Report Card for 2016’s Resolutions

I started to set Resolutions each year of the goals I want to accomplish within the coming year, and then review how I did at the end of the year.  In January of this year I wrote my resolutions in the post titled “Eric Miller Animation’s New Year’s Resolutions“.  Check them out, or just look below to see how I did.  It seems I need to try harder in 2017 if I want to get a perfect report card

green_checkAnimated Short:
I set the goal to finish the first 30 second episode of Bink this year.  While it took a little longer then I expected we were able to finish it in June of this year.

green_checkNew Clients:
I set the goal to get 3 new clients this year, and while it might be debatable I think we can count 3 new clients.  The debatable part is the one project had both our client and the end client we were dealing with.  So I’m going to count both Alpine, and Honda as clients for the purpose of this goal.  Honda is also a really big client, so it was great getting to work with them on the two projects we did for them this year.  The 3rd, and actually the first client we had this year, was Future of Play.  We did the most work for them by creating 4 episodes of the MagicMeeMees web series.  I’m very happy with the work we did with all three of these clients, and hope to continue to do work for them in 2017.

green_checkLearn Something New:
This goal has been an easy one to check off each year.  I still put it on the list because I feel it is a very important goal to have.  You should never stop learning, and this is a cornerstone to the success of my company.  Of all the things I have learned this year, the one thing which sticks out in my mind now is about how the market of selling your IP works.  This was something I always wanted to learn about, but was always an unknown to me.  It was great to sit down with a couple producers to talk about how it works.  What I learned was an eye opening experience, and it also showed me how much more I have to learn on the topic.

painted-xGrow Social Network:
This goal was to increase all our social media networks by 100%, and while I grew some of them to over 100% I was unable to do it with all of them.  Take a look at the numbers below to see how we did.

This is what the numbers are: Starting point –> 100% increase goal | Current followers = Actual % increase
Facebook: 4,427 –> 8,854 | 4829 = 9% increase
Twitter: 513 –> 1,026 | 1033 = 101% increase
LinkedIn: 146 –> 292 | 233 = 60% increase
Google+: 11 –> 22 | 23 = 109% increase
InstaGram: 235 –> 470 | 697 = 197% increase
YouTube: 5 –> 10 | 282 = 5,540% increase

As you can see the big winner is YouTube with a 5,540% increase, and Facebook having the smallest percent increase.

painted-xProfitable 2016:
The goal was for the business to make enough money I could take a salary for myself, and still have the business be profitable.  I did not achieve this goal, because while the business was profitable it was not profitable enough for me to take a salary.  Technically I could have taken a small salary, and still have the business be profitable, but I decided to keep the money in the business this year.  I’m hoping for a more profitable 2017, so I will be able to both take a salary while still keeping the company profitable.

 

Regardless of not achieving all the goals I set for the business I still feel 2016 was a great year for the company.  While I don’t want to set unrealistic goals I also don’t want to make them so easy I don’t have to push myself.  In next week’s post I will dive a little deeper into the 2016 year, and what we were able to accomplish this year.

 

If you have not already, I hope you will join me on my journey by subscribing to my blog.  If you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.

The Challenges In Starting An Animation Company

In my blog posts I often give updates on what my company is working on, and things I’m doing to try and grow it.  It might seem like starting an animation company is easy, so I wanted to share with you the challenges I face.

Building a Brand:
You might ask why building a brand is important, but as a service company it is very important.  Making animation is extremely expensive, and for my clients is a huge investment.  They want to make sure they can trust the company they are investing in to create their commercial, web series, or other animated video.  This has been a huge challenge for me, because I don’t have much of a reputation yet.  I have talked to a lot of other owners of animation or VFX companies, and many of them said it took awhile(around 10 years) before they started getting steady work.  I’m sure some of this had to do with them figuring out their business and target market, but they tell me a huge part was simply building their brand’s reputation. Sure they might have had enough smaller projects to keep the lights on, but it took awhile until the bigger opportunities started to reveal themselves.

Competition:
As you might have guessed there is a lot of competition in this space.  I’m competing against well established companies who are in a much better position to win jobs.  They already have their feet firmly through the doors of the bigger clients.

