THEATRE SETUP

(ENTREPRENEURSHIP)

Start a movie theater by following these 10 steps:

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 much can you charge customers?
 What will you name your business?

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. Securing the rights to films hinges on their popularity and the
nuances of theaters' relationships with distributors. 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?

How much profit can a movie theater make?

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.

What will you name your business?

When registering a business name, we recommend researching your business name

by checking:

 Your state's business records

 Federal and state trademark records
 Social media platforms
 Web domain availability.

It's very important to secure your domain name before someone else does.

STEP 2: Form a legal entity

The most common business structure types are the sole

proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects

you from being held personally liable if your movie theater is sued.
STEP 3: Register for taxes

Small Business Taxes

Depending on which business structure you choose, you might have different
options for how your business will be taxed. For example, some LLCs could
benefit from being taxed as an S corporation (S corp).
There are specific state taxes that might apply to your business. (sales tax and
franchise taxes in our state sales tax guides.)

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.

Additionally, learning how to build business credit can help you get credit

cards and other financing in your business's name (instead of yours), better
interest rates, higher lines of credit, and more.

Open a business bank account, Get a business credit card

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.
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:

o It is generally the landlord’s responsibility to obtain a CO.
o Before leasing, confirm that your landlord has or can obtain a valid CO
that is applicable to a movie theater.
o 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:

o You will be responsible for obtaining a valid CO from a local government
authority.
o 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.

Food Regulations

When selling food, you will need licensing from a local health department; all
establishments serving food are required to pass a health inspection.  There
are federal regulations regarding what can and cannot be added to, sold as,
and processed with food.

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.
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: Create your business website

After defining your brand and creating your logo the next step is to create a
website for your business.

While creating a website is an essential step, some may fear that it’s out of
their reach because they don’t have any website-building experience.
Here are the main reasons why you shouldn’t delay building your website:

 All legitimate businesses have websites - full stop. The size or industry
of your business does not matter when it comes to getting your business
online.
 Social media accounts like Facebook pages or LinkedIn business
profiles are not a replacement for a business website that you own.
 Website builder tools like the Go Daddy Website Builder have made
creating a basic website extremely simple.

Where Does the Money You Spend on a Movie Ticket Go?

The general breakdown for a Hollywood movie gives the movie theater 45% of
every ticket sold and the studio that created the movie 55%.

Telangana - Apply License (Permit) for Theatre

Procedure
Applicants must get a few certificates / Licenses / NOCs before applying for a
license or permit for Theatre is listed below:

1. A No Objection Certificate (NOC) from the Municipal corporation / Gram

Panchayat/ District Council/ Development Authority that has jurisdiction
over the area stating that the authority does not have any objection with the
construction/commencement of the proposed Open Air Theatre.
2. Proper documents supporting the ownership of the building/premises along
with the correct measurement of the theatre such as the height of the
galleries or tiers, width of the strait ways, number of stairs in each of the
straight ways, the width of each corridor, number of gangway or doorways.
3. A certificate stating the ownership of the cinematograph apparatus to be
used.
4. Certificate from the Executive Engineer of the Public Works Department
(PWD) of the area stating that theatre is constructed by following the rules
relating to the structural features.
5. Certificate from the Electricity Department of the State Government stating
that the electrical equipment has been installed following the rules and are
of the required standards.
6. Certificate from the District Officer of the Public Health Department of the
State Government stating that arrangements of public sanitation have been
made following the sanitation rules.
7. Certificates for public exhibition of a film produced in India from the
Ministry of Information and Broadcasting, Government of India.
 8. Certificates for public exhibition of a film imported into India from the
Ministry of Information and Broadcasting, Government of India.
9. Certificate from the Superintendent of Taxes of the area stating that no
amount of tax is due under the Amusement and Betting Tax Act of the
state.
10.Certificate from the Divisional fire officer of the area stating that proper fire
safety measures and norms have been taken while building the theatre. And
also that the theatre has proper fire extinguishers installed to control small
fires in emergency situations.
Apply In-Person:

