Many people are attracted to the construction business because of big budget projects. It’s not uncommon to hear people who became multi-millionaires or even billionaires in a short period of time by starting off in the construction business.

So, we asked an expert who’s been in the construction industry for over 20 years on his views on the construction business.

How does the construction business work?

There are usually two types of projects – public projects and private projects.

In the public realm, the construction business works off engineers and related clients, they include municipalities and related entities that put out plans and specifications for bids. Construction companies that can do that type of work will purchase the plans and submit a bid.  It is usually an open bid situation where bids are submitted by a certain time, then they’re opened and the lowest bidder wins.

The other type of work is private work that is usually negotiated, but based on plans and specifications.  Usually 3 to 6 construction companies are asked to give a price.  They are NOT opened publicly.  Developers base their decision on the best product for the best value and the best relationships.

Private projects usually have greater gross margins than public projects.

The average gross margin for private projects is about 20% in the last 3 years (previously more like 30%).

Public projects will always have low margins. Currently, about 5-15%.

Finding Work and Customers in the Construction Business

Some of the ways to find work and customers in the construction business is,

• To develop relationships with engineers, planners and municipalities who will usually give information regarding upcoming projects.
• Membership in the AAGeneral Contractors magazine that publishes a weekly list of jobs coming out for bids.

On the private side, it is all about relationships and reputation.  You will be asked to do value engineering on private work – revamp the plans in order to give them a better outcome and a better finished product.  Value engineering is a strong competitive edge.

Insurances and permits required by a construction company

This depends on the state and the country you live in. The most common ones are General Liability and Workers Compensation.

Keys to success in the construction business

• Pay close attention to detail. Then, train your superintendents to pay close attention to detail.  Never give a superintendent over 2 jobs to manage.  Superintendents should have good foremen who manage crews.  Each job should have a foreman managing a crew.  Each job should have a dedicated office person to review all the paperwork, billing, correspondence with owners, engineers and clients.
• Have a good lawyer review each contract before you sign it. The lawyer should be someone who is familiar with construction.
• Have a good team. Your team should include a banker, an accountant and a bonding company.  Then, find smart, bright people to run the jobs (superintendents).  You need experienced operators of heavy equipment.

Skills Required to be Successful in the Construction Business

You need to be very astute at understanding contract documents. You need to know your area of expertise, that is, utilities, heavy grading and site development.

Where to learn these skills?

You learn them from hard knocks.  You can’t learn it in school.  Construction management will give you the basics but then you have to go to work in order to really learn it.  Intern with a company – stay on for 3 – 5 years before starting your own business.

How many employees do you require when you start a construction company? And, in what job functions?

You need a minimum of 8 people.

They include, 2 Operators, Laborers, People with Drivers License (this is BIG in the construction industry).  Not all are qualified or legal drivers.  Driving is a must for work.

Owner with estimating and bidding skills.  As you grow, you can hire an estimator and a safety director (OSHA standards are huge – know these inside and out).

Do you need to buy or lease construction equipment? Or, can you outsource/sub-contract your entire project?

When you start, rent the equipment. Avoid a lease locked into a certain period of time.  DO NOT purchase until you know for sure that your business will survive.  With rentals, you can rent as you need it, month by month without the commitment of a lease or purchase that could financially wipe out any positive cash flow once the project is complete.

You can sub-contract the entire project, but most project specifications have a clause that requires the bidder to perform at least 50% of the work.  This is a safety precaution that prevents overly sub-contracted work and ensures fiscal responsibility.

How do you effectively sub-contract your projects? What is the due-diligence required?

• You should insist on sub-contractors to have insurance, workers compensation and their own equipment.
• Check references of previous jobs.

What are the best books or training programs you can recommend for someone who wants to start in the construction business?

Go to work at a construction company.  See if you like it first.  Invest your money wisely.  Research it first by working in it.

About the Author

John H McArthur, III and his wife Patsy McArthur started McArthur Construction Company in 1986 and then incorporated it in 1989.  MCC is a full service utilities and site development construction company licensed in North and South Carolina.  John hasn’t met a piece of equipment he couldn’t operate and makes sure all the people he hires are equally responsible and if not, willing to learn from the “ditches” up!

Image: Suat Eman / FreeDigitalPhotos.net

“I have answered many of those online ads and can tell you that all of those claims are false.  It’s just a come on to get your email address to sell to advertising companies.  The surveys are used as a way to sell individual advertising.  To participate with surveys – you need to be with survey companies that use e-mail to determine if someone qualifies for in-house surveys or not.”

– Davida Shensky

“I have tried a few work from home businesses. I’m currently working on one which is bringing me $ 300 weekly. In my experience with online work from home opportunities, the ones that say you can make $ 5000 a week are scams.”

