Do you want to start a cable company business? If YES, here’s a complete guide to starting a cable company business with NO money and no experience.
Cable was originally intended to provide television services to areas that couldn’t access over-the-air broadcasting. However with the deregulation of the industry, viewers have now been able to access hundreds of channels and it is no more regarded as a luxury thereby making the industry highly competitive, as revenue in the industry is pegged at nearly $100 billion.
However, while this might look like a potential business for entrepreneurs looking to be kingpins in the cable television industry, it is important that you are prepared for the myriads of challenges that you are going to face before you can attain a level of success.
One thing about the cable business is that while several cities might have more than one Cable Company competing for attention, some have just only one providing service to its customers.
The first thing you would therefore need to do is to determine if there is a market for the services your cable company intends to offer. One place where you can easily glean knowledge about the industry you are looking to enter into is research reports that have been published by state government or the universities in the area where you intend operating from.
Another place that will offer you more insight into the business are local business journals and trade publications as they will help you know if the population that are going to subscribe or that are subscribing to existing cable providers are on the increase.
The research conducted should also point out what major competition you are likely going to encounter. Ensure that you conduct proper research on the research firms you intend to use by ensuring that they are listed in at least one reputable directory as well as a specialized directory that has been published by accredited research associations in different countries.
You have to know the methods by which you are looking to deliver cable services to your customers as there are several methods existing for cable companies such as existing infrastructures, satellite systems like DirecTV or underground systems like FiOS.
Also to be able to compete, it is important that you enter into agreements with other service providers. Ensure that all agreements are done with the help of your lawyer or accountant so that you do not end up with the short end of the stick.
Steps to Starting a Cable Company
1. Understand the Industry
The cable industry began in the late 40s to early 50s in a bid to improve television reception and as at 1952; there were 70 systems in place that had 14,000 subscribers, which later increased to 800 systems and 850,000 subscribers in 1962.
This led to the Federal Communications Commission (FCC) to begin expanding jurisdictions and placing restrictions, thereafter leading to a market ‘freeze’ that lasted to the mid-70s. Deregulation started in 1972, which led to increased investment from entrepreneurs and the emergence of premium channels. The subscribers during this period increased to 16 million.
1984 saw a new deregulation act which caused the industry to experience a rapid growth. However, the increase in charges started to fuel consumer concern even though subscribers had grown to about 53 million at this stage. The 90s saw new regulations bringing about ‘exclusive’ programming with cable television providers retaining about 70 percent of the market share.
The investment into broadband began in the mid-90s and led to a dramatic growth which saw the rise of services such as HDTV, VOD and VoIP. Cable television companies today are also referred to as broadband providers.
In the United States, there are about 112,275,000 households with television and about 58 percent have cable. 98 percent of these homes however have only one choice as regards their cable provider especially the traditional cable providers and while there are more traditional cable providers in existence, there are few satellite providers who have a larger market audience.
Annual revenue generated by the cable companies are more than $75 billion, advertising revenues come up to nearly $27 billion. The franchise fees paid by cable companies in comparison to the amount they earn is $3 billion.
According to IBISWorld, the revenue generated by the cable company industry amounts to $104 billion and has had a marginal growth of 0.6 percent between 2012 and 2017. There are more than 6,000 cable companies in existence in the United States employing more than 256,000 people.
A large amount of the revenue generated in the industry is from the sale of basic programming packages. The dominance of these basic packages is usually from the fact that the cost is low with incentive discounts such as bundle and internet services being offered as incentive to subscribers.
Even though there has been a decline in this industry, revenue is expected to increase due to adjustment of rates as well as upgrade of subscribers.
The use of internet and bundle with basic packages by cable companies’ stem from the reclassification by the Federal Communications Commission (FCC) of high-speed internet as a telecommunication service, thereby allowing operators to regulate broadband internet service as a part of public utility.
This has however prevented cable companies from sharing their infrastructure investment costs with content companies, an act that has also cut into the profit generated by the industry. However, in the next five years (2017 to 2022), it is expected that the industry will benefit from high-speed internet subscribers as well as more upgrades to digital cable services.
The past five years has seen the cable company also expand its channels and strive to improve on the quality of services in order to not only combat dwindling subscribers but also compete with emerging digital media platforms. This has allowed cable companies to continue to struggle in order to maintain license sales and advertising revenue.
The recovery of the economy has affected the revenue of the industry positively as there has been increased advertising activity as well as disposable income that has allowed for increased purchases on premium program services. The positivity however experienced by this industry might however be temporary as online services offering comparable programming options are beginning to crop up.
