How to Start a Production Company

Benefits of Starting a Production Company

By starting your own filmmaking or production company, you can take a fresh idea from concept and development to production and release.

Economic gain and influencer renown are on the table, too. Creative entrepreneur Kevin Smith produced and released his 1992 independent film Clerks with a budget of $27,575. That film grossed over $3 million at the box office alone, launching Smith on a path to be a celebrity and key player in dozens of creative endeavors. Today, Smith’s net worth is an estimated $25 million.

Though not every production company will see Smith’s meteoric success, there’s plenty of room in the indie, marketing, and YouTube world for a new production business to make its mark.

A production company turns intellectual property, or IP, into visual entertainment for the screen, audio, stage, and more.

It’s a complicated business. Starting your production company can take grit, a solid team, funding, and abilities to manage risk, anticipate audience interest, and lead negotiations with anyone from IP creators to filmmakers and actors to distributors. Use the startup checklist below as a guide to green-lighting your production company.

How to Start a Production Company

Write a Production Company Business Plan

For starters, craft a solid business plan to guide your production company startup.

How will you specialize? Do you have ambitions to be the next Disney or Paramount? Do you want to make it big in Hollywood? Perhaps your production vision is at a different scale, such as specializing in social media videos, corporate production, documentaries, event filming, or post-production. Knowing your niche can help you keep your business focused and competitive.

Who is on your team? You may increase your chances of success if you’re working with people who excel at different parts of production. From development to distribution, production to marketing, aim to start your team with the right employees, contractors, and freelancers. See Film Production Lifestyle’s article on how to hire the right team for your production company.

How will you acquire rights and develop ideas? Production companies often work with attorneys who specialize in IP law. An IP attorney can help you draft and negotiate the legal contracts that form the foundation of every production, from what rights your company is acquiring, to how you can comply with relevant laws at filming locations.

What funding will you need, and how will you acquire it? Sure, Kevin Smith was able to make Clerks for less than what many new cars cost, but that’s not the case for every venture. Financial estimates in your business plan can help you find the right backing for your project.

Choose a Business Structure

While a sole proprietorship can seem a straightforward way to start your business, many production companies use the legal structure of a limited liability company (LLC). When you start an LLC, members can also use an operating agreement to specify how company roles and functions are managed.

An LLC balances what general partners and limited partners may do and how binding those actions may be on the overall company. Plus, the LLC business structure can potentially shield personal assets from potential liability, prevent double taxation, and give partners latitude in how profits and losses are figured into the overall business. It’s important to choose the right business structure for your new company.

Create a Business Name

Mutant Enemy. WingNut Films. Bad Robot. Gary Sanchez Productions. Worldwide Pants. Village Roadshow. Serious, silly, or somewhere in between, your production company name can be pretty much anything you want — as long as it’s not being used elsewhere.

As you develop business name ideas, also review what domain names and social media accounts are available for that name. The more consistently you can represent your company across various forms of media, the more cohesive your brand.

Register Your Business and Open a Bank Account

Once you’ve selected your production company’s name, it’s time to set up the elements your film business needs to be considered established in the eyes of the law. Using a business formation service can help considerably with this step.

Where you register your LLC will have different permit, licensure, zoning, and insurance requirements. You can also get a dedicated employer identification number (EIN) from the IRS for tax purposes. An insurance agent who specializes in the production industry can also help you navigate the right policies and coverage levels for your business. Last but definitely not least, business checking and other bank accounts at your financial institution can prepare your business for fulfilling expenses and taking in revenue.

Determine Your Business Costs

Your production company will have its own combination of startup costs, one-time fees, regular fixed operating expenses, and variable costs. Determining these costs can help you figure out what your break-even point is. You may also need to be prepared to work with entertainment unions, including paying union rates for services. Here are some business and production costs to consider in your business planning:

• Business setup fees (such as getting an LLC license, and gaining required licenses or permits for your state and/or local area)
• Office space
• Payroll
• Pre-production (storyboarding and scriptwriting)
• Talent (actors, directors, and narrators)
• Camera and technical equipment and personnel
• Visual, sound, and effects editors
• Special effects, animation, narration
• IP licensing fees
• Legal fees
• On-location services and amenities such as transportation, laundry, and catering

Your production company may also want to account for other travel costs for networking and business meetings, as well as print, trade show, film festivals, and online marketing expenses. Save time and money with B&H Photo’s guide to cutting production expenses.

How do you fund your startup costs?

Forming your production company and developing your business plan demonstrates your seriousness about the business, and it can increase your likelihood of getting the cash flow you need to start rolling. Production companies may be able to tap startup and production funding from a variety of public and private sources.

Some private banks specialize in entertainment lending. Getting to know lending staff can help you build rapport. Knowing what the lender’s requirements are — such as a minimum project budget, or what sort of licenses or royalties may serve as collateral — can be key to navigating a successful business loan.

Private individual or group investors are another common source. While some stakeholders may prefer to function more as silent partners, others will expect to influence decisions, exercise creative control, and steer distribution or licensing of other rights.

Purchase Equipment for Your Production Company

What equipment will your business need? From cameras to computers, lights to mics, you’ll potentially need a variety of equipment to fulfill both the creative and administrative needs of your production company. Depending on the scale of your company and your planned projects, equipment you might need could include:

• Film or digital cameras
• Lenses and other accessories
• Memory
• Rigs, gimbals, and/or tripods
• Mics, recorders, headphones, and other audio accessories
• Computers and software for audio and video editing

Your budgeting will vary. Basic pro equipment could be around $10,000, but examine how you can increase your budget to get the right combo of the best new or used gear you can.

Market Your Production Company

No matter how good your company or your production is, it’s going to be hard to be successful unless the right people know about you and what you’re doing. Connections and word of mouth underpin the production industry. Audiences need ways to see sneak peeks of what you’re doing — and they need to be able to spread the word to others.

Marketing and advertising are crucial to how you’ll get the word out about your production company and what you’re making.

Print assets, such as brochures, business cards, postcards, and posters are useful physical assets that you can mail or post around your area.

Social media can be a great way to build buzz and attention. Plus, since sharing and other forms of engagement are built into social platforms, you can use the compounding power of sharing to increase the public’s interest. Platforms such as Facebook, Instagram, LinkedIn, and YouTube can be powerful ways for you — or actors and others connected to your projects — to raise public awareness. Networking and referrals are key, as The Beat’s guide to marketing a production company shows.

Remember that domain name? Your business’s website is a powerful asset that tells people who you are, what you produce, and what industry and public accolades you’ve received or been considered for.

The world of production companies is vast. Here are a few ideas where you may find specialization, opportunity, and production profits for your production small business:

• Event filming
• Corporate/workplace video production
• Music videos
• YouTube channels or other ongoing branded videos
• Short films
• TV shows and series
• Real estate tours
• Feature films
• Series production for streaming services such as Netflix or Hulu
• Commercials

What niche will you choose?