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!

Specifying the Use of Surface Protection Products on Historic Interiors During Construction

Projects involving historic interiors range from the meticulous restoration of a classic movie theatre to renovations of abandoned lofts for new residences. The size of the building, significance of the interiors, and scope of work will determine how best to protect interior finishes during construction work. All work involving historic buildings, however, shares the need to properly plan for and specify appropriate temporary surface protection products. Without such provisions, unnecessary damage can result which will require additional funds and can lead to complete loss of certain interior finishes. Relying on the contractor to protect interiors without specifying such surface protection puts historic material and finishes at unnecessary risk. Protective measures must be specified in the construction specifications for the job. Although general contract language may make reference to “protecting existing construction” and may require that the contractor “restore any damage to its original condition at no additional cost” the general nature of the language affords little protection to existing historic finishes or features. Rather than provide adequate protection, some contractors deliberately elect to repair damage, believing it is cheaper. Therefore the best practice for historic interiors involves specifying protection of all historic architectural features and finishes using temporary surface protection products.

An important difference between protecting historic interior features and finishes and protecting new interior features and finishes during construction is in the timing of the construction schedule. In new work, finishes such as cabinetry and flooring are installed late in the construction schedule, after mechanical and electrical systems and other high impact work are completed, thus not exposing the finishes to major construction operations. In preservation work, however, existing interior finishes are exposed to all the high impact and potentially damaging construction phases of the project. Important architectural features which are easily removed should be stored off site, if possible, to protect them from vandalism, theft and damage during construction. Lighting fixtures, fireplace mantels, and interior doors are typical examples. Access by construction personnel to spaces with significant features and finishes should be restricted, except for their work relating directly to the preservation of such spaces. Spaces with restricted access should be identified by the planning team and indicated in the construction documents in order to allow the contractor to include any associated costs in his price proposal. For spaces such as halls and lobbies, it may not be practicable to limit access, and for all interior spaces, some construction work may be required. In such circumstances, interior finishes must be physically isolated from construction operations by means of protective barriers and coverings such as the Zipwall Systems. Such surfaces are generally limited to flooring, walls up to approximately 6 foot height, and special construction such as staircases. Flooring should be protected from damage caused by abrasion, falling objects and there are a variety of floor protection products available from companies that specialize in surface protection.

Temporary protection during construction can involve covering historic features, such as floors and walls, as well as using temporary doors to control the passage of workers and the inevitable dust and dirt. Prominently located fire extinguishers are mandatory. Where protection from spilled liquids is required, a layer of water resistant surface protection should be used. In projects where electrical systems are being upgraded the use of fire rated protection should be used. Care should be taken in choosing the appropriate floor protection to ensure that moisture from spilled liquids is not trapped against the historic flooring or that newly installed or repaired flooring can breathe. Care should also be taken to avoid coverings such as rosin paper, could potentially stain the historic flooring. Historic stairways, balustrades, balconies, fireplaces, door surrounds, window surrounds, and other components will also need to be protected from construction damage. There are a variety of surface protection products on the market including Swiftwrap handrail protection, Ram Jamb door jamb protection, DoorGuard temporary door protection and others. It makes sense to contact a surface protection expert in order to choose the best temporary protection for the project.

Specifying temporary protection of historic interiors during construction is the responsibility of both the architect and contractor. Most general conditions of a construction contract contain language such as: “The Contractor shall be solely responsible for and have control over construction means, methods, techniques, sequences and procedures and for coordinating all portions of the work. For preservation projects, it is recommended that temporary protection of historic interiors during construction be specified in a separate Division 1 specification section to ensure that required provisions are not overlooked by bidders. By creating a separate section in a price proposal, the bidder will be inclined to treat the “special project procedures” as an added cost rather than a part of the temporary facilities required for any alteration project. The contractor’s project manager can thus anticipate making reasonable expenditures for providing specified temporary surface protection during construction. To ensure the adequacy of temporary protection measures in projects involving a construction manager, temporary protection is often best provided by the construction manager, who normally works for the owner on a cost-plus-fee basis. Temporary surface protection should generally be specified as to the product name, type and company where products are available.

Conditions prior to commencement of construction should be photographically documented by the contractor. For small projects, a videotape survey may also be an effective supplement to existing conditions photographs. The owner may wish to document existing conditions independent of the contractor in order to avoid any future dispute regarding damage caused by construction operations as opposed to pre-existing damage. Temporary protection of historic interiors during construction, an essential component of any preservation project, is largely a construction management issue. A successful protection program is the result of careful pre-planning, thorough project specific specifications, owner vigilance, contract enforcement, and contractor diligence. Cost savings can be realized by minimizing damage to the historic structure in the course of construction work and the proper use of temporary surface protection products.

Is the General Aviation Industry Finally on an Upswing?

Over the past three decades, there’s been a steady decline in the number of U.S. pilots. According to the Aircraft Owners and Pilots Association (AOPA), there were 827,000 active, certificated pilots in 1980. By 2011, that number had dropped to just 617,000. During that same 30-year period, production of single-engine planes dropped from 14,000 per year to fewer than 700.

But for the past three years, AOPA has made understanding this declining trend and reversing it a top priority. AOPA actions include developing a network of flying clubs, and speaking out in Washington to help keep the rising cost and complexity of aviation under control.

