10 Things to Know About Starting a Production Company
Starting a production company isn’t easy. Here’s what you need to know to get started successfully.
Let’s go ahead and repeat what we said up top, because it’s a hard truth: Starting a production company isn’t easy. It’s a lot of hard work. But if you dedicate yourself to it, then you can make it happen. I learned a thing or two after starting a production company of my own in 2013. So let me share some advice I was given when starting out. Hopefully these ten points will help you as much as they helped me.
1. Have an Idea of What You Want to Do
This can be the hardest step in the entire process – but it doesn’t have to be. You should know going into all of this what you want to do, whether that be films, commercial, industrial, etc. If you don’t? Now is the time to figure it out. It’s also beneficial to write out your short term and long term goals. Identify your strengths and see how you can build your company around them. Just be sure to have all of this in place before you begin the process of developing your company.
2. Research What Others Have Done Well and Not so Well
Now that you know what you want to do, you’ll need to do a lot of research. This is key. If you are doing commercial or industrial work, then you need to research your local area and gauge who else is doing this same type of work. Use a site like ProductionHUB to help aid in your research. Pay attention to the services and fees that other companies provide and charge. If you can find this information, then you can find ways to compete in the market.
If you’re going into film, then you need to really research areas of the industry that fit your talents. You may be an incredibly skilled artist and could offer pre-visualization services. Maybe you’re great at promotions and could offer film marketing. Look at other successful production companies in your field and read how they got started. Use this information as a road map.
3. Be Creative With Your Name
Creating the name for your production company is key — this will eventually become your brand. So make it good and make it something relevance to you. For instance, Steven Spielberg’s production company is Amblin Entertainment, whose name came from Steven’s very first completed film Amblin. Or you could go another route and use part of your name like Ridley Scott did for his production company Scott Free. Just be creative and make sure your company stands out.
4. Research and Make Sure Everything is Legal
Once you have your name hammered out, you need to begin looking ahead. One thing you need to be aware of is that you’re eventually going to want to trademark the name. Now this doesn’t sound like a big deal, but it is. For example, years ago I applied for a trademark for my production company. However, another company had a name close to what I had created. They were also using the same classification code I was applying for. Because of this, I was not awarded the trademark and had to start all over.
Be very creative with your name and then check that name against the USPTO trademark database. Scour the internet for already established companies. You’ll eventually want to contact an attorney who works with trademark law. They can do a comprehensive search and help you file for your trademark. Just be aware that a trademark filing will run you $2000 or more when all is said and done.
5. Decide What Type of Company You’ll Be
We know what you want to do with your company. We know the name. But now what type of company are you going to be? Confused? It’s okay, I was too when the question was posed to me. You want to decide early on if you need to be a DBA, LLC, C-Corp, S-Corp, etc.
This decision is going to affect the cost of filing to do business. It will also affect your tax filings as well. Check out this information from the Small Business Administration.
Sole Proprietorship: “A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner.”
LLC (Limited Liability Company): “A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The “owners” of an LLC are referred to as “members.” Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations or other LLCs.”
Cooperative: “A cooperative is a business or organization owned by and operated for the benefit of those using its services. Profits and earnings generated by the cooperative are distributed among the members, also known as user-owners.”
C Corp (Corporation): “A corporation (sometimes referred to as a C corporation) is an independent legal entity owned by shareholders. This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.”
S Corp (Corporation): “An S corporation (sometimes referred to as an S Corp) is a special type of corporation created through an IRS tax election. An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation.”
Partnership: “A partnership is a single business where two or more people share ownership. Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business.”
6. Find a Certified Public Accountant
Now that you have your name and your structure, you’ll need to find someone to help you navigate the world of accounting for your business. This is not something you want to do yourself. Hire a Certified Public Accountant. A good CPA will not only help you figure out what will be required of you when tax season comes around, but they can help you set a realistic strategy for your business as well.
With all of this said, don’t just pick the first CPA that you find. Go in and sit with them and talk with them. Find out if they are the right fit for you. Research them online and look for reviews from others who have used their services. You’re going to be working very closely with your CPA, so find the one that is right for you and your company.
Try using the CPA Directory to get started, or just Google CPAs in your area.
7. Create Your Business Plan
Every business needs a plan. A production company is no different. This is the time when you want to take the short and long term goals you set for yourself and turn them into a business plan. Get really detailed and try to map out your path for the next three to five years. Give the description of your production company, what area of the industry it will focus on, and who will be running it.
Also, include all of the research and market analysis you did in the beginning that helped you determine what type of production company you’ll be. A business plan is a must have for any business and it’s a great way to gauge your progress and keep that progress on track.
8. Consult an Attorney
Once you get rolling and want to take it to the next level, you’re going to need representation. While this shouldn’t be one of the last things you do, it usually is the costliest, so it tends to get put off for as long as possible. Don’t wait too long to consult with and find an attorney to represent you — at some point you are going to need them. Better to have them in place early than too late.
Just like the CPA and Trademark Lawyer, take your time meeting and researching attorneys. You want someone who is going to work hard for you. One way to find a good corporate or company attorney is to talk to people you know in the industry. Gauge their recommendations and then go from there.
9. Secure Start-up Capital
Next to creating the name of your company, the hardest thing to do is to secure start-up capital for your company. If you’re working in commercial and industrial, you’ll need a certain level of equipment — which means you’ll need money. I’ve never been a fan of taking out loans, but I’ve seen some people do this and capitalize on it to start a really successful business.
For film production companies, there are all sorts of venture capitalists out there looking for ways to expand their portfolio. One of the good things about being in film is that pre-production is usually going to be the cheapest part of the process. With that said, you might be able to float this part of the project and get something together that can impress potential investors. Just be sure to have a well-developed presentation before you go into these meetings. If you can show that you have the skill and development to pull this off, then you should be able to secure some sort of funding for your film.
10. Get Out There and Spread Your Name
The biggest part about our business and this industry is networking. You really can’t ever talk too much about your project and your production company. But in order to maximize your visibility, make sure you have a presence online. Start with a website for your company, then start looking at social media like Facebook and Twitter. Then jump to the next level of social media that exists specifically for film professionals like Creative District and Stage 32.
Want to read more about the business side of the industry? Then check out these articles from PremiumBeat:
- How to Pick the Right Structure for a Video Production Company
- The Best Camera Options for Production Company Startups
- 5 Trends That Filmmakers and Video Pros Should Be Following
Are you about to start your own production company? Was this information helpful at all? Let us know in the comments below!