Research shows global media and entertainment revenue will reach $2.2 trillion by 2021, with the U.S. industry reaching a potential $825 billion by 2023.
The film and TV industry in the U.S. is made up of 93,000 businesses, employing 2.6 million people and paying total wages of $177 billion. The industry generates $17.2 billion in exports.
Over-the-Top streaming services are the fastest-growing distribution model globally, expected to reach $77.73 billion in revenue over the next four years.
The music industry in the U.S. had total revenues of $19.59 billion in 2018, with streaming services constituting 75% of the distribution. However, 52 million CDs shipped to consumers that year, too.
Producing for radio is still lucrative with ad spending expected to grow to $18.4 billion over the next four years. And, the relative newcomer, podcasts are experiencing a 7% growth in listenership every year. Podcast companies made $479 million in 2018, 53% more than in 2017. Revenues are expected to reach a billion dollars in 2021.
How to Start a Production Company:
Starting a production company can be a rewarding endeavor, but thorough planning is required if you want to see your business thrive. You'll need equipment, a team of dedicated freelancers, a business plan, and a great strategy for drawing clients and landing gigs. Read through our detailed guide to find out how to start your own production company.
Do the research.
Research successful production companies, both large and small.
Find out everything you can about other production companies that have made it in the industry. Find out more about:
- How they got started, the challenges they faced, and what worked and didn't work.
- The innovations they brought to their industries.
- What they did in the past and how they've adapted their practices in recent years.
- How their businesses are structured.
- Do they own equipment or rent it?
- What is their approach to distribution?
You will find lots of information about production companies you're interested in online, so search the internet first. Be sure to watch video interviews and/or conversations where industry professionals divulge their secrets.
Reading books written about the founders of production companies (or that they themselves have written), is also a great way to expand your knowledge.
Depending on the size of the company, you may be able to contact them directly with your questions. Try to connect with key players online or to participate in live Q & A streams.
Determine who your competitors are.
Find out as much about the competition as you can. Some aspects to focus on include:
- Their reputation, strengths, weaknesses, and market share.
- How do they go about funding projects or finding new clients?
- What services do they offer, and what are their fees?
- What are clients saying about them?
As you find out more about your competition, you may notice what makes them unique from other production companies. Start thinking about your own offerings in relation to theirs, and ask yourself what contributions you'll make to the industry and how you'll distinguish your brand.
Study industry trends and shifts in audience expectations.
Gather information about industry trends, and audiences' habits and preferences.
- Learn about the technology that is driving changes in distribution and marketing.
- How and when do people consume films, series, podcasts, etc?
- What do people look for in these products?
Reading comments and reviews by audience members is a great way to find out what they appreciate and also what's lacking in certain films, theater productions, series, podcasts, and more.
Join social media groups and communities related to your production company to keep up with important conversations.
Refine your concept.
Determine what you want to produce.
Once you know what the ultimate goal of your production company is, you'll be better equipped to achieve it.
- Are you going to make films or television shows? Are you going into radio and podcasts? Is it live events and theatre you're interested in? Are you selling video production services?
- To break it down further: if you're making films, which genre? Comedy? Mystery? Historical drama? Are you Hollywood, or indy arthouse?
- How can your work experience and skills help you choose an area?
Don't let your lack of experience or skills prevent you from choosing a certain production type. If you have an interest in podcasts, find out more about podcasting courses you could take; just be sure to do your research before committing to a course.
Describe your company in one sentence.
One of the best ways to refine your concept is to fit the whole idea into one sentence that answers what your company does, how it does it, and why others should care. This is your mission statement.
Example: The agency is a full-service video production company specializing in business-to-business marketing videos.
When you have a good understanding of what your business is about, you'll be able to more confidently articulate your goals to potential investors, clients, as well as new hires.
Get feedback about your business from as many people as possible.
Approach friends, family, potential clients and investors, industry professionals, and online forums to hear what they say about your business idea. Asking people directly is a great way to get unfiltered, unbiased feedback from people in the industry, consumers, other production company owners, experts, etc.
Keep an open mind when receiving feedback. Always be ready for criticism. Remember, it's better to identify potential problems early on, before they cost money to fix.
Keep in mind that everyone has an opinion, and if you respond badly when someone points out the flaws in your plan, it may cause them to withhold honest opinions in the future.
Take the time to listen to the feedback, being mindful of why people love or hate the concept
Use this research phase to form useful networks.
Name your business.
Choose an original and compelling business name.
The name you choose for your production company says a lot about your brand. There are a few things to consider before choosing a name that could help you land on one that is aligned with your company's values and identity.
Values: What are your business's core values? Why do you do what you do? And what values does your target market hold as important?
