But they’re unlikely to do so again after the many problems arise (which they always do) and perhaps render their hard work practically and commercially unusable. Neglecting contracts and business formalities may prevent getting investors for your film, or may cause a host of other problems that mean a film cannot get interest or distribution.

What follows is a brief list of a few critical “what and why” business details that filmmakers must do, from the outset, to minimize obstacles to a film or project’s success.

1.  Form a Production Company through which the film must be made. Why?

First, that will be the legal entity into which development/investment money is deposited. Why not take money/investments personally? Because of the second primary reason – liability. Liability in film development and production can come from multiple angles – from the U.S. Securities and Exchange Commission for taking investments without the proper paperwork (a “prospectus” or “private placement memorandum” – VERY different from a “business plan”), or from an accident involving the cast or crew on set, or to a bystander not part of the cast or crew (think a lighting element falling onto a passerby), or to the production “losing” funds needed to pay cast and crew.

This “parade of horribles” isn’t fiction – it happens all the time. And if it happens without the legal protection of an LLC or similar legally separate production company, the legal liability will likely fall personally on the producers and those heading up the project, and potentially onto the investors – meaning that personal assets will be responsible for whatever harm or legal claims.

The third reason is that the legal entity will be the “person” (a legal “person” under the law) that contracts with all those involved in the film – from the producer(s), directors, cast and crew, transportation, catering, etc. If anything goes sideways with these contracts, it is the legal person that is held accountable instead of the actual persons heading up and investing in the project.

2. Get a contract with the writer(s) for the legal acquisition of the script or story –a literary acquisition agreement (a/k/a an “option/purchase” agreement). Failure to do this means that the production does not have formal rights to the intellectual property it is making – meaning the writer/creator may have the ability to withdraw his material and prevent the production from doing anything commercial with footage already shot. So it is critical that this be accomplished before any production – or even development – takes place.

Think that you are “friends with the writer” and you’re therefore “in this together?” Are you willing to bet the entire project and all your hard work on that assumption? What is it that they say when you “ass-u-me” something?

Creative partnerships crumble all the time. Without a written agreement in place from the VERY beginning, the entire project is at risk.

3. Investments – get lawyer drafted investment documents. Or risk having to refund all investments, fines, jail time, and lawsuits by the investors themselves.

Under the SEC and state securities rules, if you have taken someone’s money and have given them an expectation of a “return” on that money, you’ve probably sold a “security.”

Yes, even selling shares of your little film may well constitute a “security” in the eyes of the federal and state governments. That doesn’t mean you can’t take such investments. But it does mean that if you do so without following the proper legal requirements, you may have to give back ALL of the money taken for the project (yes, all investments – not just the one that the gov’ment found out about), and it may mean fines or even jail time.

And independent of those terrible consequences, failing to have the right legal language in investment documents leaves the production open to lawsuits by the investors if they become dissatisfied with… all sorts of things – how you’ve spent the money, how long it has taken to get a return on the money, the size of the return (or lack thereof).

Proper investment documents are as much for the protection of the film and filmmakers as they are for the protection of the investors.

4.  Production contracts – use them – ALWAYS. Without exception!   Like it or not, a film is a business.  Even the “auteur,” if he hopes to continue making filmic masterpieces, cannot ignore the business realities that filmmaking is expensive (even in this digital age), it takes money, and money rarely comes to one who does not handle it in a businesslike manner.

So even first effort indie films are a business – a proving ground to show that you can handle the business, artistic and technical demands of being a filmmaker.  And as such there are contracts that MUST be used in the work of this business; contracts that clearly state who owns what, who has rights to what, profit/interest divisions, etc. The who, what, when, where, why (perhaps) and how much regarding the business transactions involved: the script/story option purchase agreement, cast and crew agreements, talent/interviewee release agreements, name and likeness releases, licensing agreements for use of the intellectual property of others (music, photographs, products, film or video clips (no – YouTube does not mean it’s in the public domain)), location agreements, craft services contracts, transportation agreements, insurance (workers comp, liability, errors and omissions, defamation protection), sponsorship and product placement agreements, distribution (foreign and domestic) agreements, appropriate trademark registrations, and the list goes on and on and on.

Listen to Jonathan’s original score to “The Employer” here, or go to Jonathan’s website, http://jonathanhartman.net. Also featured are many of Jonathan’s previous scoring projects and musical works.

