Film Producer’s Guide to Film Finance Part 1

Notes

This is PART ONE of a 3-part series about creating a film business plan for film producer’s looking to land a film investor to finance a movie. You can find PART TWO and PART THREE here.

What you will learn:

Think like film investors

If you are looking to get film financing, you have to think like film investors, not as a filmmaker. You will have to put aside your ‘creative’ hat and throw on your ‘business’ hat. Essentially, you want to THINK like your film investors. You need to have all the answers a potential investor may ask. Now what would those questions be? A good place to start is by understanding how a film business plan is written. Why a business plan? Well, it lays out pretty clearly what the business is, who is involved and how they plan to run the business that will ultimately generate a profit.

Now, why do I say business instead of your super creative artistic independent movie that will change the world? Because in the eyes of film investors, that is what your movie is, a business, a product they want to invest in that will “hopefully” generate a profit. That is the hard truth. Of course, there are investors out there, who love movies, especially creative artistic independent filmmakers they want to support. However, at the end of the day, your movie is still a business, a product. And let’s face it, if you’re reading this, you’re serious about filmmaking and you want to turn this into a lifelong career. If that’s the case, you’ll have to start thinking about your movie as a business, like any other business if you want to successfully get film funding over and over again.

You need to start speaking the “business language” so film investors understand exactly what you are trying to accomplish in their language and THEN you sweep them off their feet with your incredible creative talent. But first, understand the business.

Now that you’ve got your business hat on and you understand your movie is not this fancy art piece, but a real physical product that needs to get funded and then sold for a profit like any business to continue operating and growing. Let’s dive deeper into the mindset of a potential film investor.

The Business Plan

If you’ve ever seen a business plan or perhaps even written one, there pretty damn boring and super long, anywhere from 20-50 pages. There flat out facts about who you are, what you are trying to do and how you are going to do it. Nothing creative or fancy about it.

But, the business plan I’m going to suggest creating is not your typical business plan. This business plan is designed specifically for you. Hell, you might not even show this business plan to anyone. So why even bother making one? Simple. It’s to understand the mindset of your investors. If you can understand every aspect of the development of your idea/script from conception to distribution, you will have a greater chance of landing that film funding because that investor knows you have your shit together. Any question they throw at you; you have a solid answer.

There are so many intelligent creative filmmakers out there who don’t do this part at all. They completely neglect the business side of making movies. They just believe they have this amazing idea or script that is going to make millions and will make everyone rich and famous. Or that their movie is for everyone, everyone will see it and it’ll be a huge box-office success.

How many times have you heard people say, “Oh, I just thought of a million-dollar idea!”? I know I heard it all the time. Ideas are a dime a dozen, there everywhere and not hard to come by. If ideas had any real worth, everyone would be successful, rich and famous. But, it doesn’t work that way does it? It’s not the ideas that makes people super successful, rich or famous, but the EXECUTION of the idea. So many people have ideas or a great script, but wonder why nobody is investing in their amazing idea or movie script. Isn’t it obvious? Don’t they understand? They say. It’s not that your idea or script is bad (maybe it is), it’s that you are not communicating it correctly, you are not speaking the same language as your investors. You need to spell it out to them clearly, so there is no misunderstanding.

That’s why creating a film business plan is a good starting point to getting your movie financed.

This is the basic outline of most business plans:

  1. Executive Summary
  2. The Company
  3. The Films
  4. The Industry
  5. The Markets and Marketing
  6. Distribution
  7. Financing
  8. The Financial Plan

Executive Summary

Write the executive summary last. Typically, investors will read the executive summary first, nevertheless, it is the section you want to write last. Think of it as the hook that pulls readers into the net, and it must represent the future outcome accurately.

After you have written all the other areas of the business plan (The Company, the films, the industry, etc.) you will want to create a quick summary of each of those areas as your executive summary.

LEARN 7 KEY PRINCIPLES USED BY SUCCESSFUL SCREENWRITERS TO WRITE BETTER SCRIPTS THAT SELL!

The Company

In reality, the reason why so many businesses, whether big or small, fail is typically due to a lack of planning. Anyone can have bad luck, but part of planning is to look at the future results you want based off current decisions. By doing this, you can prepare for any bad luck or problems you may run into (which you probably will).

Write your plans down. Filmmakers love to declare that they can keep everything in their heads. Big mistake! If your ideas are so clear to you, it shouldn’t take long, maybe a few minutes to put them on paper. Anything you cannot clearly explain to yourself will not be clear to someone else, like an investor your hoping will invest in your movie.

Now ask yourself the following questions:

  • Why are you making films?
  • Who are you?
  • What films or other projects will you make?
  • When will you get this show on the road?
  • Where are your markets?
  • How are you going to accomplish everything?

Note how the questions are organized. Starting with the why first sets the scene for the rest of your story.

Why?

Do you have a specific philosophy? What are you trying to achieve? Make the best action movies ever made? The greatest children’s movies? Clearly outline your ideals for yourself and others. Help people understand where you are heading so they will not get lost along the way.

Who?

Start the Company section with a clear but short statement that introduces the company. Give its history, point of origin, principal owners, and so forth.

Example,

XYZ productions is a newly formed New York corporation whose owners are _____, _____, and ______. Our principle purpose is the development and production of African-American theme’s films as well as the employment of African-American actors in primary roles. Over the next five years, the Company plans to produce four independently financed feature films.

What?

Give a brief synopsis of the film production you plan to create. In the Product section of the business plan, you will go in more detail of each of your projects, but a short recap is enough in the Company section.

Summarize the following bits of information regarding your project:

  1. Films, television, web series
  2. Budget
  3. Number of projects over a period of time
  4. How the Company will be involved in each project (development, production, distribution)

When?

Be ready to be in business and ready to launch when meeting with investors. Go right ahead and file forms that may be necessary, print business cards, etc.

Common forms of business are the following:

  1. Partnership – in which a business involves two or more co-owners.
  2. Corporation – is a separate entity apart from its owners. The business assets and liabilities are separate from the owners. For this reason, many people keep copyrights under their own names. That way, if the company goes downhill, you still own the films.
  3. Sole Proprietorship – owned by one person. Easy to setup, the individual has all the control but maintains all the responsibility.

Where?

It is a good idea to let investors know of the following distribution channels you may expect:

  • Theatrical
  • Specialty houses
  • Ethnic communities
  • Foreign markets
  • Cable
  • DVD
  • Direct-to-video

How?

This is a very important area of your business plan. You will want to explain how you fit into the industry, how film distribution and film financing will work and how you plan to tackle each one.

Management and Organization

End the Company section with a brief overview of the people involved and key members of your team. It should only be a paragraph or two long.

Part 2 of Film Producer’s Guide to Film Finance

This marks the end of part 1 of our 3-part series. Click here to go to PART TWO of creating your film business plan to increase your chances of getting film funding.

References

If you found this article helpful, I highly recommend checking out the following book that goes into more detail about how to write a business plan for filmmakers.

Filmmakers & Financing: Business Plans for Independents

Recommended Resources

Producer to Producer: A Step-by-Step Guide to Low Budget Independent Film Producing

Producing An Indie Film From The Grassroots Up

Crowdfunding Your Film

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