Discoverability: Your name should be easy to remember, spell, and pronounce.
Originality: Be creative. A unique name will set your company apart from the rest and will make it easier when securing a domain name later on.
For more information about naming your business, check out How to Name a Production Company.
If you're looking for a cool and convenient way to name your production company fast, try a business name generator like NameSnack.
Can't seem to get inspired? Read through our list of Film and Video Production Company Names to get started.
Describe your business and outline your plan.
Prepare an overview of your business plan.
Doing some legwork beforehand will help you to gain a better understanding of your brand identity, goals, and offerings, which will result in a more refined business plan. Some of the information you collected during the market research phase may come in handy here.
Some important questions to answer include:
Who are you? What makes your production company superior or different? Consider how your products will contribute to the industry.
What services/solutions are you providing? Think about how your production company will ultimately benefit customers.
Who is your target market? What does your ideal customer look like? Think about the clients you'd like to work with, as well as the audiences who will enjoy your productions the most.
Who are your competitors? How does your production company differ from the competition? What makes you special?
How will you market yourself? How will you make sure clients know about your great production company? How will you create brand awareness?
Who will work for you? Provide an outline of your team. Think about anyone you've already employed and all the other freelancers you still need to hire to make a success of your production company.
How will you spend and make money? Provide a list of your expenses and your projected income.
What are your milestones? Create a timeline and fill it with all of the activities you need to complete before you can start your production company. Include due dates and the names of responsible staff members.
Write your business plan.
Your business plan should describe your business and brand, show how your business will grow, define what it will need to succeed, and outline possible challenges you're likely to face.
This business plan is a road map for you in the early stages, and it can be used to get financing and attract partners.
Essentials for a production company business plan:
- Executive summary.
- Industry overview.
- Market analysis.
- Sales and marketing plan.
- Ownership and management plan.
- Operating plan.
- Financial plan.
To streamline the process of writing a business plan, use our free template included above.
Form a legal entity.
Choose a legal structure.
You must set up your production company as a legal entity for professional, financial, and tax purposes. Consult a lawyer and a tax professional to determine which legal structure makes the most sense for your business.
Independent production companies are generally set up as Limited Liability Companies, but there are a number of basic structures to choose from.
Familiarize yourself with each of the following before choosing the best one for you:
Limited Liability Corporation (LLC): An entity that protects owners from liability, while passing taxes on to them. May use corporate or partnership tax rules.
Sole Proprietorship: A business that is owned and operated by just one person, who is then solely responsible for tax and liability issues.
Partnership: Two or more partners who share the business's tax and responsibilities.
Corporation: A distinct legal entity that assumes all liability and is taxed as a business at corporate tax rates. Has members and shareholders.
While going through the steps to making your company a legal operating entity, finalize an operating agreement. This sets out in legal terms how the company will be run, how labor will be distributed among partners (if there are any), and how any problems that arise will be addressed.
When drawing up an operating agreement, be sure to find out the reasons people are joining your company; contributions each person can make; what can be gained from the company; how long shareholders are willing to commit; everyone's expectations; how challenges will be handled; how responsibilities and authority will be divided; and who will make the final decisions.
Create an operating agreement.
An operating agreement is an outline of your business's rules, regulations, and key decisions. If you've registered as an LLC, it is advisable to draw up an operating agreement, but it may also be a mandatory requirement in your state. Be sure to visit your secretary of state website to find out more.
Some sections to include in your operating agreement are:
- Capital contributions.
- Shares and changes to membership.
- Voting rights and responsibilities
- Power distribution.
- Profit and loss distribution.
- Rules pertaining to buyout and buy-sell.
Be sure to seek legal and financial counsel when drawing up your operating agreement.
Operating agreements help to avoid misunderstandings and conflict between members, so you should consider drawing one up even if your production company is not an LLC.
Get the capital to start your company.
The amount of funding your company will need to get started depends on what type of production company you have, whether or not you will be leasing property, how many staff members are employed, and the equipment needed to become operational.
Remember to have a professional business plan ready to show potential lenders and investors.
Carefully consider all funding options available before deciding which is best for you. Make sure you weigh up the pros and cons of each.
Apply for an SBA loan.
Visit the Small Business Administration website to find a lender. Enjoy great term lengths, and lower interest rates and down payments when you apply for an SBA loan.
Get a small business loan from the bank.
There are a number of different small business loans you can apply for with your bank, some of which don't require collateral. Shop around and carefully consider the terms and conditions before signing your loan.
Do your research before meeting with the bank. If you are well-prepared, able to answer their questions directly and produce the relevant figures/financial projections, you'll stand a better chance of securing your loan.
Be sure to send all the relevant information through to the bank in a timely manner.
