How To Start A Production Company

by Mike Sloat

History…

I started up a production company while still in film school with fellow director Chris Milk and three other directors. Our company was called Spoon Fed Films, and we were able to maintain our business for about six years in San Francisco. Our Clients included HP, Wadsworth Publishing, Round Table Pizza, 3DO, Fat Wreck Chords and many independent producers, record labels and bands. Our projects ranged from talking-head corporate videos to animated short films, music videos and commercials.

We had some serious ups and downs, and learned the hard way that running a real business can be pretty difficult. Here’s what I would’ve done differently, in no particular order.

The Financial Aspect

If someone is going to put up money to start a company, say, if you have a few partners, get IN WRITING exactly what the money is: a loan an investment or whatever. No matter how good a friend someone is, this will come back to haunt you if the company were to dissolve. Make sure everything is clearly spelled out as to the terms of the loan or investment so no one is confused at the end.

Watch your spending! Keep things simple at first and only upgrade equipment and office facilities when it’s totally reasonable to do so (see the paper work section below regarding bookkeeping).

The Paper Work

Do plenty of research on the type of business you want to be; LLC, LLP, Corporation (Inc.) or Sole Proprietor. There are too many financial and tax issues to talk about here, but here’s a few resources that can help:

http://www.eqmone.com/startup.htm

http://www.dgs.ca.gpv

Stay up to date on all paper work, taxes, fees and certificates. Make sure at least ONE person totally understands all the paper work and tax issues. There’s nothing worse than five guys sitting around on April 14th without a clue as to how to issue a stack of 1099-Misc forms to a bunch of independent contractors…ugh.

A detail oriented bookkeeper is a must. Find someone that can come in once a week to go over invoices and paper work and understands tax issues regarding production companies. Sit down with this person when they come in and watch what they do, ask questions and be aware of what their job entails.

Have a plan for dissolution. I can’t stress this enough!! Make a solid plan that you can refer to if the company is dissolved. Make sure it includes everything from the $40K Digibeta deck to the throw rug in the bathroom. Seriously, get all of this stuff out of the way at the beginning so there’s no questions at the end. Think of it as a script or a treatment for the business that details everything that will happen, should the plan go sour. Speaking of plans, have a formal and realistic business plan. Try this link for help in creating a business plan:

http://www.businesstown.com/planning/creating.asp

Know Your Partners

It’s hard to really know what someone’s intentions are, but if you’re going to have partners, make sure everyone is on the same page. Most importantly, make sure everyone has the same work ethic. Running a small production company takes serious commitment, and if one person is bearing the brunt of the work, things will go sour FAST. Split up the day-to-day operations among the partners and follow up on everyone’s progress. Define, early on, what everyone’s rolls should be in the company and on a project by project basis.

Bringing In Work & Return Clients

Find clients and make them happy so they’ll keep coming back. Be involved with all the projects that come through the door and keep them moving forward. Having a ‘rep’ of sorts is important; someone who does nothing but hustle up work, making phone calls, sending out demo reels, etc. At first, this will be you and your partners. But pass it along to someone else when the work starts coming in. Offer someone a percentage of a project to do this work for you, or, if you can afford it, pay them a salary. Keep THEM happy and excited about the company and the projects as well. If a partner is more interested in being a producer, they would be the perfect candidate for hustling up some work.

Though our company survived longer than many start ups do, there are many things I would’ve done differently to keep it alive much longer. Treat the business like a production; if you’re pre-production was done well, then there will be less un-foreseen catastrophes in the long run. Make sure everyone knows the plan for the business and the dissolution, should it come to that. Good luck.


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