– Sara Rivera, Columbia, Pennsylvania

I have been seeing several of these ads online “make money online working part-time” and testimonials of several people along with photographs and a copy of their checks.

So, I decided to dig further to see if they work.

I signed up with a website and downloaded their eBook that gave me a list of about 300 survey companies and I signed up for some of these survey companies. Their surveys were quite long and I guess it took something like 5 to 15 minutes to fill out each survey. In several places I was not eligible to fill up the survey because they were looking for a specific demographic. There was a $ 5 bonus for signing up on one of the websites. I signed up and a $ 5 bonus was credited to my account online but to transfer that amount into my bank account or my PayPal account, I needed to have a minimum of $ 15 in my account. So, to earn $ 15 I needed to fill up even more surveys. However, I was not eligible for any more surveys because I didn’t fit the demographic.

So, overall my experience has been too much work for too little to no money. Working at McDonalds at minimum wage might be a better alternative.

However, don’t take my word for it, several of our readers have tried it and have shared their experiences below.

Tyler Ward, a 21 year old photographer says,” Before the business of photography blew up, I was constantly looking for ways to make money without having to go into work. By the age of 16 I was making money through these work from home jobs.

Everyone has seen the work from home ads, they claim you can make thousands each week just by working from home. These programs seem unpractical, but in reality they are very possible. However the amount of work required to do so is very undersold. A number of these programs work by reeling you in to do a survey, complete a free trial of a company and so on. Once you’ve complete X amount of surveys or signed up for X amount of free trials (we’ll call these offers for now on), the websites send you a fat check. Sounds all good in the hood up to this point right? Wrong.

What these get rich quick ads don’t mention until you’ve already started your ‘offers’ is you then need to refer X amount of people to do each offer that you’ve done. For example, I sign up for this website thinking I’m going to make $500 for completing 5 offers, which is true. However I have to refer 10 people (2 people per offer) to do the same. That’s why you see these ads become so viral over FB and random social networking websites because these people need others to sign up under them to do the same.

Once you dig deeper into these schemes, you will see there is plenty of opportunity for real money to be made. However, organization and patience is a huge must-have.”

Bethany Mooradian of QueenoftheRandomJob.com and also author of “I Got Scammed So You Don’t Have To!” says, ”Online surveys saying that you can make $5000 per month are certainly scams. There are legitimate ones like www.globaltestmarket.com, but you can only make pennies per survey. If there is an ad or post saying you can start your own company (a home-based business) doing surveys, then they are probably trying to rope you into buying and then selling information about surveys through an affiliate program.”

Rusty McMillen, An Associate Certified Coach (ACC) says, “The plain fact is, there are very legitimate, Work from Home opportunities out there. But anyone wanting to go down that road must be prepared for many things, it takes a lot of time and effort. The learning curve and education overload is un-daunting. You have to learn a lot of computer skills, become a marketing and sales expert, web designer and copywriter, just to name a few. Is it possible to make that $5000 per week, yes it is, but it is not going to happen in a week, a month and in most cases not even in the first 2-5 years. If you don’t have what it takes and don’t have the financial security or freedom to wait it out and you still have a decent job, stay there!!”

Overall, the general consensus among all our experts who have tried these online surveys and online work from home opportunities is that, some of them are genuine opportunities. But they are definitely not as easy they are made out to be. It requires time, energy and effort to make any real money. To make any sort of substantial money may take not just part-time work but over-time work. So, before you decide to get into this band wagon, make sure you are willing to put in the (over)time and are also ready to burn your fingers now and then. Otherwise, you may be better-off perfecting a skill or a vocation or focusing on a career that can give you greater rewards in the long run.

If you have tried any online work from home opportunities, please feel free to share your experiences in the comments section below.

We compiled a list of 10 business that we thought were out of the ordinary. Just not the regular old economy businesses, but something new, something innovative and something that looks “interesting.” There are so many innovative business concepts that we could compile a list of 100. We decided to start with 10. Maybe, at a later time we’ll come up with more innovative businesses. Take a look and give us your comments in the comments section below.

Tag Sell It Inc.

Jonathon Papsin, a young entrepreneur working as a Realtor in Manhattan with a knack for e-commerce, founded Tagsellit.com with his business partner Matthew Dorman, a Technology Consultant for Fortune 500 companies in Manhattan.

He’s been buying and selling secondhand goods online ever since graduating college just a few short years ago. His company, Tag Sell It Inc. is a website where people can present garage sales in a virtual format, enabling users who don’t have a front yard or garage to create a virtual sale.

In 2009 he published “The Ultimate Garage Sale Guide,” and the company has created four iPhone Apps for the company serving the interests of Flea Markets, Tag Sales, Estate Sales and an e-Book.

