Starting a Production Company: What You Need to Know

Starting a production company, whether video editing or full video production, is not for the weak or faint of heart. You'll need to do research first… lots of it. Then you'll have to take into consideration things like: How knowledgeable are you about production? How will running a company affect your family? Where will your company's physical location be? Will you have to quit your job? How will you support yourself until you turn a profit?

Business First

Before you think up company names and logo designs know this; starting-up a production company means starting a business. Running a production company is providing a professional service. How well you perform your company's tasking will decide its success. The tool which outlines your company is a business plan. Building your plan starts with research.

Start out by contacting the U.S. Small Business Administration. The SBA can walk you through the process of starting your production company. They don't do research or write business plans, but they'll give you the guidelines for what's needed.

Other sources of information are business and industry periodicals. Magazines and websites can provide specific information concerning business and industry trends related to your company. There are also books like The Complete Idiot's Guide to Starting Your Own Business and The Independent Video Producer: Establishing a Profitable Video Business.

Taxes and Other Fun Stuff

Once you have basic information about the process of starting a business, decide on a business tax structure. The type of tax structure will determine financial and legal protections your company will have in the event of litigation. Business tax structures run from Sole-Proprietorship to C Corporation. Knowing what type of structure suits your company is a major factor in running it.

The outlook for startup company success is somewhat bleak. According to the SBA approximately 627,200 new businesses started-up in 2008. By the end of the year, 595,600 of them shut down. Anyone still in business after their first year has beat the odds.

I spoke with two independent professionals who've beaten the odds. Creative Director R. Bruce Perry along with Media Concepts Provider Hisani P. DuBose sat down with us to show you the sweet and the sour of starting a production company:

Videomaker: What inspired you to start your own production companies?

R. Bruce Perry: I was inspired to start Intermix Design after ten years working in production. Working in broadcast production taught me how the technical side operated. The corporation I worked with went bankrupt, so I was faced with either getting another job or take what I knew to start my own company. In 2001, I dove into several years of poverty and all that comes with starting a business!

Hisani P. DuBose: I didn't want to wait to be discovered. I am first and foremost a screenwriter. Sending scripts to Hollywood companies was a waste of time because they wouldn't respond. Not to be discouraged, I took a digital video course when [digital video] emerged. The course went in depth about the process of filmmaking and I saw I would fare better making my own films instead of waiting to be discovered.

Videomaker: Was it difficult to get started and if so, how creative did you have to be?

DuBose: Yes, because I wasn't capitalized like I should have been. I didn't have the money to do what I wanted, but I was determined. I asked myself, "what was the smallest level I could work at that would take me the farthest?" I started making short films to get used to the filmmaking process. I thought I had a handle on things and then had to learn how to raise money! I found quickly that if you don't learn the business of production, you won't survive and thrive.

Perry: Starting a production company is difficult. You're going to need a lot of resources. Most important, you must tackle the day-to-day realities of paying the rent. We operate in an industry where the technology changes rapidly! Every day there is new equipment, software and techniques. You must stay close to the leading edge in order to be ready when a client calls. So acquire what you can and focus on the areas of production you can accomplish.

Videomaker: What types of productions do your companies produce?

Perry: Right now my company is working on a reality-based show called, Last Shot with Judge Gunn. It's a documentary style show which goes into the lives of people who have gotten into serious trouble and been arrested. Instead of a judge sitting in a courtroom passing judgment, the show investigates how their troubles began and how Judge Mary Ann Gunn may find potential solutions beyond incarceration.

DuBose: We started off with shorts and then in 2005, we produced The Vanishing Black Male which won some awards and screened in a number of film festivals. Now my company focuses on making feature films and book trailers.

Videomaker: How tough was getting the opportunity to make those productions?

Perry: I went from zero to where I am today; being ready to take on projects. All clients care about is, can you deliver what they need? It's about having the knowledge, experience and technical expertise so when someone asks, "can you do this?" I can say "yes." Most companies, including my own thrive on referrals. Referrals come from your company's reputation as one that gets stuff done.

DuBose: It's tough for independent producers because everything is stacked against you. Professional filmmaking involves a small network of people who bring people in on their projects. It's hard to get in. We hear "digital levels the playing field" and that was true… a while ago. Whenever a new technology breaks open, you have a very short window before the big guys get in. Now the big players are involved in digital so again it's a fight to get in. But you have to use your head and squeeze yourself into a niche as not to compete on their level.