1. All Corporations, Companies, Partnerships or other legal entities registered with a state’s Secretary of State need to file their “Annual Report” for the new year.  These “Annual Reports” update company/entity information with the Secretary of State’s office, including any changes in ownership or membership, any changes of address or status (active to inactive, etc.), changes of business type, or other relevant changes.

More than anything, the Annual Report is a mandatory requirement that keeps a company’s legal status “current” and in compliance with state law, therefore preserving the liability limitations that corporate/company registration bestowed.

And it’s the states’ opportunity to get a small fee every year.

Failure to file the Annual Report will result in the Company being “Not In Good Standing,” or some similar term, and could mean the loss of the limited liability protection, loss of the company’s ability to sue in the state of registration, or other unpleasant consequences.

2. Schedule and give notice of your “Annual Meeting.”  This is a requirement of most “organization” documents for most corporate entities, and therefore failure to do so jeopardizes the existence and protections of the entity.

3. Renew local and/or state business licenses, authorizations, etc.

4. Consider upcoming leases or other business decisions approaching in the year. What do you need to do now to prepare for that event?

• Give specific notice of cancellation of any contracts or arrangements (many of which may require 30 days or other notice?

• Consider other space and rents in anticipation for a lease negotiation, renewal or cancellation?

• Consider expansion to new or larger space?

• Service contract renewals, renegotiations or finding new (and possibly better) providers?

• Etc.

5. Pay city, state, federal or other taxes?

6. Franchise fees or other subscriptions due for renewal?

7. Adjustments to insurance coverages?

These are just some of the many considerations that should be visited in January, in anticipation of decisions and requirements throughout the year.

Small steps now can make the rest of the year smoother, more productive and more profitable, and will allow the corporate entity to maintain the important legal protections that shield owners from liability or other business perils.

Please contact me for a more comprehensive list of annual corporate “to do’s.”

I would be pleased to assist in any of your company or other legal or business needs.

“The state currently offers motion-picture productions a 30-percent transferable credit on total in-state expenditures, with no cap and a minimum-spending requirement of $300,000. For productions using in-state labor, Louisiana offers an additional 5-percent labor-tax credit on the payroll of employed residents. Louisiana is currently nine to ten crews deep, a nearly 400 percent increase since 2002.”

I’ve heard it said in many, many corners that a significant difference between bringing a production to Louisiana versus other states is that Louisiana has established crew and studios, so the production doesn’t have to bring EVERYBODY to make the shoot happen, just the key crew and talent.

As I am still licensed in Louisiana and California (and 2 other States), I can assist productions in LA and L.A. !

Read the full article HERE.

http://www.amazon.com/A-Guy-Called-Dad/dp/B005Z5CP8A/ref=sr_1_1?ie=UTF8&qid=1321910355&sr=8-1

“A Guy Called Dad” provides an intimate look at schizophrenia through Kacey’s experience with her schizophrenic Father.

But they’re unlikely to do so again after the many problems arise (which they always do) and perhaps render their hard work practically and commercially unusable. Neglecting contracts and business formalities may prevent getting investors for your film, or may cause a host of other problems that mean a film cannot get interest or distribution.

What follows is a brief list of a few critical “what and why” business details that filmmakers must do, from the outset, to minimize obstacles to a film or project’s success.

1.  Form a Production Company through which the film must be made. Why?

First, that will be the legal entity into which development/investment money is deposited. Why not take money/investments personally? Because of the second primary reason – liability. Liability in film development and production can come from multiple angles – from the U.S. Securities and Exchange Commission for taking investments without the proper paperwork (a “prospectus” or “private placement memorandum” – VERY different from a “business plan”), or from an accident involving the cast or crew on set, or to a bystander not part of the cast or crew (think a lighting element falling onto a passerby), or to the production “losing” funds needed to pay cast and crew.

This “parade of horribles” isn’t fiction – it happens all the time. And if it happens without the legal protection of an LLC or similar legally separate production company, the legal liability will likely fall personally on the producers and those heading up the project, and potentially onto the investors – meaning that personal assets will be responsible for whatever harm or legal claims.

The third reason is that the legal entity will be the “person” (a legal “person” under the law) that contracts with all those involved in the film – from the producer(s), directors, cast and crew, transportation, catering, etc. If anything goes sideways with these contracts, it is the legal person that is held accountable instead of the actual persons heading up and investing in the project.

