What are the things to understand and watch out for when starting a
small VFX/CGI production service?  My friend  and I are considering starting a
small company in Los Angeles. We have a very talented special effects
supervisor who already has an extensive reel in music videos and
commercials.

I am trying to understand if this could be a lucrative business to get
into, and I want to understand the industry dynamics. Also, advice on
investments in eqipment and infrastrucutre will be appreciated as
well.