The Films
Why should people go out and pay money to see bad films, when they can stay at home and see bad television for free?
SAMUEL GOLDWYN
Quoted in The Observer
Project Scope
Theatrical films are the backbone of most filmmakers’ business plans. As the industry changes, however, the potential for artistic expression is growing far beyond the notion of a single theatrical. In recent years, many filmmakers have successfully specialized in documentaries, commercials, industrials, educationals, and infomercials, as well as cable, video, and DVD productions. The focus of this chapter is traditional theatrical films. Chapter 6 (“Markets, Part II”) discusses nontraditional films.
Whatever the projects or products, all business ventures in which your company will participate over the next five years should be addressed in the Films section of the business plan. This chapter demonstrates how to describe your projects. It explains not only the amount of information that you need to include, but also what you should leave out. This part of the business plan gives you the opportunity to expound on all of the projects that your company will pursue.
How do you know what you will be doing five years from now? Undoubtedly, you know more about some films than others; some of you may not even have specific projects yet. You may have a script to shoot next year, but may not have a clue about the script for a film planned four years down the road.
Nor can you know what delays may occur along the way. It is less important to be psychic than to be as accurate as possible in terms of intentions and timing. If circumstances alter the original plan, everyone involved will reevaluate it.
The Right to Know
As your partner, the investor has a right to know what activities are contemplated in order to make an informed decision. Several years ago, a young man came to me with a proposal to create a highly specialized series of films. He planned to sell them in a narrowly segmented market. The plan contained much discussion about the future success of his company, but the only description of the projects was the word “films.” He estimated that millions of people would go to see these unspecified films.
Being the curious type, I asked him what kinds of films he planned to make. His answer was, “Good ones.” I pressed on, trying to elicit more information. After all, he guaranteed that millions would clamor to see these films. He replied, “I’m not going to tell anybody anything. They might steal the idea. Besides, it’s no one’s business; all they need to know is that it’s a good investment.”
Don’t laugh too loudly. This story is only one of many, and this young man’s attitude is not unusual. “Films,” as you may have realized by now, is not a sufficient description. Putting yourself in the investor’s shoes, how would this strike you? You would probably insist on knowing the content of these incredible films, who belonged to this guaranteed market, and how the films were going to pay back your investment.
There are certainly a few valid reasons why a filmmaker (or any other entrepreneur) might worry about revealing the details of a proposed project: (1) no identifiable plans exist, or (2) someone might steal the idea. Although theft of concept is not an unknown phenomenon, there is a difference between not telling the general public all about your plans and refusing to tell a potential money source. Prudent filmmakers refrain from describing script details in a loud voice at the local coffee shop or at a crowded party; they also resist the temptation to ask seven or eight friends to read their projects. However, the prudent do give the right people enough information to prove the advisability of the investment.
Success in any business revolves around the product. In film, where all forward motion to the goal is content-driven, the story is crucial. To sell your projects, remember the refrain, “Story, story, story.”
Hype has a place also, but it must take a back seat in the context of this plan. The trick is to do some jazzy selling around a solid idea. All the public relations in the world will not save a bad film. From Chapter 2, “The Company,” you know that the first goal for the business plan is to identify your future course of action. The second is to show investors how profitable your business will be. There is no way to forecast your success without specific ideas to evaluate. Does this mean that you must have all your scripts, directors, and stars in tow? Not necessarily, but you do need to have a framework. At the very least, for example, you want to know that you are going to produce X budgets and Y genres over a Z-year period. You must provide enough information to estimate revenues and give the investor a chance to agree or disagree with your forecast.
The Facts and Nothing But
Think of the Films section of the business plan as a story you are telling, with factual material as the priority. Fantasies may play an important part in scriptwriting, but using wish lists in this document can present a problem. Confusing the issue by citing a cast that has never heard of the project or books you do not own may give investors the wrong idea. Whether you create a false impression by accident or on purpose, the result is the same. Investors negotiate contracts based on the information you provide. In the end, if all is not as you indicated, promises can be broken and money withdrawn.
Films
When describing your film projects, the objective is to present a descriptive overview of all the critical particulars without going into excessive detail. You should disclose each film’s assets (components that may add commercial value to the project) as well as any nonmonetary values that are important to the type of films you want to make.
