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When it comes to the practical aspects of filmmaking, ranging from camera selection to mastering editing systems, independent film producers seem ready to rise to every challenge. But tell one of these folks they have to come up with a business plan and find investors to support their film and you'll find most looking for a stage door to exit. Why? Because if indie producers liked asking permission to do something or taking orders from others . . . they would be working for studios. Nevertheless, writing a business plan is a skill that smart filmmakers master because a good plan and friendly investors translates into more money and the capacity to make better films.
The most important thing to understand about a business plan is that it, alone, won't get you the funding you need. Your business plan will be the solid, practical, nuts and bolts overview that will back up your face to face and phone presentations.
How do you write a business plan?
One easy way to start your business plan is to calculate your production budget. To do this you will need to break down your script and determine how many shooting days and locations your film will need. This will tell you how many crew members you will require, and let you get a good feeling for props and special effects. Costing these elements out, then adding editing and post production, taxes, legal fees, financing fees and insurance costs should give you a good estimate of the production budget.
If you don't know how to do all this, you should spend a thousand dollars or so to hire a line producer. CRAIGLIST in Los Angeles may be a great place to start. Line producers are great at breaking down scripts and producing budgets. In fact, you may want to have multiple line producers create schedules and budgets for your film. Comparing their estimates will give you a good idea of how accurate your budgets are and may give you good insight into how to cut costs or improve quality. Line producers also know how to maximize rebates and tax credits.
If all this seems like an unnecessary expense, remember that a good line producer with lots of credits is a key requirement for your film to get financing. When you produce a feature you usually need a completion bond, and to get one you'll need a good line producer. Completion bond companies know that a good line producer will ensure the film is finished. Line producers can also connect you to good directors, cinematographers, editors and other crew.
Once you have a budget and schedule, you are ready to write an overview of the production team. As producer, your bio should come first. If you do not have a lot of film credits to your name, showcase your other successes. Expertise in management, marketing and sales are very attractive in new film producers. You should also provide information on the director, line producer, and other key members of the production team.
After you complete the production overview, start work on the talent section of your business plan. Start by listing the actors you want to work with, then contacting their agents to find out what their weekly rate is. If you are uncomfortable doing this, contact an entertainment lawyer who works with film producers and have them make the calls. The few hundred dollars you spend will be well invested. Note, you do not have to get letters of intent for these people in order to mention them in your business plan. Just indicate that these are the actors you plan to approach. For best results list multiple actors for each of the key roles. Provide pictures of actors in your business plan because many investors can't recognize actors by their name.
Ensure that your actors have credits that film and TV distributors will find attractive. IMDBPRO and BOXOFFICEMOJO can help you find out what films actors and actresses have appeared in and how much those films earned in theaters. There are many websites which can provide a DVD sales chart showing weekly, monthly and annual sales figures. Just look for "DVD Sales Numbers" on Google. Not all films are sold on the basis of "name actor" involvement, but it really does make getting investors and distribution easier.
By the time you have done all the research required to select actors, you should find it simple to start writing financial forecasts that specify how much films similar to yours made in the theater and in DVD sales both in the US and domestically. This will account for most of your film's value. Note that US Domestic theatrical sales are usually not a significant source of revenue for the producer if you work with traditional distributors. In fact they cost you money. However even a limited theatrical release does increase the value of your film because it increases the amount you get from licensing and DVD sales. Why? Because the domestic theatrical release and related marketing effectively presells the film to a broad audience.
In your sales forecasts make sure to add reasonable estimates for Pay Per View, cable television and broadband licensing and account for any product placement fees you may receive. You should also provide estimates of cash rebates or tax credits you may receive from states like New Mexico and Michigan which may account for 15% to 40% of your production budget. Done correctly, with adequate research, you should be able to prove your product will break even in a worst case scenario and make a good profit in average conditions.
Next, provide an overview of how much financing you need and how investors will be repaid. It is important to note that most investors expect that any revenues received by the production company will repay their investment and they will get 50% of any additional revenues the film earns. But there are really no hard and fast rules in this matter. The deal varies from project to project.
Once you have these elements written, add a synopsis, storyboards and any additional information that explains the important aspects of the project.
The last piece of the business plan you will write is the executive summary. It reviews the elements in your business plan with special attention given to its most favorable aspects.
Once your business plan is finished, you are well prepared to pitch your project. You should be able to comfortably explain to almost anyone why it will make money. And that is the real value of a business plan. You use it to back up your pitches. Its value is in convincing a financial partner that you really have done your homework on a project he wants to invest in.
Before you start contacting potential investors or distribute your business plan, you should have a chat with your attorney about how you want to handle investment. If you are going to sell shares in your production company, you need to pay to have your attorney create a Product Placement Memorandum. This is not the only way to accept money for your film. But it is a common way.
If your financial partner is an "active investor" who plays the role of executive producer, or if the funding you receive is a loan with a guaranteed rate of return rather than an investment, you may only need a business plan to support your pitches.
If this sounds like a lot of work, it is. But most filmmakers are quite comfortable with hard work as long as they understand its value. As a producer, you need a solid business plan as much as your investor does. People produce feature films and documentaries 365 days a year worldwide. They make money. So can you.
Nancy Fulton is a writer, publisher and independent film producer. You can find more about her work by visiting http://www.backfromiraqmovie.com and http://www.nobetterfriendmovie.com - If you have questions about her articles, feel free to contact her by email. What she enjoys most about working in film is being part of a collaborative community.
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