IndiDenim

indiDenim offers consumers the opportunity to be the designer to co-create their garment in the exact style they want.

IndiDenim has introduced an alternative to mass produced clothing by enabling customers personalize their style and fit. Customers choose the fabric, wash and pockets and also fill out a fit profile so that each garment is truly customized for each and every customer.

Each one-of-a-kind jean is then made in an artisanal way with personalized details and using premium fabrics and washes.

ShowMyProperty.TV

ShowMyProperty.TV is set to change the way properties are bought, sold and rented with a custom-shot film hosted by a selection of professional hosts. This TV-style feature will open the door and let potential buyers experience the feel of the property for themselves. ShowMyProperty.TV is tailored to the needs of both buyers and sellers, highlighting all the key features and major selling points.

Gogobeans

Gogobeans launched their cloud-based storage, sharing, and organization service at www.gogobeans.com. At a time when the biggest question surrounding social media is security and user privacy, Gogobeans puts the control of who sees what and when squarely in the hands of their users.

Their innovative method of storing and sharing ‘beans’ (aka digital files and assets) wrapped in 4 layers of security, makes the Gogobeans service ideal for the consumer as well as the teleworker, the small business and the business traveler. Users can upload large (and small) files.

Sharing involves granting access to the link where the file is stored and not sending attachments which means, for example, the ad agency with the huge graphic files can skip the FTP sites and zipping software. They can simply upload and ‘bounce a bean’ to intended recipient.

Fast Wrap

Fast Wrap is America’s only mobile shrink wrapping franchise. Fast Wrap wraps everything from boats to hotels with shrink wrap to protect it from the weather. They’ve grown to over 60 franchises in just over two years. Fast Wrap owner, Mike Enos, is a serial entrepreneur who used to own a porta potty company.

Initially inspired by the need to protect his boat for the season, Fast Wrap Owner and President Mike Enos has carved not only a national niche, but a shrink wrap legacy.

Since first developing an innovative method of mobile asset protection, then opening the first Fast Wrap in 2007, Enos and his team have created a thriving national Fast Wrap franchise opportunity, now growing exponentially across the U.S.

Innovative new massage table designed to support people of all body shapes

Rebecca Savich, the extraordinary young inventor created the ADJUSTABLE BREAST COMFORT (ABC) SYSTEM that reduces pressure on women’s breasts. The large range of motion work and vertical elevation fits all clients when they are lying face down or on their backs.

You can visit Contour Table Systems to learn more about them.

Coupon Sense

Coupons Sense prides itself on saving members 50 to 70 percent on every shopping bill where Coupon Sense is used.

Coupon Sense makes saving money a breeze.  The site, which is available in 48 states, tells you where to get coupons, and when and how to use them to multiply your savings.

CelebriDucks

CelebriDucks is the original creator of the first ever celebrity rubber ducks of the greatest icons of film, music, athletics, and history. They have produced CelebriDucks for the NBA, Major League Baseball, the NHL, NASCAR, NCAA collegiate mascots and also famous people such as Elvis Presley, Michael Jackson, Marilyn Monroe, Barack Obama, The Wizard of Oz, Alice in Wonderland, James Dean, KISS, James Brown, The Blues Brothers, Mr. T, Shakespeare, and the world’s first ever 100% recycled Green duck. To date they have created over 200 different CelebriDucks and have pioneered a whole new collectible.

WaggleWeight

WaggleWeight™ Company, is golf related, and the foundation of the company is being laid by an educational blog named Waggle Weight Wisdom™ (http://www.waggleweight.com/blog), which has for the first few years of the company educated the golf industry with respect to correcting some horribly wrong concepts and practices that have existed, it seems forever (primarily regarding a golf swing and equipment fitting) and introducing new and better concepts and practices to help this industry recover and begin to grow again.

Life History Books

Life History Books is bringing affordable memoirs to the masses with personal historians all around the world, creating memoirs for everyday people.

How many times have you thought about getting your family and personal history down in print, or wanted a loved one to do so? Life History Books conducts relaxed interviews, collects photos and lays everything into beautiful, fully-customized, archive-quality books. In just four hours of your time, you could have a memoir to pass down through the generations. These books also make excellent Christmas gifts.

Take a look at the Introduction video, which answers most of the FAQ: http://www.lifehistorybooks.com/About.html#Video

Starting a business is easy with this step-by-step program. Click here to check out The StartUp Secrets Homestudy Course.

Image: xedos4 / FreeDigitalPhotos.net

Somebody once said, “Retail is one of the easiest businesses until you have to make money.” There may be some truth to this but it is NOT the complete truth. Lot of money can be made in retail even if you are NOT a big chain.

