Thursday, August 23, 2012
The Biggest Film Killer of All Time
When it comes to company completing the production process of a film, possibly one of the most important factors is the budget. That may sound like a cliche and an obvious statement, but there is more going into that than one may think. Take for example a film that manages to raise 30-40% of their budget and decides to still shoot anyways; this is, was and always will be a major mistake and it's usually taken by first time amateur directors/producers. Another blunder is under estimating, figuring and anticipating lesser costs any given shoot will be; or just not keeping good track of expenses and often running over budget and behind schedule. Everyone is so eager to start production that the accounting aspect of it often goes under-looked or should I say overlooked. If you're not producing a bonded film, read on. Below are some suggestions that will allow your film to have a better chance at being completed straight through to distribution.
Budget & Planning
The budget is essentially your blueprint for success, a timeline of sorts that will help keep you on schedule to complete your film in all areas of the process. The budget is your most important planning guide, which will allow you to see how grand (or not) your picture is, what your financial expectations are, necessary resources, your detailed list for tax filings, payouts, receipt calculations, and profit participation asking others. It is also necessary to include in your business plans as a way of communicating the direction in which you will be heading financially.
Budgeting is about ratios which are comparative to the script in question and directly relates or effects the schedule or some may see the budget effected by the schedule in some cases. Find yourself a UPM (Unit Production Manager) or a line producer if you have no idea how to budget a film.
Accounting
Being an accountant isn't a glamorous position on a motion picture, but it sure is one of the most important once money starts going out. Having an accountant, for most productions, is as important as having a camera on-set. See it as the budget being your map and the accountant as your guide that will safely get your picture to completion. They will catch any misuse of expenses, over payment on a line item, etc. and in the end saving both time and money.
Misspending could be looked at as one of the bigger reasons why films aren't completed. Misspending is referred to as personal expenses, expenses not listed on the budget sheet, wrong line items, and of the like. Best rule of thumb is for every purchase/expense there needs to be a receipt and that receipt must be for a particular item listed on the budget. Many people will have access to spending, not just the producers, set decorators for example will have an expense account and all receipts must be turned in and those receipts must not exceed the amount budgeted per set.
While having an accountant on staff early in your development and/or pre-production may not seem like a necessary expense at the time, but it will pay dividends later. While you're concentrating on everything else that is a motion picture can be, rest assured that the accounting is a task you won't (and don't) want to put the time and energy into.
Record Keeping
No film could be completed without GOOD financial records. A film production is hectic, miserable and crazy enough why make it more difficult by not keeping good books? I have worked on two particular pictures in which the set was run beautifully, scheduling was always kept and things seemed to be flowing extremely well...at least in that regard. Both films shut down due to improper keeping of financial records, haphazard spending and the accountant/business manager/record keeper was also the director/writer/producer. That's not to say one shouldn't wear many hats, most often on an independent film you must in order to keep within the budget constraints and have a better shot at completing your film. However, I wouldn't recommend you wear the hats of the accounting dept in addition to your creative responsibilities. In addition, if you're privately financed, you should be able to display your books for any who inquire and that information should be readily available at all times.
Keeping records has a two-fold purpose; first is the obvious track of expenses, who got paid and when, how much money is left, are you on track and when it comes time to file taxes. It also helps with the bottom-line expectations for those working for profits of the film. Failing to report those expenses lowers your break-even point! Side note: if the state you're shooting your film in offers a tax return on monies spent within the state, you will not see a dime if you don't have receipts/records of expenses and you could potentially lose out on a nice chunk of change and a solid option of financing.
The second purpose is the impact on scheduling and creative decision making. A good accountant working in connection with a good line producer will allow you to keep tabs on department expenses which you can then work within your remaining shooting schedule. Example would be if you have a $250,000 set construction budget for a 30 day shooting schedule and you come to realize that you've spent $200,000 in a 20 day period, you have some hard choices to make in order to get your film done if your expenses were equal on each day of shooting. If that is the case you will have to cut costs from other line items and those departments suffer, or you can simply just increase the cost of the production and look for further investment which isn't always the greatest choice. Now, if you didn't realize your overage by the example given above you will find yourself with no money in the bank and ultimately having to shut down your production.
As you near the end of your shooting schedule, things tend to get a little more crazy. Things such as accounting and record keeping tend to go to the way side because of many different creative factors that come into play during crunch time. Start early and prevent any loss of receipts, over-calculations, and piling of reimbursements; instead set a system which at the end of each day someone collects all receipts from the day and they match and the days cost can be accounted for.
Loose Spending
One of the other big causes for a film to be shut down is nickel and diming. I remember reading about a picture being shot on a ultra-low budget, cast notable actors, a seemingly good story-line (from what I read of it online) and they were full into production. Then I read it was shut down. Now not knowing the full details of the budget and schedule I didn't know why they couldn't complete. I spoke with someone that worked briefly on the project and come to realize they overspent but didn't know where. Money just seemed to disappear. I came to know that what could have been a contributor to that disappearing act was the big fancy office they leased for their entire operation. I was told it was a nice plush space that was beautifully decorated and had all the state of the art equipment, desks, chairs, faxes, phones, etc. They also had promotional items such as shirts, hats, posters, cards, etc. That they gave away to friends, family, anyone who would take one. That is all nice I suppose but they paid the ultimate price for the fancy office. Do yourself a favor when working on your next project, borrow an office, have someone donate in-kind to your production, or budget for one that is nothing more than a box. There simply is no need for a A-grade office space, it will sap your budget before you know it. Also, if you want to get hats and t-shirts for your cast and crew that's fine as long as it's budgeted for it; but why spend your production budget on promotional materials that could be covered by a distribution company looking to exploit and distribute your film?
In the end, whether you're a producer, director, actor or a production assistant your career is important and each film you choose to work on is supposed to be an important step in the right direction. So if you hear a producer tell you they have their expenses and budget "worked out in their head" or "I'm handling the accounting" or any variation that is NOT "the in-house accounts name is and they can be found at the home office" then chances are good the film isn't going to workout and therefore you should consider your choices. Those that have bad business practices not only won't have anyone working with them but they can potentially face some strong legal action if not from the taxman but from any investors that trusted them to bring the story they believed in to life. So play it safe, play it smart and always account for accounting.
Friday, July 27, 2012
From Inception...
Tonight we had the honor and privilege to meet a young man who has nothing but the most positive outlook on life, whose attitude is infectious with every word he speaks. One who doesn't see adversity, but opportunity to overcome and win. Someone that has no limitations and has gone far beyond any and all "expectations" and has never missed a goal he has set out to achieve. He is Bobby Greco Jr, the offensive coach of St. John Fisher.
Only Bobby suffers from Arthrogryposis, (you can read about here) which has him bound to a wheelchair. He has the ability to move his neck and wiggle his fingers and toes, that's it..but you'd never know it. Five minutes after meeting him his disability disappeared and we were laughing and telling stories and he has the vibrant energy in his voice any 23 year old does. You see during the few hours I spent with him I began to think what Bobby may be missing out on in life, simple things like running in a park, riding a bike, but Bobby doesn't see those as missed opportunities but advantages to do other things....such as swimming in his backyard pool, or play goalie in a game of street hockey with his friends!
