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From musicians to clowns to magicians to comedians, an entertainment company specializes in supplying performers for everything from birthday parties to company retreats. While most companies will specialize in one particular type of performer, it's also possible to employ a wide range of people with different skills to meet a variety of needs.
Who is this business right for?
The person who chooses this business must either love to be in the spotlight or have a knack for spotting people with talent. Owners and employees should have an inherent love of entertaining to thrive. If the owner is the performer, they should be willing to work on their craft constantly and change it according to audience expectations as time goes by.
What happens during a typical day at an entertainment business?
The bulk of the work of an entertainer is their actual time spent on stage, but an owner also has to be willing to devote time to advertising and marketing their services, as well as organizing the administrative end of things (e.g., payments, scheduling, etc.)
What is the target market?
Most private clients who hire an entertainer will be financially comfortable enough to absorb the expense. However, entertainers can easily be employed by schools, commercial operations, and even government organizations who may be on more limited budgets.
How does an entertainment business make money?
Performers will usually charge a specific fee either per hour or per show. Entertainers set their rates based on not only their time but also any business expenses they may have, such as supplies, employee salaries, etc.
What is the growth potential for an entertainment business?
Entertainers may be more in demand than they think because they can perform anywhere from a school to a home to a business. Who they end up working for will depend on the entertainment company’s rates, but entertainment companies serve enough needs in a community for there to be some flexibility in the business model. Ultimately, that flexibility can translate to better growth potential.
What are some skills and experiences that will help you build a successful entertainment business?
Entertainers should have some level of expertise before getting started. A comedian doesn’t have to be equal to Jerry Seinfeld to strike off on their own, but they should have enough of a following to justify a transition. Most won’t need formal training to do what they do, but it helps to have logged plenty of professional hours mastering different types of routines.
What are the costs involved in opening an entertainment business?
Entertainers can typically get started without a lot of capital. The main costs will be taking care of their normal living expenses as they attempt to build a steady clientele. Direct costs are usually administrative (e.g., Wi-Fi, website domain-name, advertising. etc.) Performers will also need to factor in how much it will cost for them to maintain/replace their equipment.
What are the steps to start an entertainment business?
Once you're ready to start your entertainment business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your entertainment business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your entertainment business keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers. Save 15% when you create a business website with Weebly.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
What are some insider tips for jump starting an entertainment business?
Most people will begin offering their services on a part-time basis to understand more about the demand of performers in their area (and hopefully stoke the fire for demand as well.) Owners must be prepared to alter their routines based on who’s hiring them. An engineering company who wants a comedian for a black-tie dinner will want very different material than a company who wants to reward their sales team after a record-breaking month.
Part of being a performer is creating a need for your services in a community. It’s ultimately a luxury good no matter how you look at it, so it’s about showing people that their dollars are well spent. A good performer can turn a dull gathering into the place to be. This is also the time to look for angles that may not be readily apparent. For example, a guitar player could play a couple’s song on their anniversary, or a magician can be hired to perform a disappearing act during a company retirement.
If choosing to hire performers, an owner will need to catch people at the beginning of their careers before they turn into the competition. To keep them happy, they'll need to be well-compensated for their time. Owners should ideally be able to convince their employees that the day-to-day business drudgeries aren't worth becoming their own boss.
How to promote & market an entertainment business
Marketing needs will vary based on the neighborhood an owner serves. A community that’s mainly filled with young families may be most likely to hear about the business via the school or another community stronghold. Traditional paper flyers may be old-fashioned, but the right one could catch the right eyes. Websites like NextDoor or Craigslist also offer community-specific information. Finally, social media (whether via paid ads or organic content) can make it easier for people to find and share information about the company. Websites must be professional but personal enough to attract the desired audience base.
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How to keep customers coming back
The goal is always to make clients happy and be memorable enough to stand out in their minds. With all of the available entertainment in the comfort of people’s living rooms, it’s the performers job to connect with their audience so they understand that it’s not always as fulfilling to turn on a TV as it is to have a live person in front of them.
How and when to build a team
Entertainers don’t necessarily need to hire anyone initially unless they truly don’t believe they can handle the more tedious parts of their business, such as collecting money from clients and staying on top of various commitments. Once the entertainer reaches critical mass, they can either hire an assistant or additional performers to meet the demand.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an entertainment business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
Certificate of Occupancy
An entertainment business is generally run out of an office. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a entertainment business.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your entertainment business will be in compliance and able to obtain a CO.
How much can you charge customers?
Performers can charge based on their popularity as well as their business expenses. It’s not unusual for an established company to charge hundreds of dollars an hour or more a performance. Realistically though, an owner should set their rates based on their direct competition. If there is nothing like what you’re offering in an area, then work out a reasonable hourly rate that you believe people in the area would be willing to pay.
What are the ongoing expenses for an entertainment business?
Entertainment companies will need to account for travel, equipment maintenance, and employee salaries. They may also want to invest in ongoing education, depending on their specialty.
How much profit can an entertainment business make?
Because ongoing expenses are so little, most of the money made by an entertainment company will be pure profit. A person with a two-hour act making $45 an hour for their services would need to work 20 shows a week to make around $93,000 a year.
How can you make your business more profitable?
Entertainers should consider experimenting with different types of acts and audiences to appeal to more people. They can also consider doing community events where they give mini-lessons to people who want to learn a magic trick or a guitar skill for a small fee. Or they can start doing private lessons for more dedicated people.