# Thinking of starting a company



## theatre4jc (Mar 18, 2010)

So randomly today a friend of mine (and a guy I hire often for shows) asked me today...jokingly...about starting a production company together. Primarily lighting but full support in time. We both have been getting more and more consulting gigs lately and he didn't know this but it's something I've always wanted to do. Not wanting to try and be a major player but just a small company doing mostly church/school gigs. But I have no clue how to start or where to start. I know the whole developing a business plan and proposal and I would need investors or a hefty loan for initial startup costs but I was curious what you guys thought. Some of you own companies, others have been working in them for years. Is it worth it? I love load ins-outs. Running shows. 

Selling gear would be an interesting venture. I have a rounded enough knowledge base to pull off every aspect of the lighting side of it from rentals to small system designs and even installs (non electrical parts anyway). Just curious if the cost to profit ratios would even be worth considering this? 

For what it's worth, I live just north of ATL and there is a small player in this field not far from where I live and it's ran by a good friend, who I would compete against....


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## Anvilx (Mar 18, 2010)

check out this thread: http://www.controlbooth.com/forums/lighting/6604-pies-new-enterprise-thread.html

How will you individualize your self / what is your niche?


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## bishopthomas (Mar 18, 2010)

Anvilx said:


> check out this thread: http://www.controlbooth.com/forums/lighting/6604-pies-new-enterprise-thread.html
> 
> How will you individualize your self / what is your niche?



So, I read through that thread thinking, "Is the next post going to be the end of this business?" Finally I found that post and learned that his "business" only lasted a few months. So certainly do not model your business plan after this kid's...

Some questions to think about, in no particular order:
1. Why do you want to own a business? Is it for the money? Is it for the self satisfaction and/or ego? Is it because you work for someone now and think, "I can do that!"
2. Who is your target market, is there a need for your services, and what makes you think they'll hire you?
3. You'll need to start with some equipment. How much will you need and how much is it going to cost? Where will you get the money and if you don't have a single paying customer how will you pay it back?
4. What's your exit strategy? This is typically part of your business plan and outlines what steps you'll take if you decide that you just can't make it as a business (like most businesses within the first year).
5. You say you like the load ins/outs and working the shows. I think we all do, that's why we do it. But how do you feel about putting on a shirt and tie and knocking on doors of your intended customers? Most of your time will be spent as a salesman, not as a technician, so are you comfortable with that?
6. Finally, what are the benefits of owning your company over going to work for someone else? Sure you get to "be your own boss," but everyone has a boss, so don't think it's glamorous to be the decision-maker.

I have been legally established since January 07. Most of my living comes from freelance audio engineering, but in the last year (almost exactly) have been stepping up the lighting rental side of things. Finding work is the tough part for me as I am not a salesman. I am a technician attempting to play a business man on TV. As much as I like the perks of being self employed, if I found a full time staff job right now I would take it immediately.

There is no way any of us can tell you what is right for you, but think VERY hard about this before you jump into it, especially if borrowing money is involved.


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## SHARYNF (Mar 18, 2010)

This economic climate is certainly difficult for new businesses.

One of the problems with any business where the work depends on constantly procuring new business is like Bishopthomas said is getting the business. Since you are primarily working to provide the service, it is difficult top be prospecting and closing new deals. Also, a lot of tech orientated folks are not really very good sales men.

If you do go ahead with this, are you prepared to loose everything if all goes poorly, if you are borrowing money from friends relatives or financial institutions are you prepared to have the possibility of not having the business and still having the debt

if you are primarily doing consulting you you form a LLC for instance and keep doing that with a goal of putting aside so much money or having a monthly revenue stream of x dollars before you go any further. 

Sharyn


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## ajb (Mar 18, 2010)

What type of consulting are you doing? Assuming it's installs/events...

If you want to get your feet wet without a huge investment of capital, you could probably start by being more of a middle man between your clients and vendors. IE instead of telling a client 'go to Vendor A and purchase x, y, and z', tell them to buy x, y, and z from _you_. Of course you're just going to Vendor A on their behalf, and you can mark up the prices a bit for the convenience (plus, if you develop strong relationships with your vendors, you'll get better prices than the client will, so it can all balance out as far as they're concerned). Maybe x is a bunch of gel, y is a few adapters, and z is a couple of source fours; you can do this with whatever items are germane to your consulting business. You can structure your contracts however you want to limit your exposure, by for instance charging some portion of the bill upfront, and if there's a big job that's more than you're willing to shoulder as a financial middle man, you can revert to a pure consultant position. In the mean time, the small jobs should give you a taste of the types of accounting and cashflow issues that will be crucial to a successful business. As you grow, you can start carrying inventory (which introduces additional accounting factors). If you go this route for a while and can show success and growth at it, it will be easier to court investors and even banks down the line if they see that you've already got a good track record (financially and business-wise). 

