We can all find reasons to upgrade our video production equipment and software. Industry magazines tell us we should and equipment/software manufacturers advocate we do so we’ll have access to the new features available in the upgrade. There are thousands of people in production forums throughout the world who believe that staying up to date with current upgrades and technology is crucial to being competitive in the video production industry.
To an extent, they are correct. But what people don’t share with you are some of the reasons why you should not upgrade your equipment and software. Or at least not at the speed in which the industry says we should.
The underlying theme here is that upgrading your gear takes money out of your pocket which impacts the overall cash flow of your video production business. If you choose to finance upgrades with debt (loans, credit cards, etc.), then you are also impacting your cash flow because you will add payments to your monthly expenses. I know that upgrading is a necessary component of running a video production business. However, you should think hard about the following reasons NOT to upgrade before you spend the money.
1. If you haven’t mastered the video production equipment and software you have now, you shouldn’t upgrade.
When you start to get the itch for something new, take out the manual and start reading. You’ll be surprised at all the things you didn’t know about the equipment/software and this will re-energize you. Until you can push your gear to its absolute boundary every time you use it, save your money.
2. Rarely will an upgrade result in more profit for your video production business.
Think about it. Did the last piece of gear you purchased improve your bottom line? It probably didn’t. My employees are constantly advocating that I purchase new cameras or software. I respond by telling them that if they can justify on paper how the new gear will result in additional profits for the company, I’ll consider it. Needless to say, most of the new gear doesn’t get purchased.
3. When you finally pay off your car, you want to do your best to drive it as long as you can.
Not having to make payments is a wonderful thing. The same goes for equipment and software in your video business. If you have a camera that is paid for and is still generating revenue for you, think hard before buying another camera. Making money with gear/software that isn’t costing you money substantially increases your profit margins. A couple hundred dollars every quarter or year in maintenance will help that piece of gear be a profit maker for as long as 3 to 5 years, depending on what it is of course.
4. If you had a choice to invest $5,000 into equipment for your video business or invest $5,000 into something that will improve the quality of life for your family, which one would you choose?
If you chose the equipment, you have your priorities all screwed up. If you chose your family, your head is on straight. In my situation, $5,000 will cover several mortgage payments on my house and on my rental properties if/when they are vacant. Instead of sinking the extra cash into a business asset, I use that cash to build personal assets which will directly benefit my family.
5. Upgrades take time away from your revenue generating activities.
If sales are down, upgrades won’t improve that. You have to improve that. If you are in the middle of several projects, upgrades won’t help the situation. They will simply slow you down which will cause you to be less profitable. Purchasing new equipment won’t make a prospect want to do business with you. The quality of your work and reputation is what gets the phone to ring. Ninety-nine percent of the time, your clients won’t give a flip about what kind of cameras or software you use. They’ll only be interested in the formats you can provide them after the project is complete.
Obviously, you can’t run a video production company without upgrading your equipment and software when absolutely necessary. I just hope that this article has given you a reason to only upgrade when you are 100% sure you can no longer squeeze a reasonable profit margin out of the gear you have now. Training yourself to hold off on spending large sums of money for as long as possible will help to increase the financial strength of your video business as well as improve your skills as an entrepreneur. Both of which will accelerate your success!