A film business plan is essential when raising funds for film from independent investors.
There are lots of folks with experience writing film business plans: FilmProfit.com and film attorney John Cones are two fine examples.
The components of a film business plan
Every film business plan should at least contain the following sections, in whatever order you prefer:
Title Page
A Pro-looking title page which, optionally, includes a logo or graphic of your film or film company. At the bottom of the business plan you should list your “Forward Looking Statements” disclaimer, which is something like this, but consult with a lawyer – don’t just copy and paste this text.
Any statements in this business plan that are not historical facts are forward-looking statements that involve risks and uncertainties; actual results may differ from the forward-looking statements. Sentences or phrases that use such words as “believes,” “anticipates,” “plans,” “may,” “hopes,” “can,” “will,” “expects,” “is designed to,” “with the intent,” “potential” and others indicate forward-looking statements, but their absence does not mean that a statement is not forward-looking. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Table of Contents
The next section you should have in your film business plan is a solid, easy-to-read Table of Contents. That table of contents basically gives the reader a page-by-page listing of everything in your film business plan. And not only that, but it shows that you have the ability to organize a massive document into sections that make sense. I know it sounds a bit silly, but the Table of Contents, if properly written, is one of your business plan’s most impressive features, because it’s one of the first thing the potential investor or vendor sees, and can convey a wide swath of what your film business plan is all about in a single glance.
A good film business plan has got to impress people on a technical, informational level, but has to leave them with a “gut feeling” that you know what you’re doing. That gut feeling is sort of like “Well, if this guy can put together this comprehensive of a film business plan, he’s probably a professional who’s organized and meticulous.” Don’t quote me on that, but you get the idea, as ridiculous as it sounds.
Overview Section
After the Table of Contents, your film business plan has got to have a solid Overview Section, also known as the Executive Summary. This is a section where, basically, you give a little blurb about all the major sections in the business plan that are to come. You don’t want to be super-verbose here in describing each section, but you do want to convey enough information about the sections ahead to, again, show your organizational professionalism, by showing the reader/potential investor that you’re able to “feed” them “bite sized” chunks of the information they need without overwhelming them, and enticing them to read further.
It’s a well-known fact that copywriters, who make a living off of crafting words and sentences into material which attracts people to buying products, know that breaking things into “bite sized” chunks is a valuable skill to have. Take, for example, how many times you yourself have been enticed into reading someone’s blog, about a topic you really have no interest in, but which you felt compelled to read, simply because the title was something like “10 Ways To Make Your Script Better.” Then you look at the blog briefly, see that it’s broken into little, easy-to-read chunks, and then you decide to read it. It’s all about getting people to keep reading the material.
Your Film’s Objectives Section
The next section in your film business plan should be your Objectives section, which details what you plan to do with the film, or what you plan to do with the film company, using the film. Be very specific here. You want to list your specific, measurable, tangible goals that you want to achieve by making and selling this film. “Make millions of dollars” is not what you want to write. “Gross $14 million in domestic and foreign revenue, both theatrically and through ancillary markets by Q4 2015″ is more specific. Naturally, you don’t want to use too many difficult, oblique business terms if you’re going to be asking for investment from folks who don’t understand them. Then again, if you’re targeting people who appreciate that kind of language, go for it.
About The Filmmakers Section
The next section you want to include in your film business plan is a section about your team of filmmakers or your company. Include bios of your major players, including the film’s director, lead producers, and any name cinematographer or art director or special effects creator, or whomever you feel would help your cause. Listing every friend and extra you’re planning to cast in your film here is probably not the best idea. Keep this short, and put your best people here. The people you want to list are the ones with the most experience, the most respectable “pedigree,” and/or the biggest names. You might not have anybody you feel is worth putting here, but do your best. Include photos and bios of these people.
Your Film Details Section
The next section is your Film Section, where you detail what your film is about. This includes a brief summary of your film, maybe the film’s logline, synopsis; whatever you think best conveys your film to potential investors. Keep it brief and don’t overwhelm them. You may want to use “mashups” to help bridge the gap of understanding. That is, instead of just writing “Raxxid The Space Pirate is a sci-fi adventure,” try using terms to help folks get a picture of what it’s about. “Raxxid The Space Pirate” is “Pirates of The Carribean meets Aliens.” But do be careful when using these mashups, as they can be pretty annoying if not approached with accuracy.