The other competition is from companies outside the US.  First, there is Canada with their amazing tax credits, and then you have areas like India, Korea, China, and South America to name a few with much less expensive labor costs.  The talent there is also getting better and better all the time.  I often get emails from foreign companies offering their animation and VFX services if I want to outsource any of my work to them.  I always ask them for what their rates are to see how they compare to US rates.  If I tried to match their rates with US workers I would not only not be able to pay the artists what they are asking for, but also not be making any kind of a profit.

Rendering:
This might seem odd to anyone who is not in animation, but this is a big hurdle for me.  For those of you who don’t know what rendering is it is the process of the computer figuring out what each pixel will look like to create an image based on the settings you put into the software.  It calculates the models, where the camera is, what kind of lens, how many lights, where they are coming from, their color, intensity, how they interact with the different materials on the objects in frame, and many other things.  For a more detailed explanation go here.

This requires very powerful processors to figure all of this out.  I remember when I was in college, and working on my animation project ChessMate(see image below).  I would work on the project late at night, and before I left I would setup 5 or more computers to work on rendering my project.  I would leave signs begging people not to touch the computers.  After rendering all night I would come back in the morning to check on them.   I did this every night for months until I finally finished.  It would take over 16 hours to render one 2 second shot, and often there would be errors requiring me to start the whole process over again.  Computers are now faster, but the graphics are much more intense.  We also now render in HD at resolutions of 1920 x 1080 if not much higher, and ChessMate was only 728 x 414.

ChessMate Scene 1

 

I’m getting a little off topic, but my point is it takes a lot of computer power and/or time to render animation. So far what I have been doing is having the lighting artist handle the rendering.  This should work for small projects, but as I get more clients I will need to figure out other options.

There are online render services, but they can get very expensive.  The other challenging part is you don’t know how long something will take to render until you can do test renders.  This makes it extremely difficult to bid out a project for a client when there is a big unknown of how much your render costs are going to be.  One frame might take a few hours to render, or it might take a few weeks to render.  Your 5 minute animation will have 9,000 frames, so you can see how those costs could add up very quickly.

If you want to try and control those costs a bit more then you are going to have to build your own render farm.  Now you are buying thousands of dollars worth of hardware which will be outdated, lets be honest, as soon as you buy it.  Not to mention you are going to have to have enough space to keep all this hardware. Have you seen pictures of Pixar’s render farm?  Here is an image I found online.

Data Storage and Transferring:
Now you know all about the rendering challenges, so what will you do with all these images these computers are creating?  One of the 3 second shots for the client project I’m working on is 12GB, and this could have been a lot larger.  Not to mention all the files needed to create these projects.  Anything from photoshop documents, Maya files, Final Cut files, and all the other files needed to make these projects before we even start rendering.

With a remote team I also have to have a way to transfer these files between the different people on the team.  I have been using Dropbox, but I’m quickly outgrowing this.  I had to get a Dropbox Pro which gives me 1TB(1,000 GB) of storage, but found each member of the team who is synced to the project folder also has to have this much storage space.  I need to find a better option, but regardless of what option I go with it is going to be another costly expense.

Staff vs Freelance:
Currently I’m the only full time staff at the company, and everyone else is freelance who is hired based on the work we have.  This works well to keep costs down, but it makes it difficult to build a company.  It is challenging to line up project schedules with freelancers.  You might have a great artist for a project, but you might have to find someone else for your next project because the last one is unavailable.

Freelancers also provide their own workstations and software which can be a good thing, but can also cause issues.  For example one of your artists might be using Maya 2014, and another is using Maya 2016.  Now you have the issue where they can’t open each others files.  Software version incompatibility has been a huge challenge for me. On the Toys’R’Us project we had to have extra versions of After Effects to open and save the files in order for another artist to be able to open the file on a different version of the same software.

Physical Studio Location:
Having an actual studio location would help in many respects.  For starters it would speed up the production of our projects.  Being able to lean over to the person sitting next to you and ask a question or get approval is much more efficient then sending an email, and waiting for a response.  It would also solve some of the other issues I mentioned above.  We could control the workstations, and make sure they are all using the same versions of the software.  There would be less data transferring, and we could actually store the data on our own servers instead of online storage options. This would all be great, but it would be an additional overhead cost.  I would need to make sure the business was bringing in enough projects, and enough income to cover the monthly office expense. Add to this having to buy all the workstations and software licenses, and you can see how quickly it would all add up.

