Filmmakers and Financing

Business Plans for Independents

Louise Levison

• Publisher: Routledge
• Year: 2022
• ISBN:
  9781000545685
• Edition: 9
• Topic: Business
• Subtopic: Entertainment Industry
• Index: Business

This updated ninth edition of Louise Levison's ultimate filmmaker's guide provides easy-to-follow steps for writing an investor-winning business plan for independent films.

This new edition includes information on current distribution models and the evolving digital streaming service landscape. Updated examples and references solidify this edition as the go-to source for creating a successful film business plan. Complete with comprehensive explanations on how to write each of the eight sections of a business plan; a complete sample plan for reference; and a companion website with additional information and financial tables, this book gives readers the tools needed to secure financing for a film.

Essential reading for students and professionals alike, this book is ideal for anyone looking to further their understanding of film financing and how to create a successful business plan.

1 The Executive SummaryA Short Version of Everything

DOI: 10.4324/9781003166368-2

“Begin at the beginning,” the King said, gravely, “and go till you come to the end; then stop.”

—LEWIS CARROLL,
Alice’s Adventures in Wonderland

READ THIS CHAPTER LAST!

This admonition is like saying, “Don’t open this package until Christmas!” You are, right this minute, ignoring me and reading this chapter anyway. Fine; but write the Executive Summary last in your business plan. Typically, investors will read those first two pages and then go directly to the financials. It is the hook that pulls readers into your net, and it must represent your future plans precisely.

The Executive Summary is the place where you tell readers what you’re about to tell them. Am I confusing you? Remember that old advice about writing term papers: “Tell them what you’re going to tell them; tell them; tell them what you told them.” You do the same thing in the Executive Summary. It is a condensed version of the rest of your proposal. This is not a term paper; this is your life.

The beginning of your business plan is the section about your film (films, if you are starting a multifilm company). You give a brief overview of the people, the products, and your goals. In the rest of the sections—Company, Film(s), Industry, Markets, Distribution, Risk, and Financing—you provide more detail about how the company is going to function. The last section you write is the Executive Summary, which is just a summary. It presents a review of the plan for the reader.

WHY WRITE THE EXECUTIVE SUMMARY LAST?

Developing a business plan is a process of discovery. Until you actually put your business plan together, you cannot be sure what it will contain. As you will see in the rest of this book, much research, thought, and skill go into a proposal of this type. The total plan is the result of everything you learn from the process, and the Executive Summary is the culmination of that full effort.

The Executive Summary is written last for the same reason that you prepare a full budget before you do the top pages. You may have a problem with this comparison if you do the top pages of the budget first or if you do only the top pages. At best, filling in numbers on the top pages is a “guesstimate.” Only when you actually work out the real 20 to 30 pages of the budget, based on the script breakdown, will you know the real costs.

Perhaps your guesstimate will end up being right on the mark. I don’t think anyone has worked out the precise odds on that happening, but you might be more likely to win a lottery. A more probable scenario is that you will have backed yourself into a corner with original numbers that are too low. The real budget will turn out to be greater than your estimate by $500,000, $2 million, or even more. When that happens, your potential investors will be extremely unimpressed. If you are not sure how their money will be spent, ought they to trust you with it?

A business plan is the same situation magnified a thousand times. All the reasons outlined in the Introduction for writing a business plan come into play. You may be setting parameters for yourself that are unrealistic and that lock you into a plan you cannot carry out. In putting together the proposal, your investigation of the market may cause you to fine-tune your direction. Learning more about distribution—and we all can—may invite a reworking of your film’s release strategies.

Even when inventing a fictional company, as I did in “Sample Business Plan for a Fictional Company” (Chapter 11), the Executive Summary must be written last. I did not know what I was going to say in the summary until the rest of the plan was written. Although I invented the company and the statistics for the sake of an example, my Industry, Markets, Distribution, and Financing sections are all real. I did not know which facts about all those elements would apply to my particular situation. Likewise, until I worked out the numbers and cash flows, I could not summarize the need for cash. The most difficult task for many entrepreneurs is resisting the impulse to write five quick pages and run it up the flagpole to see if anyone salutes. A business plan is not a script, and you cannot get away with handing in only a treatment. Your business plan must be well thought out, and you must present a complete package. Think of this as a rule. Other guidelines are suggestions that you would be wise to follow, but this is definitely a rule. Go through the process first. By the time you have carefully crafted your document and gone through all the steps outlined in this book, you will be able to proceed with as few hitches as possible.

This process has to be a cautious one, not a haphazard one. You want to be sure that your proposal makes business sense; you want to be able to meet any goals or verify any facts that you set forth. Passion does count. The film business is too hard, and it takes too long to tackle projects, if you do not have a passion for your story and filmmaking. However, business facts are the glue that holds everything together in a tidy package.

Investors are the second reason that you write the Executive Summary only after you have carefully devised your business plan. Before you approach any money source, you want to be sure that your project is reasonable and rational. Potential investors do not accumulate their money by chance, and they are not likely to give you money on impulse. If you appear rash and impulsive, your 15 minutes of fame will run out before you know it. Treat potential investors as intelligent people, even if you are approaching the stockbroker’s favorite group—widows and orphans. They’ll have a business advisor who will read the proposal.

