Buying equipment

Posted on August 16th, 2007 in Hardware, Software, The Company by Marc Bourbonnais

Space Ace was asking a couple of weeks ago about the gear we will have to buy in our start-up. I won’t go in the details just yet since we are currently shopping around and going through sales quotes. A few things I can mention about financing and buying equipment:

Everything has to be in the business plan. Your business plan will go through the hands of bankers, investors and partners. They WILL check up on you. So if you forgot to put in those high-end ergonomic chairs, you’ll have to explain why you need to modify your initial budget for twenty 800$ chairs. Be realistic, right from the start. You’re better off with a high start-up cost than looking like someone that did not plan your business start-up properly.

Make sure you’re reasonable about the time you need to pay off your hardware. Accountants will try to write off your hardware in about five years. In this biz we all know our computers are obsolete after a year or two. You can stretch your early loans in five years, but think about the hardware you’ll have to upgrade or replace after two years.

You will not be able to rent hardware until you have good credit. Your corporation is a week old and you want to lease 20 high-end workstations? Good luck.

… but the good news is: Material goods are the easiest costs to finance. Since they are sizable assets, your creditors can take it back if you tank. (But you won’t!) Your interest rate will be lower because the risk is low.

Show you are flexible and your creditors will be happy. I’m not saying you should overshoot just to lower your costs, but if you have a backup plan or a step-by-step scheme for buying equipment, you’ll have a better chance at financing. Creditors like milestones and would rather give money in several amounts over a period of time. 



Taken from our business plan

Posted on July 20th, 2007 in The Company by Marc Bourbonnais

A colleague from Toronto was writing me today, inquiring about our future company’s philosophy. I wrote about our long term vision a while back, but his question was more along the lines of what services we want to offer and what is our strategy to differentiate ourselves from the crowd.

  • The Services

We demonstrated in our business plan the opportunities in Montreal for VFX work for motion pictures. With the experience my partners and I have, it was an obvious path to take and specifying a precise field of work simplifies the business plan. That being said, our first accepted bids are for TV commercials, so we won’t say no to a good prospect. We were lucky to have such opportunities so early that might help us get up and running fairly quickly, if our clients are able to close their deal. Time will tell.

I’m not saying we’ll grab whatever work comes our way, but if the timing is right and we can see eye to eye with the client (that’s what pitching is for) then why not? There’s a whole world of new media out there to explore.

  • The Difference

A group of experienced professionals setting up a big, long-term shop in any business will always attract attention. The “three guys in a garage” setup was considered, but it became clear very quickly that a lot of people were very interested in what we could offer. So we took the opposite route: a very big (but not expensive) open space. Already it’s turning quite a few heads. As soon as the lease is settled I’ll tell more about the place.

We also have an idea for an internal working structure for teamwork and specialized artists combined with a dynamic database for tasks and assets. We’re still polishing our presentation and it will be explained in a bit more detail when we’ll be confident enough in our product.



Milestone I

Posted on July 16th, 2007 in Entrepreneurship, CG Community, The Company by Marc Bourbonnais

Now that this blog has appeared on xsibase.com and that traffic has gone up 800%, (ahem, hi everyone!) perhaps I can step back and go through where we are at with the start-up.

  • We are three partners with close to 33% each in the company. There is Vincent Toussaint, myself and a third partner that will be announced soon, probably this week-end. We all have over 10 years experience in the CG / VFX industry and have known each other for a long time. Our skill and expertise are very different and best of all, very complementary.
  • It took us over four months to write our business plan from scratch. Re-writes are common in the last stages of financing, when every other day brings a new possible loan or investor. It’s a good thing we’re used to versioning in this business!
  • Two prospects are going well, with more along the way. We have a law firm, an accounting firm, a few government loans and just enough support from banks. We’re negotiating a long-term lease for a huge open space. Yes, incorporating the business name is taking a long time, but in a few days we’ll be officially in business.

 Here’s a few thing I’ve learned along the way:

  • As soon as you get some form of recognition (usually a loan or grant from some government official) everything starts to move very quickly. You get more people interested simply because someone gave a damn about your idea.
  • You absolutely need decent professional services (lawyers, accountants, management coaching) to calm down banks and investors. You have to shop around for people you’ll be paying close to 200 bucks an hour, so make sure they pay for the cappuccino the first time you meet them.
  • Everybody is happy to meet entrepreneurs that are not from a business background. If you can talk about your work with a spark in your eye, you’re in. Every time.
  • Visibility, contacts, network. Scream your project in the streets. Start a blog! People will eventually be interested in your idea eventually, but first they have to know about it.
  • Be patient. Be optimistic. You’re driving this thing and trying to get people onboard. Above all, stay focused. This is a very long journey, and you can’t catch your breath even for an instant.