Thankfully, 2013 numbers are indicating a positive upswing, based on data from the General Aviation Manufacturers Association’s (GAMA) 2013 General Aviation Statistical Databook & 2014 Industry Outlook.

Here’s a look at what’s been causing the pilot and production decline, and good news from GAMA’s 2013/2014 aviation industry report.

What’s been causing the decline?

According to a Washington Post article posted February 9 titled, “Small aviation businesses say pilot shortage could drive industry into the ground,” there are a variety of factors that have contributed to the decline in pilots and production over the past decades, including rising fuel prices and heightened flying restrictions following the Sept. 11, 2001, attacks.

One reason is that the recent economic downturn has left fewer people with discretionary income. Others place much of the blame on federal regulators, whom they accuse of making it too difficult for pilots to obtain and renew their licenses, which in turn hurts small aviation businesses and the aviation industry as a whole.

Many commercial pilots come from the GA pilot pool, and the global airline industry will need almost a half million new commercial airline pilots over the next 20 years, according to the Boeing Pilot and Technical Market Outlook for 2013-2032.

Good news from GAMA’s 2013/2014 industry report

Here are some positive numbers from GAMA’s annual statistical databook.

Airplane shipments and billings – In 2013, airplane shipments increased by 4.3 percent to 2,256 airplane deliveries, and billings increased 24 percent to $23.4 billion across all airplane types. This is the second-highest industry billing number ever recorded-the industry’s peak billings occurred in 2008 at $24.8 billion.

Business jets – After slowing the past four years, the business jet market stabilized in 2013. There were 678 business jets delivered in 2013, up from 672 in 2012. Several new models and increasing demand helped stabilize the market and increase deliveries.

North American market share rose to 52.4 percent from 49.7 percent in 2012. Europe’s market share declined, however, from 20.8 percent in 2012 to 15.6 percent in 2013. Customer deliveries included 11.9 percent to customers in the Asia-Pacific region, 11.1 percent to Latin America, and 9.0 percent to the Middle East and Africa.

Turboprops – Turbo-propeller plane shipments also grew in 2013, increasing to 645 shipments from 584 shipments in 2012, a 10.4 percent increase. Shipments of agricultural turboprops, which GAMA began tracking in 2011, remained strong. Traditional single- and twin-engine turboprop shipments provided year-over-year increases in unit deliveries. North American customers took 57.1 percent of turboprop airplane deliveries in 2013, up from 48.6 percent in 2012. The Asia Pacific region took the second-largest market share at 14 percent, followed by Latin American at 13.2 percent. European customers took delivery of 10.5 percent, and the Middle East and Africa accounted for 5.3 percent.

Turbine helicopters – The turbine helicopter segment provided positive delivery performance in 2013 based on analysis of equivalent companies from 2012. GAMA identified 782 turbine helicopter shipments in 2013, which is an increase of 9.2 percent compared to the prior year for the same reporting companies. In this year’s databook, GAMA has expanded the available historical data about helicopter shipments with select information from 1999 through 2013.

Piston airplane and helicopter deliveries – Feedback from airplane and helicopter manufacturers indicates that global demand from flight schools is contributing to year-over-year growth. Piston airplane deliveries totaled 933 shipments in 2013, up from 908 shipments in 2012, a 2.8 percent increase. North America ordered 52.8 percent of piston engine airplanes, Europe 17.2 percent, followed by the Asia-Pacific region at 15.1 percent, Latin America at 10 percent, and the Middle East and Africa at 5 percent of shipments. In 2013, the general aviation industry delivered 335 piston-powered helicopters, which was a slight increase from the 328 units delivered in 2012.

Turbine operators – According to JETNET, LLC, the fractional fleet of turbine operators fell to 869 aircraft in 2013, decreasing each year since 2008, the year it peaked at 1,094 aircraft. There were 4,365 fractional owners in 2013, which is also down compared to five years ago, when there were 5,179 owners. The worldwide turbine airplane fleet included 33,861 airplanes in 2013 and an additional 19,509 turbine helicopters.

Pilot population falling – The active U.S. pilot population continues to fall. The private pilot population has declined since the early 1980s, when it peaked at 357,479 pilots, and in recent years has lost between 5,000 and 10,000 active pilots each year. There were only 180,214 private pilots at the end of 2013, and a total of 599,086 total active pilots in the U.S. in 2013. One bright spot: 40,621, or 6.78 percent, were female-the highest ratio of female aviators on record.

Signs safety is improving – A welcome decrease: The FAA’s preliminary data about general aviation safety shows there were approximately 216 fatal accidents during the year, a double-digit decline in the number of fatal general aviation accidents during 2013. While data is preliminary, the FAA’s goal of reducing the GA fatal accident rate to one fatal accident per 100,000 hours flown may be possible to achieve by 2018.

GAMA also includes GA safety data developed by the European Aviation Safety Agency (EASA) for 2006 through 2012. EASA statistics from 2012 also show a decline in the total number of accidents and the number of fatal accidents.

References:

http://www.aopa.org/Community-and-Events/Center-to-Advance-the-Pilot-Community

http://www.washingtonpost.com/business/on-small-business/small-aviation-businesses-say-pilot-shortage-could-drive-industry-into-the-ground/2014/02/08/2422cadc-8f5c-11e3-b46a-5a3d0d2130da_story.html

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?