How To Start Your Editing Business

Recently, I’ve been writing blogs about the challenges to editing as a career:

• Can You Still Have a Career in Editing
• Thoughts on the Ten-Worst College Majors

But there is always room for one more creative person in our craft, so I wrote this for someone thinking of turning their editing skills into a career.

The first step is NOT to buy a ton of gear – in fact, don’t buy anything, yet. The first step is to think about your career as a business. And that is what this blog is about.

OVERVIEW

A business has three equally important components:

• Production, that which you create that others want to buy
• Sales and Marketing, which connects customers with your products
• Finance and Administration, which tracks the money, people, and resources in a company.

Almost all of us are good in one of these areas. Many of us are good in two of them. Almost no one is good in all three. Because each of these areas requires significantly different personalities and skill sets.

What happens far too often is that a business is created by someone who understands one of these components really well, but doesn’t understand the other two and, hence, ignores them. This is sad, because many great ideas have died because the entrepreneur starting them didn’t take the time to get themselves started right.

Whether you are a freelance or plan to start your own post-production company, these steps will get you started in the right direction.

NOTE: Books have been written about each of these areas. Think of this blog more as a detailed checklist.

INITIAL ADVICE

If you are just graduating from college, I would strongly suggest you work somewhere for a year before you decide to start your own company. This work experience will be invaluable, not in teaching you more about what you already know, but in teaching you what you DON’T know. This is especially true in areas of accounting, legal issues, HR, taxes, customer service, and processes.

FIRST STEP – LEARN THE MARKET AND DEFINE YOUR BUSINESS

RULE #1: The difference between a hobbyist and a professional is not the work, it’s that the professional expects to get paid for their work.

A business requires clients to grow. Spend time thinking about who your likely clients/customers will be. Find out who is likely to spend money hiring you.

The best way to do this is to invite a potential customer to lunch to talk one-on-one with you. This is NOT a sales pitch, it is an informational meeting for you to learn about them and what they are interested in.

Sample questions to ask:

• I’m thinking of starting a business doing [“insert your skill here”], would this be of interest to you?
• How are you doing what I propose to do now?
• What is working for you with your current vendors?
• What is not working for you with your current vendors?
• What would you most like to improve?
• If I could do anything, what would be most helpful to you?
• What do you feel are your biggest challenges in your business?
• What type of jobs do you want to do in-house and what jobs are you willing to give to outsiders?
• What kind of deadlines do you have?
• Who needs to sign off on the work?
• What files, formats or products do you need created (i.e. final deliverables)?
• What skills do you value the most?
• What skills are less valuable to you?
• Assuming I could do the job to your satisfaction, how much would you pay?

Use this opportunity to learn what potential clients are really interested in. Make a point to NEVER ask for work, always ask for information. The sales pitch will come later, in a different meeting. For now, your task is to talk to as many potential clients as you can to learn about the market and their needs.

In these conversations you’ll discover where the market for your services really is, how much they are likely to pay, how fast you need to work, and what you need to do to be successful. In almost all cases, what you expect the market needs and what you learn the market actually needs will not be the same thing.

Armed with this basic information, you can define what you want your business to be.

• What can you do that will generate money?
• How much money are you likely to make? (Then, to be realistic, cut that estimate in half)
• Can you do this on your own, or you’ll need to hire people? (In almost all cases, you will need to hire additional help, so plan on that.)
• What kinds of gear, facilities, and people will you need to create the products your customers will buy?

At this point, filled with good information, realistic revenue estimates, and a sense of what you need to do to be successful, you can decide whether it makes sense to actually start a company — even if this is a self-employed company of one.

NOTE: I’ve started three companies in my life. It took me five years into my third company before I finally figured out how important this basic market research is. I would have started my company anyway, but I would have been much more prepared for the work involved, with better expectations of how long it would take to be successful.

SECOND STEP – BECOME A BUSINESS

RULE #2: Working for free does not pay the rent.

You want to start a business. That means generating revenue and staying alive for the long-term. There’s a reason most businesses fail within five years. The owner created a company without actually starting a business.

