Knowing how much to spend on advertising is a struggle all businesses deal with – especially during a recession. When economic times are lean, the gut reaction is to jettison all the weight you deem “unnecessary,” batten down the hatches, huddle together with your staff, and pray for daylight. In the long run, however, how will that strategy help your business? Sure, you may weather the storm, but when you come out safe on the other side, you may find that your competitors have taken a huge lead in the marketplace. How come? Because while you were hiding in your office, they were still out there in front of the public, maintaining their visibility.

A.G. Lafley, former CEO of Procter & Gamble, said, “I think it’s more essential to innovate through a recession, and certainly what we are trying to do at P&G is to continue to bring sustaining and even disruptive new brands and products for our consumers, to make their lives better, to offer them a little more value.”

Professor Andrew J. Razeghi of Kellogg School of Management at Northwestern University said, “Moments of economic turbulence provide the unique opportunity to start new businesses, launch disruptive new products, and strengthen customer loyalty – often at a discount.” Razeghi has a great presentation entitled, “Innovating Through Recession.” You can read it in its entirety here.

Or consider this statistic from a McGraw Hill study that surveyed over 600 businesses: In the 1981-1982 recession, businesses that cut advertising spending, increased their sales 19%. Businesses that continued to spend on advertising increased their sales 275%.

The key difference between those who continued to spend money on advertising and those who didn’t is visibility. Businesses who continued to advertise were in a better position once the recession ended. They were in the forefront of the customer’s mind when he/she was ready to buy. Make the word “visibility” your motto this year. Get out in front of your customers. Advertise. Market your business. Strive to be the first company people think of when they are ready to buy.

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Grab the Market While the Competition Makes Cuts

Based on the lessons I’ve learned by running a business, I have written several articles on this blog pertaining to entrepreneurship. Earlier this year I wrote an article providing tips on what you need to have in your contract before starting any job. As I looked back over that list, I realized that I missed something very important. What happens if your client decides to pull the plug before the project is finished?

“No problem,” you say, “my client paid me a deposit up front.” That may be true, but a deposit usually only covers certain up-front creative costs. Let’s say the time you have invested into a particular project now exceeds the amount of the deposit. Let’s assume that you are well into phase two, when all of a sudden, the project is put on hold. Your client becomes unresponsive. When he/she does finally return your calls, he/she says that the company has been forced to table the project. So, how do you recoup the cost of your time up to that point?

Since this has happened to me before, I now insert a clause into each of my contracts which says something like, “Should Client terminate the project before its completion, Client is responsible for paying Company all unpaid costs incurred in the production of this video up to the date of termination.” By inserting this sentence, I can cover myself in case my client decides to shelve the video project before it’s complete. The wording of your contract ultimately might be a bit different from mine, but the point is to make sure that you get paid for your time.

Running a successful business (whether you are a sole proprietor, small business, or freelancer) depends a lot on exposure. Visibility is incredibly important, because when a company is in the market for your services, you want to be the first vendor on the call list. Sometimes, when you are first starting out, gaining exposure means conducting business trade-offs. For example, you might shoot some photos for a local publication in exchange for ad space. You might design posters, ads, etc. for a local event in exchange for sponsorship recognition. Nothing is wrong with this approach, but it’s important to be very selective for whom you do these trade offs. If you aren’t careful, you will find that you are spending a lot of time and creative energy for little in return. Sometimes the exposure pays off. Sometimes it doesn’t. The trick is to learn how to find those trade-off opportunities that will maximize your publicity. You also want to be aware of those groups, businesses, non-profits, etc. that are only interested in how many “freebies” they can get out of you. Doing favors is fine. Donating your creative talents to a worthy charity is fine. But ultimately, you have to pay the bills and you have to make a profit. So it’s important to strike a healthy balance between the two.

In the past, I have been asked to produce video content for various non-profits. Many times, these non-profits have little or no money allocated for video. I try to help out when and where I can, and I have learned that if you are willing to make special arrangements for them, then they are willing to negotiate with you, so that both parties can benefit. For example, a few years ago I did some video production work for a non-profit. I was willing to do the job pro bono, hoping to gain some exposure among local businesses. Last year, the same non-profit came to me with two video projects in mind – First, they needed a promotional video for an annual fundraiser. Second, they were interested in producing some PSAs. I worked out a deal with them that I would produce the promotional video for free and in exchange they would pay me my normal production rates for the PSAs. It was a deal that benefited both my business and the non-profit.

I would encourage all of you to be charitable, but I would also encourage all of you to be business savvy as well.