1. Applicants must visit the office of the Deputy Commissioner/ District

Collector/District Magistrate to apply for the license or permit.
2. Collect the application form from the concerned authority and fill in all the
details.
3. The application for Open Air Theatre must be in writing. Therefore, write an
application letter addressing to the Deputy Commissioner of the Police and
duly sign it.
4. Attach the copies of all the above-mentioned documents along with the
application form and letter and submit it to the licensing authority.
5. Provide all the original documents to the licensing authority for verification.
6. After validation of the documents, pay the required application fee to the
concerned authority and keep the receipt safe for future requirements.
7. Next, wait for the licensing authority to call you for visiting the site for
inspection.
8. After inspection of the site, if the licensing authority is satisfied that all the
rules have been followed and there is no objection from any authorities then
the license will be granted.
9. The applicant will receive a message/call on the registered phone number to
collect the license from the office of the Deputy Commissioner.
Note:

 Only NOC for construction of Cinema Hall can be applied online or through
Meeseva Centres.
 The applicant may be asked to show the original documents on the day of
inspection.

Required Documents

 Application form
 Application letter
 Certificate of ownership of the theatre
 No Objection Certificate (NOC) from the Municipal corporation / Gram
Panchayat/ District Council/ Development Authority
 Certificate of the ownership of the cinematograph apparatus
 Certificate from the Electricity Department of the State Government
 Certificate from the District Officer of the Public Health Department of the
State Government
 Certificate from the Executive Engineer of the Public Works Department
(PWD)
 Certificates for public exhibition of a film produced in India from the
Ministry of Information and Broadcasting, Government of India.
 Certificates for public exhibition of a film imported into India from the
Ministry of Information and Broadcasting, Government of India.
 Certificate from the Superintendent of Taxes of the area
 Fire Safety Certificate
 Identity Proof: Aadhaar Card / Passport / Driving License / Ration Card /
Govt. Id card / Defence ID Card / PAN card.
 Residential Proof: Residential Certificate issued by Local administration
office/ Aadhaar card / Passport / Driving License / Ration Card / Govt. Id
card / Defence ID Card / PAN card.
 2 Passport Size Photographs

GUYS FOR MORE INFO ABOUT LEGAL PROCEEDINGS:

http://filmmakersfans.com/start-movie-theatre-india/

FINANCIAL PLANNING:

Guys this is just a example/sample for understanding purposes. When you’re dealing
with economics then these all factors come into picture. So please take a look on
them.

8.1 Important Assumptions

The following shows the important General Assumptions for Falls River
Theatre.

General Assumptions
Plan Month 1 2

Current Interest Rate 10.00% 10.00% 10.00%

Long-term Interest Rate 10.00% 10.00% 10.00%

Tax Rate 30.00% 30.00% 30.00%

Other 0 0 0

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8.2 Break-even Analysis

The following Break-even Analysis shows the monthly break-even point.
Break-even Analysis

Monthly Revenue Break-even $23,758

Assumptions:

Average Percent Variable Cost 49%

Estimated Monthly Fixed Cost $12,176

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8.3 Projected Profit and Loss

The following table and charts show the Projected Profit and Loss for Falls
River Theatre.
 Pro Forma Profit and Loss