The Unknown:
It is easy to plan for the challenges you are aware of, but what really scares me are the things I’m not aware of.  Running your own company you have to wear many hats, but in no way am I an expert in all these different areas.  I try and reach out to others for help when I can, but you know some things will slip through the cracks.  Anyone of these unknowns could be what brings down the company.

 

As you can see there is plenty to keep me awake at night, and you might think I’m crazy for taking on all these challenges.  Well, I might agree with you, but I also see a lot of opportunities in these challenges.  I have to be creative, and look for other ways to overcome the challenges.  I’m glad it is not easy, because otherwise everyone would be starting their own animation company.  The challenges take out all the people who are not really passionate about this industry.  I only hope the challenges do not also take me out.

 

If you have not already, please join me on my journey by subscribing to my blog.  Also, if you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.

My Sales Hat: Read what I learned about Animation Sales

I often talk about how you wear multiple hats when starting a company.  Well, today I wanted to talk about a hat I have been wearing a lot lately, and this is my Sales Hat.

Have you ever thought you knew a decent amount about a topic only to have an eye opening experience which completely blows your mind?  I kind of had this happen to me recently when it came to sales.  I have always thought I was pretty good with sales, and had a good understanding of it.  Even when I worked at Apple selling computers I was always one of the top in sales at the store.  It was often me and Max who would always be competing for the #1 sales person spot.

When I started my own company I saw sales as the task I did when someone called me about a project.  I relied very heavily on my marketing to bring those potential clients to me.  Unfortunately my marketing only consisted of my website, so I did not receive many calls.  Thinking about it I’m actually surprised I got as many calls as I did.  Many of them were people who wanted a 30 minute Pixar quality animated video, and their budget was $1,000.  While I got to meet and talk to a lot of really interesting people it was from a business point of view, a waste of time.

I kept focusing on my marketing thinking the sales part was not the problem.  The truth was both were not working as well as they could have been, but it took me awhile to figure this out(I’m still figuring it out).  I also had potential clients interested in my animation services emailing me, but after I responded I would forget about them until they emailed me back.  This worked fine as long as they responded, but when they did not I lost track of them.

By now any experienced sales person reading this could see many things wrong with my sales process.  I also realize there was something not working right, and I set out to find a better way.  I started searching for a way to keep track of these potential clients, and actually had a hard time finding anything.  I obviously had been searching with the wrong keywords, since I was not finding anything.  One day I stumbled across three letters which lead to my mind blowing experience, CRM.

CRM stands for Customer Relationship Management, and is a term which refers to practices, strategies, and technologies companies use to manage and analyze customer interactions and data.  This is what I was looking for, and it turns out I was not the first person to think of it.  Actually as it appeared I might have been the very last person to think about it.  CRM is nothing unique, and has been around for a while.  I felt a little silly because I have not heard of it earlier.  There are also many online software tools to help companies with their CRM.

I started playing around with 2 of them to see how they might be able to help me.  The ones I have been looking at are Salesforce and Zoho, and this is where the lights really turned on for me.  They setup the whole sales process as a pipeline with different steps along the way.  This pipeline concept is something I’m very familiar with, because 3D animation is all about the pipeline.  You have different tasks which need to be done, and having a pipeline helps you keep it organized and flowing in the right direction.  I never thought to look at sales in this way, and I’m surprised it did not occur to me earlier.  I’m still learning about sales strategy, but let me share with you what I have learned so far.

What is a lead?  I normally called a lead a potential clients which is about as far as I went with any type of structure.  In a CRM they look at Leads as the first step in the pipeline.  Leads can be people who contact you directly through your website,  referred to you, brought in by marketing, or were on a client list you purchased.  There is a whole process which you take the leads through which includes stages like discovery, nurturing, and converting.  You start off by trying to find out as much as you can about the lead and qualifying if they are a good lead or not.  Then you make first contact to find out about what their needs are, and how your services can help them.

Once you know what they are looking for you start to build a relationship with them.  I read a study which says on average it takes 7 times of reaching out to a client before making a deal.  Most people reach out to a potential customer 2-3 times before giving up.  My thought is 7 times would be annoying, but I heard this multiple times.  So when I hear it a 7th time I guess I will have to believe it.  The idea is people are more likely to do business with someone they are familiar with.  You want to build trust with your clients, so they are willing to take a chance with you.