I’ve been drafting contracts recently for some new projects, and it got me thinking not only about the importance of having a contract, but the value in having the right content written up in your contract. You need to make sure that your contract covers any possible variable, so that if conflicts arise, you and your business will be covered. Of course, knowing exactly what to include can be difficult. After all, we that work in the production industry are creative folks, so the administrative tasks of running a business can be a challenge. Based on my experiences, here are a few guidelines on drafting a contract.

1. Describe the scope of the project. This may sound like a no-brainer, but it’s very important. You need to make sure that both you and your client are clear on the project as a whole. What is this video for? What are the goals? What will the video hope to achieve?
2. Based on the scope of the project, define the specific services you will perform so that the project responsibilities are fulfilled. Make sure you spell out exactly what you will be doing over the course of the production. Also spell out what you need from your client. Sometimes, in order to complete a video, I need my clients to provide me with still images, company logos, backgrounds, fonts, etc. In any contract, both parties should be clear on what their individual responsibilities are.
3. Specify the video project’s budget. Verbage is important here. Don’t say, “the budget for the video production services described herein are estimated at…” Never estimate in your contract. Be specific. Just write in what the budget will be.
4. Specify how much time you will be investing in the video. Every budget I draft is based on a number of factors, including the amount of time I plan on spending in pre-production, production, and post-production. Place these figures in your contract somewhere. It can read something like this, “The above budget includes X hours of pre-production, X hours of production, and X hours in post-production.  Should Client request changes to the project and Company’s time exceeds the budgeted time, Client agrees to pay Company its standard rate of X in order to complete the changes.” This particular clause covers you in case you get into production and your client starts making a lot of unexpected changes. If you aren’t covered in this way, you may find that you’re spending a lot of extra time on the video and not getting paid for it.
5. Define the payment schedule. I always ask my clients for a deposit before I start work on any video project. This money helps to offset initial time invested in the pre-production phase. I also make sure to specify in my contracts that deposits paid are non-refundable. This covers me in the event that a client pulls the plug on the video. In addition to the deposit, you need to specify project milestones at which time additional payments are due. For example, I usually ask my clients for a second payment after the video shoot, with final payment due after the video is approved.
6. Insert a clause to cover late payments. To help my cash flow, all of my invoices are net-15. However, net-30 is more realistic. Clients will often push that to net-45 or even net-60. To ensure that you receive payment from your clients in a timely fashion, insert a clause indicating that a late fee will be applied to any balance that is more than 30 days overdue. This will protect you in case your client is negligent about making payments.
7. Specify the delivery date. Make sure both parties understand when project milestones are supposed to take place, including delivery of the final video. Now, look back to #3 on this list. It’s important to remind the client (within the context of the contract) that any delay on their part in getting necessary materials to you will delay the completion of the video. You don’t want to be locked in to a deadline on the 10th of the month when you’re in your office on the 8th still waiting for your client to send photos, logos, fonts, etc.
8. Be sure to retain certain rights to the video. Every video completed is an addition to your demo reel that can possibly help you land the next job. So, in your contracts, specify that you retain the right to use the final video for display, publication, exhibition, awards, etc. for your own promotional purposes. I have never had a client that had a problem with this and it grants me the permission to show my work to other potential clients.

Working in video production as an independent professional or business owner can be a trial-and-error existence. Mistakes will be made and hopefully, lessons will be learned. The way I write my contracts is based on my experiences as a professional producer/director and business owner. Hopefully, these insights will help you in your own ventures.

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Any entrepreneur will tell you that adaptation is an integral part of a successful business. Companies have to study the marketplace. They have to watch and listen, and be willing to evolve as technologies, trends, opinions, and public tastes change.

2010 marks Parc Entertainment’s seventh year in business, and during that time we have been able to work with a variety of clients on some great projects. To date, we have branded ourselves as a video production and post-production facility. But we realize that today’s media is more integrated than it was just a few years ago. Video is now a big part of a company’s web presence. Clients that come to us for video production services often ask about web design and development. And web designers are often asked about video production. They each go hand-in-hand.

As marketing content becomes increasingly connected, we realize that clients need compelling and visually stunning content. They need a production facility that can engage, inspire, and entertain an audience. That’s where we come in. In an effort to give our clients what they are looking for, Parc Entertainment will soon be Red Fox Media. In addition to our video production and post-production services, we now offer full website design, development, and SEO for our clients. By February 1, 2010 we hope to launch our new identity and we encourage you to send us an email, call, or stop by our offices so we can discuss how our production services can benefit your business.

To see some of the website projects we have already completed, you can click on any of the following links:

Southern Fastening Systems

Industrial Health Council

Shelby Academy