South Africa’s entrepreneurial spirit is not to be trifled with. We know how to work hard, set audacious goals and see them through. We love a good challenge. Tell a local ‘trep something can’t be done, and watch them find a way to show you just how wrong you are. Because that’s what entrepreneurs are.
They’re workaholic, prone to extremes, no personal/work life balance, passionate trailblazers.
Case in point: Seven entrepreneurs from three different companies wanted to create a film according to their rules.
There were a few minor problems: They all had businesses to run and bills to pay, and a project of passion did not fit into their already-overworked schedules.
They had absolutely no budget for the film, which should have meant no cast, no crew, no sets, no equipment – basically, no movie. And without a big ticket distributor on board, in the unlikely event the film even got made, they had no way of getting it to audiences.
But whoever says entrepreneurs are firmly hinged in reality hasn’t met a true ‘trep. Faced with too many challenges and seemingly insurmountable odds, most people walk away, prepared to dream another day. The makers of Shotgun Garfunkel took an entirely different approach.
They had way too many obstacles stacked against them to create more of their own. If this was going to work, they needed to find solutions, not create more problems that didn’t exist.
“That’s the way we faced this. We said, ‘We’re going to do this,’ and then we did it,” says Tiffany Jones-Barbuzano. “Most problems are actually created by the people trying to solve them. We look for restrictions, let our heads get in the way and give ourselves reasons not to do something. If we wanted this to work we knew we needed to let our thoughts be free and not give anything the time to become a problem. If you know there’s a solution to be found, you’ll find it.”
It’s one of the biggest lessons the movie makers have carried away with them since completing the project, but it’s far from the only one.
Related: Why Money Isn’t Everything
The plot thickens
Bootstrapping a movie is just like any other start-up: You need to do what you know, ask people for a lot of favours, rely on friends, leave your ego at the door and find synergies with people whose skill sets complement your own.
“Deciding to make the Fastest Film Ever Made was the easy part,” says Johnny Barbuzano, who directed the film. “It gave us parameters we could work with and a strict timeframe. We wanted to work within 11 days from conception to a final product, so we couldn’t let the project just take a backseat to our other work.” But the world record also meant that when they sat down on 1 May to get started, they had no title, concept, characters, story-arc, dialogue, cast or crew.
“The entire process must be documented in order for Guinness to officially declare it the record-holder for the Fastest Film Ever Made, and this includes the discussions leading up to a script.
So, what do you do when you start with an absolutely clean slate? Every business coach has the same advice: You start with what you know. Over the course of three days, Shotgun Garfunkel would develop into a coming of age movie for 30-somethings who are no longer in their carefree 20s, but not quite ready for the responsibilities of full adulthood.
“It’s lovingly shot in Jo’burg and makes use of well-known landmarks from Newtown to Northcliff Hill, but it could just as easily be set in any Western-culture city in the world. It’s a story of four friends still figuring out who they are, and because it doesn’t stray from what’s real to the writers and actors, it’s authentic to its audience.
However, while the movie can be likened to a start-up, the entrepreneurs involved are anything but, and this is one of the single most important factors that made this project a success. They had wide networks they could draw on for assistance, and not a single person said ‘no’ when they were asked to pitch in.
“Organisationally we had three different companies that needed to work together seamlessly,” says Ryan Norwood-Young. “For the project to work there needed to be a lot of respect amongst us for each other’s skill sets. We had no time to second guess each other, but this actually worked in our favour. We just got things done.”
“We got a top-of-the-range camera donated to us”
If you’re going to shoot a film in four days, you want the best equipment possible. Eduan van Jaarsveldt approached his contacts at Sony and asked them if they wanted to donate the brand new Sony F55 to the project. They loved the idea. The Canon 5D was used to shoot a short film a few years ago, and on the basis of that became a huge seller in a small industry where everyone essentially knows each other. Sony’s hoping for similar hype for the F55. It’s the first of its kind in South Africa, and thanks to Shotgun Garfunkel is already making waves.
