Film Production Companies Make Profitable Small Businesses
As a startup business, film production companies have to be considered one of the best. For example, did you know that film is a nationally subsidized business in the United States? Many states offer large cash rebates that return a percentage of the money spent in the state to the production companies who film there. Michigan currently offers a 40-42% tax rebate, New Mexico offers 25%, and Georgia offers a 30% rebate. Film is an attractive industry to have in a state because it provides high paying jobs, lots of tax revenues, produces little in the way of toxic waste, and its the kind of industry that can grow and prosper very quickly in the right environment.
Armed with this knowledge, you can create a film business plan that makes it much easier to find funding for your production.
Another nice thing about film is that it provides many possible revenue streams. Before production, a production company may be able to receive payment for integrating products into a film. After production it may be able to receive ticket revenues from theatrical releases, revenues from PPV and cable rights sales, overseas rights sales, broadcast television rights sales and DVD rights sales. These are just a few of the revenue streams a good, high quality film, can exploit.
Finally, films are very fast turnaround businesses. Unilke an Internet startup which might take five years to turn a profit, or a manufacturing company which might take a decade, film production companies can develop a project, produce it, get it into theatrical release, and sell off its rights in a matter of three years. In some cases, films generate revenues for decades.
The intrepid souls that launch small businesses usually follow their heart in the businesses they choose. That’s actually an important thing to do. Every small business requires endless twelve hour days and lots of hard work to launch. If you have a passion for film, a very solid understanding of small business management skills, the ability to identify commercially viable projects, and an absolute determination to produce the best films anyone has ever seen, starting a film production company may be the right decision for you. Taking this route is definitely a very viable career option for someone with a communications degree.
Is a Film Production Company Really a Small Business?
Feature films and television shows rarely show you the truth about film production companies. That is because film production companies don’t look all that exciting until the cameras start to roll. The truth is, most film production companies are composed of two to five people who work to put one or more films together. They may or may not have an office for most of the time they are working. They may not even have a dental plan. What they do have is a film they want to make and a blueprint for how it will be done.
A film production company is absolutely a small business all the way up until it is funded and it has moved into production. Then, for a period of weeks, it is a big business. It often has more than 100 employees, union contracts, large insurance policies, millions of dollars in its bank accounts and lots of people looking over its shoulder.
After that, the production company goes back to being small again. The footage shot by the production company is edited, music is added, special effects are put in, and the whole package is sold a few rights at a time to folks around the world.
What Does It Take to Launch a Film Production Company?
The first step in launching a film production company is to start an LLC or Corporation. In most cases you will start an LLC because it protects your personal assets against being taken away if your production company is sued. Starting an LLC takes about two hours, requires two forms, and may obligate you to pay taxes in your state even in years you don’t make money. It is something you may want to talk to a lawyer about.
The next step is finding, or writing, a great script that you want to produce and then building a business plan around it. There is a very clear and straight-forward path to creating a fundable feature film business plan. It requires hiring a line producer, getting a shooting schedule and budgets done, identifying key cast and crew, creating financial projections, developing a marketing plan, and creating a distribution plan.
Once the business plan is developed, you present it to business professionals as you would any other revenue opportunity. There are several ways to structure the money you get to make a film. Some film productions are funded through loans. Some are funded through active investors. Some go to the expense of setting up a Private Placement which allows them to sell shares to investors. How you decide to structure funding has everything to do with the size of the film you want to make and the funders you are working with.
Once you have funding you produce the film as specified in the plan and start realizing the revenue streams it specifies.
Having produced one film, most production companies roll on to producing others. It is something that people get better at with practice.
Is It Really Feasible to Launch a Film Production Company?
Every start up business is good for one kind of person and not another. The guys that launch Google in their dorm room are not the folks that launch Estee Lauder in their kitchen.
Film production, as a business, requires that you be hard working, intelligent, practical, pragmatic, insightful and creative. You need exceptional verbal communication skills, great writing skills, a clean business history, and the ability to work in a fast changing business environment. It helps to have industry contacts so you can quickly find good line producers, key crew and great talent but these are things you can also acquire over time. It is very nice to start with $50K-$100K to develop your first project, but people have managed with less.
It is definitely possible to launch a successful film production company. For the right people it is the best business on earth.