Sales $187,188 $280,782 $421,173

Direct Cost of Sales $91,254 $136,881 $205,322

Other Costs of Sales $0 $0 $0

Total Cost of Sales $91,254 $136,881 $205,322

Gross Margin $95,934 $143,901 $215,851

Gross Margin % 51.25% 51.25% 51.25%

Expenses

Payroll $78,150 $82,058 $86,160

Sales and Marketing and Other Expenses $3,300 $0 $400

Depreciation $1,992 $0 $0

Rent $10,800 $0 $900

Utilities $30,000 $0 $2,750

Insurance $10,150 $0 $1,100

Payroll Taxes $11,723 $0 $1,138

Other $0 $0 $0

Total Operating Expenses $146,115 $82,058 $92,448

Profit Before Interest and Taxes ($50,181) $61,843 $123,403

EBITDA ($48,189) $61,843 $123,403

Interest Expense $0 $0 $0

Taxes Incurred $0 $18,553 $37,021

Net Profit ($50,181) $43,290 $86,382

Net Profit/Sales -26.81% 15.42% 20.51%

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8.4 Projected Cash Flow

The two founders will be the sole investors. Samantha Farmer and Steve
Brinksman will invest, both in early January.
Pro Forma Cash Flow

Cash Received

Cash from Operations

Cash Sales $187,188 $280,782 $421,173

Subtotal Cash from Operations $187,188 $280,782 $421,173

Additional Cash Received

Sales Tax, VAT, HST/GST Received $0 $0 $0

New Current Borrowing $0 $0 $0

New Other Liabilities (interest-free) $0 $0 $0

New Long-term Liabilities $0 $0 $0

Sales of Other Current Assets $0 $0 $0

Sales of Long-term Assets $0 $0 $0

New Investment Received $60,000 $0 $0

Subtotal Cash Received $247,188 $280,782 $421,173

 Year 1 Year 2 Year 3

Expenditures

Expenditures from Operations

Cash Spending $78,150 $82,058 $86,160

Bill Payments $152,553 $178,262 $256,786

Subtotal Spent on Operations $230,703 $260,320 $342,946

Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out $0 $0 $0

Principal Repayment of Current Borrowing $0 $0 $0

Other Liabilities Principal Repayment $0 $0 $0

Long-term Liabilities Principal Repayment $0 $0 $0

Purchase Other Current Assets $0 $0 $0

Purchase Long-term Assets $0 $0 $0

 Dividends $0 $0 $0

Subtotal Cash Spent $230,703 $260,320 $342,946

Net Cash Flow $16,485 $20,462 $78,227

Cash Balance $28,885 $49,347 $127,574

8.5 Projected Balance Sheet

The following table illustrates Falls River Theatre’s Projected Balance Sheet.

Pro Forma Balance Sheet

Assets

Current Assets

Cash $28,885 $49,347 $127,574

Inventory $21,681 $32,521 $48,782

Other Current Assets $0 $0 $0

Total Current Assets $50,565 $81,868 $176,356

Long-term Assets

Long-term Assets $10,000 $10,000 $10,000

Accumulated Depreciation $1,992 $1,992 $1,992

Total Long-term Assets $8,008 $8,008 $8,008

Total Assets $58,573 $89,876 $184,364

Liabilities and Capital Year 1 Year 2 Year 3

Current Liabilities

Accounts Payable $25,654 $13,666 $21,772

Current Borrowing $0 $0 $0

Other Current Liabilities $0 $0 $0

Subtotal Current Liabilities $25,654 $13,666 $21,772

Long-term Liabilities $0 $0 $0

Total Liabilities $25,654 $13,666 $21,772

Paid-in Capital $105,000 $105,000 $105,000

Retained Earnings ($21,900) ($72,081) ($28,790)

Earnings ($50,181) $43,290 $86,382

Total Capital $32,919 $76,210 $162,592

Total Liabilities and Capital $58,573 $89,876 $184,364

Net Worth $32,919 $76,210 $162,592

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8.6 Business Ratios

Business ratios for the years of this plan are shown below. Industry profile
ratios are based on the Standard Industrial Classification (SIC) code 7832,
[motion picture theatres, except drive-ins].