Bobby also has about 6 other friends, 4 of which he's known since as young as 4 years old. These young men are also Bobby's aides who most of the time never leave his side. Kyle and John I got to meet tonight, Kyle also known as "Shrek" at some points had to adjust Bobby's feet, put pillows behind his back, and give him a drink when he wanted it. Of course there is a lot more as they went on to describe, such as the lift they need to get Bobby from the chair to the bathroom or bed or anywhere else he wants to go. Did I mention that Bobby has 100% feeling in his body too? Like you and I, Bobby can feel the discomfort, the pain only he can't do anything about it. Have you ever sat too long and had to get up and stretch your legs, your rear-end hurt because of a hard chair or an uncomfortable position you've been sitting in...so does Bobby, but he can't get up and stretch or shift his body to a more comfortable position, he lives in constant pain and discomfort and cannot do anything about it. Only he doesn't let it bother him, at least as far I could tell.
I've been asked to produce a film based upon the his life. What I found tonight is something far more remarkable than I could have ever imagined, a story of triumph over adversity and of hope and encouragement. What it means to have people to support you, but to be that person supporting. That life is just a series of events and every moment we have is an opportunity. This will be a remarkable story and I thank Bobby for teaching me, encouraging me and inspiring me in those few short hours.
Only Bobby suffers from Arthrogryposis, (you can read about here) which has him bound to a wheelchair. He has the ability to move his neck and wiggle his fingers and toes, that's it..but you'd never know it. Five minutes after meeting him his disability disappeared and we were laughing and telling stories and he has the vibrant energy in his voice any 23 year old does. You see during the few hours I spent with him I began to think what Bobby may be missing out on in life, simple things like running in a park, riding a bike, but Bobby doesn't see those as missed opportunities but advantages to do other things....such as swimming in his backyard pool, or play goalie in a game of street hockey with his friends!
 |
| First visit with Bobby |
I've been asked to produce a film based upon the his life. What I found tonight is something far more remarkable than I could have ever imagined, a story of triumph over adversity and of hope and encouragement. What it means to have people to support you, but to be that person supporting. That life is just a series of events and every moment we have is an opportunity. This will be a remarkable story and I thank Bobby for teaching me, encouraging me and inspiring me in those few short hours.
Saturday, May 12, 2012
Film Comps and Projections
Over the past 5-7 years I have started several of my own businesses and have consulted for those looking to start a business. The common thread in these businesses are evaluations of other similar businesses and evaluations of their performance given a number of factors. These evaluations will help mitigate the risk of starting a business and help project the given income one may experience, film is no different.
Film comparables will lead you to your projections and your projections will help communicate an estimated earnings for your picture. Now, I've said this before but if you do not intend on making any money with your film, then why are you making one? If you do not intend on doing so then please do not read on.
There is a lot of bad and strange advice about film comps and how to successfully predict your earnings. Some say it's misleading, and it could be if they're not done correctly or honestly. Most of the time comps and projections give your prospective financiers an idea of the market and how the industry functions. You would not believe how many don't understand the flow of the dollar when reading box office reports so it's important to include this information within your business plans along with your assumptions. To understand box office reports you must understand distributor and exhibitor relationships and how general deals are structured and how those numbers effect the waterfall of the net dollar; i.e. "screen averages" usually equates to per location revenues. Below I will break these down and give you an idea of how these relationships work. At least you'll be able to take away from it an understanding as to why concessions are so costly.
Film Comparables
What are they? They are films that your film directly compares to, directly or indirectly. These films should be an example of your film. Most comps I've prepared have been done through theme comparisons as opposed to story line, this way it's more accurate to your demographic and you will have more films to choose from and you can see how more films performed with those various demographics and territories throughout the world. However, the theme isn't the only factor in considering your comps, I like to look at budget range and release dates as well, it just isn't fair to compare your $100,000.00 picture to a $50 million picture that was released in 2001. You want to select pictures that were released during the same flux of the current trend of the industry, like the past 5 years at best. On some occasions, in order for you to choose a good selection of films you may have to widen the budget range a bit. For the given, $100,000.00 example I would place that range up to $1 million, considering it is a ultra-low budget and the number of films produced in that range which receive distribution (theatrical) is very narrow. Incidentally, you may increase higher if the other factors are matched such as your theme and demographic.
What we know about your film. When preparing the comps I like to know as much about the film your producing as you do. I'd like to know everything from inspiration to your anticipated distribution. Are you really expecting theatrical release? Straight to DVD? Do you have name talent attached? Is it interesting? Any pre-sold territories? The more I know the better I can find and list those model films to better estimate your projections.
Projections
This is the section that can make you or break you, your financial predictions. A projection is what you can expect this picture to make based upon a very long list of assumptions. Assumptions I have defined below. It is extremely necessary that you list your assumptions prior to giving your projections, because this can really be considered a violation of the SEC Rule 10: (I lifted this from: http://taft.law.uc.edu/CCL/regS-K/SK10.html as it was the most understanding explanation of the Rule) I have also bold what I consider most important.
Investor Understanding
Assumptions are just that, assuming the outcome of the picture. When listing your assumptions, assume nothing and consider everything. What I mean by that is do not assume you will finish the film, do not even assume you will raise the full budget. The latest list of assumptions I created for a production I'm developing is more than 2 pages in length. Generally you will also include assumed release patterns, assumed deals, assumed rentals and everything else you've used to accurately project your earnings. You also don't want to list something that is well beyond your capacity, such as "assuming Steven Spielberg directs this picture...". That is not realistic and these assumptions are not your get out of jail free card. Your assumptions should also leave no question as to "why" or "how" you've come up with the estimates you did; i.e. "theatrical release has a 35% rental fee" but rather "assuming "OUR SUPER AWESOME MOVIE" secures domestic theatrical release, we assume the highest rental fee of 50% will be deducted from box office gross by the theatre and the remaining 50% will be received by the domestic distributor representing the gross film rentals."
Why Raisenets Are Eight Bucks
When considering your projections there is a ton of variables to consider and it would be foolish to believe that you can find them all, but we try. Variables are things that can have an impact on the box office return of any given film such as number of screens, pre-sales, territories, ratings, bloggers, distributor, release date, day and date, competition, competitions stock price, theatre nut, etc. and that is only scratching the surface and as you can see there are things that just aren't known until they're known. So this is how we go about the breakdown.
As always nothing is certain, you may have a blockbuster record breaker or you may have a dud, so the general rule is to project three various outcomes such as LOW, MODERATE and HIGH. The low represents a break even point, moderate represents the outcome based upon your comparables and the high is if you have earnings set by your highest film comp.
Once you have figured your averages from your film comps, you're ready to project your outcomes. For the sake this blog I will assume the MODERATE (based on the average of your comps) outcome.