2. Get a contract with the writer(s) for the legal acquisition of the script or story –a literary acquisition agreement (a/k/a an “option/purchase” agreement). Failure to do this means that the production does not have formal rights to the intellectual property it is making – meaning the writer/creator may have the ability to withdraw his material and prevent the production from doing anything commercial with footage already shot. So it is critical that this be accomplished before any production – or even development – takes place.

Think that you are “friends with the writer” and you’re therefore “in this together?” Are you willing to bet the entire project and all your hard work on that assumption? What is it that they say when you “ass-u-me” something?

Creative partnerships crumble all the time. Without a written agreement in place from the VERY beginning, the entire project is at risk.

3. Investments – get lawyer drafted investment documents. Or risk having to refund all investments, fines, jail time, and lawsuits by the investors themselves.

Under the SEC and state securities rules, if you have taken someone’s money and have given them an expectation of a “return” on that money, you’ve probably sold a “security.”

Yes, even selling shares of your little film may well constitute a “security” in the eyes of the federal and state governments. That doesn’t mean you can’t take such investments. But it does mean that if you do so without following the proper legal requirements, you may have to give back ALL of the money taken for the project (yes, all investments – not just the one that the gov’ment found out about), and it may mean fines or even jail time.

And independent of those terrible consequences, failing to have the right legal language in investment documents leaves the production open to lawsuits by the investors if they become dissatisfied with… all sorts of things – how you’ve spent the money, how long it has taken to get a return on the money, the size of the return (or lack thereof).

Proper investment documents are as much for the protection of the film and filmmakers as they are for the protection of the investors.

4.  Production contracts – use them – ALWAYS. Without exception!   Like it or not, a film is a business.  Even the “auteur,” if he hopes to continue making filmic masterpieces, cannot ignore the business realities that filmmaking is expensive (even in this digital age), it takes money, and money rarely comes to one who does not handle it in a businesslike manner.

So even first effort indie films are a business – a proving ground to show that you can handle the business, artistic and technical demands of being a filmmaker.  And as such there are contracts that MUST be used in the work of this business; contracts that clearly state who owns what, who has rights to what, profit/interest divisions, etc. The who, what, when, where, why (perhaps) and how much regarding the business transactions involved: the script/story option purchase agreement, cast and crew agreements, talent/interviewee release agreements, name and likeness releases, licensing agreements for use of the intellectual property of others (music, photographs, products, film or video clips (no – YouTube does not mean it’s in the public domain)), location agreements, craft services contracts, transportation agreements, insurance (workers comp, liability, errors and omissions, defamation protection), sponsorship and product placement agreements, distribution (foreign and domestic) agreements, appropriate trademark registrations, and the list goes on and on and on.

Here is a video of Mike Monteiro of Mule Designs, and his lawyer, sharing their experience – advice I’ve given to countless creative and business professionals.

Come on out and join us on the Universal Studios Backlot.

http://www.scriptwritersnetwork.org/event20110813.html

Universal Studios Backlot
Rehearsal Hall 3269
Universal City, CA 91608
Any questions, email the Scriptwriters Network at universal@scriptwritersnetwork.org.

That transition into a “going concern” is incredibly difficult for many reasons, not the least of which is the difficulty many entrepreneurs find in demanding value for their skill, service or idea. Too often entrepreneurs treat their “it”, whatever it may be, not as a business, but as the uncompensated passion from which the “it” evolved.

In doing so, they hold themselves back – they stifle their own growth into a going concern.

Here are a few common pitfalls to avoid.

After reading these suggestions you can push back from these difficulties with a simple phrase – “I wish I could do that, but my lawyer says I can’t.” (Feel free to substitute “business manager”, “accountant” or “soothsayer” if it helps get the message across).  Somehow blaming the bad news on a trusted advisor makes the refusal more palatable to them that’s hearing it.

1. Do not give “it” away – whatever “it” is.        Whether you are producing a widget, selling a thing-a-ma-jig, or building a client base,  it always seems that the intended customer wants it, initially, for free. Beware – and resist this as much as possible.  Admittedly this may be the most difficult of these pitfalls to avoid. Every entrepreneur has to “give away” some of their time, advice, know how, product, samples, skills, etc., to prove to the world that they have something of value that should be paid for. Granted.

But as the old country wisdom goes, “why buy the cow if the milk’s for free?”

Resist the give-away. If what you are offering has value, require that its value be recognized. If a “free sample” has to be given, fine. Just keep it to a minimum, and be clear in your communication that very quickly the value must be recognized – and paid.

