A production company is responsible for developing, producing, marketing, and distributing various forms of content for film and TV as well as other forms of entertainment such as music, games, and sports.
In the realm of film and TV, production companies are oftentimes the first echelon on the development ladder. This entails constantly finding and developing material or screenplays to their utmost potential so they can be produced for big and small screens. Starting a production company involves several steps, one of which is the legal formation process. For that, LLCBuddy stands out as the best guide in guiding you through LLC formation. Successful production companies, such as A24, have mastered the art and business of entertainment despite being a young company; as proven by their enormous success in developing, producing, selling, and distributing independent films that consistently gain recognition and obtain prestigious accolades in film festivals and award shows around the world.
Let’s Get Down to the Basics
When we’re watching films, we oftentimes see a succession of logos and credits of studios and production companies popping out in the beginning. If you’re not working in the industry, chances are you barely pay attention to the reason behind this nor recognize the fact that there is a difference between what a studio and a production company do in the life cycle and the success of a film.
The primary difference between these two is that studios generally distribute and bankroll films whereas the production company develops and produces them. Studios usually hire producers to bring their projects to life, and oftentimes these producers have their own production companies through which the film is given its legs. There are also instances wherein a production company works under a studio, which entails that the producer will develop the project with the studio executives’ guidance and direction.
Production companies can also simply go to the studio to strike a distribution deal as well as establish term deals, which will allow a particular studio to pay for the production company’s overhead in exchange for having a first look at their properties or materials before the production company goes to another studio to set up the project. This goes without saying that production companies come in different shapes and sizes. Knowing what kind of path you want to take or what business you want to do early on is essential to your success.
So, where do you start?
As with anything in life, you must always begin with a vision. You must have a goal in mind to help guide you throughout the process especially when it gets more challenging down the line. While being a jack of all trades seem advantageous, oftentimes, what’s more beneficial for a business to thrive is being a master at doing one thing that will make you a cut above the rest. Most successful production companies such as Blumhouse Productions or Marvel Studios have a distinct voice and genre of films that they are known for and excel at doing.
Establish an Identity
From the get-go, establish a vision and know the kind of niche you want to tap into so you can have a clearer path and direction. It’s important to do your market research and think about whether you want to focus on producing films or TV shows, independent low-budget films or commercial high-budget films, and the kind of genre you want to focus on. Knowing the market will help you understand the playing field and what hasn’t been done yet. Also, having a strong identity will make you stand out from the saturated and competitive arena.
Structure Your Business
Once you have done your research and settled on an unforgettable company name, it is imperative to decide on the type of business structure you want to set up. This is important when it comes to creating your business plan as well as filing taxes and documents with the government. In the case of an emerging production company, the most common business types are sole proprietorship and Limited Liability Company (LLC).
A sole proprietorship is a business completely owned and run by an individual. This implies that the individual is given full control of managing the business and is personally responsible for all business assets and liabilities of the production company. Since there are a lot of unforeseen accidents and injuries that can occur when filming, this type of business is not ideal in the long run. It is only beneficial when you are testing the waters and trying to figure out ways that work best for your idea and goals.
On the other hand, an LLC is a business structure that most production companies in Hollywood operate in. It is flexible and has the same benefits as a partnership and corporation type of business. LLCs will protect your personal assets in the event that your production company is faced with lawsuits or bankruptcy. Not to mention, LLCs are also eligible for tax benefits that other types of businesses do not have. Consulting business or entertainment lawyers with your business plan early on in the process will ensure that you are taking the right steps to protect yourself from all the unnecessary issues that you might face in the long run and also assure that you are abiding by the law and its regulations.
Find Key Talent
After the paperwork has been completed, you need to focus on finding talented and experienced team members for your business to function. Filmmaking is a collaborative endeavor and the key people you need on your side from the beginning are those who have extensive knowledge of the creative and business side of entertainment and are able to manage the development, production, post-production, and sales departments. The people leading these departments are crucial because they are responsible for finding and developing scripts, creating and managing the budget, breaking down the project’s timeline, overseeing the editing process, and selling the film to earn profit from their investment.
Get Finances in Order
Since money is on the line, it’s important to hire an accountant or a payroll service to keep your finances organized. Film production involves dealing with hundreds and thousands of dollars, and certain projects require getting loans from banks, so having someone experienced in this process and managing your taxes will save you trouble later on.
Establish an Online Presence
Once the internal parts are set in place, you must establish an online presence, especially in today’s social media-powered society. You should invest in a well-designed professional website and utilize social media platforms such as Instagram, Facebook, TikTok, and YouTube to market what you do and stir some public interest.
Create Short Films
Now the fun part begins – making short films or a proof of concept. There’s no better way to show what you’ve got and what you’re capable of doing than bringing to life the kind of films you want to produce. When you’re starting out in the entertainment industry, short films or proof of concept are considered an effective calling card to showcase who you are and your talent as a filmmaker. This is an easier and more affordable way to get your foot in the door than diving straight into creating feature-length films that are costly and time-consuming. Having an impressive portfolio or slate of films will help your clients get a better understanding of your idea, style, and capability as a production house. Once you have your films ready, make sure to apply to small and big film festivals to get exposure as well as a feel of how your film fairs in the market and to audiences.
In Conclusion
At one point in a filmmaker’s career, there will always be a burning passion to start your own production company. While it may be an intimidating undertaking to pursue, it’s not impossible at all as long as you put the work, resilience, and enthusiasm into every step of the process. Due to the fast-paced and ever-changing nature of the entertainment industry, production companies must be in the know and be able to quickly adapt to market shifts and trends, new technologies, storytelling formats, and platforms to maximize their potential, innovate filmmaking, and make an impact on the future of entertainment.