“It was a win-win situation for all of us,” says Bryan van Niekerk. “Sony needed the exposure and we were the perfect vehicle for them – we were bound to generate hype around what we were doing, and the F55 would be at the centre of that. And we needed that camera. Sometimes it’s just about finding the right partners.”
Of course, it helps that Van Jaarsveldt and his Team Best colleagues are well-known and respected in the industry. Trust goes a long way when you’re asking for a favour.
Team Best has a strict policy it never wavers from: It always pays its crews seven days after a job is complete. It’s unheard of in the industry and in Van Niekerk’s own words means they’re “always poor,” but it also means they have happy, loyal crews.
And when you need the best crew no money can buy, those relationships suddenly come in very handy.
“The enthusiasm to help us out was incredible,” he says. “No one said no to us. Most actors heard Johnny was directing and immediately said yes, including Jena Dover and Carl Beukes, and the crew joined because they wanted to be a part of this incredible project.
“We’ve given most of the crew work through the commercials we have shot since the film wrapped, so it’s worked both ways, but the passion surrounding the project was a big draw card. We were creating something special and every single person on set contributed to that.”
Related: Bootstrapping: The DIY Option
“Trust people and they’ll over deliver”
Shared passion is a prerequisite when taking on such an audacious goal, particularly when three companies are equal partners in the project, but this passion needed to permeate everyone on set too.
“It’s amazing what people can achieve when their hearts are really in it,” says Jones-Barbuzano. “We needed to completely trust each other, but that same attitude had to extend to the wider circle.”
“Everyone has things that they’re really good at,” agrees Meren Reddy, “and we needed to allow people to get on with it. There was no time for second guessing, but what we learnt was that when you trust someone to do what they’re already good at, they’ll deliver. We didn’t micromanage anything, and the result was a crew who all felt like this project belonged to them. We really got the best from every single person involved because of that.”
Take, for example, a friend of a friend who ended up on set as an observer.A dive instructor by trade, she had no on-set experience, but was keen to help out. After 11 days she was a production assistant, wrangling extras, solving problems and keeping things running smoothly.
Today she’s employed by Team Best as a PA – all because there was an inclusive attitude throughout the production process that encouraged everyone involved to roll up their sleeves, get involved, do their best, and feel ownership of the project.
It’s an amazing productivity and efficiency tool.
“Social media is changing the game”
A lot of those extras ended up on set in the first place because of social media. From the beginning the partners knew they would need to leverage social media platforms to make the project work. Retroviral’s Mike Sharman was roped in to assist (and play a bit-part in the film too), and a website, Facebook page and Twitter account were established thanks to another freebie from web designers (and fellow entrepreneurs) Plastic Duck Armada.
“Social media allows a project to suddenly become collaborative and inclusive in an industry that can appear quite exclusive most of the time,” says Barbuzano. “We were telling everyone that Jo’burg was going to break a world record, and people loved it – they wanted to be involved. We have a club scene in the movie that we needed extras for. We sent a tweet out that morning – one tweet – and by the early evening we had an entire club full of extras. It was incredible.”
The collaborative nature of the film spread beyond cast and crew though. What was a movie without a poster? “We chatted to one of our clients, Dean Oelschig from ad agency Halo, about helping us out with a poster. They had offered their services, and this seemed like the perfect project for them,” says Asher Stoltz.
Instead of just designing a poster though, Halo joined in the spirit of the film. Within hours they had invited eight top local designers and illustrators, booked a venue (Wolves in Illovo) and organised to audio stream the world’s fastest poster competition.
The contestants had one hour to design the poster for Shotgun Garfunkel, without (obviously) seeing the movie. People could vote for their favourite on Facebook. While there was one winner, the team ultimately got 12 different posters (worth thousands of rands) for their film – without paying a cent.
The film was screened at independent film theatre The Bioscope, owned and run by two entrepreneurs in the Maboneng Precinct in downtown Jo’burg. Chosen because it’s an independent theatre and Stoltz and Van Niekerk previously worked from offices in Maboneng, it was the ideal venue to preview the movie.