Sam Walton became the richest man in America by starting a retail business. Wal-Mart became the biggest retailer in America by starting in a small town in Arkansas.

First, let’s define what is retail?

Retail in simple terms is buying in wholesale at a low price and selling at your store at a higher price. It is as simple as buying at $ 8 and selling at $ 10.

Your local convenience store that sells all kinds of items from tooth brushes, to cigarettes is a retail business. Your specialty store where you go to buy your designer clothes is a retail business.

What do you need to do to be successful in the retail business?

1. You’ve got to love people.

Retail is all about selling and it is all about people. It’s a really dynamic environment where you are meeting new people every day. If you like people, you will love this business.

2. Choose a niche.

I am NOT a big fan of everything under one roof. I prefer niches. If you plan on getting into the clothing business for example, there are so many options to choose from, women’s clothing, men’s clothing, formal wear, casual wear, party wear, lingerie, swim wear, etc.

For example you may choose a niche like let’s say women’s lingerie. This will position your store as the “GO TO” store for that niche. But make sure there is a big enough market for that niche.

3. Location

The success of your retail store depends a lot on the location. There have been stores that may have done well in skanky locations, but those stores are rare exceptions more than the rule.

Choose a high traffic location, it could be a high traffic mall or a high traffic main street. The most important considerations when choosing a location is visibility, traffic, neighborhood. The neighborhood where you set up your store has to be in an area where your target market frequently shops.

4. Inventory Management

Retail is a very capital intensive business and to be successful in retail, you will need to manage your inventory very well. Inventory is like cash sitting on your shelves, if you don’t sell them fast then you’ll be in trouble because you won’t have cash to pay for new inventory and mesmerize your customers with new items all the time. That is the reason, many retailers do a sale so often to get rid of their old inventory and prepare for the next season.

5. Sales and Marketing

Sales and marketing is so important in every business and retail is no different. You will need to promote your store and create effective promotion programs on a regular basis.

Besides this, you will need to hire and train good quality sales people who are customer friendly. People buy from stores where their favorite people work.

These are just some of the things to look for when starting a retail business. Some of the other factors that you may have to look at are, your cost structure, it is important to choose a niche where you can get high profit margins and it is important that you keep your costs under control.

I invite you to try out my entrepreneurship course StartUp Secrets where you will learn a step-by-step process to starting a business and you will learn to avoid several pit falls that could save you a lot of money and heart ache. Click here to learn more about my entrepreneurship course StartUp Secrets.

About the Author

Vinil Ramdev is an entrepreneur, speaker, author and founder of StartUpGrowthExpert.com – An Online Magazine for Entrepreneurs who want to start and grow extraordinary businesses. He has started, built and sold a retail business.

Image: Francesco Marino / FreeDigitalPhotos.net

Florida Entertainment Attorney Edward Elkins talks about how the recording label business works.

What is a recording label?

A recording label is a business that assists recording artists and musicians with recording, marketing and selling their product (music albums).

How does a recording label work?

Depending on the size and financial assets of the record label, the record label will enter into a recording contract. These contracts define the terms of the agreement including the services the record label will complete for the artist, whether or not the artist will be required to pay the label for their services and the royalty percentages the musician and record label will receive from the sales of cds, individual songs and income from live performances.

What are the typical products or services of a recording label?

Many record labels will help the musician with recording music, marketing the music to audiences via street teams, iTunes, websites, etc.  Many firms have in house or contract attorneys that are in charge of contract negotiation and drafting as well as registering copyrights for the artist’s songs.

What are the typical revenue streams of a recording label?

Record Labels often offer advances to their artists in order to pay for the recording of the album. This advance must be repaid by the artist often through income resulting from album sales.

Once these advances are repaid, the record label and the artist will begin making a profit based upon the royalty provision in the recording contract.

Some of the royalties to the recording label comes from sales of cds, individual songs, live performances and digital downloads. The recording label keeps part of the income from these sources as royalty and shares the rest with the artist.

What are the typical expenses in a recording label?

The typical expenses incurred by record labels include business licensing, employee salary, travel, promotion and legal fees. These expenses vary in amount based upon the type of marketing, distance of travel and employee contracts the record label pursues.

How much money do you need to start a recording label?

At the very least, the record label needs enough money to cover business licensing, business cards, legal fees and marketing expenses. Services such as iTunes and cdbaby require little or no investment to sell music. Usually these services only ask for a commission when sales are made.  Many independent record labels I have encountered are located in the basement of someone’s house and run by individuals with a love of music and the desire to do whatever it takes to succeed.

What are the legal aspects you need to keep in mind when starting a recording label?

