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Starting an Animation Studio Business – A Complete Guide

Do you want to start an animation studio? If YES, here is a complete guide to starting an animation studio business with NO money and no experience.

Okay, so we have provided you an in-depth sample animation studio business plan template. We also took it further by analyzing and drafting a sample animation studio marketing plan backed up by actionable guerrilla marketing ideas for animation studios. In this article, we will be considering all the requirements for starting an animation studio business. So put on your entrepreneurial hat and let’s proceed.

Why Start an Animation Studio Business – A Complete Guide

A good number of skilled and creative entrepreneurs all around the world are making good bucks from the animation business and you can become part of them if you are creative, artistic and interested in the business. An animation studio is a company that is involved in the production of animated media.

This type of business is not capital intensive and you can start the business from your savings and from your home office. If you are hardworking and you have the right network in place, you can generate your start-up capital from one business deal. One good thing about this type of business is that you can combine it with other businesses without over working yourself.

Though starting up a big-time animation studio business may not require pretty huge startup capital but it needs a significant investment capital, solid planning and attention to detail in order to keep your business profitable. If you are diligent enough and if you have good business/marketing strategies, you can build the business from scratch to profitability within record time.

Starting a standard animation studio business just like starting any other business might not be entirely easy, but one thing is certain, it is a straight – forward business that can generate huge and steady profits if well positioned and properly managed.

It is very needful that you analyze the existing animation studios in and outside of your area. Also, you would be required to check the existing competition to know their strengths and weaknesses. Knowing the weaknesses of the existing animation studios mean that you would be able to learn from their mistakes and in turn come up with a better and more preferred animation studio devoid of the mistakes and weaknesses of others.

Lastly, before launching your animation studio business ensure that you read this article and you will be well equipped.

Starting an Animation Studio Business – A Complete Guide

  • Industry Overview

Animation studio business falls under the Video Postproduction Services industry and the industry includes companies that prepare motion pictures for public distribution by performing editing, subtitling, closed captioning, animation and other special effects services. It is important to state that companies that are involved in movie or television production and perform post – production activities in-house are not part of this industry.

In recent time, following consumer disinterest in 3D film and shifting interest from TV to online content, many animation studios have re – strategized and repositioned their client base towards the increasing number of online streaming services and advertisers that require editing services for their productions, boosting revenue for the Video Postproduction Services industry.

Because this new range of digital postproduction activity has created a pressing need for highly skilled postproduction teams that are used to new digital effects, the market has simultaneously been flooded with professional editing software and increasingly affordable hardware.

The Video Postproduction Services Industry is currently in the growth stage of its life cycle. Statistics has it that the Video Postproduction Services Industry in the United States of America is worth over $6 billion, with an estimated growth rate of 3.8 percent.

There are about 2,501 registered and licensed video post-production/animation studios in the United States and they are responsible for employing about 26,545 people. Despite the fact that Technicolor SA can boast of having a lion market share in the industry; the industry is still very much open to competition from all players.

Research conducted by IBISWorld shows that the concentration distribution of most film and TV studios heavily influences the areas in which video postproduction companies establish their business locations. Historically, industry operators have needed to locate their facilities near major studios to quickly transport completed reels and receive immediate feedback.

The report further stated that digital distribution technology has greatly reduced the need for postproduction companies to be so closely located to their clients, although many of the industry’s oldest companies continue to do so out of convenience.

The animation studio business will continue to blossom because businesses that are into movies, entertainment and advertisements will always patronize their services. Despite the fact that the industry seems over – saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own animation studio in the United States of America.

Over and above, the animation studio business is very open to any aspiring entrepreneur who has acquired the required training, skills and perhaps professional certifications to start his or her own animation studio. Just ensure that your studio is well located in an environment with the right demography and you will be fine.

Starting an Animation Studio Business – Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who patronize productions from animation studios cut across people of all genders and age groups, and also TV stations, cinemas, video production cum online streaming sites, and branding and advertising agencies, hence the demographic composition of an animation studio business is all encompassing.

The truth is that when it comes to productions from animation studios, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just a group of people or media houses, but all those that have access to both terrestrial TV stations and satellite/cable TV stations and even the online community.

So, if you are thinking of opening your own animation studio, then you should make target demographics all encompassing; it should include everyone.

