The Film Business

Filmmakers & Financing – Why Bother with a Business Plan?


Art Versus Profit

Lately, this topic has been in heated discussions on social networking and entertainment industry sites. Such activity is often the result of any film festival or market. At the 2010 Los Angeles Film Festival, James Stern, CEO of Endgame, stated three rules when making a film:

1. Make smarter movies.

2. Respect the money!

3. Before rolling cameras … think “market.”

Which one is more important—one’s artistic expression or money? My view has always been that both are. If you are using your own money, you can do anything you want. On the other hand, if you are using someone else’s money, it doesn’t mean that you automatically have to forgo your artist intentions; you just have to make clear to your financial source what the chances are that they will ever see a return on their money or profit. Then it can be their decision, which is more important.

The Role of the Plan

The business plan is the entrepreneur’s single most valuable document and his or her best safeguard for success. The majority of businesses that fail usually have paid little attention to proper planning. In Jake Eberts’s book, My Indecision Is Final: The Rise and Fall of Goldcrest Films, he mentions several times that the company, which he founded, had no business plan. Although its first film, Chariots of Fire, won the Academy Award for Best Picture, the company (different from the one in operation today) did not succeed in the long run. Would Goldcrest have fared differently had the company had a business plan? No one can say for sure, but it is obvious from reading Eberts’s book that this group of very talented people had widely divergent professional and personal agendas. They also had very different business styles.

Whether you are making one film or several, you have to identify who you are, where you are going, and how you are going to get there. The business plan allows you to plot this path. It gives you the opportunity to develop a clear picture of the growth and bottom-line prospects for your film company. It also enables you to make more effective decisions and helps everyone follow the leader. When you have a clear course laid out, you have guideposts to follow that will show you where you are vis-à-vis your goals. While you may find this secondary to raising money, it really is a priority for fulfilling that goal.

The ideal length and depth of a business plan vary. You have something to accomplish and a specific path you must travel to accomplish it. The steps that you take along that path are defined in your plan. Before beginning any business, you want to know the nature of your goals and objectives, the desired size of the company, the products and/or services it will sell, its customers and market niche, the amount of revenue likely to flow, and its sources. When you think of a business plan, your first thought may be how to impress the investor. Before you worry about the bank or the distribution company or the wealthy investor, however, you have to make a personal business plan. For all of those people—and for yourself—you have to come up with an agreeable course of action, and you have to stick to it. This book will help you do that.

Do You Need a Business Plan if You Are Only Making One Film?

In a word, “Yes.” Any movie proposal—whether for a single film or a company—that seeks to raise money from private investors needs a business plan. If you are doing a single film, the outline is exactly the same, except you have fewer numbers to project and there is no separate overhead. While production for one film is estimated to be one year, distribution can take another year or two. Once the film is distributed, you will see 80 to 100 percent of your revenues being returned in two years. It is essential to remember that before going into business, you must find out for yourself whether business is your thing. One film is a business and the producer (or executive producer) is the manager. You have the same responsibility to investors as if you were making four or five films. Reading this book will help you determine if a business is what you really want.

The Facts and Nothing But …

The structure of a business plan is standard, but the contents are not boilerplate. Each film has its own unique qualities. All plans must be substantive, promotional, and succinct, with a length generally about 20–25 pages for a one-film plan—that is, comprehensive but not too long. The business plan needs to contain enough information in a readable format that excites, or at least impresses, potential investors. Perhaps even more important, however, is that the plan clearly represents you and your ideas. Copying someone else’s plan is like copying someone’s test paper in school. You may give the right answers to the wrong questions.

Several years ago, an acquaintance of mine wrote a business plan that was very professional and cleverly laid out. He found that he had to keep it under lock and key, because other producers kept making copies of it. What they failed to recognize was the specialized nature of his company. It was structured to fund development money, not to produce films. The payback to the investors is quite different with development money. The “borrowers” of the product were so enamored of the text and graphics that they were blind to the obvious: The business plan promoted a type of company that they did not plan to run. How they ever managed to explain the relatively lower return to investors we will never know.

Excerpt from Filmmaking and Financing, 7th edition by Louise Levison © 2013 Taylor and Francis Group. All Rights Reserved.

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