How to start a commercially focused Theater Production Company- Presented at CSSD in October 2012

1. Stage Your Business
Essentials
John Spindler CEO of Capital
Enterprise

2. Key Learning Points of
Presentation
• How to start a Theatre Company- Basics
• Introduction to the Business Model Canvas.
• Basic Theatre Finances
• Sources of finances and support.
• Business Plan template.

3. Basic Step-by-Step Guide to
Starting a Theatre Company
1. Decide on who will be involved, roles, responsibilities, levels of commitment (investment) and
management structure.
2. Agree on a mission/ value statement- The criteria for determining what you are about and what
type/style of productions you are going to stage .
3. Create a name and a look. Brainstorm ideas on names and develop a logo and an identifiable “look” for
your publicity, etc.
4. Decide on profit/non-profit status. The main advantage of non-profit status ( Charity/Social enterprise) is
qualifying for grants and special discounts. It’s a lot of work, so be realistic about whether the effort is
worth it. You can always wait and turn non-profit in the future.
5. Register your company @ Companies House and possibly trade mark your name.
6. Open a bank account. This enables you to keep track of your company’s financial situation and to accept
checks written to the company’s name.
7. RESEARCH-RESEARCH-RESEARCH- Market (Audience)-Competition- Funding.
8. Identify your costs (direct and fixed) for on-going operations, pre-production, marketing and production.
9. Make funding decisions. Determining funding sources ( Investment, Grants, Loans) and likely amounts of
income . ( Ticket Sales/ Sponsorship/ Donations/ Sweat Capital)
10. Create a marketing/promotion plan of Action. Use “AIDA” and develop a plan to build audiences
through additional activities such as social network participation, teaching classes or hosting staged
readings.
11. Create a database. Consider keeping separate databases for general mailings and for press contacts.
12. Call in favours- Marshall your “Sweat Capital”
13. Work backwards. Put your first production date far enough into the future that you have time to lay
some groundwork. You won’t do your best planning under the deadline of an approaching opening night.

4. First Steps into showBusiness –
• “fiat ars,pereat mundi”
• Think of your Audience- Who are they- what do they want?
• Choose something for you first show that is relatively easy for you
to execute- something you know?
• Match ambition to resources e.g. Small Cast’s are cheaper
• Choose something simple to stage & portable
• Make it contemporary ( No costumes)
• Think of what will get your production noticed- media exposure
• Open Cast- Attract talent that can sell a show
• Don’t pay unless you have too
• Call in favours and do “quid pro quo” deals.

5. A new imperative?
• Can I reduce the “market risk” around staging a
new production?
• Can Theatre Production become self-financing?
• Can I run a new Theatre company not reliant on
Arts Council Subsidy?

6. The first steps on the road to
starting a sustainable Theatre
Production company…
A Start-up is….
“an organization formed to search for a repeatable and scalable business model”
- Steve Blank- “4 Steps to an Epiphany”
“an organization dedicated to creating something new under conditions of extreme
uncertainty”- Eric Reis- “Lean Start-up”
A business model describes….
“ how your company creates, delivers and captures value”
Or in English:
“How your company will make money”

7. http://www.businessmodelgeneration.com/

8. http://youtu.be/QoAOzMTLP5s?hd=1

9. 9

10. Value Proposition
Why would your target audience
chose to spend their money on your
show?
10

11. What’s the Canvas Model for…
• Public display of your initial insights- allows
others to give feedback?
• Every insight is a “hypothesis” that must be
able to be tested and challenged…
• Helps to devise tests and collect evidence that
proves the business model…
• Structures your business and helps to devise a
roadmap.

12. My Canvas Model…
Please complete a business Canvas Model…

13. What is your business?
1. I believe my customers need/want to……. ?
2. This need/desire can be solved with …….? (i.e. what will my product/
The GIF Test service achieve for the customer ? )
3. I and my team are best placed to lead and build this business
because…….?
4. My initial customers will be …….? ( why….?)
http://giffconstable.com/2011/12/business-assumptions-exercise/ 5. The no 1 value/reason a customer wants to get from using/buying my
service/ product is……..?
6. The customer can also get from my product/service offer these additional
benefits………. and……..
7. I will get the majority of my initial customers to become users/ buyers
through………. and………. ( Your route to market is…..?)
8. I will make my money by………? (my revenue model is……?)
9. My primary competition will be…. and …. (i.e. who is presently serving my
target customers or why to date have customers not been using
something similar to my product or offer)
10. We will beat the competition in the market due to…. and…..
11. My business will grow through………. and…….
12. The biggest risk that the product/service will not work or be competitive
is……..?
13. We will solve this risk by……..?
14. What assumptions prior to launch do I hold that if proven wrong could
cause the business to fail…..?
15. Can I test out these assumptions prior to full product launch……? (If so
how?)
13

14. Theatre Finances
14

15. Theatre Budget
• Your Salary- Personal Survival Budget.
• Scripts - both for reading in order to select a show and for production
• Royalties - varies depending on the demand for the show and the size of the hall
• Specialty props or consumables that you can't borrow
• Rehearsal/performance hall rental
• Janitorial/security services (as required by the performance hall)
• Utilities (as required by the performance hall)
• Lighting/sound equipment rental, depending on what the performance hall offers
• Costume construction, purchase or rental (this can be a cast responsibility)
• Set construction - lumber, paint, screws, hardware, etc.
• Advertising - fliers and/or posters, possibly newspaper or radio ads
• Playbills (print costs and possibly design services)
• Musicians' fees (for musicals)
• Insurance
• Storage (costumes, sets, props, etc.)

