A business plan is a tool with three basic purposes: communication, management, and planning.
As a communication tool, it is used to attract investment capital, secure loans, convince workers to hire on, and assist in attracting strategic business partners. The development of a comprehensive business plan shows whether or not a business has the potential to make a profit. It requires a realistic look at almost every phase of your film project, in particular the distribution and subsequent revenue streams needed to recoup your investment. Furthermore, it shows that you have worked out all the problems of your project.
As a management tool, the business plan helps you track, monitor, and evaluate your progress. The business plan is a living document that you will modify as you progress in your project. By using your business plan to establish timelines and milestones, you can gage your progress and compare your projections to actual accomplishments.
As a planning tool, the business plan guides you through the various phases of your business. A thoughtful plan will help identify roadblocks and obstacles so that you can avoid them and establish alternatives.
But even more importantly, in a film project the business plan also serves another major purpose; you need it to attract investors to fund your project. No one is going to invest in your project unless they can see how they are going to get repaid and more importantly, make a profit.
“Anyone looking for financing for anything should have a business plan, period,” says talent manager Glenn Rigberg, of the Beverly Hills firm of Rigberg, Roberts, Rugalo. “An independent film business plan [without money and a hard offer to go with it] won’t get actors attached. But a solid, compelling plan can give a filmmaker a certain degree of credibility in the fundraising arena. That’s where it counts.”
What should go into a film business plan? Your business plan should always be simple and straightforward. Don’t waste a lot of time developing a 40 page document that no one will read. Keep it to 10 to 15 pages at most. Generally, every plan includes the following;
* The Executive Summary – a cover sheet that lists the credits of the producers, director and talent and describes the budget, start date and other key information in short, bite-size paragraphs.
* A Synopsis- A short version of the storyline followed by an “investment merits” section, which breaks down all the positive elements of the project, but does not include the ending (you want them to read the script). These elements might be established talent, distribution guarantees, or large potential audiences for the film.
* Environment- A brief summary to educate your reader about the industry and opportunities within the industry. You can also describe who your potential customers are and you can mention a few films that resemble your project.
* Operations- Description of how your internal operation will be structured from the top down in order to produce the project. Indicate what support services, casting, equipment, facilities, locations, legal advisory services, subtitling, etc. will be required to successfully execute the project. Document any key capital requirements necessary for delivering your project. Outline sources of and terms for funding. Indicate what financing has been sourced and how much is still required.
* Marketing- Describe your company’s approach to pursuing the market to distribute your film and earn revenue. Summarize your distribution channels and strategy.
* Financial Projections- Provide an analysis of what it will cost to produce the film which addresses total funds required, funds source, and balance to be financed. Include a budget summary with projected above-the-line and below-the-line costs. List your sales projections and briefly describe how you derived them.
* Financial Statements- Prepare a cash flow statement showing inflows and outflows of cash from month to month during the first year. Prepare a balance sheet reflecting the assets and liabilities of the project. Prepare an Income Statement showing the income, expense, and profitability of the project.
In these recessionary times, cash is hard to come by. It’s no longer enough to present a killer script and a terrific pitch. In this new independent film economy, the people who still have money want to see recoupment projections, marketing plans, internal rates of return, and multiple revenue streams. A properly prepared and informative business plan will go a long way in helping you to obtain the financing for your project. It can also be a valuable tool in ensuring the timely and efficient completion of your film.