Name Actors / Name Talent Section
If you have any name actors attached, the next section in your film business plan should be a section detailing and/or highlighting those name actors. If they’re truly name actors, their photos in your business plan will speak for themselves, but for those who aren’t quite as well known, and even for those who are well known, include a little bio about each one of them, which focuses on their last few hit movies, how much money each movie grossed, etc. If you’ve got “star power” on your film, you need to highlight it here. And don’t be shy.
But what you don’t want to do is highlight a bunch of no-name actors and try to pretend they’re big names. Big mistake. People know stars on sight. That’s why they’re called stars. You’re not fooling anybody when you put up a photo of some John Doe theater actor from Mentor, Ohio and try to tell me he’s a bankable talent. You’ll look like an amateur, so don’t do it.
Your Film’s Target Audience Section
The next section you’ll want to include in your film business plan (and again, you can arrange these however you like) is your Film’s Target Audience section, where you detail to the potential investor who you’re targeting when you’re trying to sell this film. Is it a film about two senior citizens who fall in love? Maybe you shouldn’t have a target audience of 17-35. Unless those senior citizens are a husband and wife assassination team. Or one is a serial killer. Is it an animated film about a midget bouncing around a fantasy world with a magic sword? Maybe you shouldn’t list your target audience as 18-60. Find your sweet spot for your film. Don’t say your film will appeal to everyone. It never will. Be realistic. Keep your focus small and it will read as more credible, and that’s what you want.
How Movies Are Made and Make Money Section
If your film business plan is going out to a lot of potential investors who don’t know a lot about making movies or how Hollywood works in general, you should then write a section that gets them up to speed on all that. From the basics of pre-production to shooting the film itself, all the way through post-production and what you’re planning to do with the final film to try to sell it and make the investors’ money back.
This section should also have a fairly descriptive, easy-to-understand section on Distribution/Marketing/Etc. If you can’t explain to the investor how it all works, you’re not going to get them to invest. Or the chance of successfully doing so is a lot less, at the very least. Give it to them straight. Tell them about how the film will make money theatrically, on DVD, through festivals, on pay tv, cable, VOD, and the internet. And be especially ready to tell them what you’re expecting to do with the internet with regards to your film.
Financial Nitty-Gritty Section
The next section in your film business plan needs to get into the nitty-gritty of how much you’re trying to raise from the investor, what you plan to do with that money, specifically, and exactly what that investor can expect to see in returns on his money. Investors aren’t stupid, so do your math and do it well. They’re not interested in fairy tale projections on revenues. They don’t want to hear that your film is going to make more film than James Cameron’s films, or that it’s the next Star Wars. But at the same time, they’re holding your film’s business plan in their hands and reading it because they know that’s there’s a huge possibility for any film, even a little film, to explode and make a lot of money at the box office.
Everybody’s heard the stories about the little filmmaker from nowhere who’s little film which cost $5,000 went on to gross $20 million at the box office. That’s why they’re investing, but you have to be careful. You don’t want to over-inflate their hopes. You’ve got to be very reasonable in your projections. Include recent films who are similar to your film in your projections. Show how much money those films made, how much they cost, and translate that into terms your potential investor can understand. Give an example of a high scenario of how much money you think your film could make, then a medium, and then a low. And be absolutely up-front to the investor that they could potentially lose their investment if the film doesn’t do well. Any film investor worth his salt is going to want to hear that from you.
No film investor in their right mind wants to deal with a filmmaker or producer who thinks that their film is going somehow get made and magically make a million dollars and has no chance of tanking. When people with money see someone like that, they walk away. That’s generally how they became people with money, and remain so. By avoiding clowns like that.
I hope that answers some basic questions on what goes into a film business plan. It’s a bit of a general overview, and not intended to be a comprehensive course on how to write one, but hopefully I’ve imparted a little bit of what I know about the whole process that can be helpful to you.
And for further edification on film business plans, the one book on film finance / film business plans I recommend you read is Filmmakers and Financing, Sixth Edition: Business Plans for Independents by Louise Levison.
Including comparable films and their revenue in your film business plan
In every film business plan, it’s always good to include a list of films similar to yours, which have already made it out into the world and become a success either financially or critically.
The idea is that you want to show potential film investors a business plan that shows that a film like yours can make money in the marketplace, and thereby make that investor more comfortable about investing in your film.
And of course, the only proper way to do this is to use actual facts and actual data from actual films.
But unfortunately, data isn’t always available via a simple Google search, so you’ll need to either crack open your investigatory skills, or bring in an expert or a company who’s job is to put together this data.