16. Resource Need
• A director
• A stage manager
• A lighting/sound tech
• Someone who can design sets
• Someone who can build sets
• Someone willing to be in charge of publicity, including the playbill
• A music director (who will probably expect to be paid) and a choreographer (if you
plan to do musicals)
• At least three people willing to serve as the Board of Directors, or Steering
Committee, or whatever else you want to call the group that will take
responsibility for running the company. One of these should be willing to act as
treasurer.
Likewise, you will need the following:
• A place to rehearse
• A place to perform
• A place to store costumes, props, etc. between productions
• A source for lighting/sound equipment rental

17. Homework Exercise –
Prepare a production budget for your own
project?

18. Pricing & Sales Forecasting –
No of Tickets X Average Ticket Price = Sales Forecast
Cost of performance or production run / No of tickets @ “Market
Price = Target Sales Required to Break-Even.
• Price for Profit?- Need to cover the cost of performance by selling only 50-70% of theatre
capacity.
• Other Income- Subsidy or profit?
• Customer Pricing Expectation- Set by the competition, your positioning in the market and
the theatre
• Volume Vs Margin- If you give discounts you need to sell more tickets.
• Trade Profit for Cash- Importance of Advanced Bookings for Cash Flow.
• Think Long Term- Big difference between funding a production and funding a business.

19. Group Exercise
Boot Camp Productions has booked a SOLT Affiliate Theatre to stage 10
performances of a revival of “Whose Afraid of Virginia Wolf”. The Production
Budget for 10 performances is £12,000 and the development, marketing and
rehearsal budget is a further £8,000. The Theatre has 140 seats (all good
views) and the average price for seats sold per past performance is £15 at an
achieved occupancy rate of 65% .
• Will the show make a profit or require a subsidy to Box office income?
• How much profit will be made/ subsidy required?
• What would you do to make a production of “Whose Afraid of Virginia
Wolf” work at this theatre?

20. Answers
• Theatres average performance occupancy rate X
Average ticket price sold = income per performance
( 91 seats X £15 = £1,365)
• No of performance’s X Expected ticket income =
Income per run (10 performances X £1,365- £13,650)
• Total Cost of Production X projected income per run
= profit/ loss (£20,000 - £13,650 = -£6,350)
What would you do?

21. Sources of Start-up Finance
• Personal resources (time and money = sweat equity)
• Friends, Family & Fools ( Your Supporters)
• Customers and Suppliers
• Government Grants & Loans
• Corporate Sponsorship
• Debt Providers
– Banks
– Specialist lenders
• Equity Providers
– Private Investors-Angels
Matching the right mix of sources to the right stage and type of
finance is the key to successful fundraising

22. Looking for Funding? –
Grants & Awards
• Stage One (Bursaries & Awards for New Producers)- http://www.stageone.uk.com/
• Arts Council- http://www.artscouncil.org.uk/funding/grants-arts
• London Councils- http://www.londoncouncils.gov.uk/services/grants/
• Fundraising Resources & News - http://www.fundraising.co.uk/news
• Foyles Foundation- http://www.foylefoundation.org.uk/main-grants-scheme-arts
• Welcome Trust- http://www.wellcome.ac.uk/Funding/Public-engagement/Funding-schemes/Arts-Awards/index.htm
• Shell Livewire -£1000 award for new entrepreneurs 16-30 - http://www.shell-livewire.org/news/awards2011
• UK Film Council- http://www.ukfilmcouncil.org.uk/whatwefund
• New Enterprise Allowance ( August 2011 in London) - http://www.dwp.gov.uk/adviser/updates/new-enterprise-allowance
• J4B- Portal for grant finding http://www.j4b.co.uk
• Skillset: http://www.skillset.org/funding/
• AHRC- http://www.ahrc.ac.uk/FundingOpportunities/Documents/Research%20Funding%20Guide.pdf
• NESTA- http://www.nesta.org.uk/areas_of_work/creative_economy/digital_rnd
• British Council- http://www.britishcouncil.org/arts-performing-arts-funding.htm
• Angels- http://www.solt.co.uk/angels.html
Corporate Sponsorship
• http://artsandbusiness.org.uk/Media%20library/Files/Individual%20giving/09jul_taxguide.pdf
• http://www.companygiving.org.uk
• http://www.uksponsorship.com/arts1.htm
• http://resources.mediatrust.org/marketing-support/tactics/sponsorship/?gclid=CPjHwre-t6kCFcod4Qodo3-o-A
• Crowdfunding (USA only) www.kickstarter.com
• Crowdfunding. www.indiegogo.com
• Crowdfunding success story- http://www.wefund.com/project/faun
• Next Generation Finance Consortium- www.ngfc.org.uk
Loans
• ELSBC- http://www.goeast.org/pages/raising_finance_business_loads/0/raising_finance_and_business_loans.html