Because a record label is a business, you should research your state’s laws regarding business licensing. You should be able to interpret contractual language because you will encounter contracts in every aspect of creating and growing a record label.  Entertainment attorneys are good references regarding the legal aspects of managing a record label in your state. They may be able to guide you in licensing the record label as a business, copyrighting music and negotiating and drafting contracts that adhere to the law.

How much money can you expect to make from a recording label company?

Like many things in life, making money from a recording label depends on multiple factors. These factors include the market for the type of music your label signs, your marketing skills and the reception your artists receive in the community.

What are the keys to success in the recording label business?

You have to be able become a jack of all trades. You need to know accounting if you can’t afford an accountant, you need to know marketing and you need to be able to interact well with others.

What would you suggest to an entrepreneur starting a recording label company?

Do as much research as you can. Build rapport with people who are already in the industry and pick their brains regarding what does and does not work when it comes to marketing and cost cutting. Get your hands on as many books on the music industry and recording labels as you can. Your success will depend on what you know and how you use that information to your advantage.

What are the personality traits required to be a recording label entrepreneur?

You have to be a “go getter”. Success as a recording label will not come from sitting by the phone waiting for a call from the next hit band. You must go out there and find the next big star. You have to network with people to make opportunities for yourself and your label.

Any resources you can recommend like books and training programs.

Digital Millennium Copyright Act

All You Need To Know About The Music Business by Donald Passman

Guerilla Music Marketing Handbook by Bob Baker

Start and Run Your Own Record Label by Daylle Deanna Schwartz

About the Author

Licensed Florida attorney Edward Elkins practices entertainment law in Orlando. He helps new record labels and musicians with contract drafting, negotiation, registration of copyrights and publishing.

Image: Filomena Scalise / FreeDigitalPhotos.net

Have you ever been to the cinema halls and wondered, wow, how do people actually make such movies and do they actually make money out of it? You may have also seen several movie producers on Television with their plush mansions, expensive cars, super hot girlfriends and wonder that the movie business might be the best business for you.

Lets take a look at how the movie business works.

In simple terms, you write a script, make a movie and sell it. I know it’s oversimplified. I’ll give you more details, don’t worry.

I caught up with Jonathan Hlibka, Managing Director of Studio Film Group.  Studio Film Group has a successful production company and have launched into the film distribution business that is successfully expanding into multiple territories.

Read below what Jonathan has to say about the Film Production Business.

How does the film production business work?

The Film Production business is a project based business that can be defined by three words: Talent, Access, Money.  If you have talent, you will find people interested in working with you.  If you have access, you will be able to assemble talent to make dreams happen. If you have money, don’t waste it on a film but if you must, use it to support a project you’re passionate about.  Film is a long haul business and there will be a number of battles to get your project to market.

Typical revenue streams in the film business?

I want to start by saying that to maximize your revenue from a motion picture, you ideally want a distributor that understands the project and its market. For this reason, you may want to have multiple distributors handle the project in different territories.  Here is how the money flows back:

Theatrical – works as an advertising tool for all other revenue streams (drives up the value of the property through awareness). You most likely will not make any money on this stream and many distributors will not even consider doing this for a small film as it’s often not cost effective. If you find one that does, make sure you tell them you love them on a daily basis.

DVD/BluRay (replicated) – in their twilight but still important. Sales and rentals are where you will make your money here.

Digital download (like iTunes and Amazon) – The future.  And, there is a lot of money to be made in it. Usually works as a revenue split with the digital retailer.

TV broadcast licenses, Airplane licenses, etc: The long tail. This is where your film makes most of its money, over and over again. It’s also where you will most likely hear the word “Localization” for the first time. In layman’s terms that means dubbing in the local language.

VOD (Video on Demand): This will likely replace traditional TV within the next 5 years.  Generally, the producer is paid an upfront fee for a specific term.

Web: Streaming gold. Ad insertions, like TV, but now geo-local specific. HTML5 is going to play a huge role in monetizing properties across multiple platforms.

Mobile: Not quite ready for long form entertainment. However, considering that there are more web capable mobile phones in the world than there are home computers and that users are gobbling up content like never before, it is not too far away that VOD on mobile will be common and with it huge international revenue in previously unexploited markets.

Alternative Markets: This is a term we at SFG coined meaning any window of opportunity for the property that is outside of the consumer retail or broadcaster windows.  As we see it, it’s the biggest growth market of all of the above.

Film Distribution. How exactly is a film distributed?

Film distribution is a marketing and sales business. But that being said, how a film gets in front of an audience depends on the film and the marketing potential for the film.  In theatrical distribution, you can negotiate a split with the theater (like 50/50) or “Four Wall” the theater (rent it out).

Financially, the film will make 70% of its money from Friday to Sunday and the remaining 30% for the rest of the week.

