Research & Refine your Business Idea
Starting and running your own production company can be challenging if you don’t have the right tools at your disposal. It’s a highly competitive business that requires a lot of dedication and time investment on your part. But if you have a knack for video production, and a will to work hard to reach your goals, be sure thigs will work out for you. In this article, we’ll go through the necessary steps about starting up and running a successful production company.
The first step is to think about what you actually want to do in the production world. This is a vast market, with sub-divisions where you’ll find dozens of highly specialized companies. If we’re going to be fancier, we can say that you’ll have to find your niche. And a niche is just a smaller segment of a market. So, what are you passionate about? Any specific areas you consider yourself expert at? What type of work have you already done for clients and companies as far as production goes?
Answering the questions above will help you figure out what you actually want your production company to be about. Whether that’s film, industrial, commercial, or if we talk about video, cartoon, screen capture, motion graphics – there’s a wide range of options. Finding your niche will allow you to focus on a smaller segment of a rather vast market, and be the best at what you do. You’ll be able to improve a specific skill set and with that, gain a valuable reputation.
Now that you have a general idea about what your company will focus on let’s talk about equipment. This is a very dynamic area, and will mainly depend on the type of production you’ll do for clients. But it can be generalized to what the most common pieces of equipment people need to create digital content. Starting off with production-grade DSLR video cameras, lenses, lighting equipment, and assets, to having a dedicated studio space. All of these things are the essential equipment items production companies work with.
We also have to consider the software side of things. You’ll most likely need some sort of photo and video editing program. Adobe has excellent tools for the job here, with Photoshop and Premiere Pro, which are the industry standard. Next, depending on what you do, you’ll also need a 3D modeling software like Maya, 3D Max or Blender – which is a fantastic free solution. The first two are rather expensive but are considered the industry standard for many, many years.
Creating your Business Website
Creating a branding for your company is the key to succeeding in today’s economy. Start with a name, which should be relevant and catchy. Once you have a name, you can get a domain name, and start working on a logo. Next step is to start building an online presence. Having a website is a must, as it will allow you to share news, blog posts, announcements, and help potential clients find you more easily. Besides the landing page where you’ll showcase the most important aspects of your company, there should be a dedicated blog page and a services page.
Setting up a website isn’t as hard as it may sound, in-fact, many hosting providers have tailored their service around small businesses who may not be tech savvy. We suggest going with BlueHost to host your website, they’re service is simple and easy to use/setup and they’re currently offering 60% off hosting, including free domain registration.
Additionally, creating a blog on your website is also a great way to attract organic traffic and expand your business. Checkout our full guide on the best and easiest way to setup a WordPress blog here.
Once you have the basic structure figured out, there are a number of useful tools you can use to monitor the site’s performance. Setting up Google Search Console will help you see how the website ranks in the search engine, and for which specific keywords. Google Analytics, on the other hand, will help you learn how visitors interact with your website. Sessions, devices, real-time traffic, reporting – are just some of the data Analytics provides so you can better understand the people that come to your website.
Marketing Your Business
So let’s talk about marketing. It’s essential to have a good marketing strategy, and invest efforts in growing traffic and attracting potential clients. Let’s talk about how you can achieve that by utilizing different marketing strategies.
Social media is an important aspect of your marketing activities. Facebook, Twitter, YouTube – these are all sites that can help you boost your presence online and gain some followers. Make sure to check out social media sites that are specifically for professionals in the production industry like Stage 32.
But the most important thing you’d need to do is networking. It is crucial to your company’s success, especially in the early stages. Go to events near you, meet new people in the industry, attend to webinars and try to get as much recognition as you can. Print out brochures, business cards, and other marketing materials and share them on these events.
Setting Goals and KPI’s
Setting up your business is just one step of the way. You should continuously set goals and make efforts to achieve them. You may want to increase the conversion rate of visitors on your website on one of your service pages. That’s a reasonable goal every business should strive to achieve. Then, you can create a plan to reach a better conversion rate. This can be done by smarter use of call to actions, or a re-design of the page so that it’s more intuitive and attractive to potential clients.