23. Theatre Angels
The capital is raised through independent investors, or ‘angels’, who
individually invest a specific agreed amount of finance into the
production, and whose liability ends at that amount.
The first profits from the production always go straight back to
these investors until they have recouped their initial investment,
after which the production is deemed to be in profit. Once this
capital has been repaid, the investors will share in 60% of the
production’s profits, with the producers retaining the remaining
profits of 40%.
Usually, the minimum amount required to invest in a commercial
play is £2,500 and a musical approximately £10,000 but smaller
amounts are possible if agreed with the producer.
You will need a Lawyer to draw up the Agreement.

24. SEIS- Tax breaks to encourage investment in start-ups
Seed Enterprise Investment Scheme-SEIS is a tax break launched in April 2012 for UK
tax payers to encourage them to buy shares in start-up companies registered in the
UK
The Facts:
• SEIS investors can input £100,000 in a single tax year rising to a maximum £150,000 over two
or more tax years in to a single company
• Investors cannot control the company receiving their capital
• Investors pick up 50% tax relief in the tax year the investment is made, regardless of their
marginal rate.
• In the 2012-13 tax year, tax payers can roll any chargeable gain in the tax year in to a SEIS
with a full capital gains tax exemption (another 28%)
• The business must be a start-up company -registered in the UK within 2 years of claim.
• The company must not employ more than 25 workers.
• The company must have assets of less than £200,000.
• The company has to trade in an approved sector – generally not in finance or investment, for
example, a property company raise capital as a SEIS.
www.capitalenterprise.org

25. Useful Links
General Information:
• Capital Enterprise- www.capitalenterprise.org
• NESTA Guide to Starting a Creative Business-
http://www.nesta.org.uk/assets/features/creative_enterprise_toolkit
• Business Link - www.businesslink.gov.uk
• British Library- www.bl.uk/bipc
• HMRC http://www.hmrc.gov.uk
• Companies House: http://www.companieshouse.gov.uk
• Guide to Early Stage Investment:
http://www.paloalto.co.uk/about_us/Early_Stage_Investment_by_Alan_Gleeson.pdf
Essential Theatre link:
• Society of London Theatre- http://www.solt.co.uk/
• British Theatre Guide: http://www.britishtheatreguide.info/links/linkindex.htm
• Theatrical Management Association- http://www.tmauk.org
• BECTU- Technicians Union Rates- www.bectu.org.uk/advice-resources/rates/tma-rates
www.bectu.org.uk/advice-resources/rates/solt-rates
• Equity- http://www.equity.org.uk/resource-centre/
• Scripts- http://www.samuelfrench.com/store/royalties.php
• Power to the Pixel: http://www.powertothepixel.com
• Circalit: http://www.circalit.com
• Production Base: http://www.productionbase.co.uk

26. 10 minute Business Plan –
• 7 Slides
• Challenge- “ Catch a fish”- an “investor”
Grab ttention
Spark nterest- What’s in it for them?
Create a esire – Leave them wanting more
Make them ct- What’s your ask?

27. Slide 1- Introductory Slide
• Who are You?
• Short Pitch- Your business/ production in one
line
• Tell the Business Plan “Reader” what want
them to remember

28. Slide 2- Audience/ Customer
• Who are you selling too?- Who has the
money?
• Audience Profile/ Market Size?
• Why will they come?
• Comparable success stories
• Specific examples

29. Slide 3 : Your Product/Service
• What are you offering- features/benefits
• Unique Selling Proposition- Why choose to
come to your production?
• Better than the competitor because….. ?
• How are you going to first reach then secondly
convince your customers to buy? – i.e.
marketing plan.

30. Slide 4- Why Now
• Market Trends- Good opportunity now
because…..?
• Time Critical Decision making process- Who do you
need to “get on side” to start the business (get the production of the drawing
board), how is it done and how near are you to getting a yes?
• Compelling Reason to “invest” now

31. Slide 5 - Why Us?
• Team Today ( Credentials, roles &
responsibilities)
• Team Future ( Staff, Associates, Partners)
• Connectivity & Partners. – Who do you know
and why are they useful ?
• Sustainable competitive advantage- What are
you going to do make sure you are not a “one
show/trick pony” ?

32. Slide 6: Financials –
Keep it Simple ( i.e. A graph?)
• Top Line Sales
• Costs/ Cash Flow
• Investment Required & for what
• Forecast Value of Show/ IP/ Company ( based on
payback, ROI)
• Exit Strategy- How will the investor get more than his
money back.

33. Contact us for more information or to arrange a
follow up meeting
john@capitalenterprise.org
020 7 679 4598
07968 470901