“Ignore the man behind the curtain” ~ The Wizard of Oz
Imagine going on vacation, spending all sorts of money, then coming back home to find out that you’ve earned more money than you spent.
How incredible would that be? How can this be? Investment money? Trust fund? Maybe … But it could something as simple as having a business system in place.
In Robert Kiyosaki’s book, Rich Dad, Poor Dad, he explains the importance of understanding the difference between an asset and a liability.
Asset = Money that goes into your pocket
Liability = Money that is taken out of your pocket
You might think owning a house is an asset, but if you’re paying a bank a mortgage, then money is going out of your pocket. So, it’s a liability. But if you’re the bank, collecting money off the note to that mortgage then it becomes an asset. See the difference?
Although I do have reservations about the manner in which the rich are glorified in Kiyosaki’s book, I must admit his explanation of how the cash flow quadrant works is very eye-opening.
CASH FLOW QUADRANT
THE EMPLOYEE: From the outset we are taught to work hard, learn a profession, and get a job. A job working for someone else. We become an employee. Being an employee is the first quadrant of the cash flow. You earn money for the hours you work. Dollars for hours. When you clock out of work, you stop earning money.
THE SELF-EMPLOYED: The next step in the cash flow quadrant, you might move from an employee to someone who is self-employed. You work for yourself, no boss, make up your own hours … sounding pretty good. This is closer to what many professionals in the film industry represent. The self-employed, the freelancer. But you’re still earning money for the hours you work. If you get sick, there will be no money coming in … it’s just you and you alone.
BUSINESS OWNER: The next evolution of the cash flow quadrant is becoming a business owner. Now we’re talking. You have some employees, you’re your own boss, earning more money than if you were an employee. However, some business owners are enslaved to their business. Making little to no money in the process of trying to keep a business … well, in business.
BUSINESS SYSTEMS (INVESTORS): The golden zone of the cash flow quadrant is owning business systems or becoming an investor. This is how the rich keep getting richer. This is how the rich can go away on vacation and come back home to have earned more money then when they left. Their business systems just keep making money while they sleep.
Would you say that McDonald’s makes the best hamburger? Haha. No! But they’ve sold over a billion burgers. They have a business system in place that can be rinsed and repeated in any location. Business systems.
Resources, Ask, Solve, EXPLOIT, and Repeat.
WHAT BUSINESS IS HOLLYWOOD IN?
Realize one important thing. Hollywood is not in the film business. What? How can this be? No, they make movies and television shows. Right? Wrong.
Hollywood’s business system revolves around the exploitation of licenses.
Think about it. If you had owning control of let’s say, the license of Star Wars … what would you do with it? Negotiate deals to have it in theaters, on television, on DVD’s, VOD? Would you allow manufacturing companies to make toys and games for a licensing fee? Would you allow other forms of media to be created to expand the brand? What would you do if you owned the license to such a valuable brand like Star Wars?
You would probably do what has already been done … exploit it to the ends of the earth and make a lot, a lot of money.
DREAM OF THE NINETIES
The dream of the 90’s is alive and well in Portland … Haha. Actually, the independent filmmaker’s dream was alive and well in the 1990’s when the dream was to make a film, bring it to Sundance, and become rich and famous in Hollywood from that moment on.
This method is still taught today. Make a film with a genre that can sell internationally, that has sellable stars, bring it a film festival and get a distribution deal from a major studio … and this will equate to your success in the film business.
Let me ask you this … If you sell your film to a distribution company, who owns the license? You? No. So, you’ll never be able to exploit the license of the film you bled for. But you might be thinking that the distribution company will give you a million dollars for your film and you’ll be rich. Or, they say you’ll make profits on the backend when your film starts to make money.
But you know that’s not true. No filmmaker ever sees the backend money … ever.
So, if you know how the rules of the rich work and how the rules of Hollywood work, why would you hand over the control to exploit the license of your work for years to come?
By controlling the license of your film you can create various products from it, and create a business system that could earn you profits for time to come.
Your JOB is to become a filmmaking entrepreneur.
Repeat after me: The rules of the rich lie within being an investor of business systems.
Repeat after me: The real business of Hollywood is the exploitation of licenses.
Repeat after me: Controlling the license of my film I can build my own business system.
For Task #2 repeat these three phrases three times. That’s a lot of three’s. And that’s it. You will have completed your task for today. Congratulations.
If you want to get a head start, grab yourself a FREE GEAR GUIDE on all the equipment I used to make a feature film with no crew.
Follow along as we break down each task into small nuggets that you can accomplish. Thanks for being a trooper … I mean, a Film Trooper, and reading along.