Start a movie theater by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your movie theater. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a movie theater?
A movie theater requires screens, chairs for ticket buyers, a reel projector, computers, speakers, dimmable lights, sound proofing, audio/video receivers, software to play films, HDMI cables, a ticket booth, a point of sale system, cash registers, a butter warmer, a popcorn maker, candy, refreshments, insurance and labor.
What are the ongoing expenses for a movie theater?
Ongoing expenses include labor, securing the rights to films, theater upkeep, insurance, facility rent, the cost of popcorn, candy and refreshments, and marketing. If you do not own your facility, monthly rent will likely be anywhere from $700 to several thousands of dollars depending on the building's size. Upkeep of the theaters, the building and parking lot will likely cost a couple hundred dollars per month at a maximum. Securing the rights to films hinges on their popularity and the nuances of theaters' relationships with distributors. Labor costs for ticket takers, ticket sellers, concessions personnel and cleaning staff will likely be between $8 and $10 per hour. A handyman will likely demand an hourly wage between $12 and $25. A movie theater manager will likely make between $30,000 and $50,000 per year. A marketing professional will command a salary in the same range as the manager.
Who is the target market?
The ideal customer is a large group that is willing to pay plenty of money to rent a portion of the theater for a private screening. Oftentimes, businesses and other organizations will pay extra money to secure a section of the theater for their group's viewing of a film.
How does a movie theater make money?
A movie theater business makes money by selling tickets to movies. This business also makes money by selling concessions such as popcorn, candy, and refreshments.
How much can you charge customers?
The typical movie theater charges between $8 and $15 per ticket. However, some movie theaters hold discount days/nights in which tickets are sold between $4 and $7. Popcorn typically costs between $4 and $10 based on the tub size. Refreshments cost between $3 and $6. You can charge between $3 and $6 for candy.
How much profit can a movie theater make?
A movie theater business can make upwards of $50,000 in its first couple years of operation. The level of profitability depends on the location, the specific movies shown and the number of screens at the facility. Expand your business to other locations, across the region or even across the nation and your profits will likely reach six figures or even millions of dollars.
How can you make your business more profitable?
Sell more than movie tickets. A movie theater business can sell popcorn, candy, refreshments, movie memorabilia etc. It is also possible to charge more for seats in the center/back of the theater. Be sure to charge more for evening tickets as opposed to matinee tickets. Consider replacing the front row seats with row-style seats with tables and chairs. You can sell premium food and drinks to moviegoers at comparably high prices. If your local laws permit the sale of alcohol in theaters, obtain a liquor license and sell beer, wine, and other items. Consider adding an arcade to your movie theater. You can make a substantial amount of money if your arcade has some of the latest video games.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your movie theater is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
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.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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.
STEP 5: 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.
STEP 6: 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.
State & Local Business Licensing Requirements
In most states, it is necessary to obtain a movie theater license. Certain state permits and licenses may be needed to operate a movie theater 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 more 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.
Certificate of Occupancy
A movie theater is generally run out of a storefront. 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 movie theater.
- 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 movie theater will be in compliance and able to obtain a CO.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: 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.
How to promote & market a movie theater
Explore every marketing avenue to the fullest. Market your business across an array of mediums to obtain maximum exposure. Make sure your web content is optimized for search engines (SEO) so locals can find your company online with ease. When marketing your theater, be sure to emphasize the factors that make your business unique. Perhaps you have extremely comfortable seats that recline. Maybe your ticket prices are low compared to those offered by other local theaters. Stress the advantages of watching a movie at your theater and people will show up. Establish business partnerships with local entrepreneurs so you can run joint promotions with nearby cafes, restaurants, bars, and other venues.
How to keep customers coming back
Customers are looking for value and unique offerings. Keep your prices in line with those of competitors. Offer discount movie nights so people can experience your theater first-hand. An individual who enjoys a screening at your theater at a discounted price is much more inclined to return for future screenings. Consider showing a handful of independent films that competitors do not provide. Make sure your popcorn is fresh and your drinks are cold. Keep your theater as clean as possible and people will post positive reviews online and return for future showings. Consider offering price discounts to large groups of people, students, and senior citizens. Getting them in the door for a screening just might convert them into loyal customers.
STEP 9: Establish your 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.
Start A Movie Theater In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
If you have a passion for cinema, storytelling, and acting, running a movie theater business will prove especially rewarding.
What happens during a typical day at a movie theater?
The typical movie theater business owner handles a wide array of responsibilities in the usual workday. He does everything from determining which movies to show at the theater to handling marketing endeavors, hiring new employees, delegating work to current employees, and securing licensing deals for future films.
What are some skills and experiences that will help you build a successful movie theater?
The entrepreneur should have a firm grasp on the desires of locals. An understanding of the types of movies people truly desire to watch has the potential to make the difference between a successful movie theater business and one that fails. The entrepreneur should also be a skilled marketer to boot.
What is the growth potential for a movie theater?
A successful movie theater business can expand to additional locations and eventually spread across the region or even the country.
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Take the Next Step
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.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a movie theater?
Differentiate yourself from the pack. Do not show the same movies as the rest of the local theaters. Hold several promotions to get the locals interested in your theater. Try to secure licensing deals so you can show movies that are in-demand as opposed to independent films that the general public probably is not interested in.
How and when to build a team
A team will be necessary right away unless you have a single screen at your theater. It is possible for you to handle ticket sales, cleaning, and marketing, yet you will need a couple people on-hand to take tickets and sell refreshments, popcorn, and candy. Your theater will also require a someone to run the projector. As time progresses and the business grows, more employees will be necessary. It is prudent to add a marketing professional, ticket takers, ticket sellers, cleaners, and a general manager. You can fill some of these roles when the business first launches, yet you will eventually become so busy that these duties must be delegated to others.