And now the really hard work begins. “When we started this project, all we wanted to do was create a film we loved. The record was a great motivator, and once the title is official it will give us a great hook when we send it to festivals, but it was never meant to detract from the quality of what we were creating,” says Barbuzano.
“We bootstrapped a movie, and the way we sell it will be as unique as the way we made it. We know we need to get creative.
“Do we do pop-up screenings, create cult followings and use social media to create excitement around the screenings? These are the things we’re now working out.”
For Van Niekerk, the personal side of the film was one of the reasons it worked. “People felt involved in the story of the making of this film,” he says. “It’s not just about the final product. It’s the restaurants and clubs who let us use their venues and fed us; it’s the extras; the school we used; how we convinced a group of people to skinny dip in the early hours of a May morning. People want to know the background of how we did this, and the way we distribute this movie should mirror this.”
“It’s personal, and we want to share the experience.”
- Title: Shotgun Garfunkel
- Produced: 2013
- Claim to fame: Unofficial world record holder for fastest film ever made
- Start-up capital: R10 000
- Visit: thefastestfilm.com
A meeting of minds
It’s November 2012, and Asher Stoltz, Bryan van Niekerk and Johnny and Tiffany Barbuzano are catching up. They’ve shot a pilot for a local version of The Office and the project has come to a standstill. They’re all suffering from a bit of disillusionment.
Their companies are doing well and they’re respected industry professionals, but too many projects are non-starters and it’s completely out of their control.
What they really want is to create something that’s all their own and feeds their passion for the industry.
Their first idea is to create the worst movie ever made. Hardly a passion-igniter. But it does lead to a real discussion of what they can do – not separately, but together. Barbuzano had just come off the M-Net soap, The Wild where cast and crew had worked at a breakneck pace. International norms are to shoot an episode in two weeks.
South African crews typically shoot three half-hour episodes a week. “It raised the question of just how far you can push crews in this country,” says Barbuzano. “What are we really capable of?”
And then someone Googled ‘The fastest film ever made’ and they learnt about an Indian film that had broken the record. What if they aimed to break it again?
Screw the worst movie ever made, they wanted to make the best movie they were capable of producing, but without taking too much time away from their companies, asking too much of the people who would be involved, and most of all without spending any money, because they basically had a budget of zero.
Breaking the record for the Fastest Film Ever Made gave them parameters: They weren’t allowed a concept, a script, a cast, a crew, investors or an interested broadcaster. Perfect, they didn’t have any of those things anyway. What they did have was three entrepreneurial businesses (they quickly brought Meren Reddy and Ryan Norwood-Young on board) determined to create something incredible in un
- Team Best: Asher Stoltz, Bryan van Niekerk and Eduan van Jaarsveldt
- Est: 2008
- Day jobs: Commercial production
- Ghost Sheep Productions: Meren Reddy and Ryan Norwood-Young
- Est: 2012
- Day jobs: TV production and corporate video work
- Localala Productions: Johnny Barbuzano and Tiffany Jones-Barbuzano
- Est: 2006
- Day jobs: TV productionder 11 days with no capital. They needed to bootstrap a movie – and that’s exactly what they did.
How To BootStrap Your Business With Funding From Your Shareholders
Fund your business: Bootstrapping with loans from shareholders.
In the early stages of a business there is often little or no revenue – so where does cash come from to keep the lights on? In our previous article, we discussed raising funds by bringing on new shareholders.
Now we are discussing the opposite scenario – where you support the business with your personal funds rather than bringing on new shareholders. Ultimately, this is what start ups mean by bootstrapping: You, as the shareholder, get your business through a tough patch or an early stage growth phase with your own funds.
Three reasons to consider bootstrapping
Bootstrapping is a very powerful way to grow one’s business for a number of reasons. The first reason is that by having fewer shareholders, you will have fewer partners to share the profits or future value with.
But there are other more complex reasons to bootstrap. You keep control over your business, taking strategic decisions independently without consulting a large board of directors or shareholders.
