Sometimes a simple contract will suffice, spelling out the terms of the deal, and sometimes a more detailed, specific financial document may be required.  For filmmakers on our level, the simple document works the best.  Just use the following questions as a guide to write your investment contract.

How much is the investor is investing?  How much percentage of the profit will the investor receive in exchange for that amount?

When will the investor will be paid her initial investment, and when will she be paid her share of the profits?

Does she get paid back her initial investment in one lump sum?  Or is she paid back in equal parts with other investors as the money comes in?

What rights does the investor have?  Can they look at your books every now and then to make sure you’re not cheating them?  Do they have any creative say?  Can they come to the premiere?  Do they get a copy of the movie?  Do they get a credit as co-producer, executive producer, or otherwise?

Be fair, and be detailed, and don’t worry too much about any arcane financial huggermugger.  Just draw up a deal that’s clear to both you and your investor and get going.  As long as something’s in writing, you both know where you stand.

But however you draw up your contract between you and your private investor, make sure you’re not giving them a ridiculously huge slice of the pie.  But conversely, make sure you’re not taking too big of a slice yourself. The deal has to be fair for you and your investor.

Here’s a super-simplified, common way you can divvy up the profits, which is fair to you and fair to your investors. There are a bunch of ways to do it, and producers who are far more skilled than I when it comes to setting all this up, but this is how it best served the scale of films I’ve worked on.

Let’s just say that you’re going to sell shares of your movie.  Your budget is $100,000.  So to make it totally fair to the investor, if Investor Mike puts in $5,000, that means that Investor Mike put in 5% of the movie’s budget.  Therefore, Investor Mike should get 5% of the profit.

Right?

Well, let’s take a closer look at that.

Let’s say we have just given 5% to Investor Mike, based on his $5,000 investment. And now, along comes Investor Bob, who invests $95,000.  So, based on the same math you used to figure out Investor Mike’s profit, you now have to give Investor Bob 95% of the profit.

And that means, between Investor Mike and Investor Bob, 100% of your movie’s profits are now going to those two investors, leaving none for you, your team, or anyone else.

The way we fix that, is we split the profit participation “pie” into two halves:

One half of the pie is called the Producer Pie.

The other half of the pie is called the Investor Pie.

Each of those two halves contains 50% profit of the movie.  So 50% is in the Producer Pie, and 50% is in the Investor Pie.  Clear so far?  Good. Stay frosty.

Your team, the producers, director, writer, your company – everyone except the investors – are in the Producer Pie.

All the investors, including any vendors or other folks who give you free services or products in exchange for a chunk of the profit, are in the Investor Pie.  Caveat:  It’s okay to assign producer credits (i.e. credits in the movie like “Associate Producer” etc.) to investors as part of their deal, but for our purposes here, they are not considered part of the Producer Pie.

The Producers (a generic term for your whole team or company) are taking 50% of the movie without having to put in any money, because it’s the Producers who are putting in all the work to make the movie happen, but none of the money.  The Investors, however, are putting in all the money, but are not doing any of the work.  So that’s the balance.

So now let’s go back to Investor Mike and Investor Bob’s same exact investment.  Investor Mike put in $5,000 and Investor Bob put in $95,000, remember?

Now they’re divvying up 50% of the total overall profit, instead of 100% of the total overall profit, because we put them in the Investor Pie, which only has 50% of the total overall profit in it, (because the Producer Pie has the other 50%).

To make things super-simple, we’ll say that the total budget is $100,000, and of that, 100% of that is being raised from investors, so you’re raising $100,000.

And now here where it might get a bit tricky, but stay close:

100% of the Producer Pie contains 50% of the total overall profit, and 100% of the Investor Pie contains 50% of the total overall profit.

In other words, we split the Producer Pie into 100 slices.  And we split the Investor Pie into 100 slices as well.

Got it?  So picture one big pie, which is the total overall profit.

Now split that pie into two halves.  One half is the Producer Pie and the other half is the Investor Pie.

Now split the Producer Pie into 100 slices, and then split the Investor Pie into 100 slices.  Comprende?