Your business has the potential to last long after you are dead. Create a name that you will be comfortable with when you are ten years older. What seems cool to someone who is 22 seems pretentious and awkward to someone who is 35.

Incorporate. Yes, it costs money. But there’s a reason every major company in America is not someone doing business under an assumed name. I started my company as a DBA (“Doing Business As”) to see if there was a market. As soon as I saw we could make money, I incorporated, using a lawyer. Yes, it cost more, but in 15 years I haven’t had any legal problems.

Also, register as a business with the state. Yeah, its cool to fly under the radar, but, when you start to grow, it gets harder and harder to hide. It is FAR easier to jump thru the hoops, pay the fees, and put the power of the law on your side. Having a Business License makes it a whole lot easier to sleep at night, or when a major corporation asks to see references before hiring you for a gig, or when a bank asks to see incorporation papers before granting you a loan.

This means, as you are getting started, you also need to find:

• A lawyer for on-going legal advice.
• A CPA for your taxes
• An accountant to make sure your financial books are accurate
• A bank, because at some point, you are going to need to borrow money

You can’t afford to hire any of these people, but they are rentable. You need access to what they know. So find them and follow their advice in getting the financial and legal side of your business in order.

You want to look for them when you DON’T have a problem, so they can learn about you and your business to help you when you DO have a problem.

THIRD STEP – TRACK THE BUSINESS

RULE #3: Never bid solely on price. There will always be someone willing to work more cheaply than you. (See Rule 2)

The part of the business that most creative people have the hardest time with is finance, accounting and administration. This is why the world invented accountants, office managers, and payroll companies. The smartest thing I ever did, when my company was two years old, was hire an office manager. Eight years later, she is still with me and indispensable to our entire group.

When we were three years old, I hired a part-time bookkeeper to come in every week and keep our accounting books clean and neat. He’s still with us, too.

I have never figured out payroll.  The one thing I never want to do is screw up someone’s paycheck. As soon as I hired my first employee, I also signed up for a payroll service (PayChex). Another really, really smart decision.

When I first started out, I invested in a multi-user accounting system (MYOB) so that I would not need to replace my accounting as the company got bigger. We are continuing to grow and we have not begun to outgrow our accounting software.

The industry-standard for billing is 50% up front and 50% when the client approves the final work. On longer, or bigger jobs, you can work out a form of in-progress billing.) This means you need to track who owes you money, how much they owe you, and when it is due on a daily basis.

The KEY is to think about this stuff before it becomes a crisis. You can always change or modify a policy. You can always create new policies. But it is hard to come up with something coherent when fingers are pointing and voices are raised.

FOURTH STEP – MARKET THE BUSINESS

RULE #4: Buying gear is easy. Finding clients is hard.

Without clients, you don’t have a business. If you don’t like marketing yourself, partner with someone who does! Without marketing, you don’t have a business.

In my business, I’ve found it is best to partner with a marketing person, so I can concentrate on running the company and creating cool new products, while they can concentrate on making us famous.

Marketing is the process of connecting clients with your business and convincing them to pick up the phone to call to learn more.  YOU, and your skills, are the person that closes the sale. Marketing finds potential clients and delivers them to your doorstep ready for closing.

More than anything else, your company is defined by your website. Don’t make this fancier than it needs to be, unless you are selling web services.

Always build a website that you can maintain. Unless you are getting paid to do webwork, don’t invent a website that requires your full-time efforts, because if you do, you will constantly need to choose between earning money and updating the website. Regardless of which you choose, you’ve made a bad choice.

Your second most powerful marketing tool is your business cards. These need to be readable by people with bad eyesight. They need to include a phone number and an email address. AND they need to include a 3-6 word phrase that describes what your company does.

NOTE: On my business cards it says: “Helping editors find work, improve skills, and keep clients happy.” That’s what I do. And every time a client reads my business card, they know it too.

A demo reel is the next necessary item. It needs to be short, less than 3 minutes. Clients will only watch the first 30-45 seconds, so make the music dramatic, and put your best work up front. Demo reels don’t need to tell a story, they simply reassure the client that you have done the kind of work they need done before. Demo reels won’t get you the job, but they can prevent you from getting a job.

