How to Start a Film Production Business

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How To Start a Film Production Business

Starting a film production business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching your own production company.

Importantly, a crucial step in starting a film production company is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.

17 Steps To Start a Film Production Company

Find Your Niche
Choose the Name for Your Film Production Business
Develop Your Film Production Business Plan
Hire an Entertainment Lawyer
Choose the Legal Structure for Your Film Production Business
Secure Startup Funding for Your Software Company (If Needed)
Secure a Location for Your Business
Register Your Film Production Business With the IRS
Open a Business Bank Account
Get a Business Credit Card
Get the Required Business Licenses and Permits
Get Business Insurance for Your Film Production Business
Buy or Lease the Right Film Production Business Equipment
Develop Your Film Production Business Marketing Materials
Purchase and Setup the Software Needed to Run Your Film Production Business
Build a Team
Open for Business

1. Find Your Niche

When you’re thinking about starting a film production business, the first step is to find your niche. There are all sorts of different niches in the world of film production, and finding the one that’s right for you is essential to your success. Are you interested in feature films? Documentaries? Commercials? Music videos? Once you’ve figured out what kind of films you want to make, you can start building your company. Figuring out who you want to be as a production company early on will help as you create your business plan and start marketing your business.

2. Choose the Name for Your Film Production Business

The next step to starting a film company is to choose a production company name.

This is a very important choice since your film company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable that represents the type of films you produce. Here are some tips for choosing a name for your film production business:

Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
Think about marketing. Come up with a name that reflects the desired brand and/or focus of your film production business.

3. Develop Your Film Production Company Business Plan

One of the most important steps in starting a film production business is to develop your film production business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

Your business plan should include the following sections:

Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your film production business.
Company Overview – this section tells the reader about the history of your film production business and what type of film production business you operate. For example, does your production company make short films or feature-length films?
Industry Analysis – here you will document key information about the film production industry. Conduct market research and document how big the industry is and what trends are affecting it.
Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? What types of films do they watch?
Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.

Product: Determine and document what products you will create and offer
Prices: Document how you plan to set prices and sell your products to film distributors or other buyers
Place: Where will your production company be located and how will that location help you increase sales?
Promotions: What promotional methods will you use to attract customers to your film production business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing. You might also plan to be active in film festivals.

Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
Management Team – this section details the background of your company’s management team.
Financial Plan – finally, the financial plan answers questions including the following:

What startup costs will you incur?
How will your film production business make money?
What are your projected sales and expenses for the next five years?
Do you need to raise funding to launch your business?

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4. Hire an Entertainment Lawyer

An experienced entertainment lawyer can help you navigate the legal landscape of the film industry. Your lawyer can help you set up your business structure, draft contracts, and obtain the necessary permits and licenses required to operate in your jurisdiction. Additionally, your lawyer can advise you on copyright and trademark issues, and help you negotiate deals with distributors, actors, and other professionals involved in your project.

Before you begin production on any film, it is important to have a clear understanding of the legalities involved. Hiring an experienced entertainment lawyer is the best way to ensure that your production is in compliance with all applicable laws.

5. Choose the Legal Structure for Your Film Production Business

Next you need to choose a legal structure for your film production business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:

1) Sole Proprietorship

A sole proprietorship is a legal entity in which the owner of the film production business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business and there is no clear separation of personal assets.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a film production business together. The business partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a film production business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a film production business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your film production business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

6. Secure Startup Funding for Your Film Production Business (If Needed)

In developing your film production business plan, you might have determined that you need to raise funding to launch your production company.

If so, the main sources of funding for a film production business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a film production business that they believe has high potential for growth. There are also entertainment financing options that often require profit sharing as a way to pay back the initial investment.

7. Secure a Location for Your Business

If you plan to start a small film production company, you may be able to run things from your own home and shoot your films elsewhere. For a larger operation, however, you will need to find a space that is large enough to accommodate all of your production equipment and staff. If you plan on doing any post-production work, you will also need to have space for that. Make sure that the space you choose is in a good location and is easily accessible for your employees and clients.