And this is where the idea of key performance indicators or KPIs comes into play. These indicators can help you stay on the right track and steadily grow by identifying which areas can be improved. For a production company, here’s a list of the common and relevant key performance indicators:
- Film or Video Views
- Allocated Project Budget
- Play rate
- Social Media Engagements
- Click-through rate
- Traffic sources
- Page tracking
- Click-through conversion
- Watch time
- Daily new viewers
- View-through rate
- View-through conversion
Plan your Finances
Let’s talk about finances. How you invest and manage your money is the number one factor for being successful in the production business. The most important thing to note here is that your personal and business accounts and assets should be separate. Also, you should always have a clear overview of your finances. This will help you better plan and organize your costs. And many tools are great for helping you do just this. Here are some that tend to stand out:
- Shoeboxed for Receipt Management
- FreshBooks for online billing and bookkeeping
- Wave Accounting, for accounting activities
- Expensify for expense reporting
When using these apps and doing financial planning in general, you should always try to get a grasp of all your expenses. This includes equipment, office space, marketing costs, travel, staff salaries, etc. Starting a production company can be really expensive, and the costs will vary depending on what you’ll need to buy. Let’s try and break it down:
Office Space and Office Equipment
This is probably the first cost associated with running a company. The rent depends on how big of a studio you’ll need. But generally speaking, you’ll need a working place for your employees, casting rooms, filming areas, and conference rooms with whiteboards, tables, and chairs. So all this could cost you up to $10,000 when starting out. Then depending on where you are in the world, the rent could vary from $3,000 to $5,000 a month.
It’s safe to say that you’ll need at least 5 team members to get things going. From managers to video editors and artists, you’ll have to decide on how experienced members you’ll want on your team. And this will play a crucial role in your monthly payroll. Let’s say that you’ll have a base salary of $4,000 on average per person without bonuses, which makes it $20,000 per month – once again, on average. Note that managers will cost more while office assistants will have less salary. So the number above is only a rough estimate.
Computers for running this type of business are expensive. You’ll need a powerful machine with high-end CPU and GPU, fast SSDs and state-of-the-art displays. iMac Pro is a great example of a production-grade computer. If you get 5 of those at $4,999 a piece, it’ll cost you around $25k.
Now comes the software. And for any type of digital production, software is crazy expensive. Adobe Suite with Premiere Pro, Photoshop and Illustrator will cost you $49 per month, per subscription. Maya costs around $3.5k, and 3D Max $1.5k for an annual subscription. It all amounts to around $8,000 assuming you won’t need a modeling software on every computer.
Although these are the base costs, there are a few additional ones that you should consider. Starting with insurance for 3d party liability, theft, and fire, to medical-associated expenses for your employees, all the way up to marketing costs.
If you’re looking for financing help, there are a number of options you can consider. A bank loan may sound like the most reasonable thing to do. And with a good business plan, you can quickly get approved. But you should also consider crowdfunding, as that’s one of the trending ways to get some money for starting your business.
Adopt an Entrepreneurial Mindset
Running a business is a very challenging yet rewarding experience. You should never stop improving and learning new things. It’s essential for yourself, as well as for the company that you grow and develop your skill set continually. With that, your employees will also have the chance to become better and provide a better service. That’s why adopting an entrepreneurial mindset is very important to help you stay focused, motivated and determined.
Here are some brilliant books to help you be more ambitious and get in the right state of mind when running your production company:
- The Lean Startup by Eric Ries
- The Hard Thing About Hard Things by Ben Horowitz
- The Achievement Habit by Dr. Bernard Roth
- Tools of Titans by Tim Ferris
- Producer to Producer: A Step-By-Step Guide to Low Budgets Independent Film Production
- The Obstacle is the Way by Ryan Holiday
- The Producer’s Business Handbook: The Roadmap for the Balanced Film Producer
Podcasts are also a great way to keep up to date with trends and learn something new. Here are some useful ones:
- MFCEO Project Podcast
- No Film School
- Entrepreneur on Fire
- The Gary Vee Audio Experience
Other things to consider when starting your production company
Now that we covered pretty much everything else let’s talk about the legal requirements. Choosing the appropriate business structure is the first and most significant step. This means that you have to decide on what type of business you’ll register.
There are several options you can choose from such as Sole Proprietorship, Limited Liability Company, Partnership, and a Corporation. Schedule a meeting to get advice from a professional about the most suitable structure for a production company.
Accounting & Bookkeeping:
Another thing you should consider is tax reporting. Depending on where you are, different taxes will apply. You’ll need an accountant to manage your finances and work with your books.