How To Create A Movie Production Company
Starting a production company is a lot like raising a child – some days, you may wonder why you even decided to do it in the first place. Okay, I'm only half joking, but when you factor in the endgame---competing for projects, distribution, and actually getting the project made, just starting a production company can seem pretty daunting to most people. So, we've compiled some guiding principles to help alleviate that fear. We've created an essential guide on how to start a production company on a path for success.
In this article, we cover best practices for starting a production business --- everything from coming up with a memorable production company name to handling the oceans of paperwork you'll have to swim through so you can actually turn a profit.
Let's dive in.
How to start a production company
Starting a production business is an exciting venture.
Whether you want to start a commercial production company that grosses millions or a small production company that focuses on short films, if you're reading this, you're likely ready to spread your wings.
But before you decide what kind of content you want to produce, ensure this is the side of the equation you truly want to be on---not an agency, or creative role within a company that hires outside production companies. Make sure you know for sure that this is the job for you.
While this may seem incredibly obvious, for anyone who is just starting out, it's always best to brush up on these fundamentals- especially before taking the big step of creating your own production company! So real quick...just to be sure...
What is a production company anyway?
In its simplest terms, a production company handles the physical production necessary to bring art to life, whether it be film, television, commercials, video games, music, music videos, or even comics. Often production companies are either approached to make a project or develop projects in-house from scratch.
So now that you're ready to work for yourself, it's time to put pen to paper.
How do you do it? How do you start a production company right now?
Luckily, there are enough resources to get started right away. Like this guy---this filmmaker provides some great tips before you start a production company.
And no matter the type of production services you hope to offer, the process is similar.
Brainstorming the vision for your future production company is both necessary and (can be) fairly enjoyable. So let's start there.
1. Should you choose a niche?
Maybe you already know what your niche is, a.k.a. what you hope to specialize in. Maybe it's photography for weddings, web-series comedies, or even animated commercials.
Or, maybe you have absolutely no idea and just hope to start one of the many movie production companies that produces one film per year. Either way, there are few things to consider.
There is a lot of advice out there that says you have to pick a niche. And while this is good advice, and that is often true, there are plenty of successful production companies that have their hand in many "niches." But the difference is, a successful company has a clear understanding of their skill set and their resources.
If you're not entirely sure what this means for you yet, don't worry.
To help get you there and possibly even find yourself a niche, ask yourself some simple questions.
First...
What do you love?
Do you ravenously consume indie documentaries? Would organizing a music video get you out of bed in the morning?
Or, if you love the thrill of being on set, then you might want to start a production company that produces many short projects, in lieu of one big feature each year.
If you have a keen eye for a good story, you might want to think about starting a production company that plays in the scripted narrative space.
Or maybe it's just as simple as this: you're a television junkie who watches an episode of The Office daily, (no judgement), and just wants to make funny TV.
Whatever the case, the first step of learning how to make a production company from scratch is taking a step back to reflect on what excites you. If you can channel what you love into your company, it'll make the hours of work go by faster and, in turn, push you to work harder.
But brainstorming what you love extends far beyond what your Netflix queue looks like.
So next, ask yourself...
What are you good at?
Just because you love watching competitive eating videos doesn't necessarily mean you can eat fifty hot dogs in five minutes, (nor should you ever do that, please don't ever do that).
When coming up with your production company, it's important to make a list of your skills and accomplishments.
Finding the intersection of what you love and what you're good at is paramount to starting a production company that will stand the test of time.
If you love stand-up comedy and are great at churning out a product quickly, then you might want to start a production company that creates digital comedy shorts for YouTube like RoosterTeeth.
Learning how to start a production company is knowing how to make yourself as effective as possible---optimizing for your skill set. And that starts with knowing what you're good at.
It also means knowing what you're not so good at.
So lastly…
Who do you know?
Whether you're in Hollywood, California or Hollywood, Florida, starting a production company that has any chance of success requires connections.
Friends with a bunch of cinematographers? Know a bunch of actors willing to trade money for experience? Are you Steven Spielberg's son?