For DVD’s, it’s a net 90 consignment deal with retailers; then you replicate the digital master and ship the movie to the retailer.

For digital downloads, it’s as simple as signing a contract for a set number of units/years and uploading the artwork and digital copy.

For TV, VOD and all those other revenue sources, it’s an upfront license to the network or station.

For the web, it can be a license fee, a per view fee, an advertising revenue split between the host and the producer, or any combination of the above.

Mobile will be very similar to the web but with transactional functionality like digital downloads.

How is a film produced? Can you tell us the different stages of production beginning from pre-production, production and post production, what exactly goes on in these stages of making a film and what is the time-frame?

Development: This is where a producer, a writer and at times a marketer come together with a story in mind and hash out how it’s going to work.  The writer then goes off and writes the treatment and then the script.  Once the treatment and script is complete, the producer goes and attaches talent (director, actors, Spot the Wonder Dog…) and finance.

Pre-production: This is where the sets are made, the script is tightened, the actors practice, the cameras are tested. Basically, this is where the producer plans and ramps up to a production.

Production: The ‘On Set’ days where principle photography happens.

Post Production: Voice over, sound, music, visual effects, color correct, digital mastering, theatrical print.  This is where the final product comes together.

A side note:

Most films never make it out of development. I know a number of producers that have had projects they have been developing for 10 years – and yes, sometimes it takes that long. So you should probably develop a number at a time. Once a project escapes its development phase, 70 percent of the time is made up in Pre-production and Production. Generally, 30% of time is spent in post production, and some times, 50% of the money.

How is a film marketed? What is the best way to market and promote a film?

The best way to market and promote a film is to leave it to the professionals – and spend money to market it effectively. Marketing, Publicity, Unit Publicity- all are key elements on the road to financial success.

It should be noted that many major Hollywood films spend equal amounts on production and marketing.

In an ideal world, you would start marketing and promotion in the preproduction stage.  The TV shows I put into pilot and the films we currently have in development have all been assessed from a marketing perspective.  To some independent film makers, and first time directors/writers, picking a project because of a marketing logic may sound like blasphemy.  It’s not.  Proper marketing helps investors feel more secure and makes it easier for distributors to assess their ROI.

Make sure you have a strategic and creative marketing team.  They identify and conceptualize an audience specific strategy from the beginning and stick to it.  They may not be able to “read the script” as your director would, but they can tell you who would watch it and where that audience can be found. Your cast, director and producer can and should be contracted to act as champions of the project through their various social media channels. People love the films story as much as they love the story of the film.  Most importantly, market creatively; don’t let anyone tell you postering alone will get bums in the seats.

For example, I acquired the rights to “A Gun to the Head” because it really connected with me, and from a marketing standpoint there is nothing like it being released for the 25-35 male demographic.  The director, Blane Thurier – of the band The New Pornographers, has a really smart and dark sense of humor that I wouldn’t hesitate to call amateurish. Not to mention they shot it on an unproven technology (5D – well ahead of the current 7D craze) and they turned out a superb product.  Go see it, it’ll stick with you days after you watch it.

How much money do you need to make a film and where do you get the money from?

Depends on the kind of film you want to make.  You can make a film on sweat-equity, or you can hit up your rich uncle for 100m.

Most first time independent producers make their first feature for around the 100-250k mark, generally because you can win this kind of coin from dentists and doctors in a game of poker.

Your writer needs to understand how to write for this budget – this is not an easy thing to gauge unless you’ve worked on set.  Depending where you are filming, there are a number of tax incentives, film funds and private investors who want to invest (for the tax benefits).  As you move to higher film budgets, Investment Banks become a valuable source of financing.

How much money can you realistically make in the film production business? What is the expected rate of return on investment?

In the short term, the production business shows a diminishing rate of return.  A lot of great projects are sitting on the shelf because of the market correction – and I’m sad to say they may never make it to market. Your best bet is to get a producer who has a track record of delivering on or under budget, get a sales agent who can sell the project and a distributor that understands the market for your film.

In the long run, you will do well remaining an equity stakeholder on multiple projects (having a catalogue) because once the initial investment is paid back, the rest is gravy.

Realistically, and keeping the above in mind, if you collateralize your investment across multiple productions, have proper exit strategies in place with your equity investors (to buy them out as soon as the money is available) and you have someone keeping a keen eye on earnings from various territories, you could be making 10-20 percent return year over year on a catalogue of films.

What are the critical factors in the success of a film?

Proper support, both artistically and commercially.  But as with all art projects, nothing is guaranteed, so be prepared for failures and don’t let them get in the way of future success.

Anything else, you’d like to add?

Show your films! The first step to getting distribution is getting the film in front of the right people.  At Studio Film Group, we are always looking for new and exciting projects to get behind.