These are actual figures for a feature which I did the financials for. The "NOTES" column will be definitions and a description of the figures and percentages which are listed. These numbers and percentages you see are based on research performed from film comparables and the average outcome across the board of how they performed domestically and internationally. So not all percentages of earnings will be the same picture to picture. For example, Domestic Pay Cable revenue's were shown to be 11% of theatrical performance. What's important to notice is that this breakdown is showing to have lost money on its domestic release, as I've been going through literally hundreds of pictures and their releases, the domestic theatrical release is shown to be a lost leader for it's ancillary markets through a tradition release deal of 50/50 split. Some, like your typical tentpole studio mega-budget films I have noticed have a 90/10 split in favor of the studio for up to the first 2 weeks, then the scale will gradually tip in favor of the theatre. So a film that opens like "JOHN CARTER" did, it's likely the theatres didn't make much money, however a film that plays for what seems like an eternity i.e. TITANIC or AVATAR, as those weeks continue the theatres are making some serious money.
While listing film comparables and projections may be a strong addition to your investment package overall, not all films in development require it. Use your best judgment and consider the picture you're producing to determine whether or not this is a wise investment to consider. It's costly (especially if done by someone else) and extremely time consuming. I allot upwards of 2 months or more depending on the type of picture, the more 'unique' a script the longer. So if you're producing a film that you feel has a realistic shot at distribution, needs independent financing from others then you may want to consider it, or if you're doing a film for out of pocket expenses and just want to take a shot in the market then you may not need it. Either way I hope this was of some help.
Next, I will address the benefits of the JOBS Act and how it benefits those crowdsourcing, but until then you can read the Bill here: http://www.gpo.gov/fdsys/pkg/BILLS-112hr3606enr/pdf/BILLS-112hr3606enr.pdf
Film comparables will lead you to your projections and your projections will help communicate an estimated earnings for your picture. Now, I've said this before but if you do not intend on making any money with your film, then why are you making one? If you do not intend on doing so then please do not read on.
There is a lot of bad and strange advice about film comps and how to successfully predict your earnings. Some say it's misleading, and it could be if they're not done correctly or honestly. Most of the time comps and projections give your prospective financiers an idea of the market and how the industry functions. You would not believe how many don't understand the flow of the dollar when reading box office reports so it's important to include this information within your business plans along with your assumptions. To understand box office reports you must understand distributor and exhibitor relationships and how general deals are structured and how those numbers effect the waterfall of the net dollar; i.e. "screen averages" usually equates to per location revenues. Below I will break these down and give you an idea of how these relationships work. At least you'll be able to take away from it an understanding as to why concessions are so costly.
Film Comparables
What are they? They are films that your film directly compares to, directly or indirectly. These films should be an example of your film. Most comps I've prepared have been done through theme comparisons as opposed to story line, this way it's more accurate to your demographic and you will have more films to choose from and you can see how more films performed with those various demographics and territories throughout the world. However, the theme isn't the only factor in considering your comps, I like to look at budget range and release dates as well, it just isn't fair to compare your $100,000.00 picture to a $50 million picture that was released in 2001. You want to select pictures that were released during the same flux of the current trend of the industry, like the past 5 years at best. On some occasions, in order for you to choose a good selection of films you may have to widen the budget range a bit. For the given, $100,000.00 example I would place that range up to $1 million, considering it is a ultra-low budget and the number of films produced in that range which receive distribution (theatrical) is very narrow. Incidentally, you may increase higher if the other factors are matched such as your theme and demographic.
What we know about your film. When preparing the comps I like to know as much about the film your producing as you do. I'd like to know everything from inspiration to your anticipated distribution. Are you really expecting theatrical release? Straight to DVD? Do you have name talent attached? Is it interesting? Any pre-sold territories? The more I know the better I can find and list those model films to better estimate your projections.
Projections
This is the section that can make you or break you, your financial predictions. A projection is what you can expect this picture to make based upon a very long list of assumptions. Assumptions I have defined below. It is extremely necessary that you list your assumptions prior to giving your projections, because this can really be considered a violation of the SEC Rule 10: (I lifted this from: http://taft.law.uc.edu/CCL/regS-K/SK10.html as it was the most understanding explanation of the Rule) I have also bold what I consider most important.
Investor Understanding
- When management chooses to include its projections in a Commission filing, the disclosures accompanying the projections should facilitate investor understanding of the basis for and limitations of projections. In this regard investors should be cautioned against attributing undue certainty to management's assessment, and the Commission believes that investors would be aided by a statement indicating management's intention regarding the furnishing of updated projections. The Commission also believes that investor understanding would be enhanced by disclosure of the assumptions which in management's opinion are most significant to the projections or are the key factors upon which the financial results of the enterprise depend and encourages disclosure of assumptions in a manner that will provide a framework for analysis of the projection.
- Management also should consider whether disclosure of the accuracy or inaccuracy of previous projections would provide investors with important insights into the limitations of projections. In this regard, consideration should be given to presenting the projections in a format that will facilitate subsequent analysis of the reasons for differences between actual and forecast results. An important benefit may arise from the systematic analysis of variances between projected and actual results on a continuing basis, since such disclosure may highlight for investors the most significant risk and profit-sensitive areas in a business operation.
- With respect to previously issued projections, registrants are reminded of their responsibility to make full and prompt disclosure of material facts, both favorable and unfavorable, regarding their financial condition. This responsibility may extend to situations where management knows or has reason to know that its previously disclosed projections no longer have a reasonable basis.
- Since a registrant's ability to make projections with relative confidence may vary with all the facts and circumstances, the responsibility for determining whether to discontinue or to resume making projections is best left to management. However, the Commission encourages registrants not to discontinue or to resume projections in Commission filings without a reasonable basis.
Assumptions are just that, assuming the outcome of the picture. When listing your assumptions, assume nothing and consider everything. What I mean by that is do not assume you will finish the film, do not even assume you will raise the full budget. The latest list of assumptions I created for a production I'm developing is more than 2 pages in length. Generally you will also include assumed release patterns, assumed deals, assumed rentals and everything else you've used to accurately project your earnings. You also don't want to list something that is well beyond your capacity, such as "assuming Steven Spielberg directs this picture...". That is not realistic and these assumptions are not your get out of jail free card. Your assumptions should also leave no question as to "why" or "how" you've come up with the estimates you did; i.e. "theatrical release has a 35% rental fee" but rather "assuming "OUR SUPER AWESOME MOVIE" secures domestic theatrical release, we assume the highest rental fee of 50% will be deducted from box office gross by the theatre and the remaining 50% will be received by the domestic distributor representing the gross film rentals."
Why Raisenets Are Eight Bucks
When considering your projections there is a ton of variables to consider and it would be foolish to believe that you can find them all, but we try. Variables are things that can have an impact on the box office return of any given film such as number of screens, pre-sales, territories, ratings, bloggers, distributor, release date, day and date, competition, competitions stock price, theatre nut, etc. and that is only scratching the surface and as you can see there are things that just aren't known until they're known. So this is how we go about the breakdown.