If you know a lot of people in the world of tech, it may behove you to start a production company that makes explainer videos.
Whatever you decide - these three questions can be helpful in finding your niche or company's focus.
2. Research the competition before starting a production company
Once you've decided what arena you want your production company to play in, it's time to research companies like yours that are working, and others that are not.
Carefully research other production companies in your field to see what the market looks like. It's important not only to find companies that are producing the content you hope to produce, but also production companies that are operating within the same budget.
A great resource for researching film production companies in NYC and Los Angeles is IMDBPro. You can find budgets, what's currently in production, and what's been in development (hell) for years. If you hope to create a production company that offers film production services in the indie space, that research might also include festival research. Knowing how to choose the right film festival for one particular film may be relevant if you plan on starting a production company that only produces one film a year.
And this is of course hugely important if you're starting a commercial production company…
PRODUCER PRO-TIP: UNDERSTANDING THE MARKET
Cameron Woodward, a co-creator and producer at commercial production company Sprinkle Lab, says:
"It's critically important if you are hoping for a financially secure production business to build a community of 'buyers.' This could be a distribution company, a network, a fanbase, or advertising creative directors — whoever they are, getting to know who is in the market for content and helping to solve their problems with your production organization is the magic alignment you'll need to build a successful production company."
(Again with the "who you know" thing).
3. Brainstorm dope production company names
When it comes to naming your production company, you'll want a title that says the most about your brand in the fewest amount of words. In many ways, production company names epitomize a production company's brand.
Creator of Lost and Force Awakens director, J.J. Abrams named his production company Bad Robot, perfectly encapsulating its signature sci-fi voice. Veteran film producer, Scott Rudin, opted for a simpler approach when naming his film production company in NYC, landing on Scott Rudin Productions.
While vastly different, they're instantly recognizable and immediately sum up each production company's voice. You can't recreate a first impression, so pick one that stands out.
Examples of great production company names:
- Imagine - Ron Howard and Brian Glazer's company. The name is clean and instantly classic like most of the films they release.
- Syncopy - Christopher Nolan and wife Emma Thomas's production company. The name comes from the word "syncope," meaning the loss of consciousness, which can happen if you watch Inception on acid.
- Sandwich Video - Adam Lisagor's company. While not instantly recognizable, the production company has produced countless television commercials and explainer videos, known for their quirky, intensely visual style.
If you're stuck, don't fret. We compiled 30 ways to brainstorm production company names.
4. Trademark the name
Once you've made a list of production company names and crossed out all the duds, it's time to apply for a trademark.
But before you shell out the cash to process your application, first check to make sure your name hasn't been taken.
You can easily do this by searching the USPTO trademark database.
5. Hire a lawyer
It's about to get a little tricky. Knowing how to start a production company will always be less stressful if you have an attorney on your side.
Either an entertainment lawyer or small business attorney who specializes in production is best. If you're unable to afford a lawyer at this stage, it's okay, but keep in mind, spending money now could save you thousands later. It is something to prioritize when funds become available.
6. Choose business type to incorporate your production company
We've avoided it long enough, but it's time to get into the legal mumbo jumbo and incorporate your production company.
Before you can cash your first check or hire your first crew member, you have to set up your production company as a legal entity. Choosing the right one is crucial as this will affect filing your taxes.
Another important question to ask - will you be starting a production company alone (yikes) or with other people? This will be but one factor in determining your business type. Watch more on this below.
What are the different business types?
- Sole Proprietorship – is the most common structure chosen to start a business. In this structure, there's no difference between yourself and the company, which means if the company takes a hit, so do you.
- Partnership – is basically a sole proprietorship, but with more people. Each partner adds equal value to the company, sharing in the profits and losses.
- LLCs (Limited Liability Company) – is a separate legal entity than the people who created it. This is great for a production company because if someone tries to sue you they can only sue the company. It deflects responsibility from its members (owners).
- C Corp – is an independent legal entity that's owned by shareholders. The business not the people who own it are legally and financially held accountable. This is a solid option for companies that are looking to sell or "go public." Corporations offer significant protection but it costs a great deal to form one.