That means Investor Mike, who put in $5,000, gets 5% (aka 5 investor points) from the Investor Pie, and Investor Bob, who put in $95,000, gets 95% (aka 95 investor points) from the Investor Pie.  Meaning that 100% of the Investor Pie has now been sold, and there can be no more investors.  (Unless they just want to give you money and not ever take any profit percentage).

So let’s do an example of how a $10,000 profit check would be split amongst the Producer Pie and the Investor Pie.  First, let’s set up who owns what slices of what pie:

Director 10%  of the Producer Pie
Producer 80%  of the Producer Pie
Director of Photography 5% of the Producer Pie
Lead Actor  5%  of the Producer Pie

Investor Mike 5% of the Investor Pie
Investor Bob 95% of the Investor Pie

Okay, we get a check in the mail for $10,000 and, finally, after a year of paying off all the expenses, and the investors have been paid their total investment back.  That means Investor Mike and Investor Bob have been paid back their original $5,000 and $95,000, respectively, plus any interest you agreed to, and now everybody’s just splitting up the profits at long last.

The check that comes in from Acme Distributors is for $10,000.

Split that check in half.  $5000 goes to the people in the Producer Pie, and $5000 goes to the investors in the Investor Pie.

The Director is paid $500 (10% of $5,000 = $500)
The Producer is paid $4,000 (80% of $5,000 = $4,000)
The Director of Photography is paid $250 (5% of $5,000 = $250)
The Lead Actor is paid $250 (5% of $5,000 = $250)

TOTAL TO PAID TO PARTICIPANTS IN PRODUCER PIE:  $5,000

Investor Mike is paid $250 (5% of $5,000 = $250)
Investor Bob is paid $4,750 (95% of $5000 = $4,750)

TOTAL PAID TO PARTICIPANTS IN INVESTOR PIE: $5,000

Your point assignments can be totally arbitrary.  It’s your ballgame.  Assign them however you like. But if you want investors to bite, you have to be fair.

Kickstarter

If you haven’t heard of Kickstarter until now, you’re going to kick yourself. Kickstarter is a website where you can “crowd source” the funding of your film by asking for private investments from investors.

Here’s the beauty of it and why it works. Let’s say you set up a project on Kickstarter, and set it’s funding goal to be $50,000. If you don’t reach your fundraising goal by the designated time, the investors keep their money.

That way, investors are more prone to invest to begin with, because they know they’re not throwing their money towards a project that may never get off the ground. Not to mention it’s a great way to reach out to potential investors WORLD WIDE, as opposed to circulating in your geographic locale only.

The world is HUGE. Lots of millionaires. Kickstarter helps you reach those folks with a proven, working tool that you absolutely MUST be using, even if only for seed money for your film. http://www.kickstarter.com/

Weebly

Every film needs a website. We all know that. But what film investors are looking for when they’re considering investing in your film is:  Who is this guy? Does he have a company? Is it legitimate? That means your production company, even if it’s just you, needs a website too. Until recently, that meant either hiring a web guy (or getting your buddy to design one), finding a hosting company, and/or doing it all yourself (and quite possibly making a mess of it).

Enter Weebly. You can sign up for a free account and, seriously, DRAG AND DROP your website together with an awesome, easy-to-use, intuitive browser-based interface.

You don’t need HTML coding skills, you don’t need to know how to install scripts, heck, you don’t even need a hosting company. Weebly does it all, and it’s free.

And oh man, is it super-easy. Your grandma could do it.  Not to mention Weebly comes with awesome drag-and-drop plugins that allow you to add a Paypal shopping cart to your site, an email signup form, blogs, forums, surveys, videos, you name it.