Anyone that expects otherwise is unreasonable – and should be passed by quickly and without regret.

2. Confirm that value in a clear writing – always.     Early entrepreneurs often find it difficult insisting that an agreement be put in writing. They often feel that insisting on a writing shows distrust of the opposite party, and therefore may sour the new relationship.

That is looking at a written agreement from the wrong end.  First and foremost, forming a written agreement is a process that makes the parties focus on the details of their intended arrangement – clarifies the deal and the details of the deal – so as to avoid misunderstandings later.  Simply going through the process of discussing and committing to writing what each party intends will help avoid future misunderstandings and mistakes.

Focus on the who, what, when, where, why (sometimes), and how of the transaction.  How will the performance unfold – multiple stages, milestones and approvals leading to the next stage? How will payment unfold – 1, 2, 3 or more installments as performance goes forward?

If you’re finding it difficult to put your understanding in writing, it may be that the transaction is unclear. But it must be. Otherwise the situation is an invitation to problems, disagreement and miscommunication – i.e. disappointment and mistrust by one or all.

3. Beware “friend” pricing .     Much of an entrepreneur’s early success may come from friends, family or acquaintances  - and that’s great and necessary.  But with that comes the danger of giving a price or terms that are, frankly, unfair and unsustainable.

For example, quoting a price for a service that – without the friend even having requested a discount – is steeply discounted from the standard price. The person giving the quote just negotiated against himself because of the “guilt” of giving the friend a “standard” (and presumably fair) price – for example, quoting a $25,000 job for say, $18,000 – a $7,000 discount off the top – as a sort of favor. Albeit one that wasn’t even requested.

Try to think of that “friend discount” this way. What is the value of what you have to offer? And therefore, what is the discount off of the “standard” rate? (here $7,000).

Independent of this transaction, if you were to go to that friend and say, “Friend, would you do me the favor of giving me $7,000? Please? As a gift?” What would the answer most likely be?

But in underpricing the actual value of what you have to offer, you have volunteered to do exactly that.

I’m not suggesting you do not provide “friend” pricing – just be well aware of what you are doing when you do it. Make the decision consciously, and without the cloud of guilt merely because the potential new customer is a friend.

When they come to you as a customer or client, their role has shifted, and your judgment must shift to treating yourself and your business fairly.

4.  Where is the business plan?     Many new business owners dismiss the need for a business plan until someone demands one – a bank or potential investor.

That is certainly understandable. Business plans are tedious and time consuming to put together. No fun. And many people do not have a clear understanding of what a business plan is.

But more dauntingly, business plans require the fledgling business to focus on many scary and nebulous concepts: is there a demand for what I’m offering, is it enough of a demand on which to base a business (in other words, “what is my market”), what are my costs, my expenses, overhead, and therefore profits, and over a one, two, three or longer timeline (in other words, “projected profits/losses”), who are my competitors and can they respond to my presence, how much capital do I need, and how long before I am profitable, and therefore, can I last that long, etc.

But much like the process of forming a written agreement, one of the most beneficial functions of a business plan is in forcing the business to focus on all of the relevant factors. On what must be done, and known, to continue in business – and hopefully move to profitability.

These pitfalls are applicable to businesses and entertainment professionals alike.

The simple fact is that one must treat “it” like a business to become a professional.

Image by Linda Nowakowski via Flickr

Special thanks to Kimberly Reid, of the “Connect with Kimberly Reid” Radio Show (listen live). Kimberly’s radio show focuses Monday through Friday on Relationships, life balance, wellness, money/career, and spirit.

She very kindly had me on to talk about action items for entrepreneurs and business owners. (Listen to the show).

I very much enjoyed our interview and hope my suggestions were useful for entrepreneurs and business owners.

Here is the list of action items I went through, a few great book recommendations, and a few related hyperlinks for business owners, entrepreneurs and those who aspire to be.
***

1. Know your business – Draft a professional, full and complete Business Plan

What is your business? Specifically – can you describe it in a 30 second elevator speach?

What is your product, and  why are you different from / better than what is already out there?

How will you stand out from what is already out there?

Who is your client?

How will you get to her?

How will she know about / get to you?

You can’t be vague. You can’t be “hopeful” – You must KNOW!

Identify: Expected (and realistic) costs, expected (and realistic) revenues, projected growth – from day 1 to 5 years out.

Will anything change within the : week, month, year?