Often, in the early stages of a business, this kind of nimbleness is essential for maximising the impact of the founder’s creative ideas. You can rapidly deploy ideas, learn from them, improve them and deploy again – ultimately, that is the beauty of a lean start up as opposed to an established company.
Understand the risks
So why doesn’t everyone do it? Well, aside from the obvious point that not everyone has the cash to invest, there is another more subtle point: Risk.
With a limited liability company, you only lose what you put in (see our previous article describing this here). So, if you have personal savings, a bond, etc. you won’t put those on the line unless you decisively invest those funds into the company.
Raising funds from other people spreads the risk around – if you put all your cash into the company, you take all the risk.
So, what to do if you fund the company with a shareholder loan? The critical thing is to record it! If you don’t’ record it, your accountant can’t track it, and there is a good chance that the cash will remain untraced and never repaid.
A simple one page document recording how much was loaned, and a simple liability entry into your financial statements, can mean the difference between getting that money back (with interest) or not.
Treat the funds as loan capital
Then, what about the terms on which the cash is loaned? Many founders regard this as an equity investment, in terms of which the money is “invested” into the business, hopefully repaid, but not with interest. That is wrong.
No matter the scenario, you need to ensure that the funds are treated as loan capital, with a clear understanding that a market-related interest rate applies to it.
Why? Well, aside from complex tax implications otherwise, the question is actually whether or not you are a prudent investor? The reality is that these are your funds and prudent commercial practice means that you should weigh up your options.
For example: do you pay back your debt (saving you interest payments), do you invest it in your pension (earning you returns), or do you invest it in your business. Surely if you invest it in your business, you would only do that the investment has a comparable return – otherwise it is nonsensical.
An interest free loan earns you nothing, in fact, it simply depreciates your investment by the amount of inflation on a daily basis.
Having said that, although interest will accrue on a shareholder loan, it will typically not be repayable until the company actually has the funds to pay. This also applies to the principal amount (i.e. the upfront cash amount loaned to the company).
For that reason, although shareholder loans are regarded as debt, they are treated as “junior” debt – i.e. they are repaid last, only repaid after normal (arms length) creditors have received back their cash.
This is where your shareholders agreement is so useful (once again!) – one of the things which a shareholders agreement does is to lay out the general terms on which shareholders give loans, including interest rates and repayment terms.
Then, as and when loans are made in the future, you don’t need additional or lengthy loan agreements, you just need to confirm receipt, and record the loans in your financials.
Good luck bootstrapping!
Ever Heard Of The SAFE Funding Agreement?
A new way to raise capital? It provides an interesting new way to raise capital for your business.
Everything in Silicon Valley moves to keep pace with the speed at which business and entrepreneurship evolves and adapts. As a result, the legal and transactions infrastructure is forced to match this development by using increasingly innovative transaction documents.
An example of this is the SAFE agreement. Pioneered and made popular by the famous Y Combinator, the SAFE Agreement — an acronym for Simple Agreement for Future Equity — represents the evolution of the much-favoured convertible note.
The South African entrepreneurial ecosystem, whilst a bit behind the pace of San Francisco, has a habit of adopting these trends and applying them, right here in Mzansi. The SAFE agreement is no exception.
However, a word of caution — simply adopting a US template and applying it to your company can create some undesirable consequences.
To keep pace with innovative financing mechanisms, it’s important to be familiar with the salient features of a SAFE agreement.
Briefly, these are:
- Unlike a convertible note, the SAFE is not a debt instrument and so, it wouldn’t traditionally attract interest
- It seeks to mitigate the risk of insolvency for the Investee and does not have a maturity date
- It’s intended to be a simple, standardised document to cut down on transaction costs, negotiation time and provide an easier way for businesses and investors to agree on a neutral document to regulate the advancement of funds.
Typically, an investor would advance funding, in exchange for a future, contingent right to acquire equity in the business, upon the happening of pre-agreed ‘trigger events’, such as:
- Equity Financing: For example, where the Investee company raises capital in exchange for equity
- Liquidity Event: May occur upon a change of control or an IPO
- Dissolution Event: When the company voluntarily ceases to trade and/or is liquidated. One would have to regulate whether business rescue proceedings constitute a dissolution event in SA.
