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While motion pictures and television dominate much of the American entertainment industry, millions of people still enjoy live theatrical productions. Broadway alone attracted 13.27 million people in 2016-2017.
Theatre companies present plays and theatrical productions for live audiences. Some companies offer shows only at a specific theatre, which the company may own. Other companies tour to different theatres, putting on performances in many cities.
Who is this business right for?
Anyone who is passionate about theatre but also has a strong business mind may be well-suited for running a theatre company. A love for theatre is necessary because starting a theatre company is hard work and frequently doesn’t return a profit for several years. Being well-versed in running a business helps keep a company financially viable.
What happens during a typical day at a theatre company?
Running a theatre company involves a lot of work, including:
- booking tours
- marketing shows
- raising funds and finding donors
- scheduling and running rehearsals
- creating props
- getting press exposure
- actually putting on performances
Because there is so much to do, it is helpful to divide roles up among a theatre company’s members.
What is the target market?
A theatre company’s ideal customer is someone who enjoys live productions and has discretionary income. Such a person will be interested in seeing plays, and they’ll be able to afford to go to several shows each season.
While ticket sales usually account for just a portion of a theatre company’s revenue, the number of tickets sold may affect a theatre company’s ability to raise funding through other means. Therefore, getting people to pay for tickets is important even if a theatre relies on other funding.
How does a theatre company make money?
Most theatre companies have several streams of revenue. These frequently include:
- ticket sales
- donations from benefactors
- grants from government and nonprofit organizations
- merchandise sales
From 1990 through 2004, the National Endowment for the Arts reports that most nonprofit theatres received between $200,000 and $400,000 annually in contributions. Because it’s much more difficult to get donations and grants as a for-profit business, the majority of theatre companies are registered 501(c)3 nonprofits.
What is the growth potential for a theatre company?
How a theatre company grows depends on its business model.
Theatre companies that have a building to host performances in grow by adding more shows and bringing in more touring groups. For example, The Theater Company had six different shows in 2017, and each performance had its own cast and crew.
Touring theatre companies that don’t have a building grow by booking more performances and larger venues. They might start in small venues that hold 100 people or less, and then eventually be able to book major performance spaces almost every weekend.
What are some skills and experiences that will help you build a successful theatre company?
Successfully running a theatre company requires a great deal of knowledge and diverse skill set, which is why theatre companies frequently have teams behind them. In addition to the artistic knowledge that putting on a performance requires, business owners must also know how to find and apply for grants, develop a budget, manage employees, run a nonprofit organization and much more.
There are several ways for business owners to learn some of these skills:
- The American Theater Wing offers networking opportunities and internships
- Many local theatre also offer internships
- The American Theater Wing also has a series of online videos that cover different aspects of theatre
- The American Association of Community Theater (AACT) has many online resources that discuss the business side of running a theatre company
- The AACT also puts on a Community Theater Management Conference
Several books have also been written on starting and running theatres. A few titles that have valuable insights include Theatre Management, How to Start Your Own Theater Company and Building the Successful Theater Company.
What are the costs involved in opening a theatre company?
Although putting on a live performance involves a lot of work, it’s possible to start a theatre company with little upfront capital—if people are willing to donate their time for rehearsals and performances. If people aren’t willing to donate their time, starting a theatre company might not be financially feasible.
Third Angel, for instance, couldn’t afford to pay its performers until the theatre company’s second year. Even then, the company could only afford to pay people for performance days. It wasn’t until the company’s fourth year that everyone started getting a weekly wage from the company.
Assuming performers, directors and stage crew are willing to donate their time at first, the other potential startup costs can be kept extremely low:
- props and costumes can be made from items people already have or materials purchased second-hand
- rehearsals can be held in homes, parks, coffee shops, library conference rooms or any available public place
- performances can often be held in certain venues for free or a split of the ticket sales
What are the steps to start a theatre company?
Once you're ready to start your theatre company, 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 theatre company 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 theatre company 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 a theatre company?
Offering a stake in a theatre company can help entice people to volunteer their time during the company’s first few years. Many people who love the theatre understand that companies frequently aren’t profitable in the first few years. They may be willing to work for free in exchange for the opportunity to do something they love and possibly make some money in coming years.
How to promote & market a theatre company
In most cities, theatre-lovers are a close-knit community. Becoming plugged in with this community by attending performances and fundraisers is one of the best ways to promote a theatre company. The relationships built through networking can help a company secure donations from benefactors, which can help fund a company before ticket sales offer any revenue.
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How to keep customers coming back
The scripts that a theatre company chooses have a great effect on the company’s ability to attract audiences. Both fresh scripts that address current issues and well-loved classics (e.g. Shakespeare) can draw audiences, as long as they’re well-written. Even if a great script costs more than another one, money used to pay for an outstanding script is often well-invested.
How and when to build a team
As mentioned, starting a theatre company requires a lot of work, which is often done by a team. Most theatre companies start with a team, even if it’s just a small group of individuals, who are able to handle essential tasks. They normally delay adding more members for several years until they’re more established and have stable revenue.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a theatre company. 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.
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
A theatre company often has its own building or space. 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 theatre company.
- 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 theatre company will be in compliance and able to obtain a CO.
How much can you charge customers?
While a few Broadway shows command over $200 per ticket, the average theatre company charges much less. They often charge between $10 and $45 per ticket, with $10 and $15 tickets being special deals.
What are the ongoing expenses for a theatre company?
The ongoing expenses for a theatre company are sizable. They include employees’ salaries, prop creation and costuming costs, building maintenance (if a company has a building), and the price of new scripts, among other costs.
How much profit can a theatre company make?
The National Endowment for the Arts found that most theatres brought in between $800,000 and $1 million annually. This revenue included all funding sources.
How can you make your business more profitable?
Theatre companies can add additional revenue sources and increase their profits by putting on classes and renting their facility (if they have a building). Many companies offer acting classes and camps for youth. Churches and businesses may be interested in renting a large space that has a stage and seating.