How will you price your service/ product? Break it down into individual parts – costs? Profits?

Competitors? Can your competitors respond to your model – and hurt you?

Blockbuster versus Netflix !! When Netflix first launched, Blockbuster laughed at the business model. Now years later, Blockbuster is in bankruptcy and Netflix is thriving and beginning to move into original content.  But had Blockbuster focused on Netflix early on, it could have crushed Netflix at their own business model. Still the competition, or potential competition must be considered in forming your business plan.

No competitors? Why Not?  Either you’re a genius or there isn’t an OBVIOUS need or demand.

If you do everything according to your plan – WILL YOU MAKE A PROFIT ??

WHEN?

HOW MUCH?

PROVE IT – on paper.

EXIT – What is your exit strategy – whether you’re fantastically successful or not – what’s your exit strategy?  Sell? When?  How will you get there – map it out.  Retire there?  When?  What growth has happened until then – map it out.

2.            Start Forming Your Team !

Analyze your weaknesses. You’ll need to supplement with the skill sets of others to compensate. But ignore your weaknesses at your peril.

What are your strengths?  Play to those.

Your team may include:

Web Designer

Accountant

Book keeper

Business Lawyer (like yours truly)

Insurance Person

Banking relationships

Shipping & Delivery relationships

Suppliers

-       domestic versus overseas

Designer / engineers

Artists

Equipment suppliers

Consumable suppliers – paper goods, etc.

Food suppliers

There’s a ton of homework to be done on each of these areas, so start much earlier then you think you need to. The more you research, the more you will learn. You will find competitive advantages and learn of new obstacles. The earlier you find these the better!

3.            Strategize the Name

Research for same / similar names –

Domain Name

Internet

Secretary of State

U.S. Trademark Office

Think 6 months into your business – will this name still be relevant?  One year? Six years?

Think “evolution” of your business model – will this name and branding still work, or will you have to “reinvent” for the evolved business.

Reinvention – restarting requires resources, time, energy, distraction – try to get it right the first time.

4.            Register the Name

- Domain Name

- Secretary of State’s Office

- U.S. Trademark Office

**Don’t use the name until you know it’s clear AND you’ve claimed it as your own!

5.            Form LLC or other Corporate entity.

Liability protection – an LLC or Corporate entity is absolutely necessary for a myriad of reasons.

Entity through which you do business.

Contracts will be in the name of the LLC or Corporate entity.

Hiring and Firing will be done by the LLC or Corporate entity, not you personally.

6.            Scout your location

Consider the balance of expense v. location. Out of the way = cheaper  >>> but also means less visible. How does that affect your customer/client flow.

7.            Get necessary Insurance(s).

8.            Market Yourself ! And your business.

Business Cards – Don’t Leave Home without them

Social Media – never before have you been able to do so much FOR FREE !!

Networking – IT’S NOT AN EVENT ACROSS TOWN. IT’S EVERY DAY, 24 -7.

Get a Contact Management System – it may be as simple as the free Google Contacts tool.  But whatever you use should assist you in collecting important contacts, and aide you in following up with people you’ve met. Especially with people with whom you’ve had a connection.

8.            Transition from “Founder” to “Owner” – “Manager”

Doing it all yourself may have gotten you where you are, but as your business grows you will have to delegate more to others. At a certain point doing it all yourself will hold your business back, rather than propel it forward.

Prepare for the transition from “Founder” to “Owner-Manager.”

- hire passionate people

- design the business’ culture so it focuses on the things that made you successful (See “Delivering Happiness,” noted below).

BEST OF LUCK WITH ALL YOUR ENDEAVORS!

Gano Lemoine

www.lemoinefirm.com

Book Recommendations:

Linchpin, by Seth Godin (ON BEING INDESPENSABLE)

Make a Name for Yourself: 8 Steps Every Woman Needs to Create a Personal Brand Strategy for Success, Robin Fisher Roffer

Drive, Daniel Pink (ON MOTIVATION – OF YOURSELF AND OTHERS)

Value-Based Fees, Alan Weiss

Delivering Happiness, Tony Hsieh (DEDICATION – PERSERVERANCE)

MISCELLANEOUS – The Four Hour Workweek, Timothy Ferris (take what is applicable and useful)

Related articles

• Analysis of a Business Plan (thinkup.waldenu.edu)
• How Netflix Bankrupted And Destroyed Blockbuster [INFOGRAPHIC] (NFLX) (businessinsider.com)