But of course, the first step is to incorporate to protect yourself from personal liability (both financial and otherwise). There are several options here, you'll need to do some research and talk to an accountant to figure out what will be best for you. In fact, talk to an accountant anyway to be sure you understand all of the financial issues, and while you're at it, have a lawyer look over your standard contracts to be sure they meet muster and will hold up in court if a job comes to that. Once you incorporate, you need to be very careful about mixing personal and business money. If you cross the streams too much or in the wrong ways, you can wind up *personally* on the hook for business debts.


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## jfleenor (Mar 18, 2010)

My knowledge in actual lighting is limited, as I went to University for a Business degree... but in this thread I hope that I might be able to assist to some degree. 

Before beginning any new business, large project, etc... we were taught to always do something similar to a Feasibility Study. In essence, it allows you to take a step back, gather ALL the facts [not just the parts that make you want to jump into this business], and then decide if your new venture makes economical, legal, and common sense.

You mentioned a friend of yours would be your competitor. Is he your only one? Many times we assume that there are only a few people out there who would compete with us. However, we fail to take into account other, less common, competitors. For example, is there a theatre/college/university in the area which has a decent theatre? They churn out new graduates on a yearly basis, increasing your competition. On the other hand, you may be able to rope them in and add their new knowledge to your business. It's all in how you spin it.

On the other hand, how about the churches who already have a self-anointed LD? They may not feel that they need to pay for your services, when they already have someone who is fulfilling their lighting needs for free. This is where marketing, of yourself and your equipment, will come into play. 

Questions like these are what you'll want to think about. Eyes Wide Open is always a good way to enter a new market. Who knows? If you do a quick, detached, look at your surroundings, you may find a much more lucrative area that hasn't been addressed in your community.

I may have a suggestion/idea/whatever you'd like to call it. It looks like you have a university near you, Kennesaw State University? I might suggest contacting the professors in charge of the *Venture Analysis* [MGT 4122], and/or *Entrepreneurship & Creativity* classes [MGT 4121], and find out if they include Business Plan formation. If so, they may be looking for local businesses to use as a case study in their class. [Link to their Business School's website.]

Good luck! I look forward to watching your business grow.

[/end soapbox]


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## Pie4Weebl (Mar 18, 2010)

bishopthomas said:


> So, I read through that thread thinking, "Is the next post going to be the end of this business?" Finally I found that post and learned that his "business" only lasted a few months. So certainly do not model your business plan after this kid's...



Blow me, I sold the company when I found better opportunities and made a nice profit off the sale. 

I will admit it was more of an on the side kind of deal, to get my feet wet. But in the end I made a profit and that is all that counts.

That being said as the old joke goes, how do you make a million dollar production company? Start with two million.

Also, AJB has the best advice so far in this thread, selling gear is the natural extension to consulting, and doesn't carry the overhead of having to own gear.


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## jonliles (Mar 18, 2010)

All jokes aside, I've been buying lighting gear for years. Granted, it is mostly older tech and absolutley no ML's, but for small community jobs, it fills the bill. I'm only a few miles away from you. I am in the process of downsizing my inventory. Wanna chat?


theatre4jc said:


> So randomly today a friend of mine (and a guy I hire often for shows) asked me today...jokingly...about starting a production company together. Primarily lighting but full support in time. We both have been getting more and more consulting gigs lately and he didn't know this but it's something I've always wanted to do. Not wanting to try and be a major player but just a small company doing mostly church/school gigs. But I have no clue how to start or where to start. I know the whole developing a business plan and proposal and I would need investors or a hefty loan for initial startup costs but I was curious what you guys thought. Some of you own companies, others have been working in them for years. Is it worth it? I love load ins-outs. Running shows.
> 
> Selling gear would be an interesting venture. I have a rounded enough knowledge base to pull off every aspect of the lighting side of it from rentals to small system designs and even installs (non electrical parts anyway). Just curious if the cost to profit ratios would even be worth considering this?
> 
> For what it's worth, I live just north of ATL and there is a small player in this field not far from where I live and it's ran by a good friend, who I would compete against....