Let’s dive in. First off, find out what successful films out there are similar to yours. If you’ve got a serious science fiction movie, you’ll ideally want to find a serious science fiction movie to compare your film to, rather than, say Muppets In Space. If you’ve got a Matthew McConaughey-style romantic comedy, you’ll want to compare your film to one (or more) of those films. When selecting films to compare your film to, use these criteria:
1) My Film’s Budget Level / Star Factor: If you’re a smaller film with no names attached, find successful films with non-star actors which have made sales at festivals or markets.
2) My Film’s Niche (Or At Least Sub-Genre): If your film fits into a super-specific niche market, it should be easy to find comparable films which have done well. On the other hand, if your film is more of a broad drama or comedy, it’s going to be counterintuitively harder to find a comparable film, because now you’ve got to arbitrarily figure out how to compare your film with another film using broader categories, such as plot situations, settings, etc.
3) Your Film’s Tone: Though they’re both comedies, if you’ve got a comedy like The Puffy Chair, the tone isn’t going to be the same as in a comedy like The Hangover.
4) Your Target Audience: This has a lot to do with the tone as well. Many producers fall short in this category when putting together their film business plan. They think that by telling potential film investors “Hey, our target audience is everyone,” or “Our target audience is everyone 12-65,” that the film investor will see that wide target audience range as a more attractive investment opportunity. Nothing can be further from the truth. The bottom line is: if your film doesn’t target a specific demographic, your film is likely going to fail to make its money back.
So what data do you include when comparing your movie-to-be with successful movies similar to yours?
The very minimum data you should include in any film business plan:
Negative Cost (Basically, how much the film cost to make)
Theatrical Gross (US / FOREIGN)
Cable TV / Pay TV / VOD (US / FOREIGN)
DVD (if you can find this data)
There’s a ton of other revenue categories you can include, such as Distributor Fees, Exhibitor Fees, Prints and Advertising Costs, but the bottom line is that you want your film business plan’s comparable films section to show your investor that several films that are very similar to yours have turned a profit.
Don’t use smoke and mirrors, don’t use films that are way different than yours, and for the Love of All Things Holy, don’t use one-off “outliers” like Clerks, El Mariachi, and other films which made massive sales. Those are flukes. Especially in today’s film market environment.
So where do you find all this data? Here’s some links where you can do your own research, although I recommend hiring a company like Film Profit to get you the data you need. Every hour you spend crunching numbers and doing research on the internet is one less hour you have to raise money with, so hiring a professional team like Film Profit makes total sense.
When composing your film business plan, tweak to fit the film investor you’re after
Film investors aren’t a dime a dozen, for one very good reason: putting money into a film is one of the biggest, most risky investments someone can ever make. The typical film investor is one who does it for a living, either packaging films or putting together slates or is in some other way involved in raising money for movies on a professional level.
The other type of film investor is the private film investor, or angel film investor. The private film investor is rarely as knowledgeable as a distributor or film buyer or other type of film investor, but they’re also much more common and accessible to the vast majority of independent filmmakers. After all, what is a film investor than someone who wants to put money into your film?
And it’s just a hunch, but I figure that if there are a million millionaires in America alone (and that number is probably much much higher), then the odds of a DIY filmmaker landing financing from one of those million millionaires might be much better than those of landing professional film financing from an established funding source. Again, hunch.
So if we pursue that hunch, let’s explore a few of the more common types of those private film financiers.
Because no matter how many drafts of the screenplay you’ve polished, or how many sizzle reels you’ve sunk time and money into, or how many Kickstarter campaigns you’ve tried to get off the ground, if you don’t (A) understand that there are many different kinds of private film investors, who invest in films for many different reasons, and (B) do your best to couple your film to those reasons, then your film will likely never attract the investors you need to get it shot and finished.
Straight up, as a producer or filmmaker trying to raise money for film, your job is to “sell” your film to film investors by making it as attractive as possible to that investor. That’s why a lot of creative types like directors and producers and writers find it so hard to find funding — because they find “selling” distasteful or they’re just not good at it.
You don’t have to be a salesman, and you don’t have to sell, per se. But what you do have to do is highlight aspects of your film and/or what you’re trying to achieve so that your film is one that strongly appeals to the type of investor you’re trying to get aboard your train.
To that end, here are a few things you should know about a few different types of film investors and why they invest. Armed with this knowledge, you may be more readily able to dial in your “sales pitch” when trying to secure film investment from a private film investor.