After nurturing the relationship you continually move closer to close the deal, and turning this lead into a client.  In these programs they have leads, clients, accounts, competitors, and a much more organized way of looking at your client data. I found this all to be extremely interesting.  While I don’t plan to turn my company into a sales powerhouse, since I feel the whole process could easily start to feel robotic.  There is still a lot which I can take away from this.  I think a sign of a good sales person is someone who has a good structure, strategy, and process, but at the same time can be very personable and natural.  I would not want my clients to feel like they are just another number in the pipe.

Learning about this pointed out I not only need a better system closing deals with potential clients, but also I could do a better job at generating leads.  I can take a more proactive approach then sitting back waiting for people to visit my website and call me.  I have looked into brining on sales reps, but I have heard from other animation studios who have had mixed experiences.  It seems like the general consensus is doing it yourself is always best, but if you have to bring someone in then commission-only is the way to go.  Otherwise you risk spending money with little or no results, and the sales reps are more motivated when they only earning money if they are making sales.

I realize I still have a lot to learn about sales, but the more I wear this hat the better it fits.  I would love to hear from all of you about your sales secrets, and let me know if you have anything to add to what I mentioned.

 

If you have not already, please join me on my journey by subscribing to my blog.  Also, if you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.

2015 Year-End Review: Animation Studio

As this will be my last post this year I thought I should do a 2015 Year-End Review of how the year went.  This year was the first full year in business, since 2014 I was only in business for half the year.  I would like to take a look at where I was at this time last year, and compare it to where I’m at now to see what I have accomplished.

Business:
At this time last year the business was still setup as a Sole Proprietorship, but as of July 24 my business is now an S-Corp.  This was a big change for me, and the business.  It has been a slow process transitioning everything over, especially all of the accounting and bank accounts, but now the company is setup and ready to go.

Financially speaking 2015 was a loss simply because we did not work on enough client projects to counter what I’m paying to have the animated short produced.  I expected this year to be a loss financially since I wanted to work on building our portfolio, and spent less time marketing and looking for service work.  The company still has money in the bank from last year, so the business is still in good shape and I’m not worried yet.  Next year my focus will be on finding more client projects to work on.  It is a balance between working on our own IP, and doing service work to bring in money.  I will also be looking into how we can make money off our own projects we are working on.

Bink – Animated Short:
Although the short is the main reason we are in the red for this year I’m really excited we are working on it.  I have learned a great deal from the process, and what we have learned will only my make company stronger.  Plus when we finish we will have a really awesome animation to show off for the hard work, and financial investment.

Networking:
This was a big year for networking for me, and I have made a lot of new connections with people in my industry.  I have attended several industry conferences, and Producer Guild events.  I still have stacks of business cards sitting on my desk I’m hoping to reach out to.  If only I had more time in the day to get things done.

I have also been reaching out to other animation studio founders, and comparing notes.  It is really great to hear about what others in a similar position as me are doing, and what advice they might have.  While we may be considered competitors I have found we are all willing to help each other out.

Social Media:
The company had a lot of growth this year in our social media, and while I might not have all the numbers for how much growth I know it was a decent amount.  I will be putting a lot of information down here partly so I have someplace to look to each year for comparison.  Not all the social networks have tools for seeing what your numbers where a year ago.

Facebook is by far my largest network, and also the network I put the most effort into.  I will bring on someone to help with social media and marketing for next year, so hopefully I will see growth in all areas in 2016.  At the beginning of the year I had 1,659 Likes, and currently we have 4,425 Likes.

In July of this year I started a company Instagram account, and we now have 235 Followers.

I can’t tell how many Followers I had at the beginning of the year, but I think it was around 200.  We currently have 522 Followers, and hoping to double this number in 2016.

While I have not been doing anything with YouTube other then posting my Demo Reels I hope to see my 5 Subscribers I currently have grow significantly in 2016 as I begin to post Bink animated webisodes.

In 2015 on Vimeo I had 1,439 plays, 1,725 Loads, and 3 likes, and currently have only 4 followers.  Similar to YouTube I have not been posting much on here, but will be when we finish with Bink.

Marketing:
This year we had a marketing consultant do some market research and develop a marketing strategy for the company.  I’m now in the process of interviewing applicants for a part-time Social Media Marketing Coordinator position.  They will help in implementing the marketing strategy, and hopefully bring in more client projects.  At the beginning of this year we had no solid marketing plan, so I feel this is a big step forward.