The satellite cable television providers generate about $54 billion in revenue and have had a nearly 5 percent growth between the periods of 2012 and 2017. There are more than 4,200 satellite television providers in the United States employing more than 96,000 people.
Despite the shaky subscriber growth that has been experienced by this industry, new networks, channels as well as bonus features have continually been strengthened over the years. However, those that are able to survive competition and continue to attract as well as retain their subscribers are expected to generate more revenue and command a large share of the market.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
People who subscribe to cable television include households, corporate organizations in different industries, entrepreneurs, hospitals and such other institutions. Therefore if you are looking to start your cable television company, you should be prepared to provide services to a variety of people with different incomes and from different walks of life.
3. Decide What Niche to Concentrate On
This kind of business is the type that engages in wired and third party system distribution for broadcast programming. Operators in this industry usually deliver television programs received from local television stations as well as cable networks to consumers on a subscription basis usually through cable infrastructure.
Operators in this industry also offer subscribers internet protocol telephony services as well as internet access together with the package bundle for subscribers. There really aren’t any niche ideas available within this business as operators try to offer all niches in a bid to capture a fair share of the market.
Some of the niche ideas that are available for this particular business include;
- Sports Channel Packages
- Customizable Channel Packages
- High-Tech DVR
- Cheap Bundle Deals
- DIY TV/Internet Bundle
The Level of Competition in the Industry
The level of competition that exists in a cable company might be typical of any industry; however it is more so in this industry because of several factors such as capital, infrastructure and attracting the right customers. This is a business that requires you to be in several locations in order to be able to get a fair share of the market.
What most subscribers are on the lookout for when it comes to subscribing for television channels is which channels are they likely to enjoy in the package and what kind of content are in the channels that they are subscribing to. Also, some customers want to know that they can also watch their local channels as well, and so you have to think of all these when looking to establish and compete.
The cable television industry in the United States is one that is filled with major players who have grabbed a large share of the market for themselves and so if you are looking to start your own cable company and are looking to get a fair share of the market for yourself, you must be creative in order to get the attention of subscribers as you will not only battling with cable companies but also digital media as well.
4. Know the Major Competitors in the Industry
In every industry, there are usually brands that stand out and the cable industry is no different. Most of these brands that stand out have comprehensive and quality channel packages, great customer service, best sport packages, clearer HD picture, better connection, internet and phone bundle, geographical spread, DVR system as well as other packages.
Below are some of the cable television companies that stand out in the United States;
- Charter Spectrum TV
- Verizon Communications
- Comcast Corporation
- Time Warner Cable
- Verison FiOS
- DISH Network
Cable television is no longer regarded as a luxury as it is seen as a basic utility along with electricity and gas. This form of entertainment is usually considered cheaper when compared to outdoor entertainment or even going to movie theaters.
The years has seen the industry having intense competition as certain cable companies have had a sort of monopoly over others in the industry.
Competition is also coming from outside the industry as even telephone service providers are also offering data and video packages in order to be able to compete with the offerings from cable companies. Other outside competitors are the content providers themselves who are using the internet to directly reach out to consumers instead of through the cable companies.
In running a cable company, there is the cost consideration to worry about as carrying popular networks will require the company to pay a per subscriber fee; which therefore means that these sort of programming fees are hard to be controlled.
The industry is one that thrives on negotiations which can often be protracted between the content providers and the cable companies, thereby leading to carriage disruptions.
The subscribers for cable can be pretty much be described as stable, but this does not however mean that the economy cannot affect the intended revenue that the industry should generate as a downturn in the economy will cause certain subscribers to pay for fewer premium channels and on-demand events.
It is therefore important that cable companies keep an eye on the economy in order to be able to use the trends to correctly predict events for their own industry.
5. Decide Whether to Buy a Franchise or Start from Scratch
One of the toughest decisions that you will ever make as an entrepreneur going into this industry is whether to buy an existing cable company or start totally from scratch as there are no franchise opportunities existing in this industry. The option of whether to start from scratch or buy an existing company has its pros and cons but the decision on which option to go for should be totally dependent on what your core goals and objectives are.
Starting your cable company completely from scratch can become very overwhelming and even though you might not spend so much as compared to buying an existing structure. If you like challenges and the thrill of starting your business from the scratch, then this might be the best option for you.