The trick is to tell enough to engage readers, but not so much that you risk losing them. As we go through the different elements of this section, we’ll attempt to draw a line between sufficient content and excessive wordiness. Readers who must wade through pages of information that is hard to follow will just go to sleep.
Writers of scripts, books, and other literary pieces have a tendency when writing nonfiction to create a stream of consciousness that is hard to follow. Fiction requires emotional and subjective content that will draw readers into the fictional world. Business writing—and nonfiction of any kind—requires simplicity and directness. Dr. Linda Seger, noted author of books on screenwriting, says:
Screenwriting is about being indirect; proposal writing is about being direct. While the object of good fiction writing is to be subtle, hide exposition, and present many ideas indirectly, good proposal writing insures that the audience is getting the information clearly and consciously.
This is the reason why some genius invented the Appendix. In the business plan, it contains details that may be outside the formula of simple and direct information. As you proceed through the following sections, you will get a clearer picture of what this means. There are no official rules as to how much information you ought to include in the Films section of your business plan. You can do anything you want, but bring your common sense into play, and always try to be alert to the reader’s point of view.
Scripts
Disclose enough material about each script so that readers understand its value. A short synopsis is the usual format. In a page, you can tell the essentials of the story and indicate the genre of the film.
A student once questioned whether or not to include the title of his script. He feared that someone would steal it, because it was innovative and catchy. Whether or not to reveal the film’s title must be your decision. More often, writers fear that someone will pirate their ideas rather than their titles.
The first step to take to protect yourself from possible theft of your story is to copyright your project. Most writers register their scripts with the Writers Guild of America. An even better procedure is to file for registration with the Library of Congress in Washington, D.C.
Once you have done this, you can prove that your story existed as of a particular date, and you can feel free to give it to others. Keep in mind that registration does not prevent theft; it just helps you prove ownership in the event of theft. Unfortunately, you cannot copyright ideas themselves. Michael Donaldson, in his book Clearance and Copyright, says:
Copyright law only protects “expression of an idea that is fixed in a tangible form.” This means that written words are protectable; the ideas behind them aren’t. You can’t copy something that is just an idea in the air.
Keep your plot summary brief but tell everything that happens in the story. Do not include the entire script or the 50-page treatment. If included in the body of the business plan, it will break the flow of the story you are trying to tell by taking the reader too far afield. If readers need more than the plot synopsis you provide, they will ask you for it. A too short plot summary might look like this:
Title: Boys Who Wreak Havoc
Four teenage boys decide to take over a small Wisconsin town. They kidnap the minister’s daughter as a bargaining tool in their effort to make one of their members the mayor. Their attempt to control the population unites the townspeople, who, although previously selfish in their individual pursuits, come together to take back their town. The girl is saved without bloodshed, and peace reigns.
This paragraph does not tell enough about the story to give the reader a true idea of everything that is in the film; it would be better placed in the Executive Summary section. Several sample plot synopses have been included on the CD accompanying this book. Be sure to read them.
Briefly, you want to include enough information to be sure that the reader does not misconstrue the type of film you plan to make. If the girl is raped or there is a nude scene, be sure to mention it. Failing to mention a scene that affects the nature of the film because you think potential investors might not like it is a sin of omission. If, for example, you let your investor assume that you were making a PG-13-rated film although you know that it will be R-rated, your money source can object and demand his money back.
What if you do not have specific scripts? State this up front. Even without scripts in hand, you can define your projects in terms of size and genres. You may be looking for development money to obtain scripts. Concentrate on what you know about your project. You must tell investors at least the size of the films that you plan to make. One way to describe this situation is as follows:
We are planning to make three films with family themes over the next five years, ranging in size from $1 million to $10 million. The initial $50,000 will allow the Company to develop scripts and to option stories from other writers. Production is expected to begin by the end of the first year after funding.
This scenario is not as tempting to investors as the first one, but it is doable. For investors, providing money for development is always a greater risk than providing money for well-planned projects. The danger for the investor is that the producer may never find the right project and begin production. Or an agreement made with the source of production money may further dilute the initial investor’s position. However, if you have some experience and a credible team, try for the development money. On the other hand, rather than writing a full business plan, you may choose to have an attorney write a proposal for development money. It will specify how much money the investor will be paid when production money is raised and what points they will receive in the eventual production.
Suppose you know neither the subject of your films nor the size of their budgets. In one plan, the company stated: “The producers plan to make low-budget features with the formula that has proved most profitable both in theatrical and video releases scripts in this area are plentiful.” Seems a little vague, doesn’t it? Aren’t you curious to know what these proven formulas are?
