Forums: Discussions for entrepreneurs and small business.

Taboo Business

Hello all, for the first time in a long time I am feeling frustration based on being in the Business we are in.

We run a business that is looked down on by most, one my wife and I can`t discuss with our friends or family. Our associates we meet related to our other business, rental properties, etc.

Now mind you what we do is completely legal, ethical, and well, by our standards moral.

We have been in this industry for almost 14 years and it has always paid the bills and put one of our two kids in college and made us a lot of money.

Our industry is probably one of the most profitable in the world, some estimates as high as 100 Billion, but more realistically 5 to 10 billion in the U.S.

We have been successful at providing services to other people in our business and consulting is now a large part of our of our overall revenue base.

We have helped many small entrepreneurs find small funding for their projects.

Now we are looking for some substantial investors and partners and its like we have the plague.

If you haven`t guessed by now we produce Adult content, yes Porn, Dirty pictures and Movies.

Not Kiddie Porn, exploitive or demeaning content, nor do we do anything that involves dangerous activities or unhealthy practices.

We are a safe, respectful, successful family owned business.

Our piece of the industry (Midlevel wholesale content production) is dying. With competition from the Eastern Europeans, and the Asians we just can`t compete any more. We are down 40% from last year and I see it getting worse.

We just can`t compete with a guy in Prague who`s cost of doing business is so much cheaper than ours.

He has the same equipment as us (We both purchased our stuff of the Internet) but his costs for Talent are 90% less than mine.

Where I may pay $300 U.S. an hour he pays perhaps an equivalent of $5 or $6 an hour.

And we both sell our product on the same market and now to the same people.

This is not a new story for American business nor is it something we didn`t see coming.

We are ready to branch into a new and exciting area of our industry and have started looking for partners and investors, shoot we are even having trouble finding qualified employees.

Don`t get me wrong I can find plenty of guys to come check out our business, but most are a waste of time and energy and many turn out to be just creepy.

We have come to the conclusion that we need to hire someone to assist us in our search for funding and are trying to find some sort of broker but are leery of spending much money up front.

We are posting here to see if perhaps anyone has any ideas on were to find a broker or funding advisor that can help us find funding for our new venture.

Thanks for taking the time to read our story of woe do to foreign competion :-)

Thanks
Bill

Hey there, Bill. We`ve had a couple of previous discussions on the so-called adult entertainment industry. One was about the ethics, but that really was a flame more than a discussion. The other discussions look at the business issues.

In your situation, I`m reminded of the classic story about the buggy whip industry. As the automobile came down in price, and Henry Ford introduced the production line, horse-drawn transportation began to decline. An offshoot of that field was the buggy whip business, and it began to collapse.

People use the example to highlight the entire concept of product life expectancy. Bill Gates said, long ago, that he projected Microsoft as approximately a 10-15 year business. As you know, he recently left the company, and Microsoft is starting to have a harder time "automatically" selling products.

The adult entertainment industry is complex in that it runs on two (not one) basic drivers. The first is the natural, probably genetic-level interest in sex and erotica. But the second is the cultural "control" of the first driver. When people wear clothes, that makes naked bodies less available. When nobody wears clothes, something other than nudity is the attraction.

In other words, any business is determined by availability. The key question is "availability of what?" In this case, it isn`t sex that`s the product, it`s a complex combination of potential sex, imagined sex, fantasy, and prohibition. When each of those becomes readily available, competition moves into another arena.

You can compete on price, availability, service, choice, time, quality, and various other concepts. Here`s an interesting article that goes all the way back to the original "lemonade stand."

The Internet has changed entirely the global culture, and so you`re starting to feel the buggy-whip effect. Setting aside legal entertainment and changing social mores, there`s also the massive influx of illegal activity, with slavery being the most heinous.

So you`re competing not only on availability and pricing, but you`re also running up against very large businesses that aren`t constrained by any sort of law. That`s going to wreak havoc with pricing, which in turn affects projected investment returns.

What`s the new area of diversification, if you don`t mind my asking? I`m having a difficult time envisioning something that wouldn`t also run into this major competition problem. I think that to see if investors would be interested, we`d have to analyze the underlying projected market, market trends, and so forth. 

Hi Craig,

Yes we are aware of the down sides of our business, the challenges involved, and have been planing for a year or so our exit strategy and our new plan.

We have been in the Adult business successfully for 14 years and with revenues in the high 6 figures.

We are moving into the Internet TV business.

Live streaming video with interactive hooks to a dynamic web site, VOD, Interactive participation for our paying members via 2 way video links or one way feeds with a telephone pay per minute system for non members.

We have a comprehensive business plan, revenue projections, market summaries, technical description, Etc.

Our problem is finding  qualified investors to work with, who will take us serious.

That`s why I am sort of looking for advice on working with some sort of a broker or Middle man and how to qualify or vet them as well.

Any ideas or comments from any one would be helpful.

On a personal level most of our capital is tied up in real estate or other not so liquid assets.

We are in a situation were we may have to continue with the old to fund the new, not our ideal situation but due to the inability to raise cash,  the kind of cash we expected would come from our assets, go figure huh ?? it might be like working two jobs like lots of Americans are doing now days.

So to restate the question I was wondering if any one has any advice on working with some sort of broker or middle man that can help us find qualified investors.

Thanks Bill

-------------------------

James M Stayton
New Business Development
Onlinexchange.net
877.538.3490 Toll Free
707.317.7584 Office
707.320.0513 Fax
707.689.0568 Cell
Find what your looking for.

I think that was my point as well, the "done to death." Your business venue likely wouldn`t suffer from lack of investors, so I`m wondering if maybe you`re getting a lot of talk but no follow-through is that perception of diminishing market?

Bottom line is that any investor is looking closely at the ROI. It really doesn`t matter what`s the product, it`s all in the potential for growth and the increase in revenues. Adult entertainment isn`t as arcane as biophysics, genetics, and so on, so a lot of people would believe they understand the business---even if they don`t.

You seem to be getting the queries, from what you`ve said; so the problem may be in this perception area.

On another side of the problem, even if you have your money tied up in real estate, that`s still a fairly decent form of equity. Couldn`t you get your capital as a loan against your properties? Then you wouldn`t have to split the equity in the company?

-------------------------

James M Stayton
New Business Development
Onlinexchange.net
877.538.3490 Toll Free
707.317.7584 Office
707.320.0513 Fax
707.689.0568 Cell
Find what your looking for.

-------------------------

Shane Eloe, CPA
http://numberinsights.com