List of Niche ideas Within the Animation Studio Business That You Can Specialize in

It is the norm for animation studios to be creative and come up with productions that will catch the fancy of their target audience; it could be cartoons for children or animation advertisement for adults. That is why it seems that there are no niche areas in the industry.

But on the other hand, some animation studio may decide to major in some key areas such as;

  • Post processing animation video content
  • Audio editing (adding looping and sound effects)
  • Adding closed captioning, subtitles or dubbing
  • Creating and inserting graphics, animation or special effects
  • Creating credits
  • Formatting animation content for various media
  • Receiving and incorporating feedback from test audiences
  • Promotional activities
  • Operating animation film libraries (preserving and storing finished videos and stock footage)

The Level of Competition in the Animation Studio Line of Business

The bottom line is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your services or business properly, you will always make headway in the industry. Just ensure you are good and creative at producing animation contents or films, you can deliver excellent customer care services and you know how to attract and reach out to your target market.

But over and above, there are several animation studios, complimentary businesses such as graphics studios, video production studios and any other businesses that also produce animation content for media scattered all around the United States and in the cyberspace.

So, if you choose to start your own animation studio business in the United States, you will definitely meet stiff competitions amongst animation studios, graphics studios, video production studios and any other businesses that also produce animation content for media within and outside your business location. Besides, there are larger animation studios – brands that determine the trends in the industry on a global stage and you should be ready to compete with them for customers.

List of Well – Known Brands in the Animation Studio Industry

In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time and so are known for that, while others are best known for how they conduct their businesses and the results they have achieved over the years.

These are some of the leading animation studios in the United States of America and in the globe;

  • 20th Century Fox Animation
  • Powerhouse Animation Studios, Inc.
  • A Squared Entertainment
  • Ace & Son Moving Picture Co., LLC
  • Adelaide Productions
  • The Animation Picture Company
  • Allspark Pictures
  • Animax Entertainment
  • Augenblick Studios
  • Atomic Cartoons Canada
  • Bento Box Entertainment
  • Big Idea Entertainment
  • Blue Sky Studios
  • Creative Capers Entertainment
  • The Curiosity Company
  • DisneyToon Studios
  • Don Bluth Films, Inc.
  • Rhythm and Hues Studios
  • Sony Pictures Animation
  • Walt Disney Animation Studios

Economic Analysis

If you are looking to delve successfully into launching a business and maximizing profits, then you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.

Animation studio business is not a green business. As a matter of fact, you will come across several animation studios and complementary businesses such as graphics studios, video production studios and any other businesses that also produce animation content for media if you search online.

So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of what is required to rent a space where you are expected to open your animation studio business and the amount required to purchase working tools and supplies needed for the business, and also the cost to successfully run the business.

Over and above, if you are considering starting an animation studio business, then your concern should not be limited to the cost of renting a studio facility and purchase working tools and software apps needed for the business, but also on branding and on how to build a robust clientele base and business network. The truth is that if you are able to build a robust clientele base and business network, you are sure going to maximize profits in your animation studio business.

Starting Your Animation Studio Business from Scratch vs Buying a Franchise

When it comes to starting a business of this nature, it will pay you to buy the franchise of a successful and well – established animation studio brand if you have the funds as against starting from the scratch. Even though it is relatively expensive buying the franchise of an established animation studio brand, but it will definitely pay you in the long run.

Besides starting an animation studio business from the scratch is less stressful when compared to other small scale businesses. With an animation studio business, you should just try as much as possible to get the right employees, animation and graphic skills, tools and equipment, build business relationship and network with key stakeholders and then leverage on every marketing tool within your disposal especially the internet to market your services.

Please note that most of the big and successful animation studios around started from the scratch and they were able to build a solid business brand.

Possible Threats and Challenges You Will Face When Starting an Animation Studio Business

If you decide to start your own animation studio business today, one of the major challenges you are likely going to face is the presence of well – established animation studios and any other businesses that also produce animation content for media both within your location and the online community. The only way to avoid this challenge is to create your own market.

Some other challenges and threats that you are likely going to face is economic downturn and unfavorable government policies. There is nothing you can do as regard these threats and challenges other than to stay positive that things will work well for you.