Prepare a detailed plan of how the funds you're applying for will be used.
Find a financial backer.
Find a venture capitalist, private equity investor, or angel investor to believe in your idea and provide the start-up funds for your production company. You can search online to find these investors, or attract them by means of a crowdfunding campaign.
Comb through your professional and personal networks to find potential investors. Sometimes the person you're looking for could be a mutual friend.
Start a crowdfunding campaign.
A crowdfunding campaign is a great way to generate the funds you need to start your production company. By constructing a compelling narrative around your production company, you can get strangers and angel investors to back your business and donate some start-up capital.
Just be clear you've read the terms and conditions of the crowdfunding platform you're using.
Make sure you've clearly outlined your own terms on your crowdfunding page and that potential investors know if there are any incentives for those who donate to your cause.
Set up social media pages related to your business so you can better engage with your audience. Maintain an active presence and try to respond to all questions.
Use your crowdfunding campaign to establish your client base. You are already attracting people who are interested in your business, so set up a mailing list and keep them updated on opening specials and more.
Use your own savings.
Relying on personal savings to fund your start-up is a great way to remove debt from the equation, thereby reducing your risk when starting a new business.
Insure your production company.
Get quotes from different insurance companies.
Before committing to an insurance company, shop around and compare quotes and packages. Do your own research and make sure you are getting adequate coverage at the best price.
Find out about discounts. When you take out multiple policies from the same insurance provider or when you pay upfront, you may be eligible for a discount.
Consult an independent agent. You can gain valuable insight by speaking to an independent insurance agent. Use their knowledge to help you make the final decision.
Production projects are expensive, involving a range of valuable equipment and many people, and so you'll need to make sure you are covered project-to-project in case of unforeseen events.
Your production company should purchase several types of insurance, including:
- Media Liability Insurance.
- Publisher's Perils Insurance.
- Business interruption insurance.
- Small Business Liability Insurance.
- Commercial Auto Insurance.
Look for insurance companies that offer packages catering specifically for businesses in the media industry. These packages cover cast and crew, equipment, third party property damage, etc.
Decide on a location.
Determine your office requirements.
If you're running a small operation, and outsourcing much of the work that goes into getting a product out to market, anything more than a home office isn't really necessary. The size and the nature of your production company will determine the features of your office space.
Some key questions to ask when determining your office requirements:
- What will I be using this office for?
- How many departments do I need?
- How fast should my internet be?
- How many staff members will work here?
Find an office.
No matter the size of your production company, you'll need a location that's secure and safe, and one that is ideally situated near a transport hub.
If you're not ready to commit to a permanent location, look into shared office space. Co-working environments can be great for creative projects.
To help keep your workers productive, happy, and healthy, consider investing in some basic gym equipment or having a dedicated recharge room or "chill space" where staff can unwind.
Determine how many workers you need.
In the beginning, you'll play most of the roles found in the average production company, but you can start with a basic staff that will ensure your company gets off on the right foot.
- Head of development.
- Head of production.
- Head of post-production.
- Sales and distribution head.
- Certified public accountant.
Be sure to factor in budgetary constraints when determining the size of your team.
Advertise available positions.
Write enticing job descriptions and post them on job sites, local job boards, social media. Be sure to use your professional networks to help spread the word as well.
Hire employees or freelancers.
For a small production company, it is best to build up a network of freelancers to tap into for each project. You can do that through platforms like Upwork.
For full-time staff you can use hiring software to help you streamline the process of posting jobs, accepting applications, scheduling interviews, and sending out final job offers.
Always look for freelancers whose experience align with your project or the outlined job requirements.
To protect your work, have your freelancers sign a legal document that states you are the owner of all completed work.
To protect your clients, you may want freelancers to sign a non-compete agreement. This agreement essentially prevents them from stealing your clients.
Market your company.
Create a company website.
Register a domain and build a site that explains who you are and what you offer, and that allows you to showcase your work. Having a website increases your visibility, discoverability, and legitimacy. Use a website builder to design a website or pay an expert to help you.
You may want to hire an Search Engine Optimization (SEO) specialist to help drive traffic to your website and improve its ranking.
Start social media accounts for your business.
Facebook, Instagram, and Twitter pages will make it easier for people to engage with you. Share snippets of projects you're working on and those that you've completed.
Use your social media platform as an extension of your brand. It is a direct link to your audience and it can be a powerful tool for generating interest in your products and services.
Publish a blog.
Blogs keep your website active and full of fresh, topical, and interesting information. They're also a great way to showcase your writers, short films, trailers, music, etc. Blogs give you a strong platform for conveying your values, approaches, and mission.
You can share links to your blog on social media to encourage audience engagement with the content you publish.