Ratio Analysis

Sales Growth 0.00% 50.00% 50.00% 4.18%

Percent of Total Assets

Inventory 37.01% 36.18% 26.46% 0.54%

Other Current Assets 0.00% 0.00% 0.00% 27.25%

Total Current Assets 86.33% 91.09% 95.66% 32.96%

Long-term Assets 13.67% 8.91% 4.34% 67.04%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current Liabilities 43.80% 15.21% 11.81% 23.77%

Long-term Liabilities 0.00% 0.00% 0.00% 30.06%

Total Liabilities 43.80% 15.21% 11.81% 53.83%

Net Worth 56.20% 84.79% 88.19% 46.17%

Percent of Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 51.25% 51.25% 51.25% 100.00%

Selling, General & Administrative Expenses 76.99% 0.00% 40.59% 76.64%

Advertising Expenses 0.00% 0.00% 0.00% 3.12%

Profit Before Interest and Taxes -26.81% 22.03% 29.30% 2.78%

Main Ratios
Current 1.97 5.99 8.10 0.93

Quick 1.13 3.61 5.86 0.63

Total Debt to Total Assets 43.80% 15.21% 11.81% 2.70%

Pre-tax Return on Net Worth -152.43% 81.15% 75.90% 61.15%

Pre-tax Return on Assets -85.67% 68.81% 66.93% 6.94%

Additional Ratios Year 1 Year 2 Year 3

Net Profit Margin -26.81% 15.42% 20.51% n.a

Return on Equity -152.43% 56.80% 53.13% n.a

Activity Ratios

Inventory Turnover 10.40 5.05 5.05 n.a

Accounts Payable Turnover 6.95 12.17 12.17 n.a

Payment Days 27 43 24 n.a

Total Asset Turnover 3.20 3.12 2.28 n.a

Debt Ratios
Debt to Net Worth 0.78 0.18 0.13 n.a

Current Liab. to Liab. 1.00 1.00 1.00 n.a

Liquidity Ratios

Net Working Capital $24,911 $68,202 $154,584 n.a

Interest Coverage 0.00 0.00 0.00 n.a

Additional Ratios

Assets to Sales 0.31 0.32 0.44 n.a

Current Debt/Total Assets 44% 15% 12% n.a

Acid Test 1.13 3.61 5.86 n.a

Sales/Net Worth 5.69 3.68 2.59 n.a

Dividend Payout 0.00 0.00 0.00 n.a

FOR CLEAR-CUT IDEA: https://www.bplans.com/movie-theater-business-

plan/financial-plan/
 SATELLITE AND DIGITAL RIGHTS

Satellite right is the legal permission given by the producer of a film to a

Television channel to show (broadcast) the film in TV. It might be for a limited
time period or for lifetime. There will be many clauses and conditions like the
film can be shown in TV only after a particular time period etc. Nowadays,
satellite rights play an important part of a film funding. If the film has a big
star associate with it, the TV channels pays huge amounts as satellite right
before or while shooting. But if there are no big names in a movie, most of the
time the movie has to release and proof itself to be taken by the channel. The
satellite rights are mostly sold like an auction- Who pays more will get the right
to air the film. Also it will increase the popularity of the channel. In the
meantime, the channel plays the film many times and gets the money back
through advertisements.

Note: - Unsourced and rumoured (or yet to be confirmed) stuff from the Yahoo
answer is not included.

For the second part, these are the facts to decide about the amount paid for
satellite right:

Cast.

Production Banner (Yashraj production can sell its films on higher rate to
channels than any new production house).

Past record of the people associated with the film.

Success or expectation of the film.

There could be many others but it's like a bid on the expectation of film
earnings from TV.

http://filmmakersfans.com/fully-explained-satellite-rights-in-the-indian-
movie-industry/

Digital and satellite rights

Usually the Satellite Channel will be given exclusive first rights for a period of
24 months commencing from the 6th month of the movies release in theater
but for smaller movies the exclusive rights will be for only 12 months with
release within 3 months.

At last comes your swot analysis which u have to do on your own on the basis
how, when, where, which theatre is set up.

Don’t forget to look up on infrastructure, food related requirements and

regulations.

ALL THE BEST