According to statistics however, more entrepreneurs prefer buying an already existing cable company because not only does it have functional structures as well as a customer base and a steady stream of revenue already in place, but you will also be buying a proven business enterprise.
However, before buying an already existing business enterprise, ensure that you have conducted a thorough research about the cable company so that you do not end up buying an enterprise that is not only making money but that will plunge you into a huge debt.
6. Know the Possible Threats and Challenges You Will Face
In every business that is being started, there will always be threats and challenges that the entrepreneur will face. The higher the investment, the higher the amount of threats and challenges. As an entrepreneur, you shouldn’t be afraid of threats and challenges but should be willing to face them.
You should however note that not all threats and challenges can easily be combated and should this happen, it is best that you remain optimistic while waiting for the moment to pass.
Some of the threats and challenges that you will face when looking to start your cable company is having to struggle with a saturated market that is facing declining revenue, competing against large competitors, competing against digital media platforms, economic downturn that affect subscribers purchasing power and dealing with regulations from the industry and government agencies.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Even though there are several legal entities in existence for entrepreneurs looking to start their businesses in the United States, anyone looking to start a cable television company only has the choice of choosing between a Limited Liability Company (LLC) or a corporation.
The decision to choose either will depend on the type of business, tax consequences and flexibility structure. Both legal entities have limited liability because they help protect the assets of the owners from creditors. During creation and management however, the LLC is easier and more flexible than a corporation.
Even though the LLCs are easier to form than a corporation, they are usually regarded as creatures of the state law and so the processes which comes in forming an LLC usually varies depending on the state where the LLC is being filed. Once the article of organization has been formed and all notice requirements have been met, the LLC is considered to be officially formed.
One major disadvantage with an LLC is that taxes are paid on the profits and salaries of the members. This is different from a corporation where profits are taxed on the corporate level. Also, due to the fact that LLCs are creatures of the states where they operate, it makes for uncertainty in the way the LLCs can operate in different states.
There are two types of corporations that can be formed and they are S Corporation which is regarded as a pass-through entity for tax purposes and C Corporation where taxation is at the corporate level. When it comes to excess profits, there is usually more flexibility for a corporation. Also, a corporation can easily issue shares while an LLC cannot.
Corporations however require a great deal of paperwork as it is expected to meet more guidelines especially as regards electing its board of directors as well as ensuring that records are kept. Also, corporations have to deal with double taxation where taxes are paid twice on the same income.
8. Choose a Catchy Business Name from the ideas Below
Choosing a catchy business name for your cable company is very important as the name is what people will recognize and use in identifying your services – either good or bad.
Choosing a name isn’t easy because not only must the name be catchy and memorable, it must also be pronounceable and identify the industry which you are in. Some of the catchy business name ideas that are suitable for your cable company include;
- FiNK Communications
- Broad TV
- Digi-Choice Corporation
- Max Media Cable
- Premier Communications
9. Discuss With an Agent to Know the Best Insurance Policies for You
Having insurance policies for your cable company is very important because not only are you running a capital intensive business but the risks that the business carries should not be borne by you alone. Having insurance coverage means transferring any risks associated by the business to a carrier.
It will also be very irresponsible of you to hugely invest in a business without insuring it. While it is important to insure your business, you shouldn’t just buy any policies, so it will be best to speak with an insurance agent or broker about what insurance policies will be best for you business and how much you would need to set aside.
Below are some of the basic insurance policies for your cable company;
- General Liability Insurance
- Casualty Insurance
- Workers’ Compensation Insurance
- Commercial Property Insurance
- Errors and Omissions Insurance
- Key employee insurance Life
- Directors and Officers Liability insurance
- Umbrella Policies
- Cyber Insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The evolution of technology has broadened the issue regarding intellectual property protection in many ways and it is a huge deal in this industry. When starting a cable company, you should ensure that you apply for intellectual property protection by getting specialist lawyers to provide advice on all the aspects regarding IPP law.
The advice will range from registration, protection, enforcement, maintenance of IPP, licensing as well as how you can exploit your IPP rights.
11. Get the Necessary Professional Certification
In starting a cable television company, you do not require professional certification of any sort as all you would need is to hire experienced professionals with their own certification to help you run and achieve the intended goals and objectives for your cable company.
You can get professionally certified yourself by either choosing general professions like management or specific ones like finance and television.
12. Get the Necessary Legal Documents You Need to Operate
Having the required legal documents before starting your cable company is very important; this is a very prominent business with several industry regulations and to not lose any of your investments; it is necessary that you get a lawyer and an accountant who have the experience to help in getting all the needed documents.