When one of these trigger events occurred, the investor would acquire the right to purchase shares in the company at a pre-agreed ‘valuation cap’ or a discounted valuation to the actual value of the company.
The valuation cap attributes a pre-agreed, but notional, value to the company that will be used in the calculation of how many shares the investor will purchase. For example:
Investor A invests R1 million into Investee Company B at a valuation cap of R10 million. At the Trigger event, the actual valuation is calculated to be R20 million. Accordingly, Investor A will purchase shares equivalent to a R1 million equity purchase in a R10 million company, despite the value of the company actually being R20 million.
This translates into relatively more shares in Company B, than if purchased at the actual valuation — a win for the investor and just reward for taking a bet on a speculative business.
An alternative is the ‘discounted valuation’ method, which arises where the investor agrees with the investee company to discount the real value of the company at the trigger event, by a pre-agreed percentage.
In the example above, where Investor A agrees with Investee Company B to invest R1 million at ‘valuation less 20%’, he would get more preference shares than if he had invested R1 million at the actual valuation.
A further alternative is a hybrid of both the discounted valuation and the valuation cap, where the investor is able to choose either scenario, depending on which would yield the greater number of shares.
It is worth remembering this about SAFE agreements:
- The business is free to issue as many SAFE agreements as it pleases, unless this is specifically regulated
- There is no uniformity on the treatment of the SAFE as a non-debt instrument and has not, to the best of my knowledge, been tested by International Financial Reporting Standards
- The SAFE provides for the subscription of shares on a substantially similar basis to that of other shareholders, but the investor has no way of knowing those terms, unless specifically regulated in the document
- There is no maturity date, so the investor could wait indefinitely for the trigger event to occur.
6 Tips For Bootstrapping
Not all start-ups have the luxury or know-how to gain financial investment at the outset. Most often, newbie entrepreneurs will need to fund the business from their own pockets and resources — this is called bootstrapping.
Bootstrapping a business is a lesson in hard work and flexibility, but ultimately it can help accelerate a company’s success.
Here are my survival tips for entrepreneurs
1. Pick your business partners carefully
When you are bootstrapping, most of the work will have to be done internally; you need to have a partner who shares your vision and is able to bring a skill-set that you don’t necessarily possess.
If you are good at different things, chances are that you can get more done and keep expenses and outsourcing to a minimum.
2. Generate cash flow fast
The most successful bootstrapped companies today share this common trait: They generate cash flow almost straight from the word go.
Without cash flow you will burn any initial investment you have made in the company and you will definitely not be able to show investors any traction.
3. Get good at accounting
If you’re not a numbers person, get one. Track what is coming into the business and what is going out. If more money is leaving than coming in, we have a problem. Look at free budget tracking apps online, such as GoodBudget and You Need A Budget.
4. Don’t be lazy
Don’t outsource work that you can do yourself. Yes, there may be people out there who can do certain tasks better than you can, but in a bootstrapped environment, you will have to learn to wear many different hats.
5. Don’t try to be fancy in the beginning
Posh offices, embossed business cards and fancy tech are all unnecessary items for the bootstrapped entrepreneur.
Use freeware, print your own business cards and use social media instead of expensive websites to promote your business.
6. Don’t take no for an answer
Perseverance is everything. Network, build relationships, be seen, use social media to your advantage. Bootstrapping is ultimately an investment in yourself that will yield results in the long run.
Read next: Essential Tips for Bootstrapping
Start-up Advice2 months ago
9 Quotes Every Entrepreneur Should Live By
Lessons Learnt2 months ago
15 Wise Insights From 15 Entrepreneurial Icons
Company Posts2 months ago
Enhance Your Entrepreneurial Flair With An Online Postgraduate Diploma From The University Of Pretoria
Personal Finance2 months ago
If You Think These 5 Things, You’ll Never Get Rich By The Time You’re 30