Society:
This year I started the Society of Creative Professionals(Temp Name), and so far it has been going great.  We have had a monthly mixer since July, and I have met a lot of really great people.  I have a lot of big plans for the society, and hope to accomplish many of these goals in 2016.

Personal:
At the beginning of last year my wife and I had an almost 1 year old son, and were trying to do our best to keep on top of our personal lives.  This year I feel like we did not do the best job of keeping in touch with all of our friends, and wish we could have seen them more.  It is challenging with the little one, and with both of us working full time.  This year we also announced we were expecting a baby girl in May of 2016.  I’m sure this will make having a social life even more challenging, but we are very excited to be growing our family.

Our growing family will not only make our personal life more challenging, but will also impact the business.  I will be getting less sleep again(after we finally got our son to sleep through the night), and it will add more financial pressure to succeed.  I would imagine starting a business with less responsibilities would be less stressful, but I feel my responsibilities motivate me to succeed.

Conclusion:
I feel 2015 was a year of learning and growing.  While I don’t have a lot of work or profit to show the success we had I still feel it was a very successful first full year.  I have set things up for a very positive 2016, and can’t wait to see how the year goes.

Have a great New Year everyone, and I hope 2016 will be the best year of your life so far.

 

If you have not already, please join me on my journey by subscribing to my blog.  Also, if you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.

Report Card for This Year’s Resolutions

The report card for this Year’s Resolutions which I set at the beginning of the year in the post “New Year’s Resolutions for an Animation Studio” is not the best report card I have received.  While some of my priorities have changed I thought it would still be fun to look at the goals I was aiming to reach for this year as we come to the year’s end.  While I didn’t achieve as many goals as I hoped I still feel this year has been a huge success.  Just don’t show this to my parents since I might get grounded. LOL

eTMkRaAAcWork-Life Balance:
At the beginning of last year I was coming off of a busy project with Toys’R’Us, and my work-life was very much out of balance.  I feel I have done a much better good job at keeping a work-life balance this year.  If at all possible I try and only work during “working hours” on weekdays.  Yes, I might be checking and responding to work emails on my phone during my personal time I try and keep it to a minimum.  I also multi-task at night when watching TV by reading business related articles, but this is something I enjoy doing.  I guess when your “work” is also something you enjoy it is very difficult to separate them.  I could always continue to improve on this, but there is always room for improvement with everything you do.

x_mark_red_circle3 new Major Clients:
When it comes to clients this year was not as good of a year as I hoped it would be.  I set the goal for 3 new major clients, and now I realize how ambitious this goal was.  While it’s always good to set your goals high it is not a good strategy to set them so hight you will have no chance of reaching them. This one was nearly impossible for a new animation studio.  It would have been really nice though!  While I have had a lot of clients contact me the majority of them didn’t have the budgets required for me to take on the projects.  It is a very challenging and competitive time, and I’m competing against studios who have been around much longer and are more established in the industry.

x_mark_red_circleGrow Team:
I had the goal to grow my team this year, but I’m still a company of one.  The company is setup in the virtual studio model, and I’m working exclusively with freelancers.  This is mostly due to the fact I did not have the income to bring on anyone full time.  The one major change to my company’s structure was changing it from a sole proprietorship to an S-Corp.  So in away the company did grow, but not in the way I was thinking when I set my goals.  Adding others to the team is still one of my top goals, but finding out how to make that work is not easy.  At this point having an assistant would be amazing to help me get through my daily tasks, so I can focus on the more important parts of the business.  A smarter choice might be to bring on a partner who’s skills are complimentary to mine.

eTMkRaAAcDevelop my own IP:
This goal was more of a “It would be nice”, but I did not imagine I would actually be able to do it.  Not only did I develop our own IP(Intellectual Property), but we are actually making it.  In May of this year we started developing our own animated short which is currently called “Bink”, and we are planning on finishing production early in 2016.  Any of you who regularly read my blog knows it has been the main project I have been working on this year.  It came out of the need to show clients the quality of CG animation we can do, and since we currently had no fully animated content on our company’s demo reel I needed to find a way.  I knew in order to get respectable clients I would need to have something to show, and this is why creating our own shorts moved up in priority.  I’m very excited about our progress on the short, and looking forward to being able to share the first episode with everyone.