Often an investor will ask to see the Executive Summary first whether you are making one film or forming a company. In order to present him or her with the summary, you have to write the entire plan first or there is nothing to summarize. Since a crucial part of the two or three pages is going to be a financial summary, how will you do that without running out all the data first? You would be making it up, which is not a good idea. The investor will be making initial assumptions based on those numbers. You don’t want to be in the position later of saying, “Gee, we were a little off. Our budget is $5 million rather than $2 million, and the net profit is $3 million rather than $15 million.” You will have lost an investor.

Besides, if the investor likes what he sees in the Executive Summary the next communication will be, “Let me see the rest of the plan.” That person means today—now. As I pointed out earlier, he or she assumes that there is a body of work supporting your summary; therefore, the summary and the complete proposal have to match. You do not want to have to tell potential investors that you will have the complete plan in a month. When equity investors ask for a business plan, you must have all the market explanations, facts, and figures to hand and in order.

STYLE OF THE EXECUTIVE SUMMARY

The image experts say that you have 30 seconds to make an impression, whether it is at a job interview, in a negotiation, or at your local party place on a Friday night. Your business plan has a similar amount of time. First impressions count; they will make the reader either want to read further or toss the proposal aside.

Cicero said that brevity is the charm of eloquence; this thought is a good one to keep in mind. In a few paragraphs, you must summarize the entire business plan to show the goals driving the business, the films, the essential market and distribution factors, and the major elements for the success of the project. Each chapter in the outline has its own summary. I know that it is hard to understand this repetition; students and clients ask about it all the time. That is why I keep coming back to it.

Earlier I said that the Executive Summary is the hook; you can also think of it as the bait that attracts the fish. You want the reader to be intrigued enough to read on. You need not try to rival John Grisham or Stephen King as a writer of thrillers or horror stories. You should not expect to keep readers on the edge of their seats. Simply provide the salient points in the Executive Summary: Less is more. If the Executive Summary of your plan is as long as this chapter, it is entirely too long. You can be long-winded later. All you want to do in the summary is give your readers the facts with as little embellishment as possible. Remember that this is a business proposal, not a script.

LAYING OUT THE EXECUTIVE SUMMARY

Follow your outline when writing the Executive Summary. Give the basic information of each section. Do not deviate from the path that you have already chosen. Anything you say here has to appear in more detail somewhere else in the proposal. Refer to the Executive Summary of the sample business plan in Chapter 11 while reviewing how to lay out your own summary.

Strategic Opportunity

Typically, the first section of the Executive Summary is called “Strategic Opportunity.” It includes a few short statistics to show your investor that the film industry is a good investment. My business plans have:

• North American box office revenues
• Revenues for the independent film segment of North American box office
• Worldwide box office revenues
• Future box office revenues worldwide as projected by PricewaterhouseCoopers (usually four years ahead)

The Company

This section describes the outstanding elements of your goals and plans. Here, the reader finds out what the name of your production company is, what type of film or films you are making, and who you are.

A short introduction to your production team is included to give investors an idea of your team’s experience and expertise. If you happen to be starting a company, you may want to call this the management team, as it will include executives who aren’t involved in production per se. Indicate any notable attachments—director, producer, and/or actors—but save their bios to follow in the longer Company section. If you have a company plan in which each film has its own director and producers, you may want to include their bios with each film rather than in the Company section.

As we will discuss later, be sure to include only people who have given consent to be involved in your project in some written form. Do not include people who you would like to work with but who have never heard of you. Typically, you can include consultants, such as the business plan advisor or attorney, in the longer Company section; however, if you feel it is important to put them up front to add immediate credibility for your team, do so.

Film

In this section, give readers only the most important information about your proposed film or films. Normally, I include one or two lines that have some punch or are intriguing while still giving the investor the essence of the story. Look at some of the one-line plot summaries in the Internet Movie Database (http://www.imdb.com). For example, for The Gift, they have, “A young married couple’s lives are thrown into a harrowing tailspin when an acquaintance from the husband’s past brings mysterious gifts and a horrifying secret to light after more than 20 years.” This sounds more interesting than, “A young couple moves to a new house and run into an evil man.” Both are correct, but you want to pique your investors’ interest. Like the “elevator pitch,” you want to emphasize any sensational, attention-getting words (harrowing, tailspin, mysterious, horrifying, and secret) but also be concise and clear, using no more than two sentences. The fuller explanation will make your investors ask what the husband did and how horrible it was. If they like it, fine. If they don’t, it saves you time—they are not likely to like it after they have read the complete synopsis either.

The Industry

Before describing your specific segment of the marketplace, it is necessary to give an overview of the industry based on what is in the longer Industry section. Mine starts out: “The future for independent films continues to look impressive, as their commercial viability has increased steadily over the last two decades.” Then detail a few independent films that have done impressively well in the last two or three years. They do not have to be comparative to your film, but Oscar nominees that the reader will recognize are always a good idea. Next list the independent films that have won the Best Picture Oscar in the last ten years, assuming the current tre...