Finance for Video Production

The ease and speed with which high-quality video can be uploaded to online platforms to reach constantly connected global audiences makes it a vital tool for brands, corporations and individuals.

This has created a massive market for video production. Videos for corporate homepages, product videos for retailers and manufacturers, internal communications or training content, case studies, event videos, conferences, webinars – as well as weddings and large family events – all represent potential markets for video production companies.

Simply owning a camera and some editing software might be enough to allow you to create video, but setting up a real production business will demand a great deal more.

Depending on the kind of videos you wish to produce, your video company might need:

• Cameras - professional standard 4K/UHD
• Range of lenses - macro, tele and zoom
• Tripod, Steadicam or shoulder mount
• Camera lights
• Lighting rig - a basic 3 point rig is essential for indoor shots
• Microphones - boom, shotgun and wireless
• Audio recorder
• Cables and batteries
• Quadcopter drone - vital for aerial shots
• Editing suite hardware and software - Final Cut Pro is an industry standard for video editing

Your business will also need the usual IT with software for billing and, for most types of shooting, a vehicle will be essential.

Having quality equipment is essential, but it is only part of what is required to set up a video production company. Running a business in a competitive sector will require investment in marketing and a website, and may require cash support to stay in business while you build a reputation and a client list.

At Rangewell, we understand the challenges of the video industry, and can help you find the solutions you need to overcome them.

Understanding your funding options

There are many forms of commercial finance. You may need to find the right type of funding option to allow you to:

• Acquire equipment and assets
• Acquire premises
• Set up a new video production business
• Provide working capital
• Finance growth
• Deal with tax

Funding your equipment

You will need the full range of conventional office equipment as well as a professional quality camera, audio and editing equipment. An entire video studio can be run using one high-powered computer with desktop video production, but you should still expect to invest a minimum of £15,000 for professional commercial quality video.

Asset Finance - Hire Purchase and Leasing - can help make virtually any type of equipment you need affordable. Asset Finance works by making the equipment or ‘asset’, the security for the funding that pays for it. This means that if you were unable to repay, the lender could simply repossess it. This reduces the risk to the lender and consequently the cost to you.

There are several types of Asset Funding:

Hire Purchase

Hire Purchase lets you spread the cost of buying the equipment you will use for the long term.  Arrangements generally last between 6 and 60 months. You pay a deposit plus fixed monthly instalments for the agreed term, after which the assets become yours. At Rangewell, we can often help set up HP agreements that undercut those of equipment suppliers, or which let you take advantage of the lower costs of pre-owned equipment.

Hire Purchase may be appropriate for basic items such as lighting equipment that can give long service, although it can also provide a cost-effective way to acquire items such as cameras.

Leases

Finance and Operating Leases work like rental agreements and let you spread the cost of equipment with no upfront payment. This type of finance could be the best option for equipment which will have a limited life. You can simply return it to the finance house at the end of the lease, leaving you free to update to the latest technology.

This may be particularly appropriate for systems used in your editing suite, where the pace of technological change is rapid, and where increased power and speed can make a real contribution to your productivity.

Contract Hire

Contract Hire can be the most cost-effective way to provide vehicles. A van may be necessary if you need to transport equipment for location shoots.

Funding for premises

Your business will need premises. An office will be essential, and you may also need studio, editing and technical space.

Even a serviced office or studio suite will require an upfront payment. If you want to move straight into your own office complex, you will also have additional costs, including power and business rates to budget for.

We can provide Premises Finance for all your studio or premises need.

Renting may be unavoidable in the early days. However, renting premises restricts what you can do with your space, and means ongoing costs, and puts your business at risk of rent increases. Buying premises with a commercial mortgage could be a sound investment, allowing you to build a studio as well as providing a valuable asset for your business.

Find out more about a Commercial Mortgage.

Funding a new video production business

You will need to think about how you will structure your business. A limited company or a partnership may be the most appropriate foundation for the future. The costs involved for incorporation are minimal.