eTMkRaAAcContinue to learn:
This was an easy one for me.  I have learned so much from running a business and producing an animated short.  With the business, I have tried and failed on many things, but also have had a lot of success.  I have learned a great deal from both.  I’m learning more about marketing, corporations, taxes, financing, networking, and many more.  With the short I knew a great deal from working at DreamWorks about a very specific part of the production process, but I’m learning things I had no idea about.  I thought I knew a lot about an animation pipeline, but my understanding was only so deep.  The technical challenges to make sure assets and shots work with downstream departments is a huge eye opener.  I know I will never know everything, but I have been lucky enough to work with an extremely talented and intelligent group of people who have been a huge help.  This is only one part of what I learned during this process of producing the short.

x_mark_red_circle10,000 Facebook Likes:
Yes, another very ambitious goal I had, but did not achieve.  The week I wrote the goal I had gained over 512 likes in 1 week, and thought if I kept even half this momentum I would easily make it to 10,000.  Well there was a lot of weeks I did not gain any new likes, and none of the other weeks were even close to 500 likes.  At the beginning of this year I had 1,450 likes, and I’m currently at 4,417.  While this is still an almost 3,000 gain it is nowhere near my 10,000 goal.  The larger my social network the easier it will be to get our shorts out to more people.  The other point I should mention is it is not all about numbers, but the quality of those likes.  We want to get our content out to people who really want to follow our story, or potential clients who might send work our way.  So while I want to reach as many people as I can I also want to target my likes to be from the right people.

x_mark_red_circleDo Good:
While I like to think I did some good I feel I did not do enough, and this is why I’m considering this a miss.  While it is easy for me to use the excuse of how busy I was it is a pretty weak excuse.  I hope next year I can find ways to give back to my community, or other people in need.

x_mark_red_circleGovernment contract work:
Last year I was looking into doing government contract work.  I was going to classes about how to get government contracted projects and not only learned it is very difficult, but currently impossible for me.  They required your business to be around for at least 5 years.  This ruled me out instantly, so I put it on the back burner for a few years until I’m a more established business.

eTMkRaAAcWikipedia Approval:
This was added partially as a joke, but also out of a desire to get my business into the “history books”.  I kept trying to add Eric Miller Animation Studios to Wikipedia, but they would instantly take it down with the reason “no sign of real notability”.  It became a goal to get a Wikipedia page for my business to stay, and not be removed.  In February I was able to get an Eric Miller Animation Studios Wikipedia article up on the site.  While this was mostly a person mission of mine it turned out to be great for business. I have been receiving a good amount of traffic to my company’s website from my Wikipedia page.

While I did not achieve as many of my goals as I hoped I did make a lot of progress this year.  I hope 2016 will be our best year yet, and each year after will be better then the last.

 

If you have not already, I hope you will join me on my journey by subscribing to my blog.  If you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.

Eric Miller Animation Studios Incorporated

Eric Miller Animation Studios Incorporated!  That is right, as of July 24, 2015 my company has been reborn as its own entity.  I thought I talk a little about what this means without getting to technical and boring.

So now what?  You might be wondering what this means.  When I started my company it was a Sole Proprietorship, and basically myself and the company was one and the same. By incorporating it separates my personal assets from my business’ assets, and this basically gives me some legal protection and tax savings.

Currently the corporation is what they call a single-owner corporation, since I’m the only owner.  This makes for some interesting things to happen when operating as a corporation.  I’m now required by law to form a board of directors and have at least one meeting a year.  Since I’m a single-owned corporation the board can be one person… me.  This means I’m the chairman of the board, and the board of directors all at the same time.

If that is not crazy enough, the board also has to name the executive officers to run the company.  The 3 positions that have to be named are president, secretary, and treasurer.  I’m excited to announce who the board(me) has named for each of these positions.

President: Eric M. Miller
Secretary: Eric M. Miller
Treasurer: Eric M. Miller

I know, big surprise.  So yeah, how silly is that?  As long as I’m the only shareholder I have to have a meeting with myself, take notes, and vote myself in to all the above positions.  As the company grows, and if I take on investors this will all change, but for now this is how it is.  I mean I’m already wearing all those hats, but now I have to be officially named, and notes need to be recorded.