As always nothing is certain, you may have a blockbuster record breaker or you may have a dud, so the general rule is to project three various outcomes such as LOW, MODERATE and HIGH. The low represents a break even point, moderate represents the outcome based upon your comparables and the high is if you have earnings set by your highest film comp.
Once you have figured your averages from your film comps, you're ready to project your outcomes. For the sake this blog I will assume the MODERATE (based on the average of your comps) outcome.
NOTES
|
MODERATE
|
|
Domestic Theatre
|
$25,900,000.00
|
|
Box Office Gross
|
1
|
$25,900,000.00
|
Exhibitor Share (50%)
|
2
|
$12,950,000.00
|
GROSS FILM RENTAL
|
$12,950,000.00
|
|
Distribution Fee (35%)
|
3
|
$4,532,500.00
|
P&A
|
4
|
$5,000,000.00
|
Domestic Theater Net Profit
|
$(467,500)
|
|
Domestic Ancillary Sales
|
||
Pay Cable (11%)
|
5
|
$2,849,000.00
|
Network TV Revenue (15%)
|
6
|
$3,885,000.00
|
TV Syndication (15%)
|
7
|
$3,885,000.00
|
Home Video Market (38%)
|
8
|
$9,842,000.00
|
GROSS ANCILLARY SALES
|
9
|
$20,461,000.00
|
Distribution Fee (35%)
|
$7,161,350.00
|
|
Domestic Ancillary Net Profit
|
10
|
$13,299,650.00
|
Foreign Theatrical
|
||
Box Office Gross (62%)
|
11
|
$16,058,000.00
|
Exhibitor Share (50%)
|
12
|
$8,029,000.00
|
Distribution Fee (40%)
|
13
|
$3,211,600.00
|
P&A (50%)
|
14
|
$2,500,000.00
|
Foreign Theatrical Net Profit
|
$2,317,400.00
|
|
Foreign Ancillary Sales
|
||
Pay Cable (8%)
|
15
|
$1,284,640.00
|
TV Revenue (50%)
|
16
|
$642,320.00
|
Home Video Market (40%)
|
17
|
$770,784.00
|
GROSS ANCILLARY SALES
|
$2,697,744.00
|
|
Distribution Fee (40%)
|
$1,079,097.60
|
|
Foreign Ancillary Net Profit
|
18
|
$1,618,646.40
|
REVENUE AND PROFITS
|
||
Total Worldwide Earnings
|
19
|
$65,116,744.00
|
Total Revenue after Fees
|
20
|
$16,768,196.40
|
Film Costs (Budget)
|
21
|
$11,500,000.00
|
Total Net Profit
|
22
|
$5,268,196.40
|
Total ROI
|
52.6%
|
|
ALLOCATION PER UNIT
|
23
|
$2,634.09
|
These are actual figures for a feature which I did the financials for. The "NOTES" column will be definitions and a description of the figures and percentages which are listed. These numbers and percentages you see are based on research performed from film comparables and the average outcome across the board of how they performed domestically and internationally. So not all percentages of earnings will be the same picture to picture. For example, Domestic Pay Cable revenue's were shown to be 11% of theatrical performance. What's important to notice is that this breakdown is showing to have lost money on its domestic release, as I've been going through literally hundreds of pictures and their releases, the domestic theatrical release is shown to be a lost leader for it's ancillary markets through a tradition release deal of 50/50 split. Some, like your typical tentpole studio mega-budget films I have noticed have a 90/10 split in favor of the studio for up to the first 2 weeks, then the scale will gradually tip in favor of the theatre. So a film that opens like "JOHN CARTER" did, it's likely the theatres didn't make much money, however a film that plays for what seems like an eternity i.e. TITANIC or AVATAR, as those weeks continue the theatres are making some serious money.
While listing film comparables and projections may be a strong addition to your investment package overall, not all films in development require it. Use your best judgment and consider the picture you're producing to determine whether or not this is a wise investment to consider. It's costly (especially if done by someone else) and extremely time consuming. I allot upwards of 2 months or more depending on the type of picture, the more 'unique' a script the longer. So if you're producing a film that you feel has a realistic shot at distribution, needs independent financing from others then you may want to consider it, or if you're doing a film for out of pocket expenses and just want to take a shot in the market then you may not need it. Either way I hope this was of some help.
Next, I will address the benefits of the JOBS Act and how it benefits those crowdsourcing, but until then you can read the Bill here: http://www.gpo.gov/fdsys/pkg/BILLS-112hr3606enr/pdf/BILLS-112hr3606enr.pdf
Monday, April 23, 2012
To Form or Not to Form
Filing a Business
Nowadays it's pretty cost efficient to produce a film of any length. Short films, episodic, and feature films of all kinds are being produced today without any sort of ground under them. If you're aspiring to be creative, such a director, writer or DP, it's important to lay the ground work early and properly to ensure your entire focus is creative when the time comes. You don't want to wear too many hats when you're taking on a creative role in a production, especially going from creative to business, it's exhausting and your work will most likely suffer. Do it right, do it smart and do it first.
So, when is it a good idea to form a business around the film you're producing? First, before answering that, let's take a look at the common mistakes made by filmmakers. I see these fancy opening graphics of "production" companies that don't exist. Makeshift press releases listing the production company, the actors, director, budget, etc. We've all seen it and it's just amateur when "A SUPER AWESOME PRODUCTION Presents" and then you Google that company to find out it doesn't exist in the digital world or see it just has a Facebook page with 2 people that like it. One of the biggest mistakes is producing a film without a proper business idea and the ground work laid for that particular film. This is unacceptable if you want to be taken seriously. The fact remains, if you wish to direct a film or write, shoot, etc. you must become a producer first and foremost.
Being a Producer First
The moment you decide you want to make a film you are a producer. A good producer will not only know which story to select, but will know and understand your own limitations. If you aspire to be a writer and have a wonderful idea you believe will have commercial appeal, know your limitations: can you write this? Do you have the ability to convert your idea successfully to page which can be translated to screen? Do you fully understand or grasp the concrete structure that is your story? Do you write dialogue well, do you have the ability to know the difference between good and bad dialogue? That is just scratching the surface. If you answer "NO" to ANY of these questions, then be a producer first and hire a writer to do it for you. Now, if you aspire to be a writer then sidesaddle that writer during the process, find out technique, structure, beats, moods, act breaks, etc. Learn as much as you can. What if you want to be a director? Lots of people do and lots of people are. Find a director if you haven't directed before or know anything about direction or acting or on set behavior. Be a producer first.
Be a Good Producer
If you want to be taken seriously and advance yourself into the status you desire then start from day 1 doing things the correct way. Whether or not you're raising funds to produce your film you should have the ground work laid as a business. Depending on the budget and who's money you're using will really determine the level of which to establish your business. If you're using your own funds you should at least file a DBA (Doing Business As), it set's you a part from yourself as a business. However, if you're using someone else's money aka investments you should file your articles of organization with your state for an LLC (Limited Liability Company). It will cost a few hundred dollars, but they'll issue you Federal EIN (tax ID) and you'll be officially registered as a business. It'll show any potential investors or anyone you want to partner up with you and your film that you're serious. Besides, you always want to be prepared in case your little film becomes the next "Facing the Giants".
