THE NIGERIAN ENTERTAINMENT BUSINESS: â€˜Professionalize the Hustleâ€™ – PART 1
It is widely accepted that the only way a business can grow is for it to invest in itself, with said investment is usually in form of cash although it can also be in the form of intellectual property, real estate, technical know-how, human resources, customer lists or other contributions. Investment (funds) can be sourced internally from the profits of a company (ideally), or, as is more often than not the case, from external sources such as private investors and/or financial institutions.
An entertainment business is no different in this regard; be it a music company, film Production Company, broadcaster, publisher, cinema chain, theatre Company or any other business within the entertainment value chain. Some rules are timeless and universal.
Unfortunately, as it stands a major challenge in the Nigerian entertainment sector is the lack of verifiable data at the micro level; namely, with respect to the performance and value of individual, or groups of, businesses within the industry and by extension the sector as a whole. Of course even in advanced economies statistics are never exact and are generally based on extrapolative methods and techniques, meaning conclusions are based on a sample of data to which a number of rebuttable assumptions/principles are applied; however in such economies said extrapolations are at least formulated to some extent from accurate, independently confirmed business and market data.
SHOW AND PROVE
Businesses can only attract investment if they show their value and/or prove their past performance; by way of presenting evidence of their previous track record and evidence of their assets and liabilities in the form of annual accounts and balance sheets. Said proof, present along with a realistic strategy or proposal as to the likely effect of additional capital being injected into the said business, forms the primary basis upon which investors can be persuaded to part with their money.
The irony is that the said information, which includes the (true) turnover, expenditures, profits, losses, assets, liabilities and other key indicators that together form a medical report of a business’ health are, under the laws of the country, obligatory for all businesses to file with the corporate regulator.
All Nigerian companies are mandated annually to file returns with the Corporate Affairs Commission and tax returns with the relevant Inland Revenue service. Such filings are the first port of call for any auditors that may be engaged to prepare an audit or review, with the contents of said filings being compared with the internal books of account of the business in question.
Investors only invest in businesses that have proven that the economics of their operations are sound. Such proof must necessarily be in the form of the audited filings of the business and corroborating documentation to support same.
Businesses need to begin to focus their attention on the book-keeping, administrative, and compliance aspects of their operations; and given the general lack of experience of business owners with best practices it is important that the services of suitably experienced professionals that understand the mechanics of the business are engaged. The right professionals can assist entertainment businesses to improve their business-practices, governance, regulatory compliance, record-keeping, as well as in marketing and sales.
Traditionally lawyers are viewed in Nigeria almost as theorists in law that argue over semantics amongst themselves, with a judge being viewed as ‘one of them’. However, a new breed of modern attorney in Nigeria with strong business acumen and commercial awareness are increasingly leaving the court rooms to actively assist their clients in developing their businesses whilst still fulfilling their core duties of providing professional legal advice and services as and when required.
Attorneys with additional qualifications and/or experience in business, finance, economics and especially the creative industries has spawned a new breed of lawyers forging a modern and technology driven kind of legal practice.
Lawyers must have in depth knowledge about, and experience in, the industries, economy, and political climate within which their respective clients operate. The law is fluid and is ever changing, being reviewed and refined both statutorily through primary and subsidiary legislation, and judicially through court decisions and rulings.
Additionally, the modern commercial and corporate lawyer understands the mechanics of commercial enterprise, the state of the markets, competitors, and most importantly where new opportunities can be exploited or existing opportunities maximised. The contracts and transactional arrangements made in the entertainment business can be quite numerous and often complex. Knowing what the value of a song, album, movie, television show, logo, appearance or likeness and other intangible property can be worth and how the different rights attached to said property can be negotiated and agreed upon is a major point of added value of the modern attorney in the entertainment business.
Furthermore, an attorney is well versed in how businesses operate, and more importantly how it can be structured and managed to achieve more productivity and efficiency through the hiring of the appropriate personnel, additional training to business development staff and executives, negotiating more favourable terms/less onerous obligations in commercial transactions, refining operating practices and procedures, identifying cost savings and efficiency-gain opportunities based around the legal and regulatory framework.