Some of the features are only available with the paid Weebly, but even that’s super-affordable, and I recommend it highly.  You can have your production company’s website up and attracting film investors in a matter of minutes. http://www.weebly.com/

Hootsuite

If you’re getting the word out about your film, you’re probably using Twitter and Facebook (or you live in a cave.)  Hootsuite allows you to log into both in one easy interface and track comments about you, post new posts, add friends, update your status, and more. And it’s FREE. http://hootsuite.com/

Mailchimp

Every good film fundraising campaigns needs an email list. Mailchimp is a free email list manager that lets you create mailing lists and blast out emails to your subscribers, FREE (for up to around 2000 subscribers, I believe). You can also create signup boxes which you can use on your website, track email opens, and tons more awesome tools, like I said, all FREE. You’ve got to start building your email list if you’re serious about raising money for your film, so you can let investors know that you have a viable plan for internet marketing to fall back on should your film not be bought at Sundance. (Chubby chance.) http://mailchimp.com/

Sendible

Sendible is another great Twitter/Facebook tool that allows you to AUTOMATE your posts. Schedule posts to Twitter and Facebook days, weeks in advance, and then forget about it.  Well, technically, don’t forget about it, because that’s just bad social networking. (Keep your eye on your posts, and respond!)  It’s a paid service, but well worth it. http://sendible.com/

Square

Square allows you to turn your smartphone into an instant credit-card swiper. You can accept credit cards for payments, seed money, whatever a producer can think of. You sign up for a free account and then Square sends you a free small swiper tool that you plug into your phone, and wham – you’re ready to accept credit cards. Check out their site to learn more about your phone’s compatibility and all the other juicy details. https://squareup.com

By “muck up,” I mean – write it from a producer/creative viewpoint, rather than approaching it from the viewpoint of a potential film investor.

When folks are in love with the script, or the project, or they’re simply writing the synopsis from the viewpoint of a creative person aboard the film, they tend to forget that a potential film investor doesn’t necessarily want to read every single detail in the synopsis. Some do, yes, but remember the most important job of a film business plan is to help convince the potential investor (along with other documents, interactions, and marketing materials) to invest in your film.

When you hand them your film business plan, you also need to hand them your script. If they want a lot of details, or to read every emotional beat, they can read the script.

In other words, a synopsis in a business plan is not the same beast as a synopsis outside of a business plan.  You want it to be brief, 1 page maximum, and you want to cover the major story beats, and THAT’S IT. Big blocks of text in a business plan tend to cause potential investor’s eyes to glaze over, and a synopsis is one big block of text. Your film business plan needs to keep moving, at a brisk pace. Don’t bog it down. Get back to the numbers; the blurbs; the facts.

Demonstrate that you understand the two things that are usually the most important to a potential investor:  (a) their precious TIME and (b) HARD DATA.  A synopsis can be a time suck to read, but not only that, it’s as far from HARD DATA as you can get in a business plan, because it’s a make-believe story (unless you’re making a documentary) told in one page or less.

• DO make your synopsis brisk, easy to read.
• DO include the major story beats.
• DO keep the potential film investor in mind while writing your synopsis.
• DO get someone who’s not close to your film to synopsize your script. (Or pay a company)

• DON’T lard up the synopsis with tons of details.  Every detail you list is one more detail an investor can dislike.
• DON’T use the same synopsis in the business plan as you’re using for other things.
• DON’T give two versions of the synopsis in the business plan.
• DON’T get cute in the synopsis or include “notes” or “asides” or “cast name actors for illustrative purposes” in your synopsis.
• DON’T slap one long, unbroken paragraph of text onto the page.

Major story beats only. And make sure you tell an interesting story with those story beats. (If you can’t, you may want to rethink the project or rewrite the script.)

Remember – if they want a lot of detail, they can ask you or they can RTFS. (Read the @*$#%^ Script!) And either of those can be a great way to draw your potential film investor in more, and potentially boost your chances of her investing in your film.

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.

http://www.the-numbers.com/
http://www.natoonline.org/statisticsboxoffice.htm (Box office/exhibitor statistics)
http://www.showbizdata.com/ (Video revenue information – Requires a free registration)

Companies that specialize in providing your film business plan with comparable film revenue data:

http://filmprofit.com ($70 and up)
http://www.baselineintel.com/ ($200 and up)

1) Know that no company is going to give you cash to feature their product in your small film, they’ll just give you product.  There are rare exceptions.  Rare, rare, rare.

2) Make sure you’re not turning your entire film into a commercial for the product you’ve agreed to place in your film.

3) Make sure the product placement actually serves some practical purpose to getting your film made.

A good example of product placement was on the film I produced called Boppin’ At The Glue Factory. One of the producers had a friend at a healthy soda company, and we featured the soda in several scenes, and on the t-shirts of several small characters, in exchange for approximately 25 days worth of soda, which kept our crew happy and hydrated.