Side Note: If you file for a tax ID you will need to file it in your return for that years taxes. Even if you don't have any money coming in you still need to file. I believe my accountant called it a 'no activity'.
So now that you have your freshly filed LLC, you're ready to venture out and find someone to write your story? No. Before you go out and preach you have the best idea it will also serve you (and others) to see if you actually do. How to go about doing this is a little tricky and a little creative, so let your creative juices flow. If you don't yet have your script, at least start by writing out your idea in treatment form from beginning to end leaving out no great detail. Once you have that you can roughly gauge your commercial appeal by the "beats" of your story. I explain this process a little more in the previous blog here: http://myfilmstuffs.blogspot.com/2012/02/on-expanding-business-plan.html
It's a good idea to keep your audience in mind while writing your story, otherwise you won't get much of an audience. To find your audience you should at least put forth a little effort and do some research as to who you expect will want to see your story. Some helpful sites are:
http://www.ercboxoffice.com
http://boxofficemojo.com/
http://natoonline.org/
http://www.the-numbers.com/
http://www.mpaa.org/
http://www.nielsen.com/us/en.html
http://www.variety.com/Home/
http://www.hollywoodreporter.com/
Be a Smart Producer
Whether you're using your own financing or you have private investors you will want to follow protocol and be as systematic about the production as you can. A good trait to have as a producer is organization, whether it be with time or just in general, organization goes a long way. If you're looking for private funding there is little room for error, now with the expansion of crowd sourcing for private investment it's becoming more and more popular and more and more complex. Let's go over some of the details.
Disclaimer: I am in no way an attorney of any sorts, the following information is based upon my experiences and you should always request the counsel and advise of a licensed attorney or certified accountant.
As far as I'm concerned there are two ways to structure your offering (asking of money) and that is as a loan or equity investment. If it's a loan (which I wouldn't do) you have to worry about it being secured or unsecured and what recourse is attached to the loan (can they sue you or not), doing you include any equity or steak in the profits and to what guarantee are you offering. As equity, you offer a percentage of up to 50% and are sold as 'shares' or 'units'. Basically you're offering securities, it's a fancy and scary word. With this there is a lot to be considered, such as are your investors going to have a say in the production (active investor) or not (passive), and what kind of offering are you giving (eg. 50/50 net split with 15% compounding interest). If you are going to offer equity investment you should consult an attorney to draft the proper documents necessary (private placement memorandum, operating agreement, subscription agreement, etc) and also you want to file with the SEC (Security and Exchange Commission). I believe it's Form D as an exemption under Rule 506 and that is if you're offering to accredited investors only. What is an accredited investor? http://www.sec.gov/answers/accred.htm
You will also be obligated to disclose all information about your project that the investor might need to make an intelligent decision with regard to the offer. It should be listed in the private placement agreement; the structure of your company, how much you're looking for, the offer, the repayment structure, any influential contracts or agreements, the budget top sheet, the film itself, and any other legal documents pertaining to the business itself...oh and your business plan. It's complex, so please consult with a professional before doing anything.
Your budget. Chances are that anyone you give the plan to will skim the executive summary and head right to the financials. They want to know how much you're looking for, what they get out if it, and most importantly WHEN. So it's beneficial to you if you have a budget in mind and a nice outlook at how you're going to spend that money. I only did 2 budgets, one was for a Nicholas of Myra and the other was for $250,000 documentary. The reason I have only done 2 is because you need someone that does budgets and watches over it like a hawk, a production manager and/or a line producer and they know costs and where to find it and work deals. If you're not either of these, then call one to have it done. It should include a top sheet (summary) and a thorough page by page analysis of the cost of each line item.
Be a Smarter Producer
Once it's out there that you're looking for financing, you may experience some weirdo's coming out of the wood work that really don't have the capability to help you raise money, but they're only interested in taking your money. These people will claim they can find you financing and they will require a 10% finders fee. If they do anything other than give you contact information to people they believe are interested in investing, and you pay them the 10% and you find out they are NOT registered or a licensed securities broker ...you can be in a lot of trouble and out a lot of money. Another trick they'll use is that they'll require that you give them money in order for you to get investors. It's crazy and stupid but it happens. Don't fall for it. If anyone says they have money to invest, ask to show you proof, it's not bad business to ask so don't be afraid to. You need to protect yourself, you need to know that your investors are accredited (annual income meets a certain amount, etc.) there is a check list out there that you have them or their representation fill out to have on file that says they are accredited.
When I was helping Jerry with Nicholas of Myra, we collaborated on a lot of these aspects to ensure we had the proper footing in which he can proceed to make the film. It sure wasn't easy but it was essential if we were to expect anyone to give us any money to make the film.
Business Plan
For information on what to include and how to structure your plans, please refer to my previous blogs
Here: http://myfilmstuffs.blogspot.com/2012/01/structuring-business-plan-for-films.html
and here: http://myfilmstuffs.blogspot.com/2012/02/on-expanding-business-plan.html
Nowadays it's pretty cost efficient to produce a film of any length. Short films, episodic, and feature films of all kinds are being produced today without any sort of ground under them. If you're aspiring to be creative, such a director, writer or DP, it's important to lay the ground work early and properly to ensure your entire focus is creative when the time comes. You don't want to wear too many hats when you're taking on a creative role in a production, especially going from creative to business, it's exhausting and your work will most likely suffer. Do it right, do it smart and do it first.
So, when is it a good idea to form a business around the film you're producing? First, before answering that, let's take a look at the common mistakes made by filmmakers. I see these fancy opening graphics of "production" companies that don't exist. Makeshift press releases listing the production company, the actors, director, budget, etc. We've all seen it and it's just amateur when "A SUPER AWESOME PRODUCTION Presents" and then you Google that company to find out it doesn't exist in the digital world or see it just has a Facebook page with 2 people that like it. One of the biggest mistakes is producing a film without a proper business idea and the ground work laid for that particular film. This is unacceptable if you want to be taken seriously. The fact remains, if you wish to direct a film or write, shoot, etc. you must become a producer first and foremost.
Being a Producer First
The moment you decide you want to make a film you are a producer. A good producer will not only know which story to select, but will know and understand your own limitations. If you aspire to be a writer and have a wonderful idea you believe will have commercial appeal, know your limitations: can you write this? Do you have the ability to convert your idea successfully to page which can be translated to screen? Do you fully understand or grasp the concrete structure that is your story? Do you write dialogue well, do you have the ability to know the difference between good and bad dialogue? That is just scratching the surface. If you answer "NO" to ANY of these questions, then be a producer first and hire a writer to do it for you. Now, if you aspire to be a writer then sidesaddle that writer during the process, find out technique, structure, beats, moods, act breaks, etc. Learn as much as you can. What if you want to be a director? Lots of people do and lots of people are. Find a director if you haven't directed before or know anything about direction or acting or on set behavior. Be a producer first.