Typically, the information in a proposal of this type is not enough. The right mix of ingredients is always a balancing act, but you probably would have to be a known filmmaker with an impressive track record to get away with this proposal. Even for an experienced moviemaker, this pitch would be hard to sell. Most people want to see specifics to which they can attach a value, either monetary or personal. Anyone with a modicum of business sense understands that handing out money to someone with no real plans except “to make a film” would appear to be foolish.
No doubt you can find an exception to this rule somewhere. Perhaps you’ve heard about an eager young filmmaker who, with his toothy smile and youthful enthusiasm, convinced a jaded dealmaker to hand over money. Nothing is impossible, but the odds are against this happening. This scenario sounds too much like a script and not enough like real life.
At this point, you may also want to address the question of the potential audience for your flick. It does not hurt to add a qualifying sentence to your plot synopsis—for example, “Films about Wisconsin, such as Walter from Wisconsin and Cheeseheads Reign Supreme, have been popular lately. We plan to capitalize on this phenomenon.” On the other hand, you may be shooting the film in Wisconsin and raising your money there. In that case, add “Director Buffy Angel was born and raised in Milwaukee, where the film will be shot.” However, save the discussion of the distribution and financial ramifications of your films for later sections of the plan. If your readers follow custom, they will have read the Financing section before this one anyway. It is easiest for readers to follow your plan if you group all of the project descriptions together and do not digress with long discussions on other subjects.
Attachments and their Value
In this balancing act, any person, place, or thing that adds value to the script is important. You want to give your project every chance to see the light of day, so recount any attachment with a perceptible value. Here are five examples of attachments: (1) options, (2) books, (3) stars, (4) director, and (5) dollars. Notice that your favorable opinion is not one of the choices.
Options
An option is a written agreement giving the producer exclusive rights to a project over some specific length of time. If the option is exclusive, it ensures that no one else can make the project while the producer holds the option. Obviously, if you are the writer, it is your project. However, if you are representing other writers’ scripts as part of your package, you must declare the ownership status. Representing films as your own when they are not is clearly a no-no.
Not only the script itself, but also the subject may need an option. If you are dealing with true stories of living people (or deceased persons whose estates own the representation of their likeness and life), you may need to seek permission to do the story. Getting the option, or “rights,” after the fact can be a costly process.
You do not want to be in the position of having a deal on the table for a film and having to go back to obtain the rights to it. After the fact, the subject can and often will deny having given verbal permission. If you have not done your homework, it is the subject’s right to stop the production, which sometimes leads to an expensive payoff or a court injunction.
Books
A published book adds value to a film in several ways. The sales history adds clout to your project, the specialized market it represents provides a ready-made audience, and the book usually furnishes additional ways to hype the film. Unless it is your book and copyright, the first step is—you guessed it—an option. The cost of the option depends, again, on the person you are dealing with and the relative fame of the book. It would be useless to even try to give you prices. As soon as the ink is dry in this book, the market will have changed. In truth, a book option, like a script option, can cost anywhere from nothing to millions of dollars.
An author (or the representatives of an estate) may have a subjective reason for you to make the book into a film and be very generous in making an agreement with you. On the other hand, if money up front is the primary focus, the author will drive as hard a bargain as possible. This area is one of the few in which your sparkling manner can have a concrete impact. On occasion, deals have been done because the author liked the filmmaker and wanted to see the project get made. Passion for the project counts for a lot in negotiating with authors. One way to be sure that you cannot use the book, however, is to refrain from seeking the rights to it.
Options can be obtained for a reasonable price if the timing and people involved are right. For example, two producers bought the rights for a paperback mystery novel plus the author’s next two books for a few thousand dollars. No one else had approached the author, and the books were not the type to make the bestseller lists. Nevertheless, the author had a large audience among mystery fans. With no competitive bidders, the producers were able to make a good deal.
Another producer optioned several books of women’s stories. The books had a large following, but the subject was still “soft” at major studios. She couldn’t get the deals that she wanted and the films deserved. Once The Hours, Far from Heaven, My Big Fat Greek Wedding, and Real Women Have Curves were released in the same year to critical acclaim and/or significant boxoffice results, however, studios and independent companies were falling all over themselves to make similar deals. It’s all in the timing. A change in the attitude of the trendmakers (studio executives, agents, and critics) increased the value of the producer’s optioned books immediately.