- S Corp – is a special type of corporation where you can't be taxed twice (once as a corporation, and twice as a shareholder). However, it can only come through a special IRS tax election.
Before you register your production company, know the different types of business structures out there, and choose the one that fits your needs. If you need more information, check out the U.S. Small Business Association.
7. Assemble the dream team
The question of how to start a production company can be rephrased as "How do I convince a group of people to never sleep again?"
Just kidding.
But ultimately, you'll want to surround yourself with people who can expand your business in ways you can't. Remember the question - what are you good at - and fill in the gaps.
Just ensure you hire people you can trust. Bringing people on you've already worked with is a great vetting tool.
Your dream team could be ten people, or if you are criminally insane, just you. Actually, more often than not, for many people just starting out, it might be a solo-show, but eventually, the company will likely grow. Some tips on how to grow your team below.
Ideally, you'll have people covering the major workflows of your production company. And you can develop your film crew list as you keep track of who's doing what job and when.
Below are some roles to fill, but keep in mind they may at first be filled by you, or just a few other people. In the early stages, "Head of Development" might be you and a friend nursing some ideas. In other instances, you might hire these roles much sooner than you think.
What are the key roles in a production company?
- Head of Development or Creative Lead – this role in your company is in charge of finding great scripts to produce. This can sometimes mean procuring great intellectual property or coming up with concepts to pitch to clients if you're producing commercials.
- Head of Production or Producer – this person is in charge of actually producing the content. This includes hiring a director, crew, casting, handling the finances of the production, and procuring film production insurance.
- Head of Post-Production – this person oversees the editing process, including visual effect work, foley work, motion graphics, and more.
- Head of Distribution – this person handles selling your film. If you're a commercial production company, this person would make sure that all the assets are delivered to the client.
But when you're just starting out, the bigger question will come down to hiring. Do you hire freelancers, make them employees, or make a select few business partners?
Depending on your state's requirements, laws will vary, but if you're operating out of California, there are pretty strict rules for employee classification.
8. Set financial and artistic goals
Obviously the only financial goal that matters is to be profitable. However, when starting a production company it's important to roughly estimate how much of the profits you want to reinvest back into the company each year.
In the early days of starting a production company, it's important to reinvest most of your profits back into the company. While it will cut into your weekly paycheck, it allows the company to keep chugging along to more lucrative gigs.
You'll also want to keep your production budgets as lean as possible starting out.
Early budgets can range anywhere from a few hundred dollars all the way to hundreds of thousands of dollars — the challenge is found more in how a producer spends the budget, rather than how big it is. The profit margin in your production business is either found in carving out a margin from your project budget or finding distribution and success in the entertainment market with an audience.
PRODUCER PRO-TIP: GO LINE BY LINE
Cameron Woodward says,
"The best way to build a financially successful production company is by thoughtfully managing your production budgets, line-by-line. As productions grow in complexity and departments — camera, art department, post-production — each department will have different cost requests and it will be up to the prudent executive producer to properly allocate the budget to optimize for profit and the look and feel of the film."
Setting artistic goals
Before you set up entertainment payroll or option a script, set both a short term and long term artistic goal for your production company.
Above all, your goals should be simple and achievable. Instead of making your artistic goal, "winning an Oscar," make your artistic goal something along the lines of "producing a science fiction short film," or "producing a national television spot, or "making a music video that's animated."
Of course, you'll have to temper these ideas with reality and what work actually comes in.
9. Write the business plan
With all of these elements in place you can now write out a business plan to hold your production company accountable.
At this point, it'll seem like a regurgitation of everything you've researched, but having it on paper will help you stay organized (and also get funding).
The U.S. Small Business Administration recommends putting together a business plan, including the following:
What goes into a business plan?
- Executive summary - a brief description of what your company is and why you'll be profitable. Include: a mission statement, that you're a production company, your leadership team, employees, and location.
- Company description - a short summary of what makes your production company different from the rest and what types of clients and productions you'll make.
- Market analysis - here you'll briefly describe what you learned when researching your production company at the onset.