Starting an Animation Studio Business – Legal Matters

  • Best legal entity to use for this type of business

You have the option of either choosing a general partnership, limited liability company which is commonly called an LLC, or even a sole proprietorship for a business such as animation studio business. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale animation studio business especially if you are just starting out with a moderate startup capital in a small neighborhood and with just one outlet. But people prefer limited liability Company for certain reasons.

As a matter of fact, if your intention is to grow the business and have work for clients all across the United States of America and other countries of the world, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.

Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.

These are some of the factors you should consider before choosing a legal entity for your animation studio business; limitation of personal liability, ease of transferability, admission of new owners, investors’ expectation and of course taxes.

If you take your time to critically study the various legal entities to use for your animation studio business with the ability to sell franchise and work for clients all across the United States of America and other countries of the world, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.

Catchy Business Name ideas Suitable for an Animation Studio Business

When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.

If you are considering starting your own animation studio business, here are some catchy names that you can choose from;

  • Silver Pictures® Animation Studios, LLC
  • Nu Nation™ Animation Studios, LLC
  • Sally Daniels® Films & Animation Studio, Inc.
  • Chap World™ Entertainment & Animation Studio, Inc.
  • Universal Colors™ Films & Animation Studio, Inc.
  • Slow Motion™ Animation Studio, Inc.
  • Aleen Boston© Animation Studio, Inc.
  • Allen World® Animation Studio, LLC
  • Classic Media™ Entertainment & Animation Studios, Inc.
  • Red Film© Animation Studio, Inc.

Insurance Policies

In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your animation studio business.

Here are some of the basic insurance covers that you should consider purchasing if you want to start your own animation studio business in the United States of America;

  • General insurance
  • Health/Medical insurance
  • Liability insurance
  • Workers compensation
  • Overhead expense disability insurance
  • Business owner’s policy group insurance
  • Payment protection insurance

Intellectual Property Protection/Trademark

If you are considering starting your own animation studio business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection.

Is Professional Certification Needed to Run a Starting an Animation Studio Business?

Ordinary, if you just want to operate a small – scale animation studio, you would not need any professional certifications to run the business, but if you want to run a standard animation studio then you would need some form of certification if you want to be ahead of your competitors.

The truth is that if you want to make impact in the video post-production services industry cum animation studio line of business, you should work towards acquiring all the needed certifications in your area of specialization. Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in this competitive market.

These are some of the certifications you can work towards achieving if you want to run your own animation studio;

  • Advanced Professional Certificate in Animation, Graphic Design or Illustration
  • Certified Professional Animators
  • Toon Boom Certification
  • BCIT : : 3D Modeling, Art & Animation Certification

Please note that you can successfully run an animation studio on a small scale in the United States and in most countries of the world without necessarily acquiring professional certifications and business license as long as you have adequate experience cum background in the video postproduction services industry cum animation studio line of business.

List of Legal Documents You need to Run an Animation Studio Business

The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.

These are some of the basic legal documents that you are expected to have in place if you want to legally run your own animation studio business in the United States of America;

  • Certificate of Incorporation
  • Business License
  • Tax Payer’s ID/Tax Identification Number
  • Business Plan
  • Non – disclosure Agreement
  • Employee Handbook
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use
  • Online Privacy Policy Document (basically for online payment portal)
  • Apostille (for those who intend operating beyond the United States of America)
  • VAT registration
  • Company Bylaws
  • Memorandum of Understanding (MoU)
  • Building License
  • Franchise or Trademark License (optional)

Financing Your Animation Studio Business

Starting an animation studio business can be cost effective especially if you choose to start on a small scale by operating from your home or shared office space. Securing a standard and well – positioned studio facility, purchasing working tools and software apps needed for an animation studio business are part of what will consume a large chunk of your startup capital. If you choose to start the business on a large scale, you would need to go source for fund to finance the business because it is expensive to start a standard large scale animation studio business.

When it comes to financing a business, one of the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.

Here are some of the options you can explore when sourcing for startup capital for your animation studio business;

  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for loan from your bank
  • Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
  • Source for soft loans from your family members and your friends

Choosing a Suitable Location for your Animation Studio Business

It cannot be overemphasized that the location you chose to open your animation studio business is key to the success of the business even though you can work for both online and offline clients, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power and lifestyle.

