Thinking of starting an entertainment company? First off, congratulations! You’re joining a community of entrepreneurs who love to make people happy. Whether it’s dancing, magic, or music, your service can elevate any event into something your clients won’t forget.
It’s not easy though. According to the U.S. Bureau of Labor and Statistics, 6.5 million small businesses are opened each year, and only 25 percent will last 15 years or more. So how do you start an entertainment promotion company and make it last?
In this article, you’ll get the answer to that question.
How to Start an Entertainment Company
In this article, Clint Stinchcomb, President and CEO of Curiosity Stream, shares everything you need to know about how to start an entertainment company that doesn’t suck. Clint is an expert in entertainment and has over 25 years of experience working in traditional and digital media.
If you’re ready to start your entertainment powerhouse, then keep reading. You’ll learn all the basics you need to start your company, from planning to finances.
Choose Your Niche
It’s not enough to say you’re starting an entertainment company; you have to be specific. Several categories fall under entertainment, so you should know what to do before you go any further with planning.
Here are some common niches for the entertainment industry:
- Event DJ
- Entertainment promotion
- Lighting and design
- Party planning
As you can see, there are a lot of options for niches to focus on. How do you choose? Focus on your passion. Are you an entertainer, or are you someone who enjoys connecting entertainment to people? Understanding what you want to do is crucial to starting your own entertainment company.
Create a Business Plan
Every business starts with a business plan. While this might not be the most exciting activity, it is a must if you want to succeed and grow. Your business plan acts as a roadmap for your entrepreneurial journey. It outlines your starting point and shows where you’re going.
A business plan also clearly identifies what your company does, your values, and your mission. These are all essential elements that you should be clear on to help with your branding, too (more on that later).
Here are some questions your business plan should answer:
- What’s your business name and structure?
- What are your startup and ongoing costs?
- Who is your target customer?
- What’s your marketing strategy?
- How much will you charge your customers?
Having this information laid out will help you identify whether you need funding, employees, equipment, etc. A solid business plan will also come in handy if you are seeking help from investors or banks.
Register Your Entertainment Company
To make things official, you have to register your business with your state legally. Having a registered business will allow you to report your earnings and file taxes correctly.
Registering a business entity is done through your local Secretary of State, and you can complete it online through their website. When choosing a business structure, you’ll have several options to choose from, and selecting the right one depends on a few things. Factors like your number of employees and how you plan to operate.
To help you decide what’s best for your entertainment company, look at these standard options and their differences.
A sole proprietorship is a business owned and operated by one person, but a married couple can also choose this option. If you plan on starting a solo venture, you’re automatically recognized as a sole proprietor by law, so it isn’t necessary to register.
You can still register your business’s name with the state to ensure you’re the only one operating under it. Also, licenses and permits may still be required by your state, depending on what kind of service you’re offering. For example, a catering company will need to be licensed to serve food and alcohol.
A partnership is a business that is owned by two or more people. There are two types of partnerships, general partnerships (GP) and limited partnerships (LP). For this type of business, it’s assumed that all partners manage the business and are responsible for profits and losses.
A partnership business is similar to a sole proprietorship since it’s automatically assumed when two or more people start a business. This also doesn’t require registration with the state, but it is good to register the business name. Many entrepreneurs use this option when they seek partners to help fund their new entertainment company.
Limited Liability Company (LLC)
Limited Liability Companies are a happy medium between strict corporations and unprotected sole proprietorships and partnerships. They offer limited liability protection like corporations, which can help if you find yourself in a legal situation. They don’t require a lot of paperwork or requirements like the other two options.
What makes LLCs even better is that you can choose how the IRS taxes your business. You can select to be in charge of your taxes similar to a sole proprietorship or act as a pass-through entity like corporations.
If you plan on starting an entertainment company that functions as an independent entity and functions separately from the owners, you need to register it as a corporation. These businesses usually have shareholders, a board of directors, and officers who control the company. However, it’s not required, and one person can manage all of this.
Like partnerships, there are different options to choose from. There are c-corporations and s-corporations. S-corporations preserve the limited liability of a c-corporation and are only established for tax purposes. Whatever you choose, know that corporations come with more regulations and tax laws to comply with.
Open a Business Bank Account
To correctly manage your company’s finances, you have to keep them separate from your personal. That means opening a business bank account. Not only will having a business bank account make it easier to manage your company’s finances, but it will also protect your personal assets from being affected by anything with your business.
A business bank account will also help you build business credit, separate from your personal credit. Having a strong business credit score will help you get approved for loans and business credit cards. These are always good options, especially if you’re looking for funding.
Establish Your Brand
Too many companies skip over branding or don’t give it enough attention, but this shouldn’t be considered optional. If you want your entertainment business to succeed, you must establish your brand’s image and mission. This will not only capture your target audience’s attention, but it will make them remember your company and stand out amongst the competition.
Your entertainment company’s brand isn’t just about having a nice logo, though. Your brand is also how you interact with your customers. That’s why developing a habit of putting your customers first is essential.
Get the Correct Permits and Licenses
Depending on how you operate and how you registered your business, you’ll need to obtain the necessary permits and licenses. Every state has its requirements, so be sure to check on the Small Business Association’s list that’s broken down by industry.
It’s also important to remember that these will cost you money. Don’t forget to work the fees into your startup costs when you’re creating your business plan. Getting the right permits and licenses will allow your entertainment company to function legally, and it will also show customers your credibility.
Get Business Insurance
Here’s another thing that some entrepreneurs view as optional, but business insurance is a must-have. Many states require you to have this type of insurance to legally and safely operate. But don’t look at it as another expense. Business insurance will protect your company financially in the event of an emergency or loss.
There are different kinds of business insurance, but it’s best to start with General Liability Insurance. This insurance is commonly used by small businesses and will give you all the protection you need. Another typical insurance you might need is workers’ compensation insurance, which will protect your employees if they are injured on the job.
Start Building Your Entertainment Company Today
Now that you know how to start an entertainment company, you can start putting your ideas into action. Just remember, it’s all about planning. Planning your business and your financial goals will make it easier to get your company off the grounds. Follow these steps, and you’ll be on your way to entertaining people all over your city!