Be a Good Producer
If you want to be taken seriously and advance yourself into the status you desire then start from day 1 doing things the correct way. Whether or not you're raising funds to produce your film you should have the ground work laid as a business. Depending on the budget and who's money you're using will really determine the level of which to establish your business. If you're using your own funds you should at least file a DBA (Doing Business As), it set's you a part from yourself as a business. However, if you're using someone else's money aka investments you should file your articles of organization with your state for an LLC (Limited Liability Company). It will cost a few hundred dollars, but they'll issue you Federal EIN (tax ID) and you'll be officially registered as a business. It'll show any potential investors or anyone you want to partner up with you and your film that you're serious. Besides, you always want to be prepared in case your little film becomes the next "Facing the Giants".
Side Note: If you file for a tax ID you will need to file it in your return for that years taxes. Even if you don't have any money coming in you still need to file. I believe my accountant called it a 'no activity'.
So now that you have your freshly filed LLC, you're ready to venture out and find someone to write your story? No. Before you go out and preach you have the best idea it will also serve you (and others) to see if you actually do. How to go about doing this is a little tricky and a little creative, so let your creative juices flow. If you don't yet have your script, at least start by writing out your idea in treatment form from beginning to end leaving out no great detail. Once you have that you can roughly gauge your commercial appeal by the "beats" of your story. I explain this process a little more in the previous blog here: http://myfilmstuffs.blogspot.com/2012/02/on-expanding-business-plan.html
It's a good idea to keep your audience in mind while writing your story, otherwise you won't get much of an audience. To find your audience you should at least put forth a little effort and do some research as to who you expect will want to see your story. Some helpful sites are:
http://www.ercboxoffice.com
http://boxofficemojo.com/
http://natoonline.org/
http://www.the-numbers.com/
http://www.mpaa.org/
http://www.nielsen.com/us/en.html
http://www.variety.com/Home/
http://www.hollywoodreporter.com/
Be a Smart Producer
Whether you're using your own financing or you have private investors you will want to follow protocol and be as systematic about the production as you can. A good trait to have as a producer is organization, whether it be with time or just in general, organization goes a long way. If you're looking for private funding there is little room for error, now with the expansion of crowd sourcing for private investment it's becoming more and more popular and more and more complex. Let's go over some of the details.
Disclaimer: I am in no way an attorney of any sorts, the following information is based upon my experiences and you should always request the counsel and advise of a licensed attorney or certified accountant.
As far as I'm concerned there are two ways to structure your offering (asking of money) and that is as a loan or equity investment. If it's a loan (which I wouldn't do) you have to worry about it being secured or unsecured and what recourse is attached to the loan (can they sue you or not), doing you include any equity or steak in the profits and to what guarantee are you offering. As equity, you offer a percentage of up to 50% and are sold as 'shares' or 'units'. Basically you're offering securities, it's a fancy and scary word. With this there is a lot to be considered, such as are your investors going to have a say in the production (active investor) or not (passive), and what kind of offering are you giving (eg. 50/50 net split with 15% compounding interest). If you are going to offer equity investment you should consult an attorney to draft the proper documents necessary (private placement memorandum, operating agreement, subscription agreement, etc) and also you want to file with the SEC (Security and Exchange Commission). I believe it's Form D as an exemption under Rule 506 and that is if you're offering to accredited investors only. What is an accredited investor? http://www.sec.gov/answers/accred.htm
- a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase, excluding the value of the primary residence of such person;
- a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year
You will also be obligated to disclose all information about your project that the investor might need to make an intelligent decision with regard to the offer. It should be listed in the private placement agreement; the structure of your company, how much you're looking for, the offer, the repayment structure, any influential contracts or agreements, the budget top sheet, the film itself, and any other legal documents pertaining to the business itself...oh and your business plan. It's complex, so please consult with a professional before doing anything.
Your budget. Chances are that anyone you give the plan to will skim the executive summary and head right to the financials. They want to know how much you're looking for, what they get out if it, and most importantly WHEN. So it's beneficial to you if you have a budget in mind and a nice outlook at how you're going to spend that money. I only did 2 budgets, one was for a Nicholas of Myra and the other was for $250,000 documentary. The reason I have only done 2 is because you need someone that does budgets and watches over it like a hawk, a production manager and/or a line producer and they know costs and where to find it and work deals. If you're not either of these, then call one to have it done. It should include a top sheet (summary) and a thorough page by page analysis of the cost of each line item.
Be a Smarter Producer
Once it's out there that you're looking for financing, you may experience some weirdo's coming out of the wood work that really don't have the capability to help you raise money, but they're only interested in taking your money. These people will claim they can find you financing and they will require a 10% finders fee. If they do anything other than give you contact information to people they believe are interested in investing, and you pay them the 10% and you find out they are NOT registered or a licensed securities broker ...you can be in a lot of trouble and out a lot of money. Another trick they'll use is that they'll require that you give them money in order for you to get investors. It's crazy and stupid but it happens. Don't fall for it. If anyone says they have money to invest, ask to show you proof, it's not bad business to ask so don't be afraid to. You need to protect yourself, you need to know that your investors are accredited (annual income meets a certain amount, etc.) there is a check list out there that you have them or their representation fill out to have on file that says they are accredited.
When I was helping Jerry with Nicholas of Myra, we collaborated on a lot of these aspects to ensure we had the proper footing in which he can proceed to make the film. It sure wasn't easy but it was essential if we were to expect anyone to give us any money to make the film.
Business Plan
For information on what to include and how to structure your plans, please refer to my previous blogs
Here: http://myfilmstuffs.blogspot.com/2012/01/structuring-business-plan-for-films.html
and here: http://myfilmstuffs.blogspot.com/2012/02/on-expanding-business-plan.html
Wednesday, February 22, 2012
On Expanding the Business Plan
I wanted to expand on some of the points made in the previous blog on business plans. As mentioned there is a lot of different information which needs to be included, so below I have gone on to explain those various parts. I also left out a few things in the first post that will be addressed below as well.
Now the common question about this is do you need one if you're not looking for money?
Yes. There are a ton of reasons as to why you will need a business plan (the plan) not just to obtain financing. As a matter of fact, a plan is not put in place for the simple purpose of obtaining financing. A plan is exactly that, a plan that will help you as a producer keep the production train on the right track. Imagine if you were to travel from Buffalo to Los Angeles by car and you didn't have a map. Sure you can drive in the general direction WEST and you might get there eventually but you probably won't take the most efficient way there. You might get lost, need help with directions, perhaps you get so lost you end up in Montana, and you're running out of financial resources because you're so far off track you might not EVER get to L.A. Get it? The plan also allows you to work toward an objective which might not otherwise be clear in the beginning. The objective not being to complete the film, but to sell it and hopefully earn back the budget. So by having this plan set in place you'll know what you should be doing before you do it in order to achieve that objective.
Side Note: Why in God's name would you want to make a feature length movie without the hope of making money on it? It's a MASSIVE waste of time and resources if you don't start out with that in mind.