To find the right space, consider:

Driving around to find the right areas while looking for “for lease” signs
Contacting a commercial real estate agent
Doing commercial real estate searches online
Telling others about your needs and seeing if someone in your network has a connection that can help you find the right space

8. Register Your Film Production Business With the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.

9. Open a Business Bank Account

It is important to establish a bank account in your film production business’ name. This process is fairly simple and involves the following steps:

Identify and contact the bank you want to use
Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
Complete the bank’s application form and provide all relevant information
Meet with a banker to discuss your business needs and establish a relationship with them

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your business plan and financial model in hours.

10. Get a Business Credit Card

You should get a business credit card for your film production business to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.

11. Get the Required Business Licenses and Permits

Every state, county and city has different business license and permit requirements.

Nearly all states, counties and/or cities have license requirements including:

General Business License -Every business needs a general business license, which you can obtain from your local city or county government office. This is usually a very simple and inexpensive process.
Filming Permits – In order to film on public property, you will need a filming permit. This can be obtained from the local city or county office that handles permits for filming in your area.
Noise Permits – If you plan on doing any filming that will involve making noise, you will need to obtain a noise permit. This can be done through the city or county office that handles permits for filming in your area.

Depending on where you operate your film production business and whether you film outside of your physical location, you will have to obtain the necessary state, county and/or city licenses.

12. Get Business Insurance for Your Film Production Business

Business insurance policies that you should consider for your film production business include:

General Liability Insurance – A film production company needs general liability insurance to protect against third-party claims of bodily injury, property damage, and personal and advertising injury. Film production companies are at risk for lawsuits arising from accidents that occur on set, personal injuries to cast and crew members, and copyright infringement claims.
Business Interruption Insurance – Business interruption insurance can protect against lost income and extra expenses incurred if their operations are disrupted by a covered event. Covered events can include natural disasters, equipment failure, and power outages.
Workers’ Compensation Insurance – Your production company needs workers’ compensation insurance to cover medical expenses and lost wages for employees who are injured on the job. In some states, workers’ compensation insurance is mandatory for all businesses.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.

13. Buy or Lease the Right Film Production Business Equipment

You might be able to start a small production company with just a decent digital camera and some other basic equipment. A larger film production studio needs more advanced video and audio equipment, such as high-end cameras, recorders, microphones, and editing software. It also needs a studio space with good lighting and soundproofing. Film production equipment can be very expensive, so be sure to do your research and find options that you can afford. You can always make upgrades after you start bringing in profits.

14. Develop Your Film Production Business Marketing Materials

Marketing materials will be required to attract and retain customers to your film production business.

The key marketing materials you will need are as follows:

Logo – Spend some time developing a good logo for your production company. Your logo might appear onscreen, get printed on clothing, and be used across all your marketing efforts. The right logo can increase awareness of your brand and help you stand out from other production companies.
Website – Likewise, a professional film production business website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how your target market perceives you.
Social Media Accounts – Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your film production business. A good social media presence can also help you draw attention to new projects.

15. Purchase and Setup the Software Needed to Run Your Film Production Business

A film production company needs software to help with the creation and distribution of its films. This can include software for editing, visual effects, and DVD production. Popular software options include Adobe Premiere Pro, After Effects, and Sony Vegas.

16. Build a Team

An important step in starting your own film production company is to put together a great team. This team will be responsible for bringing your vision to life and making your films a success. You’ll need talented individuals with a passion for film, as well as a strong work ethic and good communication skills.

Some roles you might need to fill at your film production company include producers, directors, cinematographers, editors, and production designers. Some larger film production companies have individual teams for areas like casting and costuming. Start with what you need and can afford and plan to build out your team as you grow.

17. Open for Business

You are now ready to launch your film production business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.

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How To Start a Film Production Company FAQs

Is It Hard To Start a Film Production Business?

No, it's not hard to start a production company. However, it does require some initial investment and planning. But if you're passionate about film and have a good story to tell, then starting your own production company can be a great way to bring your vision to life. Some common challenges when starting a film production business include funding equipment and employees. Following the steps outlined above will help you get started.

How Can I Start a Film Production Business With No Experience?

Turning a passion for film into a business without any industry experience can be difficult. One important thing to do is research. Investigate how other successful film production companies got started and see if you can find experienced professionals to mentor you or offer some business advice. Having a good entertainment lawyer is also beneficial since they can help you navigate the unique legalities of the film industry. Finally, look around for online courses on film production that might help you.

What Type of Film Production Business Is Most Profitable?