Videomaker: Do you employ friends or family? If so, what are the advantages?

DuBose: Yes, my son and daughter are talented artists and I've used them in many of my projects since they were teenagers. They've been critical in helping me understand how to incorporate design elements and even dance into my films. When they became adults the issue of payment came up. They both said, I had children because I wanted staff!

Perry: I also work with friends. You must have alliances and collaborations when working in the production industry. Rarely can you do everything alone. Most of my friends are in the business and if they weren't around, I wouldn't make it. Working with friends makes it easy when time comes for signing checks and deciding who buys beer for the wrap party!

Videomaker: What are the work expectations for a startup production company?

DuBose: Learn the legal side of running your company. Sit down with an attorney for a couple of hours to talk about your plans. It'll cost some money, but it's well spent. Also get someone who does public relations work. If you can't afford it, form an alliance with someone starting out until you can afford to pay a publicist. Publicity is important because once the work is done, people need to know it.

Perry: There is an expectation you'll be working eight hours a day, five days a week due to your talent and the glamour of being you. Wrong! You'll get out there and beat the street for new business seven days a week. Others who had their own companies warned my 9-to-5 business model would go out the window. They also warned to be prepared to devote the time I woke until I went to bed on keeping the business going. Everything I was warned about came true!

Videomaker: Describe some of the financial challenges your startup company faced?

Perry: Overhead. You don't have to have a full-blown production company in a nice building with a receptionist starting out. I learned fast you don't need a company car or office. The way to survive is keep your overhead low. You can work out of your garage. Just do what's necessary to cover operating costs.

DuBose: When you're under capitalized, you won't hire all the people you need. Even cutting costs by doing everything yourself, financial issues still surface. You need equipment, technicians, and don't forget office supplies! What about stamps and shipping costs? Where is your office going to be? If it's in your home, how will you set up workspace? It's a challenge you seriously have to consider.

Videomaker: What advice would you give those interested in starting their own production company?

DuBose: Be aware you are starting a business. Take time to learn what you are doing. Stay on top of your game concerning the technical side because that's how you make your money. Don't ignore potential sources of income when it comes to your films.

Think of all the money George Lucas made off toys, lunchboxes, and games [from the Star Wars franchise]. When courting investors, you can show them potential income streams attached to the project. Keep good records and take stock of what your business has done. If the IRS comes after you, you'll need that information to cover your back. Surround yourself with people who understand what you do and develop a thick skin. Lastly, take care of yourself.

Perry: We are evolving into a YouTube world. Cheap cameras have reached a pretty good level of quality and the technology is available to everyone. Now anyone can claim [to be] a filmmaker and think they can do projects for $300! Those are hobbyists. Hobbyists make videos for fun and that's fine, but they are not professionals. If you're serious about having a thriving business, arm yourself with the skills, knowledge and experience to charge fees [that] are competitive in the market. Don't take shortcuts. You'll find yourself unable to handle larger more lucrative projects because you don't have the knowledge and skills required. What you know makes you a professional.

Conclusion

Starting a production company is not for the weak or faint of heart. You'll need to be knowledgeable about the service you intend to provide, the production industry and the day-to-day running of your company. To surmount any lack of funding, you must be resourceful, keep overhead low and build alliances with other professionals. Regular research will be required for you to keep up with both industry and business trends. Make use of resources like the SBA, periodicals and books. Your breadth of knowledge will be what helps keep you in, if not ahead of the game. Lastly, remember that you are starting a business… your business. Beyond the money and hard work lies the joy of doing what you love, because you love doing it.

Check out our article, market research for your editing business for more tips.

Writer-producer-director H. Wolfgang Porter is a former U.S. Naval Combat Cameraman who now produces independent film and published works.

4 COMMENTS

  1. I thought this article was really great a spot on! As an owner of a video production company myself based in Phoenix Arizona (http://dmakproductions.com), we had a very similar start. One thing that really helped us was reaching out to other video production companies in our area. We met with 3 or 4 professional producers who had their own companies and we asked if they would be willing to meet us for lunch, our treat, to pick their brains about the business. We didn't have anyone that wasn't willing to meet with us. Those first relationships that we built are actually still in tact. In fact, we had a five-figure job come our way a couple weeks ago, and we decided to bring in one of the first producers that we've met with and his crew on this shoot as we needed additional crew. I'm sure he's glad he met with us some years later!

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