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, obtain loans, convince workers to hire, and help attract strategic business partners. Developing a comprehensive business plan shows whether or not a business has the potential to generate profits. It requires a realistic look at almost every phase of your film project, in particular the distribution and downstream revenue streams required to recoup your investment. Also, it shows that you have solved 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 set timelines and milestones, you can assess 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 well thought out plan will help identify roadblocks and obstacles so you can avoid them and establish alternatives.
But even more importantly, in a film project, the business plan also has another important purpose; you need it to attract investors to finance your project. Nobody will invest in your project unless they can see how you will be paid and, more importantly, how you will make a profit.
“Anyone looking to fund anything needs to have a business plan, period,” says talent manager Glenn Rigberg of the firm Rigberg, Roberts, Rugalo in Beverly Hills. “An Independent Film Business Plan [without money and a hard offer to go with it] you won’t get attached actors. But a solid and convincing plan can give a filmmaker some degree of credibility in the fundraising arena. That’s where it counts.”
What should be included in 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 max. Generally, each plan includes the following;
* The Executive Summary: A cover that lists the credits of the producers, director, and talent and outlines the budget, start date, and other key information in short, concise paragraphs.
* A synopsis: a short version of the story 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 may be established talent, distribution guarantees, or large potential audiences for the film.
* Environment – A short summary to educate your reader about the industry and the opportunities within the industry. You can also describe who your potential clients are and you can mention some movies that are similar to your project.
* Operations: Description of how your internal top-down operation will be structured to produce the project. Indicate what support services, casting, equipment, facilities, locations, legal advisory services, subtitling, etc. will be required to successfully run the project. Document any key capital requirements needed to deliver your project. Describe the sources and terms of the financing. Please indicate what funding has been obtained and how much is still needed.
* Marketing: Describe your company’s approach to finding the market to distribute your film and earn revenue. Summarize your distribution channels and strategy.
* Financial Projections – Please provide an analysis of what the film will cost to produce addressing total funds required, source of funds, and balance to be financed. Include a budget summary with projected costs above and below the line. List your sales projections and briefly describe how you obtained them.
* Financial Statements: Prepare a cash flow statement showing month-to-month cash inflows and outflows for the first year. Prepare a balance sheet reflecting the assets and liabilities of the project. Prepare an income statement showing the income, expenses and profitability of the project.
In these times of recession, it is difficult to get cash. It’s no longer enough to present a great script and a great pitch. In this new independent film economy, people who still have money want to see turnaround projections, marketing plans, internal rates of return and multiple sources of income. A well-prepared and informative business plan will go a long way in helping you obtain financing for your project. It can also be a valuable tool in ensuring the timely and efficient completion of your movie.