Being able to read manuscripts before they are published gives you an advantage over other filmmakers. Agents have access to unpublished manuscripts all the time. If you happen to know about a book that is about to be published by an unknown author and you can strike a deal prior to publication, it may work to your advantage financially.
Stars and Other Fantasy People
Attaching star actors, star directors, and famous producers is the fantasy of many independent filmmakers. Having Brad Pitt or Tom Hanks in your $500,000 film might be a recurrent dream of yours, but, unfortunately, their salaries include several more zeros. Nevertheless, you can have attachments that add value to your project, as long as they are real. No wish lists.
With lower budgets, “bankable” stars (the actors whose names ensure a certain level of boxoffice revenue when the film opens) are probably not an option, but you still can have a name that interests an investor. The value of the name is often in the eye of the beholder. Foreign buyers may put value on names that are only a moderate attraction on a U.S. movie marquee.
Directors who command high salaries will also be out of the reach of very low-budget filmmakers. Emphasize your director’s previous experience, but do not fabricate it. With higher budgets (over $5 million), the inexperience of the director may become a hindrance and possibly dangerous. You want the director to be able to handle the film and, especially, the actors. In addition, experienced actors are often unwilling to work with an unseasoned director, and investors become more nervous about spending their money.
Because the producer has the major responsibility for keeping the budget on track, previous experience with feature films is important. In independent filmmaking, the producer is often the only connection between investors and their money. Once the cash has gone into the film’s bank account, investors must depend on the producer to protect its use. Not only does the producer watch the money, but also she has to have enough clout with the director to stop him from going over budget. Always keep in mind that this process is a balancing act of all the different elements.
Money
“Well,” you say, “of course, money adds value.” It seems redundant but really is not. Clearly, hard cash for development and production has a straightforward relationship to your project, but what about any partial funds attached to your project? For some reason, newer producers do not think to mention them as part of their project’s description, but they should. If any money at all is attached to your project, announce it here. You will discuss it at greater length in the Financing section. Remember that all attachments are of value to the film and belong in this section. You want to depict any ingredients of this mix that will positively influence someone to make your film. In addition to hard cash, you should mention any co-production agreements, below-the-line deals, negative pickups, or presales. But make sure you have your deals in writing before putting them in the business plan.
Budget
For prospective investors to evaluate your films completely, they need to know the size of the budget. Again, we have two types of films: those with complete scripts and those that are just a gleam in the producer’s eye. When real scripts exist, real budgets should exist as well.
To save money, many filmmakers pass a tuning fork over their script and say, “One million dollars.” Do not just make up a figure. Anyone who contemplates financing your film will take this number seriously. So should you.
Many independent films have been delayed because the money ran out during either principal photography or postproduction. The investors have said, “You told me $800,000, so that is all you are getting.” Studios often have reserves for a certain amount of budget overruns; equity investors do not. This admonition also goes for digital movies. Include enough money for transferring to 35mm. (More about digital in Chapter 4, “The Industry.”)
Some filmmakers develop only the two top sheets of the budget—this is just one step ahead of the tuning fork method—and figure out the complete cost later. However, you should calculate the total cost now to save explanations later. Estimating the cost of the general categories (cast, location, wardrobe, and so on) can be very dangerous, no matter how experienced you are. Break down the script (production managers and line producers are good at this job) and calculate the entire amount.
In describing your film, you should simply state the size of the budget along with its attachments. A paragraph or two on the entire project will be sufficient. Consider the following example:
This film has a $2-million budget, based on filming in Cincinnati. Susie Starstruck and Norman Goodlooking are set to star in the film. Ms. Starstruck has been featured in The Gangbusters and Return of the Moths. Mr. Goodlooking has appeared in several movies of the week. Herman Tyrant, the director, has made two low-budget films (Be My Love and Girls Don’t Sing) and has previous experience in commercials. The film has partial financing of $100,000 from an equity investor, with all territories still free for distribution.
In this paragraph, the writer has explained the essentials. Here we learn the size of the budget, the location (much of the cost in this example is predicated on the film being shot in a right-towork state), and the experience of the lead actors and director. One investor already has an equity position, but all the sales markets are available. Note that the writer has saved any discussion on the implications of adding another equity investor for the negotiation.