About the Interviewee

Jonathan Hlibka is the Managing Director of Studio Film Group.  Studio Film Group has a successful production company and is also into the film distribution business that is successfully expanding into multiple territories. Jonathan has been an Independent Producer and also an Executive Producer.

About the Interviewer

Vinil Ramdev is an entrepreneur, speaker and author of several ebooks. He is founder of StartUpGrowthExpert.com – An Online Magazine for Entrepreneurs who want to start and grow extraordinary businesses.

Interview co-ordinated by Nadia Sandhu

Image: Francesco Marino / FreeDigitalPhotos.net

I meet a lot of people who say, I have “x” amount of money, can you tell me what business to start for this budget. For starters, this is great because you have a budget. So let’s prepare a checklist of what else you need to look at before choosing a business that is right for you.

A prospective entrepreneur contemplating what business she should choose?

1. Likes and Dislikes

You need to consider your likes and dislikes before deciding what business you want to pursue. Choose a business that fulfills your passion. If you have no passion towards fitness and you are obese as hell then starting a gym or a health related business may not be the right move.

Experienced entrepreneurs will tell you that a business is an extension of yourself. So, you can’t run away from that fact. So, choose a business that is YOU!

2. High Profit Margins

This is a bit of a controversial point. Not everybody will agree with me on this especially those who run high volume low margin businesses. But my personal opinion is, I like to stick to businesses with high margins. The low margin businesses are a bit too tight for me. I suggest you do the same as well. Look around for businesses with high profit margins.

3. Lifestyle

Your business will define your lifestyle to a large extent. No matter how passionate you are about your business don’t look at it as a hobby. It is work where things need to get done, deadlines need to be met, operations need to be effective and you need to be profitable.

If you don’t like to work nights and weekends, don’t get into the restaurant business. Get into something where you get to work during the day and you can take nights and weekends off.

4. Budget

Another factor you need to consider is your budget. Some businesses are highly capital intensive and some are less capital intensive. If you get into the retail business be careful, retail is a highly capital intensive business.

So, write down a number on a sheet of paper based on your savings or the amount of capital you plan on raising from family and friends.

5. Skills and Experience

It’s so much easier starting a business that is centered around your skills and experience. If you are a fitness trainer, then it might be a great idea to start something around that skill or if you are a beautician then you could open a beauty saloon.

Hope this article helps you to choose a business that is right for you. These are just some of the factors to consider when choosing a business that is right for you.

You can get more ideas on business opportunities by clicking here.

About the author

Vinil Ramdev is an entrepreneur, speaker and author of several ebooks. He is founder of StartUpGrowthExpert.com – An Online Magazine For Entrepreneurs who want to start and grow extraordinary businesses.

Image: br3akthru / FreeDigitalPhotos.net

The majority of entrepreneurial minded individuals dream about one day managing their own business.  Acquiring a franchise, as opposed to starting a business from scratch, is one of those options. The following basics are covered in this article: a review of the tenets involved with franchising, industry terminology definitions, pro’s and con’s of buying a new franchise or a resale, and recommendations for performing due diligence as it relates to evaluating the numerous choices available.

What is a franchise?

A franchise is a right legally granted to a group or individual which empowers them to represent a specific company’s products or services within a defined territory or location.  Companies leverage franchising to expand their market presence in an economic and expeditious manner.  Simply defined, a franchise is an opportunity that affords an individual the privilege to establish a company based upon previously developed concepts, processes, or ideas from another business entity.

Most experts recognize three basic types of franchises:

1. Business Concept: Business format franchises allow a franchisee to replicate a business concept under the franchisor name in order to merchandize and offer products and services.  (examples: McDonalds, UPS Stores, etc).
2. Distributorships: Distribution franchises are arrangements which provide the ability to market and sell other company’s  products.  (examples: Apple computers, Nike Shoes, etc)
3. Licensing: Brand name licensing provides the individual licensees the ability and right to utilize the parent company’s trademark in the operation of their own company.  (examples: NFL team logos, Elvis Presley photographs, etc)

There are thousands of franchises in the United States that span every conceivable industry and product.  For purposes of this article, we will be focusing on the ‘Business Concept’ franchise.