If you make the mistake of renting or leasing a facility for your animation studio business in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business and perhaps giving direction to potential customers.

Most importantly, before choosing a location for your animation studio business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out. This is why it being very important to gather as much facts and figures before choosing a location to set up your own animation studio business.

These are some of the key factors that you should consider before choosing a location for your animation studio business;

  • The demography of the location
  • The demand for animation studio production services in the location
  • The purchasing power of residents of the location
  • Accessibility of the location
  • The number of animation studios, graphics studios, video production studios and any other businesses that also produce animations content for media in the location
  • The local laws and regulations in the community
  • Traffic, parking and security

Starting an Animation Studio Business – Technical and Manpower Details

On the average, there is no special technology or equipment needed to run this type of business except for customized animation and graphics software apps and social media management software applications and other animation related software apps. So also, you will definitely need computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves).

As regard leasing or outright purchase of a studio facility to use as your operational base, the choice is dependent on your financial standing, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent/lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property.

When it comes to hiring employees for a standard animation studio business, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Studio Manager, Animators, Modelers and Riggers, Graphic Artist, Sales and Marketing Officer, Accounting Clerk, and Cleaners. On the average, you will need a minimum of 5 to 10 key staff members to run a medium – scale but standard animation studio business.

Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some high – profile animation productions especially from big corporations. If you are just starting out, you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you which is why you should make plans to partner with other highly talented and creative animators, modelers and riggers that operates as freelancers.

The Business Services Process involved in an Animation Studio Business

The business process as it relates to animation studios is dependent on the project they are executing per time. For example, if an animation studio is to handle animation production for a branding and advertising agency, they are expected to have a meeting to know exactly what they want and the scope of the job before they are billed for the job.

Once the contract is sealed and payment made, they first production is produced and submitted to the agency for constructive criticism. The corrections are penciled down and they are worked on and proper editing is done. If the production is accepted, then the balance payment will be made, if not, the process will be repeated until the client accepts the production output.

It is important to state that an animation studio business may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility.

Starting an Animation Studio Business – The Marketing Plan

  • Marketing ideas and Strategies

Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch an animation studio business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for video postproduction services industry and animation studio line of business.

As a matter of fact, your marketing strategy will center on creativity, reliability, swiftness, safety, pricing, thoroughness, and above all excellent customer service. You should ensure that whenever your customers hire your services, they will get excellent service. If you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.

These are some of the marketing ideas and strategies that you can adopt for your animation studio business;

  • Introduce your animation studio by sending introductory letters alongside your brochure to television stations/media houses, branding and advertising agencies both offline and online
  • Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, YouTube, LinkedIn and Instagram to get your message across
  • Print out fliers and business cards and strategically drop them in offices, schools, sport facilities, libraries, public facilities and train stations et al.
  • Make use of attractive hand bills to create awareness and also to give direction to your animation studio facility
  • Create a basic website for your business so as to give your business an online presence
  • Directly market your products
  • Join local animation, graphics and video production associations business associations for industry trends and tips
  • Provide discount days for your customers
  • Advertise our business in community based newspapers, local TV and radio stations
  • List your business on yellow pages ads (local directories)
  • Encourage the use of word of mouth marketing (referrals)

Strategies to Boost Your Animation Studio Brand Awareness and Create Your Corporate Identity

If your intention of starting an animation studio business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by working for clients all over the globe and selling franchise, then you must be ready to spend money on promotion and advertisement of your brand.

No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your animation studio business;

  • Place adverts on both print (newspapers and entertainment magazines) and electronic media platforms
  • Sponsor relevant community based events
  • Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your animation studio business
  • Install your billboards on strategic locations all around your city or state
  • Engage in roadshows from time to time in targeted neighborhoods to create awareness of your animation studio business
  • Distribute your fliers and handbills in target areas
  • Contact television stations/media houses, branding and advertisement agencies and other key stakeholders throughout the city where your animation studio is located informing them about your animation studio business and the services you offer
  • List your animation studio business in local directories
  • Advertise your animation studio business in your official website and employ strategies that will help you pull traffic to the site
  • Position your Flexi Banners at strategic positions in the location where your animation studio is located
  • Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.
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