Accounting

Posted on July 5th, 2007 in Entrepreneurship, The Company by Marc Bourbonnais

Another essential professional for a start-up : the accountant. This service can be split into two categories:

  1. Financial counseling and auditing;
  2. Day-to-day bookkeeping and payroll.

Banks and investors will absolutely need #1 to work with you. Of course, these top accountants can be pricey but as with lawyers, you get what you pay for. Because a good relation of trust and understanding has to be established, shopping around for an accounting firm involves talking about your business plan, goals and business philosophy. I’ve visited a few contenders and they are all competent, knowledgeable professionals. You just have to find the one that is genuinely interested by your start-up initiative. Choose wisely, as you’ll need this person for all sorts of financial counseling. Again, recommendations from your personal network are a must.

As soon as the Company will be incorporated, the accountant will take care of setting up the commercial bank account, tax numbers and bookkeeping structure. Which brings us to #2. A book-keeper can be hired for a day per week to get things started, if you don’t have a lot of employees. A lot of freelancers work this way with a limited number of firms, so it’s not difficult to find a good candidate.

Finding the best accountant took a few days and a lot of phone calls. Now if the incorporation can go through…



What my Business Plan Told me

Posted on June 7th, 2007 in Entrepreneurship by Marc Bourbonnais

About 150 hours of late night work spread over several months went into my business plan for a VFX shop start-up. At first I did not believe all the sources I was mentioning in my last post stating that it takes over 100 hours to have a decent written paper, but it’s true. My document is complete, except for the budget numbers that will get polished with the help of an accountant. It’s under 20 pages long, not counting the financial details. I’ve chopped off a good deal of fluff, like I would do on my résumé if I was applying for a job. It’s not a novel, and the people who have to read it usually go through a number of these every month. Better keep it short and to the point.

 The most tedious part of writing a business plan is finding enough data to support your claims about the market you are about to enter. After a bit of digging, I did find two nice tidbits that helped make a nice opening:

  • The U.S. Department of Labor predicts a 40% increase in the number of computer specialists and artists in digital effects for motion pictures between 2004 and 2014;
  • Statistics Canada reveals a 20% increase in the number of CG / VFX shops in Canada in 2005 after a few steady years.

 Your pitch goes a long way when you start with official numbers like that. I was glad to find these charts; I think they are pretty darn interesting. Add to that a few newspaper articles:

  • The state of the movie-making business in Montreal, especially with the end of the conflict between unions;
  • The huge video game industry boom in Montreal and Quebec City;
  • The new U.S. craze for digital projection and 3-D movies in theatres.

The document was revised after every official presentation. The good thing is that it was always well received; the better thing was getting great comments that helped me clean up the business plan event more. The secret is to be truthful and passionate. My audience always knew I was an experienced professional in my field but very, very new to enterprising. Trying to sound like a skilled business man would definitely fall flat. If you’re passionate enough (and you assure everyone you meet that you’ll hire accountants, lawyers and financial advisors to assist you) you just have to be yourself and everything will be fine. At the worst they simply tell you ‘no, thanks’, and that’s it.

 At the moment I’m preparing myself for a final round of hunting for funds through financial institutions (yikes). It will be a tough part, but with the work I have already done I am now backed by small investors and assistance from the Provincial and Federal governments. I can now sit in front of a banker without breaking a sweat.

Okay, my hands will shake a little.



Step 1 : Planning The Business Plan

Posted on June 6th, 2007 in Entrepreneurship by Marc Bourbonnais

One of the first steps in this undertaking was to write up a decent business plan. For those not accustomed to enterprising (which was my case a few months ago), it might sound like writing up a to-do list of some sort , but it’s much more than that. It’s the entrepreneur’s business card, and it’s the only way to meet bankers, government officials and business partners. There are tons of valuable information on the Internet regarding business plans, incidentally on banks and government sites. Other less formal websites about entrepreneurship are a gold mine of hints and advice. Here are some of my favorites, with some entries about business plans:

  • Seth Godin is also very popular in the blogsphere. He wrote many successful books on enterprising and holds a very slick blog about careers, entrepreneurship and marketing.
  • Businesspundit is written by Robert May and is shock full of interesting views about the corporate world. A bit heavy on the business jargon, but you’ll find great stuff to read.

With all this info and much more research I wrote a complete business plan for my start-up and it helped me get my foot in the door with financial organizations and potential partners. Even business opportunities that did not go all the way through turned out to be an excellent way to meet key players in financing, administration and even production. Next post I’ll go through some of the results.