Attend as many industry events as possible, with the aim of forming relationships with insiders The film, television, radio, and music industry is well-known for being network-driven.
Join relevant guilds and societies.
There are a number of guilds and societies dedicated to supporting and protecting the craft of producing films, music, radio, etc. Joining a guild or society offers you access to a larger network and support. Relevant guilds include:
Costs of Starting a Production Company:
$50 - $500
$1,000 - $3,000
$200 - $500
Software, internet, and cyber security
$700 - $1,000
$500 - $1,000
Rent Your Equipment to Start:
In the beginning, rent the equipment you need for each project. This will keep startup costs down and give you the chance to work with a range of equipment before deciding what is worth owning.
Common Rates for Film/Video Production Crew:
Director of Photography
$500 - $2,000
Commercial Video Editor
$400 - $1,000
$300 - $700
$300 - $600
$200 - $600
Production Company Metric: Cost of Production
Whether recording albums, producing corporate videos or weekly podcasts, the cost of production tells you how much money your company uses to make one unit of production (a video, a song, a radio show). The cost of production becomes a factor later when working out how much to charge a client after adding your mark-up.
Unit cost = (fixed costs + variable costs) ÷ number of units
Your video production company produces a corporate marketing video for a client. It takes two days to shoot and three to edit before delivery of the final product. Over those five days, your company rented equipment, paid for a location permit, and paid various freelancers (videographers, editors, voice-over artists, actors, sound engineers, etc). At the same time, your company pays monthly rental and utility costs plus software licenses and salaries.
How to calculate the cost of production:
Step 1: Add up all your variable costs for the five days.
- Freelancer rates total: $10,000.
- Equipment rental: $5,000.
- Location permit: $2,000.
- Transport: $1,000.
- Catering: $1,200.
Variable costs total: $19,200.
Step 2: Work out the fixed costs for the five days.
Simply divide your fixed costs for the month by the number of days your business operates, and then multiply the result by the number of days needed to complete the production.
- Rent: $2,000.
- Software licenses: $1,000.
- Lights and Water: $800.
- Salaries: $10,000.
Total fixed costs for the month: $13,800.
For this example, let's say your company operates 20 days out of each month.
13,800 ÷ 20 = $690
Your company pays $690 toward fixed costs every single day. Now multiply that by the number of days required to produce the video.
690 x 5 = 3,450
Fixed costs over five days: $3,450.
Step 3: Calculate the cost of production.
Unit cost = (fixed costs + variable costs) ÷ number of units
Unit cost = (3,450 + 19,200) ÷ 1 Unit cost = 22,650 ÷ 1
Unit cost = $22,650.
For this example, it costs your company $22,650 to make the corporate marketing video.
What does a production company do?
Production companies source the funding, talent, expertise, and equipment needed for completing projects in the areas of film, television, music, radio, and live performances, and manage the processes behind the production of such works.
How much does it cost to start a production company?
It can cost anything from a couple of hundred dollars to hundreds of thousands to start a production company. It costs around $160.00 to register a company. Bigger operations can cost up to $85,000.00 to get started and cover running costs for the first six months.
How is a film studio and a production company different?
The simple answer is that film studios own facilities where films and TV programs are made, and they also often do the distribution. Production companies make films, TV shows, podcasts, radio shows, video content, etc.
Is Netflix a production company?
Netflix is predominantly an OTT (Over-the-Top) service provider of films, documentaries, and series, but is also a production company in that it produces its own content.
What is a production manager responsible for?
Production Managers plan production schedules and ensure that the production process runs smoothly, on time, and within budget.
How do you create a production company?
- Do the research.
- Refine your concept.
- Name your business.
- Create a business plan.
- Form a legal entity.
- secure financing.
- Purchase insurance.
- Decide on a location.
- Hire staff.
- Market your company.
How does a TV production company make money?
Television production companies make money either through accepting commissioned projects or by selling or licensing the ownership rights of a product (TV show) to a network.
What is a full service production company?
A full-service production company handles the entire production process from the planning and creative development phases right through to post-production.
What is media production?
Media production is the business of conceptualizing and producing material intended to inform and entertain mass audiences through various media channels such as TV, radio, and the internet.
What does a production assistant do?
A production assistant, or PA, does a variety of tasks involved in making a production. Being an entry-level position in the film and TV industry, PAs help with catering, answer phones, run errands, shuttle people and equipment around, and do just about anything asked of them.
What is a music production company?
A music production company records, manufactures, and distributes music.
What is an independent production company?
An independent production company is one that is not owned by a parent company.
What is the oldest film production company?
The Gaumont Film Company has been producing, co-producing, and distributing films since 1895.
Is a production company an LLC?
A production company can be set up as an LLC.