The filmmaking industry has definitely seen a major rise in filmmakers and up-and-coming cinematographers, but once in a while, a few serious ones consider putting up their own film production company.
Like every form of commercial art, filmmaking can be both fulfilling as a craft and as a lucrative business. So if you are serious about taking your love for films and filmmaking to the next level, here are a few helpful tips on how you can start your very own production company.
What is a Production Company?
A production company is in the business of making feature films, documentaries, music videos, commercials, or any other videos that require a team, a budget, and extensive planning. While some production companies handle every aspect of the media creation from script writing and shooting, to editing and distribution, other production companies can take on the responsibility of working only on the preproduction, production, and postproduction of the content. In this case, this leaves the core idea, including the script writing, marketing, and distribution of the content up to the company or person who hired them.
What Does a Production Company Do?
Production companies can vary in what they specifically do, but the average production company will handle the many aspects of turning a film from a work on a page to a viewable media that can get in front of audiences. They handle the preproduction work of script writing, scheduling, budgeting, casting, contracting crew, obtaining permits, and a plethora of other duties to get the script ready for shooting.
Production companies then manage the production, overseeing the cast and crew, making sure everything runs as smoothly and within the budget and time constraints as possible. They ensure the content is high quality and that there will be enough footage for the postproduction team.
Production companies can also handle the editing, color grading, sound mixing, and mastering of the media. There are also many production companies who specialize in some aspects of these varied roles.
Step-By-Step Guide for Starting a Film Production Company
We’ll be honest: there’s no single path for putting up a production company. You’ll have to be prepared to read a hundred more articles, seek the help of industry professionals, and learn from experience before you can actually consider yourself an expert.
Nonetheless, let our guide on how to start a film production company give you a good glimpse of what’s to come in your long and exciting journey ahead.
Find Your Niche
While there are production companies that can handle any type of content creation, the best ones are usually known for a specific type of content they produce. Some production companies do only commercials, some do only narrative films, and some only do films of a specific genre, such as horror.
The benefit of working more specifically is that you get known for that type of work more quickly and when clients look for a production company, they are more likely to go with someone with more of track record in the field that they are looking for. Clients will also check through your portfolio and if almost all of your work is what they want to do, they will feel comfortable that they are dealing with an expert on that niche.
When determining what you want your niche within the film industry to be, you need to do two major steps. First, research your local market and find out what other production companies focus on. See if there are any gaps in the market that you could fill. Secondly, and most importantly, make sure you pick an area that you could foresee yourself doing for the long haul. If you pick a subject just because you can make money working in this sector, but you don’t enjoy doing the work, you will end up with a lack of motivation that can seep into the business. This may lead to burnout, lack of creativity, and potentially closing your business. Be careful, mindful, and considerate with what you choose.
Establish Your Company as a Legal Business Entity
No matter how small your films are going to be, you’ll first need to officially register your business. This involves naming your company (a simple Google and IMDB search can help you verify whether or not it’s already been taken), seeking some legal advice, and consulting a trusted accountant for your taxes.
Establishing yourself as a legal entity also includes opening a bank account under the company’s name, having a business address, contact numbers, and building your own website — also using the company name and an official .com domain.
Don’t forget to create social media profiles on Facebook, Twitter, Instagram, and maybe even on Pinterest and YouTube, to put your company on the map and allow more people to find you.
Choosing Your Type of Company: LLC, Sole Proprietorship, S-Corp, C-Corp
There are a few different ways to form your company. The major ones are: Sole Proprietorship, Partnership, Limited Liability Company, C-Corporation, and S-Corporation.
Sole Proprietorship
Sole proprietorship is the simplest, but most risky. This is really only good for people who have a very low-risk business as this type of business does not separate your personal finances from your business ones. This means you can be held personally liable for what your business does, including obligations and debts. Sole proprietorships can be a good choice for low-risk businesses and owners who want to test their business idea before forming a more formal business.
Partnership
Partnerships can be formed between two or more people. There are two types of partnerships, limited partnerships (LP) and limited liability partnerships (LLP). Limited partnerships are formed with one general partner who carries unlimited liability while all other partners have limited liability. LLP’s grants limited liability to all partners.
Limited Liability Company (LLC)
A Limited Liability Company (LLC) is the best of both worlds of corporate and partnership business structures. LLCs protect your personal finances and assets in most cases.
C-Corporation
C-Corporations are considered separate taxable entities and may be expensive to form. They require you to have very detailed records over all aspects of your business while the owners receive the strongest protection from personal liability.