But however you structure your business, there will be some unavoidable costs too:  

• Staff costs. You may be able to launch a business with just yourself and a partner, by calling in freelance specialists as required. However, you will soon probably need permanent staff for reception and administration. Your staff will need to be paid even when clients are slow in paying you.
• Marketing and Website. Securing your business’ name with a domain (such as .co. or .biz)  will be vital to help potential customers find you. Registering a suitable name may cost only a few pounds, but if you need to buy a name that is already registered, you may need to negotiate with its registered owner. Setting up your website and promoting it through social media will be another essential investment. You might expect to spend £5000 to create even a simple website that is ready to present your services.
• Overheads. Your video business will also have a number of overheads, from business rates to insurance.

The total costs of all these essentials will depend on your circumstances and your business model, but you must have the funding for them until your business finds its audience and revenue stream.

Funding for start-ups can be difficult for many lenders to provide. However, if you have a sound business plan and experience within the sector at Rangewell we know lenders who may be able to advance the funds you need with a Start-up Loan, or a Secured or Unsecured loan.

Secured Loans are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your home, or your business premises. They can be used to borrow large sums of money, of £250,000 or more. These may be appropriate for many of the large costs you will encounter in the early stages of establishing your business.

Unsecured Loans can be suitable for smaller sums, from £5000 upwards, although some lenders will not let you borrow more than one month’s turnover with an unsecured loan.  

It may also be possible to buy an existing video production business - whether as a partner buy-in or a complete buyout. It could offer an established revenue stream and a proven business model, and although the costs may appear greater than starting up, it may be easier for lenders to provide the sums you need.

It may be possible to do this with ‘jigsaw’ funding. This is a bespoke finance package, made up of a number of loan types, such as a commercial mortgage for the premises, with other loans to cover goodwill, and asset finance for your equipment.

Find out more about funding for buy-ins and buyouts.

We can also help with a number of specialised financial solutions which can help provide funding once your business is established:

Working Capital Finance

Working Capital Finance can help you stay afloat and pay staff and suppliers during the early stages of your business. It is designed to provide the operating expenses, from staff costs to supplier bills while cashflow is slow. It is usually designed to be repaid in the short- to medium-term, once your video business is fully on its feet.

Growth Finance

Large-scale finance can be vital if you have major plans such as acquiring a competitor. Growth Finance can help. Lenders may require an established trading history and record of profits, but it may be possible to arrange Growth Finance based on your profit projections, rather than on your trading history.

Revolving Credit Facilities

Overdrafts are a traditional form of business finance, but these days banks may be reluctant to provide them. Revolving Credit Facilities can be an alternative, providing a line of credit, with an agreed limit that you can call on when you need it. You only pay for the money you take out, so it can be a cost-effective way to raise funds if you need them.

Invoice Finance

There are various revenue models that your video business might adopt. If your income stream is based around corporate sources, you may find that there are restrictions on your cashflow as a result of late payments. An Invoice Finance arrangement can bring you cash as soon as you issue an invoice, providing a flow of revenue that keeps pace with the amount of business you do.

Tax Loans - helping deal with demands

Whatever your revenue stream, you will face substantial quarterly VAT or annual tax demands. These can cause serious problems with your cash flow. Tax loans help you to spread the cost of your tax demands into affordable monthly payments, avoiding issues with HMRC.

Find out how a Tax Loan could help you smooth your tax flow.

How we can help you capitalise your video business

At Rangewell, we work with businesses throughout the media industry. We understand your business and the
potential it offers, as well as the challenge you face.

We can use the expertise we have built up to help  you find the financial solutions you need to capitalise your business, whether you want to fund capital expenses, working capital or growth.

As well as conventional finance products, we can help you find Alternative Funding, using new loan providers and styles of funding. We know the lenders who can offer the most competitive rates for your sector. Whether you have a straightforward finance need, or require a complicated ‘Jigsaw’ funding plan made up of a combination of products, we can work with you to find the answers that are right for your needs.

Call us now to get our experts working for you and the future of your business.