A somewhat worse situation took place on the film I wrote and directed, Audie & The Wolf.  The script, as originally written, had only one single moment where a character drank from a bottle of wine, and subsequently smashed that bottle on another character’s head.

The producer of the film, the same producer who had scored the soda product placement on Boppin’, read that moment and saw an opportunity.  He had a business contact who owned a winery.  So he urged me to write a larger part for the wine, in various spots throughout the script, insisting that the wine be featured in a key romantic scene, in a key horrific scene in the kitchen, and thoroughly stocked inside one of the characters’ refrigerator for 2 or 3 other times when the refrigerator was seen open.

His insistence was based on the idea that his winery-owner contact would appreciate the gesture in the script, and want to not only provide the film with free bottles of wine, but perhaps investment funds.

Turns out, the winery owner didn’t want to invest cash in the film, but had no problem putting his wine in the film.  In return, what the film received was several cases of the wine, which was never used except to line the producer’s stash, and to be handed out as gifts here and there by the producers.  It served no other purpose in the film, and we featured the wine for no real reason.

In yet another example, on the same film, the same producer insisted we feature a brand of beer.  The producer claimed that the liaison for the beer company had connections with several semi-prominent film festivals, and could put in a good word for our film at those fests once the film was finished.

So the producer insisted that the fridge in the film be fully stocked with this brand of beer as well – and in nearly every scene which could remotely justify having the beer in it.  Not to mention, decorative mirrors with the beer’s logo on it were placed throughout a key character’s house, and show up in many, many scenes of the film.

A year later, the beer guy put in a good word for the film at one of the festivals, and the film was accepted.  But whether or not the film suffers from the amount of beer logos throughout is a question I keep coming back to every time I watch the film.

As a result of my experiences with product placement, I’m extremely wary of it.  The best I can say is that If you’re in a position where you have to sell out your film by offering product placement, make sure you do it for something tangible and useful that helps the film, and isn’t just there so that the producer can curry favor with a vendor.

Hoping your film gets into a film festival and gets sold is not, repeat, NOT, a viable film business strategy.

Not even when sex, lies, and videotape and Clerks and all those other legendary films that got their big breaks and made their big sales at film festivals, was this a viable film business strategy.

Even back then you were playing the odds, submitting your film to any festivals of note.

So if you’re thinking of baffling your investors with b.s. about getting your genius film into Sundance or similar, you’d be better off striking that notion from your mind as soon as possible.  Here’s the rundown on one of those big festivals, just for illustration purposes.

The Sundance Film Festival is arguably the biggest and most important American film festival of all time.  An invitation to play your film at the Sundance Film Festival is considered a coveted privilege by nearly every independent filmmaker in the world.

Boasting a vast array of features, shorts, and documentaries from around the world each year, and attended by thousands of filmmakers and artists at the top of their game, Sundance is the end-all-be-all of film festivals in America.

But here’s the facts:

For the 2008 Sundance Film Festival, 121 feature-length films were selected including 87 world premieres, 14 North American premieres and 12 U.S. premieres representing 25 countries with 55 first-time filmmakers, including 32 in competition. These films were selected from 3,624 feature film submissions composed of 2,021 U.S. and 1,603 international feature-length films. These numbers represent an increase from last year when 1,852 U.S. and 1,435 international feature length films were considered.”

So there were 3,624 feature films submitted, and 121 of them played.

That’s 3.3% of submitted features got played.  Not bad!  But wait.  There’s a little more to it.

Consider the categories they’re filling up:

Dramatic Competition – 16 films.  Films must be having their World Premiere at Sundance.

Documentary Competition – 16 films.  Films must be having their World Premiere at Sundance.

World Cinema Dramatic Competition – 16 films, same as above, but the films must be from out of the United States.

World Cinema Documentary Competition – 16 films, same as above, but the films must be from out of the United States.

Okay.  So that right there kills 64 of your slot possibilities if you’ve already had your premiere.  If you haven’t, then you’re down 32 slot possibilities because your film has to fit into either one of the World categories or the U.S. categories.