There is no definite answer on which type of film company you should start if you want to earn the most profit. The film industry is a very competitive one, so it is important to choose a niche that will allow your company to stand out from the rest. There are many different types of film production businesses, such as commercials, music videos, feature films, documentaries, and more. Each type of business has its own set of challenges and opportunities. The biggest factor impacting your profits will be creating content and offering services that many people are willing to pay for.

How Much Does It Cost To Start a Film Production Business?

The cost of starting a film production business varies depending on the size and scope of the operation. For a small business, the start-up costs may be as low as a few thousand dollars. However, for a larger production company, the costs can be tens or even hundreds of thousands of dollars. Some of the factors that will impact your startup costs include the type of equipment you need, the cost of commercial rent in your area, and employee salaries.

Initial costs include:

Filming and editing equipment and software
Studio space/office space
Legal and insurance fees
Website and other marketing/promotional items

What Are the Ongoing Expenses for a Film Production Business?

Running a film production business can be expensive. Hiring a production accountant can help you keep track of ongoing costs. The key financial metrics in the film production market are as follows:

Purchases – This is the largest expense category for the industry, and includes things such as 3D and $K production equipment, other equipment, on-site amenities, craft services, makeup, movie rights, etc.
Wages – Wages consume almost 1/5 of industry revenue, and go to high-salary positions such as producers, cinematographers, talent, directors, etc.
Marketing – This is a significant expense for film production companies. Attracting large first-weekend audiences is a priority for most films, and increased publicity also improves distribution revenue.
Rent & Utilities – Movie producers often rent large facilities in high-traffic areas, as well as trailers for the cast. Industry operators also sometimes rent some or all the equipment needed to make the film.
Miscellaneous – Other costs for the industry include things like transportation, depreciation, and subcontractors.

Other ongoing expenses include:

Equipment depreciation
Production costs (highly variable)
State and federal taxes

How Does a Film Production Business Make Money?

There are many ways that a film production business can make money.

The most common way is through the sale of distribution rights to distributors. These distributors then sell the rights to exhibit the film in various media, such as theaters, television, home video, and online streaming services. The production company may also earn royalties from the exploitation of these distribution rights.

Additionally, a film production company may generate revenue through the sale of merchandise related to the film, such as DVDs and Blu-rays, soundtracks, posters, and toys.

Finally, a film production company can also earn income from product placement deals struck with companies that want their products featured in the film.

Is Owning a Film Production Business Profitable?

Yes, owning a film production business can be quite profitable. The film industry is growing at a rapid pace and there is a lot of money to be made in this business. However, it is important to remember that this is a very competitive industry and it takes a lot of hard work and dedication to be successful. Some things you can do to increase profitability include finding an untapped niche market, closely monitoring your expenses, and effectively marketing your productions to the right audiences.

How Much Do Film Production Operators Make?

According to Recruiter.com, the average salary of a Producer/Director ranges from $72,000 to $108,000.

Why Do Film Production Businesses Fail?

There are many reasons why film production businesses fail. Some of the most common reasons are poor planning, lack of experience, and insufficient funding. Most production companies will also fail if they repeatedly spend more on producing projects than they make back.

How Big Is the Film Production Industry?

With moderate annual growth (2.7%), the Film Production industry’s more than 7,500 businesses are currently worth almost $43 billion.

What Are the Key Segments of the Film Production Industry?

Film production companies’ sales are segmented by the type of film produced: action and adventure, comedy, drama, thriller and suspense, and other (such as horror, musical, and documentary).

What External Factors Affect the Film Production Industry?

A number of factors affect the performance of the Film Production industry. These drivers include:

Technological Change – Technology has made a huge difference in the Film Production industry. Better equipment and storage have increased the sophistication of production, and digital technology has cut production and distribution costs.
Demand From Movie Theaters – Film producers try to release movies when people have more time to go see them, such as during the summer or over a holiday.
Per Capita Disposable Income – When people have more money, they are more willing to spend on entertainment, including going to the movies and purchasing DVDs, Blu-rays, and digital copies of films.
Total Advertising Expenditure – Product placement is an important part of financing a film. Therefore, film producers benefit when companies have large advertising budgets.
Trade-Weighted Index –This measures how strong the dollar is compared to other currencies. When the dollar is strong, film production companies tend to make their movies in international locations to save money.