Definitions/Structure:

• Franchisor: The franchisor owns the overall rights and trademarks of the company and allows its franchisees to use these rights and trademarks in order to do business.
• Franchisee: The entrepreneur who acquires the right from the franchisor to use the company’s trademarks, sell proven and recognized products, or utilize an established business practice in a defined area or specific location.  The franchisee typically pays an initial fee in exchange for this right, in addition to a royalty that is typically paid on either a percentage of profits or as an annual expense.
• Franchise Consultant: Franchise Consultants provide an important service to individuals evaluating whether buying a franchise is the right path to take.  A competent consultant will help the individual understand the pros and cons of each opportunity including the fees involved.   Several of the more established franchise consultants will have a profiling and modeling process to assess the entrepreneur’s lifestyle and business goals whereby specific franchise recommendations can be made.
• Franchise Disclosure Document (FDD): The FDD will detail the contractual obligations, the royalty and fee schedule, geographic territory details, roles of the franchisee and franchisor, and any other legal terms related to the franchise.  In the United States, the FDD is governed by the Federal Trade Commission (FTC).  In addition to the federal regulations, 23 states have adopted their own requirements pertaining to the marketing and sales of franchises in addition to the distribution of the FDD.
• Franchise Agreement: The Franchise Agreement is the contract that details the responsibilities, obligations, and expectations of the franchisor and franchisee, in addition to the terms and conditions for the franchisee.  This is a legally binding contract and is signed by the entrepreneur when they have finalized the decision to acquire the franchise.
• Franchise Re-Sale: The alternative to buying a new franchise would be to acquire a franchise re-sale.  A franchise re-sale is essentially a franchise that has already been put into operation by another individual.  Typically, re-sales have a track record of verifiable earnings, management and staff already in place, and an established customer base.

There are considerable benefits to those individuals who pursue franchising as the path to small business ownership.  As with anything, there are drawbacks as well.  Detailed below is a summary of the advantages and disadvantages to acquiring a franchise.

Advantages:

•      Proven business model and product/service. Typically  a brand with market awareness

•       Marketing/Sales/Ops support

•       Quick start up

•       Training, professional guidance; Typically there exists a historical perspective

•       Continued consulting relationship

•       Access to other franchisees for help

•       Regulated by the FTC (Federal Trade Commission) = easy to evaluate franchise (FDD)

Disadvantages:

•       You have to follow the system to be successful – limited choices

•       Usually must meet mandated annual sales goals – not completely your own boss

•       You pay franchise fees and royalties in exchange for training and marketing support

•       Protected territories = operational boundaries

•       Binding contract

•       Franchisor’s problems are your problems

At any given time, there are many franchise re-sales available for purchase.  Acquiring an existing franchise in the secondary market is often the preferred path for many individuals.  A summary of the advantages and disadvantages of purchasing a franchise re-sale are as follows:

Advantages:

•     Existing cash flow & good will

•      Actual historical results

•      Attractive to funding/finance companies

•      Established location & customer base

•      Employees in place

•      Systems may be in place

•      Owner financing

Disadvantages:

•       Challenges in confirming actual cash flow

•       Business is over-valued (inflated by goodwill)

•       Hidden seller motives

•       Employee defection

•       Higher Debt Service

•       Poor training/support by the former owner (if part of the deal)

Acquiring a franchise that has a proven model of success can be one of the fastest and most economical methods to fulfilling the dream of owning a profitable business when compared to starting a business from scratch. There are thousands of franchises available and the research, investigation, and qualification process can be daunting, to say the least.

Leveraging a consultant with an established track record of success who possesses the tools, resources, core experience, and global network will help to demystify the complex variables associated with the due diligence process.  Assisting the entrepreneur to narrow the plethora of opportunities based upon individual lifestyle and financial requirements will enable the entrepreneur to smoothly travel the road to business ownership.

About the author
Michael Fekkes is a Certified Business Intermediary (CBI®) at ENLIGN Business Brokers

Tel. 910.691.2202 ● Email: mfekkes@enlign.com ● Web: www.enlign.com

Note from the Editor

Michael has a been a great contributor to this blog and I love Michael’s insights. There are times I agree with Michael and there are times I don’t.

What I like about Micheal in this article is he advises people to use a Franchise Consultant rather than go through the process alone. I think this is a very valuable tip for first timers. At times, there is a huge gap between what the franchisor says to what is actually the reality of the situation. You’ve got to be aware that there is a lot of sugar coating when it comes to franchise sales.

Personally, I am not a big fan of buying a franchise or even buying a franchise resale. Rather, I’d prefer to buy an existing business that is already profitable. Because when you buy an existing business you already have existing revenues and a proven system in place if the business is profitable. The upside is you can expand the business and you own the brand.

Whereas in a franchise you are building someone else’s brand NOT yours. To me a franchise is like buying yourself a job. Not to mention the upside is fairly limited. If you’d like to expand then you probably might need to buy an additional franchise in another region.

Having said all this, for some people and in certain situations a franchise might be the best option. All I am saying is evaluate other options like buying a business or starting a business from scratch before buying a franchise.

Regards,
Vinil Ramdev
Founder and Chief Editor, StartUpGrowthExpert.com

Image: Francesco Marino / FreeDigitalPhotos.net

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