So we’re now down to 89 slots for your feature to fit into.

Now let’s break it down further.  Here are some more categories for features at Sundance.

Premieres – To showcase the diversity of contemporary cinema, featuring brand new work from more established filmmakers.  The 2008 Sundance Film Festival featured 16 films in the Premieres category.

I’m assuming you’re not an established filmmaker, and so your film wouldn’t fit into the Premieres category.

So now we’re down to 73 slots for your feature to fit into.  And out of the categories that remain are American Spectrum, Park City At Midnight, and Frontier, 11 had name actors in them, including:

Chazz Palminteri, Natasha Lyonne, Joseph Fiennes, Ashley Judd, Mary Tyler Moore, Alec Baldwin, Kieran Culkin, Timothy Hutton, Benjiman Bratt, Drea de Matteo, Wes Studi, Robin Williams, Chloe Sevigny, Clea Duvall, Amy Poehler, Parker Posey, and Carrie Fisher.

And while having a name actor in your film isn’t a requisite to be in the Sundance Film Festival, let’s just take off those 11 slots just as well.

So now you’re down to 62 feature slots.

But also in those categories are 6 documentaries, and a retrospective of the classic Sundance film, sex, lies, and videotape.

So let’s call it 56 feature slots that are open to shmoes like you.

And if your film fits very well into one of these categories, you’ll likely have to limit your slots even further.

American Spectrum (16 feature films in 2008)

“A tribute to the abundance of compelling voices and the creative spirit of independent filmmaking, the Spectrum program presents out-of-competition dramatic and documentary films from some of the most promising new filmmakers from the U.S. and around the world.”

New Frontier (7 feature films in 2008)

“This category features works that push at the perimeter that circumscribes present-day cinema and encompasses experimental film, media-based performance, and all work that celebrates the promising new filmmakers from the U.S. and around the world. ”

Park City At Midnight (8 feature films in 2008)

“A treat for true cinephiles and casual filmgoers alike, this section presents an eclectic mix of horror, over-the-top comedies, surreal tales, explicit animation, and bizarre stories that defy categorization. A great place to find the next cult classic. ”

But let’s be generous.  Let’s say that all told, Sundance has 56 slots for feature films that you have even a remote shot at.

So what was our number again?  Ah yes, there were 3,624 feature films submitted to Sundance in 2008.  So based on our math, your actual percentage chance of landing a slot for your feature at Sundance is actually not 3.3% at all.  It’s more like 1.5%.

Cool!  So 1.5% isn’t really all that improbable, right?  It’s better than no chance at all, right?

You betcha!  But now let’s take a closer look at some realities that make up the process of getting a feature film into the Sundance Film Festival.

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 budgetwise, 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.

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 Carribbean” meets “Aliens.” But do be careful when using these mashups, as they can be pretty annoying, and some people downright hate them.

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 Camerons’ 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.

Thanks for reading!

Brian

How to Write a Film Business Plan (An Overview)

I’ve been raising money for films for almost 25 years now and am always asked about what goes into a film business plan, or worse, am asked to write one for a fellow filmmaker. So here’s the skinny on how to write your own film business plan. It’s a general overview, not intended to be a step-by-step guide. But it should get you started.

“Can I just download a film business plan template and fill it in with my film’s information?”

Yes. There are a number of places online where you can purchase a film business plan template, download it, and fill in your own information. My own Independent Film Business Plan Template, of course, is one I can recommend which is very comprehensive, and another is Megadox.com. I list a few more places at the bottom of the page.

“Can I have someone write my film business plan for me?”

Yes. There are lots of folks with great experience in writing film business plans on the internet you can pay to write you one, but just a heads up: a lot of them are uber-professionals whose rates may be out of the typical independent filmmaker’s budget range. For the most part, what you’re paying for is years of their expertise. Some are simply AWESOME, (FilmProfit.com is one such place.) but just like any profession, there are some who really don’t know what they’re doing, so watch out. Also, attorney John Cones has some great info here on Surview Entertainment.

“What are the sections I need to write into my 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 professionality, 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, measureable, 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 targetting 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.

I’ll continue the rest of the overview in Part 2!

Brian