Some film investors invest in film because they think film is sexy
The Hollywood mythos is one of the most alluring and most enduring attractions on the planet. From the heyday of the silent era, to the golden age of motion pictures, and continuing today through the digital glitz and glamour of the modern era, making movies remains a romantic, attractive endeavor. And just because you’re a film investor doesn’t mean you’re inured to the siren’s song of the motion picture and the razzle-dazzle of the red carpet and klieg lights.
Film investors who invest in film because they’re attracted to the glamour of Hollywood, or because Hollywood is just so different from what they may be steeped in day-to-day with their other careers or pursuits, generally are interested in putting money into a film because it buys them that closeness to what they perceive as the celebrity-oriented or more public-facing aspects of the film business.
But make no mistake — just because they may be new to the film industry and they may be fascinated with celebrity, or spellbound by the magic of Hollywood doesn’t mean they’re stupid, or can or should be taken advantage of. If they have money to consider investing into a motion picture, it probably means they’ve been extremely successful in some other sector or business, and extremely successful people, generally speaking, are not stupid, and especially not so when it comes to spending money.
That said, if you’re trying to raise money from a film investor who tends to put a lot of emphasis on the glamorous or magical aspects of the film industry or film production, when it comes to your film business plan or investment materials, it may behoove you to highlight some of the things that that particular kind of investor may find more interesting than others. For example, if your production is pursuing name talent and/or big names, name those names. If you’ve got an in on the Warner Bros. lot and you know you’ll be able to to run your production office out of one of their legendary office buildings, that’s another thing you might want to highlight.
Similarly, if your film investor is enthralled by the idea of shooting on location in an exotic destination, highlight that location. Highlight the logistics required as a result of choosing that location. For example, if your film takes you to Costa Rica, make sure to mention in your film business plan, or in your verbal pitch, all the hotels you’ve got your eye on, or emphasize the week you’ll be shooting on a pristine beach with celebrity A or B.
And keep in mind that the film investor who’s in it for the glamour will only rarely admit it. They’ll cite other reasons: being curious as to how the film industry works, wanting a change in their regular, perhaps self-described “boring” careers, travel, you name it.
Also keep in mind that some film investors fall on the extremely wrong side of this “being attracted to the magic of Hollywood” spectrum and are folks you may not want to get involved with. If you get the impression that a potential film investor may be in it for the wrong reasons, walk away. Examples of wrong reasons include being obsessed with meeting a particular actor, attracted to the prospect of “hooking up” with cast or crew, throwing big Hollywood parties, etc. Trust your gut. There’s a difference between someone who’s genuinely curious or enraptured with the magic of Hollywood and someone who’s out to indulge in them, which will often be at the expense of not only your film, but of your reputation as a filmmaker, by association.
Some film investors invest because they’re pushovers, or are bad with money
Some film investors might consider investing in your film, but only because they’re bad with money, or they’re easily swayed.
As a filmmaker seeking to raise money for your film, it might be tempting to accept the money of a film investor who says “yes” to every dollar amount you’re pitching them, but beware: these folks might just be saying yes because they don’t know any better, or don’t truly understand what you’re asking them to deliver. Or, worse, they might not actually have the funds.
In any case, it’s been my experience that most investors who say “yes, yes, yes” when offering money to a film production are the ones saying “What? What? How?” by Day 2 of that production. And if that happens, and the money stops flowing, your production could be dead in the water.
So make sure your film investors understand what they’re saying yes to, and make sure they have the dough. If your film has financing stages, make sure those financing stages are outlined clearly in the film business plan, but more importantly, in whatever contract you sign with your film investor.
And also be aware that while some pushover film investors might be hands-off during production, they can still rain on your parade during post-production, or even after the film is locked. A quiet and quiescent film investor doesn’t always stay quiet and quiescent. Taking your funding away, or running out of money as you’re trying to shoot the film is bad, yes. But if that money goes away while you’re in the home stretch in post, or trying to get a sales agent aboard, or trying to get the key art finalized, it’s even worse. Because now you have a finished film, but it’s been hobbled at the knees. Get into bed with these kinds of film investors only if you and they share a mutual, solid understanding and can refer back to a solid, mutually-beneficial contract.
Some film investors invest because: art
For every 10 film investors doing it solely for the money or glamour are probably 1 or 2 film investors who are doing it for the art alone, or for whom the artistic aspects of making a motion picture rank highest.
