The People to Talk to Before Launching an Import Business

Q: I have an Eastern European contact who owns manufacturing facilities that produce red and white wine and beer. I am considering the possibility of importing and eventually distributing some of his products. What documents do I need to have and what U.S. government offices should I contact before I even think of contacting the potential distributors, resellers and marketers?

--Tim Pasztorka, Burbank

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A: A good place to start getting some of your questions answered, especially when it comes to licensing, tariffs and import regulations, is the U.S. Customs Service at (310) 514-6721. Next you should contact a freight forwarder, because these businesses usually fill out the certificates necessary for shipments in and out of the country and could probably also offer advice. There are a number of freight-forwarding companies in the Long Beach area that you can reach by checking the yellow pages under “freight forwarding” or “shipping companies.”

Before you start thinking about licensing and shipping, however, you need to research the market and get some kind of handle on whether there is a potential to sell these products in the United States. Try contacting the commercial attache at the embassy of the country where the wine and beer is produced. Many countries are anxious to export their products to the U.S. and will have some motivation to help you get started. They may also have access to computer databases and search engines that could be very helpful.

--Robert Breunig, Regional International Trade Coordinator, SCORE, U.S. Export Assistance Center, Long Beach

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Q: I am a credited producer and am completing a business plan for a production company specializing in G, PG and PG-13 product. Can you direct me to sources of financing?

--Michael Cook, Santa Barbara

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A: There are two basic types of financing available for the type of venture you are contemplating: equity and debt. Both will require a strong business plan, detailing the products/properties developed to date, to support the operation contemplated.

Equity, or stock ownership, should include some of your own funds as part of the equity base of the company. A portion of the equity may also come from friends and relatives and include properties that have been developed that are being contributed to the organization.

Another source of equity to fund the development and production of your properties is the studios for whom you have produced in the past. Depending on the track record of the films you produced and the studios’ perception of your contributions, coupled with the strength of your current story concepts and planning, you may be offered a development deal. In that case, you might receive funding to continue story development and pre-production as well as an overhead fund for necessary expenses related to running the production company. The downside to this for you is that the studio will own all distribution rights in perpetuity and the majority of the profits in exchange for the risk it is taking.

While some venture capital firms consider equity investments in motion picture production companies, this is rare due to the risk involved. Motion pictures, while potentially lucrative from the numerous revenue streams available and the continued growth of the global market for American entertainment product, face stiff competition for the consumer’s entertainment dollar.

The other method of financing is debt. Most lenders will want some form of collateral as a means of securing the loans. This would involve a second mortgage on your home and perhaps other assets such as bank accounts and 401(k)s. I suspect this may not be to your liking, but if you are passionate about your plans, it may be a viable route.

Since you most likely have story ideas developed and other essential elements attached, the pre-sales route may be the most attractive. This is a very common practice with many independent producers. Consider pitching the ideas to the studios, cable networks, home video distributors and, most important, to the many foreign sales organizations. With firm contracts from reputable domestic and international distributors to pay upon delivery of the films in hand, you may be able to discount the contracts at one of the many banks servicing the entertainment industry. Those funds could then be used to produce the films. Keep in mind that a production budget and a completion bond may also be required.

--Marty Shindler, Independent Management Consultant, Calabasas

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If you have a question about how to start or operate a small business, mail it to Karen E. Klein, Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016, or e-mail it to kklein6349@aol.com. Include your name, address and telephone number. The column is designed to answer questions of general interest. It should not be construed as legal advice.