ASK & DISCUSS INDEX

4 years, 9 months ago - Marlom Tander

Keep it simple and write out in clear english, with math examples, what you want to do.

The main thing is to define at outset how the profit will be calculated. Because the first rule of the dodgy profit share deal is to bill your own time as a fee so there never is a profit. So lets rule that out :-)

Structurally you need everyone to be clearly involved on an entrepreneurial basis, in order to try and avoid any issues re minimum wages. This means you need maths that shows that people stood to make a LOT more for their time than minimum wage, based on reasonable sales expectations. Albeit, for taking on the risk of bugger all.

I'd look at something like a Limited Company, and everyone gets shares. You could do Sole Trader for smaller projects. Partnership you really want to avoid. Note that it is frighteningly easy to create a partnership by accident.

The easiest way is to say something like, if you are paying all the costs, so you are the investor :-


All expenses agreed in advance, and for which you provide receipts, will be paid by the investors. All third party costs we need to incur, will be paid by the investors. No one involved can bill the project for their time or services.

Revenues :-

Initial revenues will be used to repay the investors

Once they have been repaid, the next tranche of revenue will be used to pay minimum wage everyone (except me) for their hours worked. Pro rata if insufficient funds.

Any surplus will be paid as dividends, so everyone will get a fair share. So my money is entirely dependent on me making it work. Which is why I have the biggest shareholding.

SO....share allocation. This very much depends on the details. When you do the maths the first thing you'll notice is that IF you actually think you'll make a profit, you really want to simply hire as many people as you can afford, esp those who are supporting cast or day hire crew and keep shares for those whose creative input you need but can't afford. Because money (if available) is cheaper than equity in a profitable project.

The main legal point is that the laws are written to protect workers from exploitation. Sweat equity is allowed and the proof is that you are able to make a solid case for potentially large rewards. So, will your deliverables allow for cinema or streaming release?

People are also allowed to volunteer their time for anything they like, knowing that they have little expectation of reward.

What can get you into trouble is getting people involved with the promise of profit share, but they then realise that the project is unlikely to generate profits, but is really about your attempt to win prizes and build your career. False presences - minimum wage lawsuit, possibly against you personally, in spite of the limited company protection.

Message me if you want to discuss further, happy to help during covid downtime :-(

4 years, 9 months ago - Vicki Helyar

Hi Marlom,

Wow, what an incredibly detailed reply, thank you so much.

It goes to show; your answer has provided more answers than solved questions so it's clear that there's much I don't know about the business side and how much I have to learn, and your answer has helped so much with that. I need to look over it again with a fine tooth comb.

Thanks so much for offering for me to ask more questions...I may have to take you up on that, if okay?

Thanks again so much - very much appreciated.

Vicki

4 years, 9 months ago - Marlom Tander

Of course