If a potential film investor is considering putting money into your film in order to advance the art, or to contribute to a specific sector of the arts, or even to help make an artistic statement, here are two key things I ask you to keep in mind:
- That film investor, because they’re investing in the art, in all likelihood considers themselves an artist.
- Film is a collaborative art, yes, but is ultimately at its best and strongest when there is one person making the final choices across all aspects and departments. If the film investor’s vision and yours are not aligned, you can be in a world of hurt if that investor decides to withhold funding at any point in the film’s creation or marketing.
Film investors who truly understand the art are those who let the creatives bring their choices. If you suspect that the film investor you’re considering bringing aboard may not understand that paradigm, you may want to rethink collaborating with them. Film investors should never control a film’s creative choices, but should be supportive of them. That said, a very clear picture of what those choices may look like needs to be rendered for that potential film investor up front in order to avoid as much conflict as possible later on.
All film investors want their money back (and then some)
Throughout this entire article, you’ll notice I didn’t use the term “film donator” or “film money giver.” I used the term “film investor.” Barring those ultra-rare people who throw money at films and don’t expect anything in return, any film investor wants what any other type of investor wants: their money back, and a return on their money. (But at least their money back.)
Don’t ever lose sight of the fact that while these people may have a dozen different reasons for putting money into your film, one of the biggest (if not the biggest) motivations is to make money with their money by helping to create a financially successful film.
No matter what the motivations (some of which I’ve explored above), it’s up to you to make clear to any potential investor in your film that you have a plan to make their money back. It’s up to you to detail how much money you need over the various funding stages. It’s up to you to be absolutely cogent, on paper, how and when that potential investor will receive her money back, and how and when that potential investor will receive profits.
If you’re accepting real money in any significant amounts from a film investor — you need to make sure everything is on paper and agreed to. You need to have all the details spelled out for them, whether they ask for it or not.
But most importantly, know your potential film investor, and make sure she’s a fit for what you’re trying to do and what your film is trying to achieve. With money, there are always strings. Learn what those strings are before you accept the money. And if you see no strings, create them yourself and get your investor to understand and agree to them.
Setting up a film company to include in your film business plan – good idea?
If you’re setting out to produce a feature film, and you’re serious about finding film investors and making money with the film, you’re going to probably want to set your film company up as an official company.
But first, before you start researching all the different directions you can go when starting up your film company as an official entity, let’s make sure you’re even ready to do that, and/or let’s make sure you’ve got what it takes to keep it going and utilize it properly.
Ask yourself the following questions:
1) Am I serious about accepting film investment money from private investors?
2) Are the private investors I’m going after serious investors (as opposed to just close friends and/or family)?
3) Would it be highly impractical to try to make this movie without a legitimate company entity?
4) Am I ready to keep track of a totally separate tax-entity, and keep track of that entity’s profit and loss on a year-in, year-out basis?
If you answered NO to any of those questions, you may want to re-think starting your own film company.
Flat out, it’s best to have a film company on paper, official and ready to go, when making a feature film. But a lot of producers and filmmakers don’t understand the many intricacies, responsibilities, and finances that go into setting up a real, actual, legal company entity.
If you’re taking limited investment funds from a handful of friends, family, or close relatives, you can probably get away with a simple investment contract between you and the investors.
Further, if you’re on a small enough scale budget-wise, you probably don’t need to be worried about major liability issues, such as “Our actor lost both his limbs in a helicopter stunt.” You’ll likely only be dealing with liability on the scale of “Who’s gonna pay for my car windshield now that your camera mount shattered it?”
So be realistic. Don’t go to all the trouble of setting up an actual, legal company entity of any flavor if you’re just making a small film. You’ll end up doing a lot more paperwork and “playing office” than you will raising money for the film, and/or actually, you know, making the film.
That being said, if you’re planning a budget of $50,000 – $1 million or even upwards from there, you’re going to want to set up a company. Investors on that level are simply not going to invest if you don’t have a legitimate business on paper.
In closing, know that a film business plan is just one of many components you’ll need to woo film investors. Passion, pitch deck, a video trailer — all of these things are great to have and fairly essential, but really the only other vital component you’ll need is a film budget. If you can’t afford to hire a line producer to break down your script, line it, schedule it, and budget it, at least get into the ballpark with a film budget you can create here at Screenplay Readers.
Good luck with your film business plan and I’ll see you at the premiere!