Below are some of the legal documents that you will need to run your cable company;
- Certificate of Incorporation
- Operating Agreement for LLCs
- Business Plan
- Cable Operators License
- Insurance policy
- Zoning Permits
- Contract Documents
- Employment Agreement
- Business License
- Employer Identification Number (EIN)
- Federal Tax Identification Number (TIN)
13. Raise the Needed Startup Capital
A cable company is a capital intensive business as it takes a lot of money to launch a cable company that will become viable. However, you should note that the area and state where you intend to locate your cable company plus scope and size of the company will make start-up costs vary.
Start-up costs for cable companies can run from hundreds of thousands to millions of dollars and this is therefore no small investment. This is one of the businesses that will require you to meet with several investors before you can execute your start-up.
It is therefore important that you develop a comprehensive business plan that will enable you to convince potential investors of the need to commit funds to your cable company. Below are some of the financing options that is available for your start-up cable company;
- Generating part of your start-up capital from sale of stock or property
- Selling part of your equity to interested investors in exchange for capital
- Applying for loan from commercial bank
14. Choose a Suitable Location for your Business
It is important that you choose the appropriate location when looking to start your cable company as your location will matter a whole lot in how you are able to attain success. Before deciding where to locate your cable company, it is important that you take a thorough research of your market in order to determine who your target audience is.
According to statistics, most people that subscribe for cable are usually those in suburban areas and so if with this information, you decide to locate your cable company in the inner city or rural areas, you might struggle in order to attain your goals and objectives.
You can either get an empty lot with which you can build your facility from scratch or you can find a building and carry out renovations to suit your requirements. In order to get the best deals, it is best that you engage the services of a real estate broker so he may find the best deal for you.
Getting permits for the location which you intend to use is very important. However, ensure that you not only adhere to the zoning and construction requirements that have been allowed by the city and state governments you are looking to operate your cable company from.
You should know that in building your cable delivery infrastructure, you might need to carry out some underground digging or build towers in order to install the cabling wires.
You can also build or lease the facilities you intend to use as your service office. If you are going to be building the facilities, ensure that you hire a professional and experienced contractor to help you in building according to standard specifications.
Ensure that your facility can be easily accessed so that customers looking to visit, advertisers, employees and others might not have a hard time locating your facility.
15. Hire Employees for your Technical and Manpower Needs
More people are beginning to rely on cable companies for more than television services as most companies now offer basic internet and phone services. Those that are looking to start a cable company have the choice of becoming a landline provider or satellite broadcaster.
The landline providers are usually quite popular in metropolitan areas and cities where there is a huge number of people, while satellite cable companies usually thrive in the rural areas where there are less impediments as regards getting signals and installing dishes.
Where you intend to locate your cable company will help decide on the methods you intend to use in delivering cable services to your consumers. You might need to form agreements with other providers to enable you offer quality services to your consumers. Ensure that all agreements are done with an accountant and a lawyer.
Getting all the technical equipment you will need to run your cable company is very important and you will need to engage the services of reliable manufacturers.
It is important to build a solid business structure by hiring competent and experienced professionals to take over certain roles in the company. This kind of business requires that you build your business structure of employees with technical and professional requirements before even launching your cable company.
Some of those that you will need to hire include; business network executive, business manager, relationship manager, human resources, IT and database manager, accountant, customer relationship executive amongst others. From the above analysis, you will need at least 10 key individuals to run your cable company successfully.
The Service Delivery Process of the Business
The processes involved in starting and running a cable company is basically the same for most with only a few who look to stand out from the rest. Cable companies usually employ a subscription model that enables the customers to pay a regular monthly fee in order to have unlimited access to certain channels depending on the package.
Traditional cable companies (landline provider) often have to secure their franchise rights from municipalities, which might prove a significant challenge especially for new cable companies as most city authorities do not want their sidewalks to be dug up by companies seeking to lay broadband.
However, rolling out a satellite isn’t easy as well which is why the business is such a capital intensive one as all this must be in place before revenue can be generated.
One other important process that has to be dealt with is the business structure as this determines how well other processes in the cable company are effectively coordinated in order to bring about achievement of the intended goals and objectives.
16. Write a Marketing Plan Packed With ideas & Strategies
Creating marketing strategies is very important as this will enable you to generate the revenue that will help sustain and grow your business. Marketing not only helps you generate the revenue that you will need to grow and sustain your business; it also helps you create awareness for the business as well.
