by Conan Simmons – September 12, 2021 – 8:59 pm
One of the most challenging parts of making a movie, be it a feature film or a short, is raising the money to make a quality production. Many filmmakers often overlook the most powerful tool at their disposal in their efforts to bring aspiring visions to the screen – the business plan.
Having a solid business plan at the beginning of any business venture is essential as it can make or break the road to success. Yes, it’s possible to produce a movie without a business plan and that movie may even go on to win an Oscar for best picture. Without a business plan outlining your production company’s strategy going forward even an Oscar won’t save you from going bankrupt. A business plan is often the difference between a filmmaker who makes one good movie never to grace the screen again and a schlock filmmaker who never seems to go away.
This article will outline what a basic business plan should look like. Whether you’re looking to make the next blockbuster franchise or if you’re planning to enter a different industry this basic outline will help you on your way.
A business plan needs to be well written so make sure you don’t use bad grammar or spelling. Potential investors will look at your business plan as a reflection of who you are and is their first glimpse at your capability of accomplishing your goals.
Now let’s dive in.
EXECUTIVE SUMMARY
At the beginning of your business plan is the executive summary, a brief synopsis of the basic information anyone needs to know about your venture. It’s essentially a brief outline of what is contained in the rest of the business plan. As such it is recommended to write this first part last after you’ve concluded the research you will need to flesh out business goals. This section will usually look like the following.
The Company
For the executive summary this provides a brief description of what type of company it is, the business structure and who is in charge of operations.
The Projects
A quick description of what films your company is looking to produce. Is it an original screenplay? Is it an adaptation of a book or true story? Do you own the rights to legally make a film based on the book or true story?
The Industry
What part of the industry is your company involved in? Development and production? Distribution? What is the general outlook of the industry currently and what is the future forecast?
The Market
Which market of the industry is the company involved in? Horror movies? Comic book fantasy? Family films? Romantic comedies?
Distribution
Briefly describe how your films will reach the market.
Financing
A quick description of how the company plans on financing operations. How much will the company need to spend? How much does the company expect to make in profits? How else does the company expect to make money?
THE COMPANY
Following the executive summary is the real meat and potatoes of the business plan. Where the executive summary functions more like an elevator pitch the rest of the business plan is where you lay out the details for those seriously interested in investing in your idea.
This is usually the first section you should write of your business plan. In this section you detail who is in charge of running the company and what experience they have that qualifies them to be in charge. It is important to state if you do not have previous experience making a film as any false statements made in a business plan can surmount to serious legal trouble, often charges of fraud.
Along with the description of who is running the company you will also need to state what type of business structure is in place, i.e. sole proprietorship, LLC, partnership, corporation. Make sure you have filed the correct paperwork with the government of the state in which you have elected to do business as well as obtained any business licenses required by our local and state governments.
In this section you will also detail the history of your company, is it a startup or are you transitioning from another industry? Of course, you will also describe what business your company is engaged in and where you plan on offering your products, i.e. one feature film budgeted at $1 million made for theatrical release. The details of the project go in the following section.
THE PROJECTS
Here is where you will state what movies you plan to produce. Do you have screenplays already written? Are they based on books or true stories? What do you have on option (written agreement) giving exclusive rights to your company? Are there notable stars/filmmakers who are signed on to your project? How much money is already invested in the project?
It is important to have a detailed budget sheet made outlining expected costs of the production. Be sure to state what your target market is for the film and give an estimated time of delivery for how soon your film will make it in front of audiences.
THE INDUSTRY
In this section you will showcase your knowledge of the industry you expect to do business in. If you are looking to produce scripts you need to know what type of scripts are favored by the industry and how your company fits or breaks that mold. If your company is looking to get into distribution you need to know how distribution works.
You will need to layout how the industry makes money as it is crucial to know in order for your company not to go bankrupt.
It is important to have done your due diligence by researching the industry and know where the industry is headed. For filmmakers this is especially challenging now as not only the pandemic but streaming is upending the industry at large. If you do your due diligence by properly researching the industry you should be able to offer an educated estimate as to what to expect form the industry moving forward.
All of this should help you describe how your company is to compete in the industry.
THE MARKETS AND MARKETING
In this section you will describe what market within the industry your company will focus on. Are you making low budget horror films or high brow dramas? What is your target audience? People who care about social/environmental issues? Women who love historical costume dramas?
Compare the budget of your films with the budgets of successful movies within your market niche. This is where research is especially important as you will learn that the popularity of a film doesn’t always mean the film made money. Some movies made a ton of money and were quickly forgotten by mainstream audiences. The more you know your market the higher the chances of your company being successful.
This section is also where you will detail your marketing strategy. How will you promote your film? Advertising online? Hosting charity events?
Give information about what other companies in your market are doing because it is important to know who and what your competitors are up to. Are there any important mergers or acquisitions of companies in your market? Is a new industry emerging that might upend the current status quo, i.e. streamers vs. theaters?
DISTRIBUTION
This section is where you will go into detail on how your products will make it to market. Will your films be theater only releases? Streaming day-and-date? You know how important this section is if you’ve heard about Scarlett Johansson suing Disney. Clarifying the distribution strategy in your business plan may help your company avoid a similar debacle.
Be sure to detail how your distribution strategy may vary for different markets. Are you planning a streaming only release domestically with theatrical releases in foreign markets? A strategy like this was recently on display when Amazon elected to release the Chris Pratt film ‘The Tomorrow War’ on streaming in the U.S. followed by a theatrical release in China.
FINANCING
This section outlines how your company plans to obtain financing in order to stay in business. Are you looking for angel investors? Hoping a venture capital firm will provide you with funds? Are you able to produce a movie with presales to distributors who agree to handle your film? Do you plan to obtain advances from streaming companies? Are you looking at co-productions with other companies?
Be sure to detail however you plan on funding your productions. Your investors need to know if you’re planning to acquire debt financing or not, so if you plan on obtaining funding from anywhere this is the section where you need to state it.
THE FINANCIAL PLAN
The final section is where you’ll be putting a whole lot of numbers, usually in charts. This section is where you detail the estimated revenue streams and cash flow covering what is spent on your production, along with general overhead expenses, and where you expect money to be coming in from whether it’s theaters or streamers or elsewhere.
It is important to state any risk factors that may cause plans or estimates to change. If you have a contingency plan in place beforehand your business will be better equipped in case of market turmoil.
Finally, end your business plan with a Statement of Revenues and Expenses, which are essentially charts showcasing where and on what the money is expected to be spent and where the money is expected to be flowing back into the company from.
Once you have your business plan in place you will find yourself in better position to make the films you want. It is important to abide by any government mandated filing requirements in order to have a legal business structure and not run foul of the law in acquiring funding for your films. Seek out professional advice and guidance from both an entertainment attorney and a professionally certified accountant.
If your business idea is something other than making movies you can still use the above business plan structure just modify the information to make it relevant for whatever industry and market you are looking to do business in.