S-Corporation
S-Corporations allow income, losses, deductions, and credits to pass directly to the shareholders, which avoids double taxation. It is only available to smaller companies of 100 or fewer shareholders and are sometimes referred to as a “pass-through entity”.
Create a Business Plan for Your Film
Having a solid business plan for your film will give your company better chances of achieving success. This particular step involves a ton of paperwork and maybe even more advice from experts, but they are essential for ensuring that you’ve got your bases covered to eliminate risks of setbacks, especially if you’re going to be spending significant amounts of money and dealing with important people in the industry.
It helps to make your business plan as specific yet realistic as possible and should include the following:
- Confidentiality agreement
- Specific goals for the company and your film
- The kind (and size) of the team that you’ll need for it
- Proposed budget with estimates
- Target date and schedule for filming and release
- Where and how you plan on finding investors
- Campaign and fundraising plans
Film business plans normally also include your Distribution Strategy, which we’ll discuss more about below. Go over your business plans thoroughly and, if possible, seek other business plans and other sources for information on how to create a successful film business plan to get a better idea of how the finished product should look like.
Raise Money for the Production of Your Film
With your business plan set, it’s time to start campaigning for your film and raise enough funds to finally get your production rolling. Fortunately, there are a few effective ways to do this without actually having to beg for the money or visiting your investors one by one. Successful film companies would advise the following strategies:
- Presenting your business plan to big production companies or studios
- Partner up with another producer
- Applying for government funding
- Seeking brand sponsorships in exchange for product placement
- Launching a crowdfunding campaign
- Finding an “angel investor”
Remember to try your best to stick to your budget plan and cultivate good connections with those who can (and can’t) help you with your project, so you can establish and maintain your credibility in the years to come.
How Do Production Companies Make Money?
Like any business, a production company needs to make money in order to survive. There are a few ways that this can be achieved. The fundamental answer is to find clients who respect your work, have an ongoing need for your services, and are willing to pay fair market value for what you are providing. Client relationships are the core of how production companies make money. There are also other strategies such as getting funding from governmental grants, but these are less reliable.
Another way is to make a product such as a series or film and try to get a distributor to sell it for you, sell it to a streaming platform outright, or try to get distribution on your own, which can be very difficult, but not impossible.
Gather Your Filmmaking Team
Creating your own business plan and raising enough funds for your production may require the most time and effort, but picking out the members of your production team involves critical thinking and probably a lot of listening to your gut.
Film production companies can start off with four key personnel and eventually increase this number along with the workload. You’ll eventually need a Social Media Manager and several assistants in addition to the following key positions:
- Development Executive: Also known as the head of development, this person finds and develops good scripts and screenplays with the potential to become successful films.
- Production Supervisor: As head of production, this person makes sure that each production sticks to the proposed schedule and budget.
- Post-Production Supervisor: Responsible for the editing process (which includes special effects considerations during pre-production) and for making sure that deadlines (sometimes for more than one film at a time) are met.
- Head of Sales and Distribution: Often referred to as just the distributor, this person supervises the crowdfunding and self-distribution of the film, aside from traditional sales methods.
Devise a Film Distribution Strategy
Many would agree that distribution is the core of the movie business. It’s what gets producers and the entire production staff paid for all their hard work. With limitless creativity and modern filmmaking gear at everybody’s disposal, it’s become much easier to produce films, but profitable distribution is harder to secure—and that’s where your company should come in.
As a general rule, it’s important that your strategy includes being clear about your ultimate goals for your movie and target film festival, provided that you would like to market your film to the public this way. You should also hire a good publicist who can properly promote your film and focus on critics, reporters, and social media. Other ideas for your strategy may include determining your target audience, having local and international agents and reps, making traditional distribution deals with established distributors, and retaining all (or most) rights to your film.
While film distribution in this generation has noticeably gotten more difficult, the ray of hope comes from the fact that you can self-distribute and utilize the Internet to sell your film internationally. It then becomes important that you include building your social profiles and presence in your strategy. At the same time, it helps to learn about internet marketing strategies that can help you market your films on a more global platform.
Show What Your Company Can Do
Once you have a niche and start to produce films, no matter what type, you need to have a strong online presence as well as good word of mouth. Being able to display your work on your professionally-made website so that your clients trust you and believe you can achieve what they are looking for, is an early step to surviving that initially tough phase of any company.
Don’t forget to make sure that your website is optimized by using solid SEO practices. This can make a huge difference in the amount of business you can get. You will also want to invest in social media, word-of-mouth, and direct advertising.