I’m also no longer considered self-employed, since I’m now technically an employee of Eric Miller Animation Studios.  I even have to start taking a paycheck.  The IRS says officers of a corporation have to take a “Reasonable Salary”, and give no real explanation of what that means.  If anyone can tell me what that means please let me know in the comments below.  This is a newer requirement to prevent officers of corporations from taking low salaries, and then get paid in dividends.  Dividends are taxed at a much lower rate, so this was being abused to save corporate officers a lot of money in taxes.  I remember hearing about Steve Jobs and Jeffery Katzenberg only getting paid $1 a year, and originally thinking they were doing it because they were cool guys.  I later started to think it was for tax savings, and it turns out I was right.  This new law is why Mr. Katzenberg now takes a $3 million salary, instead of his one dollar salary.  I sure hope that is not what the IRS considers “Reasonable”, or my company will be in debt within the first month.

The take away from all of this is that nothing really is changing for my business other then being a little more official in the eyes of the government.  There will be some tax savings, and added legal protection to me and my family, but that is really it for right now.  There are some other advantages, but I won’t bore you with all the details.

 

If you have not already, I hope you will join me on my journey by subscribing to my blog.  If you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.

That’s A Wrap! April Update

You might have noticed that I’m a little late on my blog post for this week.  While I normally try and post every Monday sometimes that is not always possible. This week was an eventful week, and it left me with no time to write a post until now.

On Monday I spent most of the day with a bookkeeper going over my company’s Quickbooks database.  I wanted to make sure the books were in order, and check that I was doing everything correctly.  This is one of those little things that in the back of your mind you worry about wondering if you are doing something wrong that will destroy the company.  Luckily besides a few minor things everything was in great shape, and I got to let go of the stress of worrying about it.

Tuesday I finally got to meet an ex-coworker face-to-face.  I know that sounds odd that I had a coworker that I never met in person, but that is the truth.  We both worked at DreamWorks Animation, and met while we were working on Monsters vs Aliens.  I was at the Glendale campus, and she worked at the Northern PDI campus in the bay area.  We have kept in touch, and a few years ago she moved down here to SoCal.  She is currently working at Disney Junior, and we finally got the chance to meet for lunch.

After our lunch I spent the rest of the day working on my presentation that I will give to Disney Junior at the end of May.

On Wednesday I had a great phone conversation with Everett Downing, the director/creator of The Book of Mojo.  He is currently working on getting his animated short funded on Indiegogo.  It sounds like a really fun project, and we hope to meet and discuss how we might be able to work together on his project.  He already has a talented group of artists that are already on board to help with the project who are working at studios like Pixar, DreamWorks, Disney, Paramount, and others.

The campaign still has a way to go to reach its goal, and time is running out.  Check it out, and if you are interested in contributing feel free to donate. The Book of Mojo

That brings us to Thursday, which is when I finally have a chance to catch up with my blog.  Once I finish this I have to go over my schedule for the next few weeks.  I have a list of people I need to meet with, but I’m running out of time in the week to have meetings.  I have been trying to keep my lunch meetings to no more then one a week, but lately I have been doing 2 or 3 a week.  On the days I have lunch meetings I don’t get as much work done, so I try and not over schedule them.

Tonight I’m going to the ASIFA general membership meeting.  I have been a member of ASIFA since 2007, and this will be the first time I have made on of the meetings.  I normally only go to the free movie screenings that they have.

ASIFA (Association Internationale du Film D’ Animation) was founded in 1957 in France, and chartered under UNESCO in 1960 as a membership organization devoted to the encouragement and dissemination of film animation as an art and communication form.

I thought that it would be a great opportunity to meet the other members, and do some networking.

Last week I met with the founders of Boom Box Post.  I have been looking for different companies to collaborate with on projects to help with the things I don’t know much about.  Boom Box Post is a boutique post-production sound studio, and is co-owned by two really great people, Kate Finan and Jeff Shiffman.  It is scary the similarities we have in our situation.  We each have moved out to California around 10 years ago, and I started my company in July, and they started in August.  They are working with some really great clients, and I look forward to working together on some future projects.

Hopefully this momentum continues.

 

If you have not already, I hope you will join me on my journey by subscribing to my blog.  If you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.

When Starting A Company You Wear Many Hats: This is My Accounting Hat!