Another reason you should be accustomed to drafting plans is to be accustomed to drafting plans. To paraphrase a quote by Greg Lamberson "unless you're content on swimming in the local pond forever" you should honestly know your complete and full objective and have the wherewithal to put it down on paper in a professional format. Be ready! Someone may want to entertain the thought of giving you money for another movie idea....be ready! And remember a film production is a shallow accomplishment without distribution and it's associated income. I'll say it again,if you're not making a film to earn some money in return, then why the F&*% are you? It's an expensive hobby.
So back to the finer points of the plan. It's important to know the difference between a GOOD plan and a BAD one, and that is your content. If it's not clear and easily understandable then it's probably bullshit. Don't allow your potential financiers to wonder and assume. Treat them like a 5 year old and tell them what you're planning on doing and how you're planning on doing it...then tell them again. Remember: SIMPLE.
Company & Mission - THE TEAM
As mentioned, this is going to outline the type of company you're setting up and what it's all about, including your team. I didn't expand on the "TEAM" part because I just felt it was assumed. The more I read around the intrawebs I see there are a lot of Robert Rodriguez's out here. A LOT. Let me be straight and clear about this, you're not Robert Rodriguez so stop trying to be, unless you're content on swimming in the local pond for pretty much ever. If you can't delegate and trust people to work with you that are better than you are then don't bother trying to make a film...and certainly do not expect anyone to give you money to make that movie. So back to the team. You need to be clear on who you are, and who you're looking to hire and how. Your team isn't just the director, DP, etc. Remember this is a business so your team should be an attorney, an accountant, public relations, a distribution rep, a creative producer for production (unless that's you, but usually a UPM or Line), creative and marketing rep, and perhaps a business affairs rep. Now this doesn't mean you have to go out and hire these people right away or even that they'll be full time on your project; what that means is that you'll have them retained for counsel and refer to them when needed. It's also ok if you do not have the names of the people you're looking to hire to fill those rolls. Just mentioning that it is in your purview to bring them on is what's important. Now I get the fact that there are a lot of films being made that wont' need all of that but you must have what is important to your picture's success and go with it. It's also important to have someone on the team currently that has the experience to make your investors feel comfortable. If you've never produced a feature length film, get someone that has on your team STAT!
Now your creative team being the director, DP, etc. Most of you are probably thinking "well I'm the director too" which is fine but remember if you're not seasoned as a producer/director, those that you're approaching for money on a serious level are going to wonder how you're going to manage to balance both of those massive responsibilities. Get someone that 's going to help produce if you're going to be concentrating on directing when that comes around.
So get a team, one that makes you look good.
Comparables and Projections
Breaking down the market and listing your projections. Projections are what you can assume you'll make in revenues. I said in the first post that you should breakdown your script by emotional beats and then find 40 movies that best match your script for the comparison. I will expand on that. However, just be prepared that this is the most time consuming and most difficult aspect of your plan. This is why companies charge thousands of dollars for information like this.
A beat is something that happens that directly relates to your specific target audience. In a movie trailer for instance, they are filled with these beats because they want to get the most amount of people in their target audience to the theatre. These beats are every little image, sound and emotion that tells us what the story is all about under a specific list of categories and those are: children, adolescent, men, women, horror, supernatural, sexual, and the standard genre's action, comedy, romance and drama. So read through your script and every time one of those occur mark a "1" in that category. Remember, actors and directors are beats too....that is if you're attracting name talent.
Now for the hard part, after you have gone through your script and marked all those beats out, write a script for a 30 second trailer. You will write it to the second, meaning you should include what is shown and spoken on the trailer according to time. Don't forget to include a good VO narrative like "In a world (0:04)...where one man...(0:06)", title sequences, etc. My guess is that most of your trailer will come from pages in your script between 25-55. Remember to pose a conflict for your lead character and don't answer that conflict. Now count the beats again that appear in your trailer. If you've got 48 beats (more than 1 beat can occur at the same time) break those down into percentages of category. For example, if you have 12 beats in children that is 25% of your total number of beats. So chances are it's a children's film or family film. Now the fun part, go to IMDB and do a search for those films, choose 40 films made in the last 5-7 years that closely resemble your picture in terms of budget, storyline and genre...and start watching those trailers and counting beats. Once you have all 40 broken down you can determine the top 5 films which closely relates to your script according to the beats. Then find out how those pictures did, their release dates, star power, etc. throughout all release windows. Get all revenue stream amounts, domestic, foreign, ancillary, what the P&A was and break those down against the budget and figure your averages. Don't take the highest grossing films to "pad" your stats...those aren't realistic. Take the median of the outcome and you can safely project your outcome if it were to be picked up for distribution. When listing your projections, give 3 outcomes, poor, moderate and excellent. Don't ever use the word "expected"...you never expect anything in this business. That takes me to your "assumptions". Everything in this stage is assumed. Since no one can accurately predict the future you are only assuming these outcomes. You should list accurate assumptions, such as "assuming we raise the full amount..." "assuming we complete the picture", "assuming we are released for distribution through a major, minor, independent, etc." ...then the following outcomes are assumed.
Use that information for your comparable chart.
The Industry
None of the above information means anything to any non-film investor unless they have a basic understanding of how the industry functions. I'd recommend inserting a couple pages about the current status of the business, how it's doing in terms of box office, attendance, independents, grosses, trends, future outlook...this would be a good place to insert the ridiculous discussion about the future of digital filmmaking. Sure box office is down overall but how are independents doing in this field? Remember Sundance had 40 films sell in January 2012, and over 50 sold in 2011. Give figures too, investors wont' take your word for it. Also list where you're finding your information. Do research. Search the trades, scan the top festival sites and find out who's doing what and why, find out how some publicly traded companies are doing via the SEC search page (they will list their financials on those pages and you can see how they're doing).
You will also want to show how money is tracked, from the top to the individual unit. Why? Because no investor is going to read your entire plan from top to bottom. They will scan your summary then jump to the financials to see how much you need and how much they'll make and when. So give them an idea of how money flows and more importantly the time frame. Some may think that the movie will take 2 days to shoot and will be released that Friday and by Monday they'll see millions. No, try 3 years or more until any money is returned, so show them why it's 3 years rather than 3 days. In addition, track it to the unit so they'll know how much they'll see if they buy 1 or 100 units.
So anyone looking to put a plan together will have their work cut out for them so that's all for now. Next blog I'll share some information about selling those units and why they might be considered "securities" you'll need to register with the SEC. Yikes!
Also, if anyone needs any clarity on what's been posted I'll gladly address it individually.
Now the common question about this is do you need one if you're not looking for money?
Yes. There are a ton of reasons as to why you will need a business plan (the plan) not just to obtain financing. As a matter of fact, a plan is not put in place for the simple purpose of obtaining financing. A plan is exactly that, a plan that will help you as a producer keep the production train on the right track. Imagine if you were to travel from Buffalo to Los Angeles by car and you didn't have a map. Sure you can drive in the general direction WEST and you might get there eventually but you probably won't take the most efficient way there. You might get lost, need help with directions, perhaps you get so lost you end up in Montana, and you're running out of financial resources because you're so far off track you might not EVER get to L.A. Get it? The plan also allows you to work toward an objective which might not otherwise be clear in the beginning. The objective not being to complete the film, but to sell it and hopefully earn back the budget. So by having this plan set in place you'll know what you should be doing before you do it in order to achieve that objective.
