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Filmmakers: Why Bother With a Business Plan?

Filmmakers: Why Bother With a Business Plan?

Check out this excerpt from Louise Levison‘s “Filmmakers & Financing: Business Plans for Independents,” available now from the Focal Press. Levison’s clients have raised money for low-budget films such as “The Blair Witch Project,” the most profitable independent film in history, and for companies raising as much as $300 million. “Filmmakers & Financing” is available on Amazon here.

In this excerpt, Levison explains why, yes, everyone who’s looking for investors needs 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 it 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.

Is This Book For Someone Making One Film?

In a word, “Yes.” 
After six editions, people still call or email and ask me this question.
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.

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