Starting a movie theater can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful movie theater.
Importantly, a critical step in starting a movie theater is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Movie Theater:
- Choose the Name for Your Movie Theater
- Develop Your Movie Theater Business Plan
- Choose the Legal Structure for Your Movie Theater
- Secure Startup Funding for Your Movie Theater (If Needed)
- Secure a Location for Your Business
- Register Your Movie Theater with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Movie Theater
- Buy or Lease the Right Movie Theater Equipment
- Develop Your Movie Theater Marketing Materials
- Purchase and Setup the Software Needed to Run Your Movie Theater
- Open for Business
1. Choose the Name for Your Movie Theater
The first step to starting a movie theater is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your movie theater:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your own business.
2. Develop Your Movie Theater Business Plan
One of the most important steps in starting a movie theater is to develop your movie theater business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your new business.
- Company Overview – this section tells the reader about the history of your movie theater and what type of movie theater you operate. For example, are you a first-run theater, art house theater, a repertory theater, traditional movie theater, drive-in movie theater, or an IMAX movie theater?
- Industry Analysis – here you will document key information about the movie industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products or services like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your movie theater? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your movie theater make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Movie Theater
Next you need to choose a legal structure for your movie theater and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the movie theater and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
2) Partnerships
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to open a movie theater together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a movie theater include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a movie theater is that it offers limited liability to its owners. This means that the theater owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your own movie theater, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Movie Theater (If Needed)
In developing your movie theater business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a movie theater to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a movie theater that they believe has high potential for growth.
5. Secure a Location for Your Business
There are a few things that you will need to take into account when finding a location for your movie theater. You will need to find a space that is big enough to house all of your guests. You will also need to make sure the space is accessible and convenient. You should also consider the cost of the space, and make sure that it is affordable.
6. Register Your Movie Theater with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your movie theater’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your movie theater to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
There are a few licenses and permits that are required to start a movie theater. These licenses and permits include a business license, zoning permit, and occupancy permit. Reach out to your local government to learn more about what licenses and permits are required in your area.
10. Get Business Insurance for Your Movie Theater
The type of insurance you need to operate a movie theater will depend on the location and scope of your business.
Some business insurance policies you should consider for your movie theater include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Movie Theater Equipment
To run a movie theater, you will need a projector, a screen, a sound system, and seating for your guests. You may also want to add a concession stand to sell snacks and drinks.
12. Develop Your Movie Theater Marketing Materials
Marketing materials will be required to attract and retain customers to your movie theater.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your movie theater. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional movie theater website provides potential customers with information about the products and/or services you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your movie theater.
13. Purchase and Setup the Software Needed to Run Your Movie Theater
To run a movie theater, you need software to handle ticketing, concessions, and movie projection. There are a number of different software options available, so you can find one that suits your specific needs.
Ticketing software can handle everything from ticket sales to customer tracking. Concession software can manage your inventory and track sales. And projection software can ensure that your movies run smoothly and look their best.
14. Open for Business
You are now ready to open your movie theater. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Movie Theater FAQs
Is it hard to start a movie theater?
No, it's not hard to start a movie theater. In fact, it can be a relatively simple process, depending on your location and the type of theater you're looking to open.
If you follow the steps above, you should be able to start your movie theater without too much difficulty.
How can I start a movie theater with no experience?
Start by doing some research on the industry and what it takes to start a movie theater. You may also want to reach out to people who are already in the movie theater business to get advice and learn from their experience. With planning and hard work, you can start a successful movie theater business.
What type of movie theater is most profitable?
The most profitable type of movie theater is the one that screens new releases. This type of theater typically charges a higher admission price than theaters that show older movies and independent films. In addition, they tend to have more expensive concessions. For these reasons, new release movie theaters generate more revenue than other types, such as independent theaters.
How much does it cost to start a movie theater?
The cost to open a movie theater can vary depending on the size and location. Generally, the cost to start a movie theater is around $500,000. This includes the cost of the property, renovation costs, and the cost of equipment.
What are the ongoing expenses for a movie theater?
Some of the most common ongoing expenses for a movie include rent or mortgage payments, property taxes, utilities, staffing, concessions, and marketing. In order to keep a movie theater running and profitable, it is important to budget for all of these expenses. For smaller independent theater owners, rent or mortgage payments can be the largest expense, while for larger chains, marketing may be the biggest expense. Whatever the case may be, it is important to track all costs in order to make sure the theater is not losing money.
How does a movie theater make money?
A movie theater makes money by charging customers to watch movies. They typically charge a fee for each ticket, and sometimes also charge a fee for concessions. This allows the theater to make a profit on each movie that is shown.
Another way that many theaters make money is through advertising. They can sell advertising space on their screens, or on the tickets themselves. This allows them to make even more money from each movie that is shown.
Finally, theaters also make money by renting out their space for other events, such as concerts or corporate meetings. This allows them to bring in additional revenue from outside of the movie business.
Is owning a movie theater profitable?
There is no definitive answer, as profitability depends on a variety of factors such as the location of the theater and the types of movies being shown. However, many industry experts believe that owning a movie theater can be a profitable business if it is done correctly.
One reason a movie theater is a lucrative business is that people will always want to see movies, especially if there is a good new release. Another reason is that film distributors often offer discounts on tickets, which can attract customers. Finally, theater owners can make money from concessions sales.
Why do movie theaters fail?
Movie theaters are often considered a staple of the American entertainment experience, but there are a number of reasons they may fail. One reason is that most movie theaters can be prohibitively expensive for some customers. In addition, many people now prefer to watch movies at home, where they can avoid the high prices of theater tickets and concessions. Finally, movie distributors are often victims of piracy, which can significantly reduce their profits.
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