Do not worry about repetition; it is part of the building-block formula. You give an overview of the film. Then, in the Distribution and Financing sections, you go into greater detail about pertinent elements.
What if you do not have a full script or any actors and you have little or no experience? Do not lose heart. You can still explain what you are planning to do. Look at this example:
The ABC Company plans to make four films over the next five years. The first two films will be low-budget ($250,000 and $1 million, respectively) and will deal with coming-of-age themes. Both films are in the treatment stage, and the director, Fearless Author, will write the screenplays. Mr. Author wrote and directed four short films, two of which have won awards at film festivals. Mr. Experienced Producer, whose films include Growing Up? and Life Is a Flower, has given us a letter of intent agreeing to serve as Executive Producer. The third and fourth films will be in the $3- to $5-million range. Mr. New Producer will produce these films after serving as Co-producer on the first two. Neither treatments nor scripts exist for the third and fourth films. They will be in development during the first two years.
Common sense will tell you that this package has less substance than the first one. It may be harder to find financing, but not impossible. If you find yourself in a similar situation, all you can do is try to create as many advantages for yourself as possible. The worst approach you can take is to say, “We are nobody with no plans. We plan to find no one experienced in anything, but we want your money anyway.” It’s true that no one is going to be this truthful, but on many proposals, it is not difficult to read these words between the lines. You have to learn to make realistic compromises to reach your goals. And above all, don’t lie.
Too Much Can Be Harmful
One of the biggest nightmares that financial folks have is to receive a ten-pound business plan that includes every piece of paper in the producer’s desk. Your goal is to have people read your proposal; therefore, you want to give them enough information without making the plan too heavy to lift. Suppose you have a complete budget for each of your projects. Do not put them anywhere in this business plan. An interested party will ask for them soon enough, and you can have the dubious thrill of explaining every last nickel.
If you have a strong desire to show detail, you can put the top sheets of the budgets in your Appendix for perusal at the reader’s convenience.
The same goes for the biographies of the stars, director, producer, and anyone else involved with your projects. A few paragraphs describing each principal’s background is sufficient. The three-page bios do not need to be in the body of the plan. If you feel strongly that someone will have a burning need for this information, the Appendix is the place for it.
Don’t make potential investors guess about the applicable credits by including newspaper reviews in your business plan. Summarize the essentials. If you are bursting at the seams with your wonderful reviews, you know where they go—the Appendix.
As far as I am concerned, photocopies of any kind should be forbidden by law from appearing in business plans. When you are trying to separate investors from their money, a well-typed, neat page counts; it shows that you care enough to give them the very best.
One finished plan given to me a few years ago weighed in at two pounds. Thrown in with the appropriate and readable text were nine pages detailing every industrial and commercial film that the director made. Later sections included photocopies of numerous charts and articles from various publications. The investor was presumably supposed to wade through all this paper and reach a conclusion. Not wise. By filling your plan with extraneous paper, you might appear to be covering up an absence of fact, or you might give the impression that you do not understand the proposal yourself. Personal impressions are intangible, but they count. Always keep in mind that the human beings who read your treatise will have human failings. Once they are distracted or annoyed, their attention may be lost, and your package may be tossed in the “forget it” pile. Some rules are made to be broken, but the one about brevity and clarity is not.
Assessing Strengths and Weaknesses
Casting an unbiased eye over your plans is always hard for entrepreneurs. A strong desire for everything to work often clouds your vision. Evaluating the strengths and weaknesses of your project(s) in the beginning, however, will save time, turmoil, and money later. You might be able to describe the strengths of your company as follows:
- Associates of the company possess unique skills or experience.
- The distinctive characteristics of our projects set them apart from our competitors’ products.
- We have special relationships with distributors or other professionals or companies in related fields.
- Unique aspects of this business that will help us are
Film production companies are often started with a combination of production and distribution personnel with varying levels of experience. Newer filmmakers team with experienced hands-on producers outside the company. Well-established companies often seek experienced personnel when going into new lines of endeavor. New Line Cinema, for example, grew into a major independent production and distribution company with low-budget, mass-market products, such as the Nightmare on Elm Street (1984) films and Teenage Mutant Ninja Turtles. Skip into the next century, and the company was instrumental in that fantastic $300 million trilogy known as Lord of the Rings.
On the reverse side of the ledger are your company’s weaknesses. