You’ve got a great idea for a video project or business, so the next step would seem to be finding some funding to supplement what you can put into the project from savings. Before you do that, though, you need to create a budget that addresses how much additional capital you’ll need and where that money will go. Financiers, whether they come in the form of big banks or your aunt Daisy, always want something in return, usually money. If it is money, your first task is to lay out all the projected costs and returns. If you haven’t done so yet, create a business plan. Don’t forget to factor in potential problems. There will be problems.
Peer to Peer Financing
Now for the potential sources. While it’s still relatively new and thus might not spring immediately to mind, crowdsourcing is a great fit for a video producer. Just in case you weren’t aware, crowd sourcing targets a large group of people with something in common and asks for a small amount of money from each individual in return for something related to the project such as a commemorative t-shirt. This source of funding comes from people attuned to technology, so tech companies or projects with a technological focus dovetail with their interests. For more on this, see The Legal Dos and Don’ts of Crowdfunding and Crowdfunding Success and Failure from a Producer’s Perspective.
Considering more than one source of funding is also always a good idea. Some sources are literally close to home: friends and family. Some pros to this source are you already have their trust (or you probably wouldn’t bother asking), they care about you and want you to succeed, and you won’t have to fill out endless forms. Some cons are you may lose their trust if your project fails, and they may take it very personally. Thanksgiving will mean you’re carved up along with the turkey. They may also feel even more right to tell you what to do because now you’re financially indebted to them as well. Think carefully about the potential problems here.
Considering more than one source of funding is also always a good idea
Larger Funding Sources
Venture capital sources, while difficult to secure, offer a great alternative, one that doesn’t involve straining relations with family and friends. Venture capitalists might be individuals or entities, but they have two things in common. One, they already have wealth. Two, they want more wealth. They take chances, or ventures, for potentially high future returns. They’ll want assurance your project will make money, so you must know this. Be able to articulate your reasons for expecting success. Another thing they expect is, often, some say in the project or business. Their money is at stake, so they really do have a vested interest. Make sure you know what they’ll expect and how involved in your business they’ll be and then get it in writing. You probably don’t want to give up your vision just to get something out there.
The government, while potentially maddening in their requirements for loan applications, at least probably won’t show up in the middle of a shoot. The Small Business Administration (SBA) not only offers loans, but all sorts of other help as well. Not sure of how to write a business plan? They can guide you with free information. Be aware the initial processing fees for loans may be higher.
Traditional lending sources are always a possibility. Local banks and credit unions may be more amenable to your project since they are invested in growing the local economy. Whether small and local or having a nationally recognized name, here’s where that business plan will serve you well: these sources are all about the bottom line and making sure you pay the loan back. They can also be quite conservative, so your credit history, both business and personal, are important, but so is your reputation. Past indiscretions of all kinds can hurt you here. You may need to put up collateral or get a cosigner (such as a business partner). Make sure you get a business loan and keep your business and personal finances strictly separate. Using such funding for personal expenses can constitute fraud.
A few more to avoid
- One: Using credit cards to fund start-up costs. The interest rate is too high and can quickly and easily use up any profits.
- Two: The wrong investors, those who don’t share your vision or want to take over your project or business. Remember, it’s yours.
- Three: Putting up collateral you can’t afford to lose. Failure is always possible, so don’t jeopardize your home or transportation or retirement funds. You don’t want to live with those relatives who are still mad at you.
- Four: Lying to investors. Not ok. Not wise. Just don’t do it.
Getting financing may seem daunting, but just remember, once you’ve got it in place, the fun part can start: putting your dream into reality.
Jackie Howland is a retired college English instructor who fills her time with creative writing, bird watching, and gardening.