Side Note: Why in God's name would you want to make a feature length movie without the hope of making money on it? It's a MASSIVE waste of time and resources if you don't start out with that in mind.
Another reason you should be accustomed to drafting plans is to be accustomed to drafting plans. To paraphrase a quote by Greg Lamberson "unless you're content on swimming in the local pond forever" you should honestly know your complete and full objective and have the wherewithal to put it down on paper in a professional format. Be ready! Someone may want to entertain the thought of giving you money for another movie idea....be ready! And remember a film production is a shallow accomplishment without distribution and it's associated income. I'll say it again,if you're not making a film to earn some money in return, then why the F&*% are you? It's an expensive hobby.
So back to the finer points of the plan. It's important to know the difference between a GOOD plan and a BAD one, and that is your content. If it's not clear and easily understandable then it's probably bullshit. Don't allow your potential financiers to wonder and assume. Treat them like a 5 year old and tell them what you're planning on doing and how you're planning on doing it...then tell them again. Remember: SIMPLE.
Company & Mission - THE TEAM
As mentioned, this is going to outline the type of company you're setting up and what it's all about, including your team. I didn't expand on the "TEAM" part because I just felt it was assumed. The more I read around the intrawebs I see there are a lot of Robert Rodriguez's out here. A LOT. Let me be straight and clear about this, you're not Robert Rodriguez so stop trying to be, unless you're content on swimming in the local pond for pretty much ever. If you can't delegate and trust people to work with you that are better than you are then don't bother trying to make a film...and certainly do not expect anyone to give you money to make that movie. So back to the team. You need to be clear on who you are, and who you're looking to hire and how. Your team isn't just the director, DP, etc. Remember this is a business so your team should be an attorney, an accountant, public relations, a distribution rep, a creative producer for production (unless that's you, but usually a UPM or Line), creative and marketing rep, and perhaps a business affairs rep. Now this doesn't mean you have to go out and hire these people right away or even that they'll be full time on your project; what that means is that you'll have them retained for counsel and refer to them when needed. It's also ok if you do not have the names of the people you're looking to hire to fill those rolls. Just mentioning that it is in your purview to bring them on is what's important. Now I get the fact that there are a lot of films being made that wont' need all of that but you must have what is important to your picture's success and go with it. It's also important to have someone on the team currently that has the experience to make your investors feel comfortable. If you've never produced a feature length film, get someone that has on your team STAT!
Now your creative team being the director, DP, etc. Most of you are probably thinking "well I'm the director too" which is fine but remember if you're not seasoned as a producer/director, those that you're approaching for money on a serious level are going to wonder how you're going to manage to balance both of those massive responsibilities. Get someone that 's going to help produce if you're going to be concentrating on directing when that comes around.
So get a team, one that makes you look good.
Comparables and Projections
Breaking down the market and listing your projections. Projections are what you can assume you'll make in revenues. I said in the first post that you should breakdown your script by emotional beats and then find 40 movies that best match your script for the comparison. I will expand on that. However, just be prepared that this is the most time consuming and most difficult aspect of your plan. This is why companies charge thousands of dollars for information like this.
A beat is something that happens that directly relates to your specific target audience. In a movie trailer for instance, they are filled with these beats because they want to get the most amount of people in their target audience to the theatre. These beats are every little image, sound and emotion that tells us what the story is all about under a specific list of categories and those are: children, adolescent, men, women, horror, supernatural, sexual, and the standard genre's action, comedy, romance and drama. So read through your script and every time one of those occur mark a "1" in that category. Remember, actors and directors are beats too....that is if you're attracting name talent.
Now for the hard part, after you have gone through your script and marked all those beats out, write a script for a 30 second trailer. You will write it to the second, meaning you should include what is shown and spoken on the trailer according to time. Don't forget to include a good VO narrative like "In a world (0:04)...where one man...(0:06)", title sequences, etc. My guess is that most of your trailer will come from pages in your script between 25-55. Remember to pose a conflict for your lead character and don't answer that conflict. Now count the beats again that appear in your trailer. If you've got 48 beats (more than 1 beat can occur at the same time) break those down into percentages of category. For example, if you have 12 beats in children that is 25% of your total number of beats. So chances are it's a children's film or family film. Now the fun part, go to IMDB and do a search for those films, choose 40 films made in the last 5-7 years that closely resemble your picture in terms of budget, storyline and genre...and start watching those trailers and counting beats. Once you have all 40 broken down you can determine the top 5 films which closely relates to your script according to the beats. Then find out how those pictures did, their release dates, star power, etc. throughout all release windows. Get all revenue stream amounts, domestic, foreign, ancillary, what the P&A was and break those down against the budget and figure your averages. Don't take the highest grossing films to "pad" your stats...those aren't realistic. Take the median of the outcome and you can safely project your outcome if it were to be picked up for distribution. When listing your projections, give 3 outcomes, poor, moderate and excellent. Don't ever use the word "expected"...you never expect anything in this business. That takes me to your "assumptions". Everything in this stage is assumed. Since no one can accurately predict the future you are only assuming these outcomes. You should list accurate assumptions, such as "assuming we raise the full amount..." "assuming we complete the picture", "assuming we are released for distribution through a major, minor, independent, etc." ...then the following outcomes are assumed.
Use that information for your comparable chart.
The Industry
None of the above information means anything to any non-film investor unless they have a basic understanding of how the industry functions. I'd recommend inserting a couple pages about the current status of the business, how it's doing in terms of box office, attendance, independents, grosses, trends, future outlook...this would be a good place to insert the ridiculous discussion about the future of digital filmmaking. Sure box office is down overall but how are independents doing in this field? Remember Sundance had 40 films sell in January 2012, and over 50 sold in 2011. Give figures too, investors wont' take your word for it. Also list where you're finding your information. Do research. Search the trades, scan the top festival sites and find out who's doing what and why, find out how some publicly traded companies are doing via the SEC search page (they will list their financials on those pages and you can see how they're doing).
You will also want to show how money is tracked, from the top to the individual unit. Why? Because no investor is going to read your entire plan from top to bottom. They will scan your summary then jump to the financials to see how much you need and how much they'll make and when. So give them an idea of how money flows and more importantly the time frame. Some may think that the movie will take 2 days to shoot and will be released that Friday and by Monday they'll see millions. No, try 3 years or more until any money is returned, so show them why it's 3 years rather than 3 days. In addition, track it to the unit so they'll know how much they'll see if they buy 1 or 100 units.
So anyone looking to put a plan together will have their work cut out for them so that's all for now. Next blog I'll share some information about selling those units and why they might be considered "securities" you'll need to register with the SEC. Yikes!
Also, if anyone needs any clarity on what's been posted I'll gladly address it individually.
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