Tchotchkes (yes, I had to look up the spelling) are those freebies you keep swiping at trade shows. They are cool to create and give away. They won’t earn you a dime.

Now that you’ve got the goods, its time to find clients. Every client you will ever work with is already working with someone else. You need to think about what you have that is unique or special so that once clients learn about it, they will demand to work with you. Until you figure out what makes you special, and can explain it clearly and easily to potential clients, you won’t get any work.

NOTE: “Special” never means the cheapest price. There will always be a college kid willing to work for free. You are running a business, not a charity.

FIFTH STEP – HIRE PEOPLE

RULE #5: 50% of your job is people skills. 30% is creating stories from the material you are given. 20% is technology.

You can’t do everything and grow. You CAN do everything and stay small. If growth is your target, finding good people is the key. The people you hire for your team will determine the success of your company.

• Hire people who know what you don’t know
• Hire people a bit different from you
• Hire people who fit with your personality

Most important, don’t be afraid to hire someone who is smarter than you are. Smart people are great people to learn from. And you will always be learning.

You don’t need to hire everyone at the beginning. Hire people as you need them. But plan from the beginning whether you will be hiring people, because the answer to this changes your thinking.

SIXTH STEP – SETUP SYSTEMS AND PAPERWORK

RULE #6: Within reason, never buy gear in anticipation of getting work. Get the work first.

The secret to successful editing is organization. Get organized at the start of a project and stay organized throughout. This is one of those truisms that newbies nod their heads and ignore. Until they are at deadline on a major project and can’t find the stupid logo that they need to finish that stupid, high-budget project.

After you’ve gone through that agony once, you become a believer. Organization is everything.

Organization is also everything in your business. Shoeboxes filled with paper make for great stories, but miserable companies.

• What is your workflow?
• What is the process when a new client is signed?
• What is the process for final delivery and invoicing?
• Who is responsible for collecting on outstanding debts?
• What’s the procedure if a client is unhappy?

The more you turn work into a workflow, so that everyone in the company knows the procedure, the less time you spend chasing problems; because the problems don’t start in the first place. Think about and develop policies to answer common questions:

• Create a standard contract, never do work without putting it in writing
• Create a standard warranty for your work, and put it in writing
• Create policies that describe how you will handle client changes
• Create policies that define how you will handle refunds
• Create policies that define customer service and follow-up
• Figure out the standard rates you will charge for your work
• Determine how often and how much you bill for a job

Every day when I get into the office, I ask: “Do we have any crises?” It is SO reassuring when the answer is consistently, “No.”

My second question is always: “Are we making any money?” And it is even MORE reassuring when that answer is: “Yes.”

SEVENTH STEP – BUY GEAR AND GET TO WORK

RULE #7: Always buy gear with client dollars.

Buying gear is fun and exciting – and, if you don’t have clients, it will drive you into bankruptcy. When a client says they want to work with you, signs your work agreement, and hands you a check for 50% of your charges, it will take you exactly 2 nanoseconds to order all the gear you need for the project.

Get the money FIRST, then spend it on gear.

After that, the fun starts.

SUMMARY

Once you’ve spent the time thinking through your business, you’ll be surprised at how smoothly things run on a daily basis. Because you’ve covered the basics, you can shift out of “fire-fighting” mode, and into “creating cool work” mode.

Because we took the time to think about the stuff we really don’t want to do and put the people and systems in place to handle it, we can now concentrate on what we love to do.

There is no rule that says you have to do everything yourself. If you take the time to assemble the right team, working creatively is just incredibly fun.

And profitable.

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As always, I’m interested in your comments — especially here. Tell me what your biggest discoveries were in starting a business. What would you have done differently? What worked?

Feel free to share these thoughts with others – its taken me a long time to figure them out for myself.

Larry

P.S. A couple of years ago, I created a set of three training videos that goes into this in a lot more detail. They are the three most popular videos I’ve ever published. You can learn more here:

• Grow Your Business
• Market Your Business
• Prospecting and Sales for Your Business

Technology changes, but the basics of running a business don’t. These can help.

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