to ensure compliance with regulations and to navigate the complexities of financing. Each option has its own requirements and considerations, some of which are resource prohibitive. In other words, it’s not an easy road even if you have financial acumen.

Photo by Bernd 📷 Dittrich on Unsplash

This kind of thing really isn’t for everyone (standard disclaimer, this is not financial advice, I am not a financial advisor, etc.). I don’t mean to say this is the route creatives MUST take. You shouldn’t just dive into this without a plan and certainly you should have the desire and will to withstand great financial pressures. Your risk tolerance will need to be high enough to absorb the sometimes terrifying costs running a business requires.

One goal of this newsletter is to nudge creative people, including myself, just a little, to give them the notion of doing things differently than they’ve been taught. We’ve been taught to let others handle the money and business. In doing that, we’ve handed the keys to the car and kingdom to people who do not have our best interest or the expression of unique stories in mind.

Does this require risk? Absolutely. And I know creatives can be risk-averse types. We’re dreamers, yes, but we also are pragmatic; we’ve had to be after a lifetime of absorbing bad messages about money.

And, in all honesty, now in this particular moment in time, is a particularly terrible time to start a business. Business loans have interest rates commensurate with some low-end consumer credit card interest rates now. Belts have been tightened. Banks are taking fewer risks, and demanding more paperwork (aka proof) to show you know what you’re doing. This can be a daunting prospect.

But if you have a heart of a lion in business, and you have the stomach to eat enormous costs up front, then this could be an avenue for you.

Food for thought.