With marketing you are expected to anticipate the needs of your intended target market and then use this to craft strategies that will allow you to get a fair share of the market.
Before you can however create the right marketing strategies for your cable company, you will need to conduct a thorough research as to who your target market will be. Also, the marketing research will allow you to know who your competitors are and what their strengths and weaknesses are and how you can manipulate these weaknesses to your advantage.
Ensure that you hire professional marketing executives that have experience in the industry to help draft out effective marketing strategies that will help you achieve your intended goals and objectives. Also, ensure that you empower your marketing executives to modify or remove strategies that aren’t working and might not allow your cable company to achieve its full potentials.
The internet has made it possible for cable companies to reach more of their target audience and as such many companies are using this means and are employing marketing professionals that are well versed in the use of technology to create marketing strategies that will attract more subscribers into paying for their packages.
Below are some of the marketing ideas and strategies that you can use to attract subscribers;
- Ensure that you erect billboards in strategic locations around the areas where you intend to operate your cable company from
- Give radio and television interviews in order to increase awareness for your cable company
- Place adverts in newspapers and magazines in order to create awareness for your business
- Create social media platforms such as Facebook, Twitter and Linkedin in order to create awareness about your business
- Get a professional to create a website that will help promote your cable company
- Empower your marketing executives to physically market your cable company to intended target market
17. Develop Iron-clad Competitive Strategies to Help You Win
The cable television industry has become deregulated for more than a decade and has opened the door for many entrepreneurs to try and get a share of the market for themselves in an industry that is not only competitive and capital intensive but lucrative as well.
Some of the competitive strategies that you can develop in order to win over your competitors are; ensuring that you partner with television stations whose programmes have creative content; try to develop new creative content for your subscribers and also ensure that you offer your subscribers different packages that they can choose from with different charges and channels attached to your offer.
18. Brainstorm Possible Ways to Retain Clients & Customers
Attracting customers is one key way you can generate revenue to sustain and grow your business. Every business has strategies in place which they use to attract customers. However, while attracting customers to a business is very important, retaining a high number of customers is also important as well.
According to statistics, companies that retained a high number of customers spent less than those that usually had to attract new customers all the time. This is because satisfied customers were likely to tell their friends, colleagues and neighbors or even leave positive reviews on websites, thereby helping to bring in new customers who will be willing to try out your services.
There are several reasons why customers usually leave a brand for another and one major reason is customer service. When customers know that their complaints are promptly attended to and that you are listening to their feedbacks, they are more likely to excuse any issues that you might have regarding the way your business is being run or your bundle packages or even charges.
No matter how little or how much subscribers are paying for service, one thing that they want is to have quality and comprehensive channels. This lets them not hinge on how much they are paying as opposed to what quality they are getting.
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
No one intends to start a business without creating strategies that will boost the awareness of the brand. This is because the publicity strategies that you generate for your business helps to boost the business by allowing more people to become aware of the business than if you didn’t conduct any publicity at all.
The advantages that come with publicity is so beneficial that many companies do not mind setting aside a large sum of money to get the publicity they need to grow and boost their business.
However, publicizing one’s business is not as easy as it sounds because without carefully creating your strategies, most of your campaigns are not likely to have the intended effect and you would end up wasting money and not still achieving your goals and objectives/
Which is why like every other important decision that you will be making during the course of starting and running the business, it is best that you take time to study what strategies will be best in helping you achieve your goals and objectives.
Because of how competitive the industry is, not engaging in publicity strategies might mean you will be struggling when it comes to generating revenue. However, it is important to be wise about the strategies you intend to create so that you do not end up wasting money on publicity campaigns that are not effective.
The internet has made it quite possible for cable companies to give their potential audience a teaser of what they have to offer.
While this is one of the most effective publicity strategies, it is best handled by professionals who will fully understand what tools to use to achieve maximum exposure. Some of the strategies that can be used to boost awareness for your brand as well as create a corporate identity include;
- Creating a YouTube page and using this to promote your cable company
- Sponsoring certain events and shows in order to create awareness for your cable company
- Creating a professional website and employing an SEO strategist to ensure that your website ranks tops in different search engines
- Placing adverts for your cable company in popular forums and blogs in order to create awareness
- Installing billboards in strategic locations such as close to the mall, movie theater, sports venue or a place with a high amount of traffic
- Ensuring that you create incentives and discounts for your loyal customers