One of the things that both exited me, and terrified me in starting my own business was getting to be involved in all aspects of the company.  When you are first starting out you have to wear many different hats.  Some seem to fit really well, while others never really fit right.  When you are the only employee everything is your responsibility, and you end up being the CEO, producer, coordinator, production assistant, and in my case the nanny.

I’m coming up on 2 months since I left my day job, and I wanted to share with you some of the hats I have been trying to wear.  In this post I’m going to focus on the accounting hat.  I do want to say that I’m not a financial expert, and I’m simply talking about my experiences.  Consult a financial professional about your own financial and business situation, since chances are 90% of what I write is probably wrong.

How many of you have ever used Quickbooks?  My first experience with Quickbooks was in high school when I would help my dad keep track of his Golf Course sales company.  I was one of those weird kids that actually loved financial stuff.  My dad mainly used Quickbooks to write invoices, and keep track of inventory.  Since I knew I would need a way to do bookkeeping for my company I decided to go with what I was familiar with, and bought a copy of Quickbooks.

Example Animation Chart of AccountsI thought I had a pretty good idea about financing, but quickly realized how little I actually knew. I have slowly started to figure things out, but there is still a lot I’m trying to wrap my head around.  How many of you have heard of Chart of Accounts?  If you want something that will make your head explode look no further then Chart of Accounts. (click image to see an example chart of account for an animation company)

The definition of a chart of accounts is a list of account names and numbers used in accounting to organize financial records into different expenses, liabilities, assets and income.  That sounds easy enough.  Wrong!  When you start trying to figure out what expenses go where, and how many different income accounts you should have it becomes very tricky.  Should I have one income account for sales, or should I have separate income accounts for each type of income.  For example, a separate income accounts for Production Services, Animation, VFX, Motion Graphics.  There are benefits to keeping things simple, but there is also benefits to having more detail.  Finding out what is best for me is something I’m still trying to figure out.

There are other things in Quickbooks that I have been working on learning.  Things like doing estimates, linking items to the proper accounts, tracking mileage, and other expenses, and knowing how to bill back clients for those expenses.  I really do enjoy all of this stuff, and love the challenge and pushing myself to learn new things.  If you have any Quickbooks tips please leave a comment below.

Taxes… enough said?  As a service company I don’t have to worry about sales tax, unless I sell something physical (At least from my understanding of it).  For example if I make a video for a client those services are not taxed, but if I put the video on a hard drive to give to them I need to add sales tax for the hard drive.  What I do have to worry about is income tax on the profit my company makes (Income-expenses).  As a sole proprietorship I end up having to pay self-employment tax.  This is basically your social security and medicare tax.  When you are an employee at a company they often split this tax with you 50/50, and although this is standard there is no law that your employer needs to pay half.

When it comes to employees I will mostly be hiring freelancers to help with my projects, and they are independent contractors, and are responsible to pay their own taxes.  If I do hire employees I will then have to worry about withholding a part of their wages for taxes, and contributing to their social security and medicare.

Another thing that I have been thinking a lot about is the legal structure of my company.  Currently I have it setup as a sole proprietorship, which is the most common type of small business.  The company is no different then the owner in the eyes of the IRS, and the income the company makes is the owners income, and is taxed that way.  A disadvantage is it does not offer any legal protection for the owner, and does not survive after the owner leaves.  When I start making more money it will eventually become more beneficial to structure my company as a S-Corp, or LLC.  These provide limited liability for the owner/s, and can offer some tax benefits.  The legal and financial advice that I have received so far seems to be in favor of a S-Corp, so I’m currently trying to learn as much as I can about this structure.

Luckily there are professionals that can help you with a lot of this, and trust me I’m constantly talking to my CPA.  Even with their help I do feel it is important to have a general understanding of the finances of your business.  Ultimately you are responsible for your company, and even professionals can make mistakes.  By having a general understanding you can flag things that don’t seem right, and be able to make good decisions based on what the numbers say.

A good financial plan is a road map that shows us exactly how the choices we make today will affect our future. ~ Alexa Von Tobel

As you can see the accounting hat is a very important one.  I don’t think everyone would enjoy wearing this hat, but it is one of my favorites.

 

If you have not already, I hope you will join me on my journey by subscribing to my blog.  If you have any thoughts or advice I would love to hear what you have to say, so please feel free to leave me any comments below. Otherwise, be sure to stay connected with me on Twitter (@MillerAnimation). Only Time Will Tell.