- Organization and management - briefly describe your partners (if any) here, and then declare the business structure your production company will be following. An organization chart can't hurt, nor can your teammate's resumes.
- Service or Product Line - Here you would describe the types of clients you'd create content for, and how long it would take you to turn churn out a television pilot, feature film, etc.
- Marketing and Sales - Briefly describe how you'll gain new clients and buyers for your final products. Here, you would also describe an example of how your production company will take an idea from start to finish.
- Funding Request - If you're going to seek out an investor (more on that below), here you should explain how much money you need and where it will go -equipment, cast, operation costs, VFX, etc.
- Financial Projections - here you would describe how much money you think you'll make in the first five years and beyond. The research you've done upfront will certainly come in handy here.
Consider startup and on-going costs
For your financial projection and funding request sections of your business plan, it's important to know an estimate of your startup costs.
When starting a production business, think of all of the potential spends…
When you're not out shooting, do you need a workspace or can you work from home? What about if your team grows? Or are you trying to open up a brand new production house?
A workspace in LA or NYC can easily start at $10k a year, and that's being fairly conservative.
What about gear---will you be purchasing everything upfront or renting equipment? Either way, gear can cost thousands of dollars. While iPhones can definitely make a movie, if you're starting your own production company, you're likely going to want a decent digital camera, booms, mics, lights, hard drives, a reliable computer, and filmmaking software.
If you plan on owning your own gear--- are you storing it at your house, or paying for a storage space?
Hiring crew can range anywhere from a few thousand dollars to hundreds of thousands of dollars depending on how fast your company grows, if you hire union talent, and the number of projects you're producing per year.
Marketing, insurance, licensing, trademarks, are other necessary expenses to create and build a successful production company.
Many of these items listed above are of course also on-going costs.
Ensure you have all of this information laid out before you meet with any investors.
10. Secure funding
Maybe you've got a few million dollars lying around your apartment. Maybe your father invented the Toaster Strudel.
But if not, once you've got a solid business plan for your production company, it's time to take it out to investors.
Investors can take many shapes and forms from venture capitalists to family friends. If you can't find anyone to invest (or don't want to give up equity), you can always self-finance or take out a loan. However, you're putting yourself on the hook.
How to fund your production company:
- Send your business plan out to a studio, or a larger established production company.
- Procure an angel investor (who doesn't have to be in entertainment).
- Apply for a government artistic grant.
- Partner with another production company in NYC, Los Angeles, or overseas.
- Crowdfund through online websites like Kickstarter or Seed & Spark.
PRO-TIP: KEEP STOCK OF WHAT YOU HAVE
While the cost of starting a production company may seem gargantuan, it begins to slim down when you take stock of what you already have.
Rental services like ShareGrid are great if you're looking to keep costs low in the first few years of your production company. Use Wrapbook if you don't want to spend too much money on an entertainment payroll company. Or you can use them to purchase an insurance policy for as low as $500.
11. Get paperwork in order
The last few steps to ensure you're running a legitimate business include opening up a bank account for your production company, obtaining an employer identification number or EIN from the IRS. You'll also have to file articles of incorporation or organizational documents (if you haven't already), as well as file an operating agreement.
Again, it is highly recommended to consult with a lawyer before, during, and after this process. Your location will also have an impact on what kinds of licenses you'll need and how you'll be taxed.
12. Hire a production accountant and set up payroll
Production accountants ensure your production company is paying exactly what it needs to the IRS while staying in budget.
And because entertainment payroll is more complicated than a Terrance Malik film, producers often turn to entertainment payroll companies to onboard and pay their cast and crew.
Unlike other industries where you can hire an independent contractor and pay a lump sum, in the world of entertainment, most of your workers will be classified as employees.
This means for every hire you'll have to fill out start paperwork, ensure the proper taxes are paid, and provide workers comp insurance. And that's on top of guild fringes.
With payroll companies like Wrapbook, you can easily onboard cast and crew, collect tax forms, stay guild compliant, and even direct deposit into your cast and crew's bank accounts.