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## SHARYNF (Mar 19, 2010)

Just keep in mind as soon as you try to tie consultant with selling something the perception on the part of the client is that your objectivity is lost.

Sharyn


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## Kelite (Mar 19, 2010)

It's pretty cool that each response has been from a unique perspective, each person in a somewhat different time/position of their lives. 

A trusted friend (and former co-worker) and I chose to take the plunge by starting our own sub-S corp. Each of us had worked for years with successful tool & die shops, reaching the 'glass ceiling' of advancement within our respective shops. When asked his advice of my hanging a shingle, the shop owner sat me down and discussed the many pros and cons of 'being your own boss' (and the fact that EVERYONE becomes your boss when you begin a business.) He was very helpful and even offered me one of his house accounts that was taking more time than was available.

Our young business grew with substantial cash and time investments and we borrowed a bit to purchase our only new piece of CNC equipment to accompany the used machines. We had several part time employees to alleviate the 70-80 hours per week each of us worked. This schedule showed no sign of slowing either...

When my lovely wife let me know our second daughter was on the way, something absolutely had to change. My family was certainly more important than owning a business and living there 7 days a week. (Amazing how reality slaps you in the face when those two words "I'm pregnant" are spoken!) I was able to negotiate an exit strategy from our company with my business partner. Not an easy manuever, and probably the most stressful time of my life. (His too!)

Fortunately, it turned out as a win-win. The tool & die shop has expanded, purchased another company and has 25 full time employees. I too have been blessed to work for a most incredible company, Apollo Design Technology, and recently celebrated 13 years of satisfying service. 

Sorry for the boring 'when I was a kid' story, just remain mindful of the time required by a new business. Like a new baby in the family, constant, patient, and loving attention *must* be given for that business to grow. Loads of your time _WILL BE_ required, plain and simple.

You may consider speaking with a few small-business owners from various markets in your community. Their hard-earned insight will be worth its weight in gold. Really!

Whether or not you decide to go on your own, the mental exercise will be healthy and will increase your appreciation of other businesses and their owners. 

As the adage states- "He who fails to plan, plans to fail"


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## museav (Mar 28, 2010)

You seem to not have a real focus, you mention everything from a production company to selling gear to designing and installing. Trying to be everything is probably a bit much for a small, start-up. For example, being a dealer for reputable brands may get into minimum commitments or credit history or issues with existing dealers in the area, it is not always a matter of being able to be a dealer just because you want to.

What would set you apart from other competitors? Do you have any existing history or contacts that might draw in some initial work? Have you considered any of the potential legal, accounting and tax issues? Things like that many potential opportunities may not be feasible if you do not carry appropriate insurance, aren't a properly licensed business, aren't registered with the state purchasing agencies, etc.

I know that the Small Business Administration has an office out at KSU and they may be able to help. KSU also offers some continuing ed classes that might be useful.


Pie4Weebl said:


> Also, AJB has the best advice so far in this thread, selling gear is the natural extension to consulting, and doesn't carry the overhead of having to own gear.


Actually, I disagree quite a bit and believe that selling gear is potentially more a conflict with than a natural extension of consulting. A consultant is supposed to be protecting the Client's interests, when the consultant is potentially providing and even profiting from the related equipment and/or installation sales there is almost inherently a conflict of interest. If nothing else, any such potential conflict of interest should be clearly identified to the Client.


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## bishopthomas (Mar 30, 2010)

After the past few days that I've had, I will have to agree that selling gear is a mistake. I think it makes sense for a large company that can employ a sales team, but for a small one man operation it is more of a hassle than it is worth. Everyone is trying to get the best possible price and you are either forced to not make the sale or not make enough money to justify your time. Also, people want things to magically appear on their doorstep I Dream of Genie style. I'm constantly getting people saying, "We're finally ready to make the purchase but we need it here tomorrow." This sometimes is MONTHS after my initial quote, sometimes based on B stock items (which they are aware), and may not even be available any more. Finally, finding time to take care of all this mess during business hours (and keeping in mind time zone differences) while also doing production work every day is almost impossible. Between prepping the gear, loading the trucks, driving to the gig, setting up, running, and loading out the show it's hard to find time to call your suppliers and customers.

I think a small company should choose one aspect to excel at and stick to that. I am learning that the hard way and am considering dropping my dealerships and "sales department" because I can't put the effort into it that is required. And the amount of effort, in my opinion, just isn't worth the small amount of money. Anyway, off to make the phone calls I was saying I don't have time for...


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