Wrapbook has recently introduced Quickbooks integration as well, making the day-to-day minutia of accounting and bookkeeping much easier, especially if this is the first time you're starting a production company. Reach out for a live demo, or view the pre-recorded demo here.
13. Purchase insurance policy
Actors slip. Lights fall. PAs get into fender benders delivering Tender Greens to Writers Room.
For this and literally thousands of other reasons, you'll need to have a great insurance policy to protect you when unexpected incidents occur during pre, post, and production.
While some production companies will take a short term production insurance policy for each production they run, it's usually far more efficient and significantly cheaper to take out an annual policy.
Unlike short term production insurance, an annual policy will cover any production you produce within the course of a year. If you plan to shoot more than once in a year, you should strongly consider a DICE policy as it often is cheaper.
Wrapbook offers annual policies, and will also provide short term policies if you're a payroll client. Reach out to one of our insurance experts if you ever have any questions.
14. Produce some spec work
Ask any Hollywood screenwriter and they'll tell you, "You've got to have a great sample."
The same is true for producers. Before studios hire you to produce a short film, commercial, or music video, they'll want to see what you've already done.
When producing your sample work, make sure your production company's voice shines through. While you'll want to avoid being gimmicky, having an extremely memorable demo reel will make you stand out in future client's inboxes.
PRO-TIP: MAKE A FAKE COMMERCIAL
Have an idea that a huge brand would never go for? A product that doesn't exist?
That might be the perfect beginnings of a buzzy spec commercial that could make its way around the internet and lead to future jobs. These guys did it, and so can you.
Of course if you're not trying to start a media company or commercial production company, you can still produce on spec. Put together reels of your short films, comedy web-series, whatever! As long as it makes sense for your goals and will attract the right audience to grow your business or make a name for yourself.
15. Start building an online presence
Nowadays, it's hard to exist without an online profile of some kind. For your production company, a website is the best place to start.
Your website should be as clean as possible where your contact information and past work are easily accessible. I would also recommend your site's URL is the same as your production company's name.
Of course, having a strong social media presence is just as vital. Social media can be a great tool to get noticed by future clients or if you're really lucky, some major Hollywood big shots.
Social media also works well to discover other opportunities for your business like film festival info (or contests when applicable).
16. Never stop networking
If you're starting a media or commercial production company, building a client list will likely always be your priority. If you own a film production company, networking is just as essential. Maintaining kind and generous relationships with those you work with whenever possible is a great way to establish yourself and your company in the industry.
And once you get your first client...
17. Nail the first gig
Obviously, you want to blow the first gig out of the proverbial water. But many forget that the first gig will only be judged by one person: the client.
As you hire a crew and dream up your artistic take, be sure that you accomplish everything your client wants. Ask questions often. Write down all of the notes.
That way, if things go wrong, you can always point the client back to the deliverables mentioned. And if the client is happy, there's a good chance you'll get recommended.
18. Send thank you notes
Once you've wrapped up the job and are looking for the next one, be sure to send a thank you note to your clients and freelancers. It's a simple gesture that goes a long way.
It's also a great excuse to email past clients to see if they know anyone who needs a producer.
19. Pat yourself on the back
Acknowledge your successes! You deserve it---getting your first client (or second, or third), shooting your first film, or heck, starting a production company is no joke!
Share your work on your social channels. For better or for worse, Instagram, Facebook, and (sigh) Twitter are here to stay, so make sure to share your final product or film online. As mentioned in a previous section, not only will it help lead to more work, but could potentially lead to an online following. I mean hey, if you post correctly you could have your own distribution network before you know it.
20. When running a production company, look ahead
From the latest camera technology to shifting COVID trends, the industry will forever be changing.
Staying flexible and adaptable to change will make you an invaluable resource and someone clients will want to hire again and again.
Wrapping Up
Learning how to start a production company is a game of trial and error. No two paths to success are the same. However, these guiding principles should help get you started.
Have a question about setting up payroll for your production company? Reach out anytime.
How To Create A Movie Production Company
Source: https://www.wrapbook.com/blog/how-to-start-a-production-company
Posted by: baileylierearmeng.blogspot.com
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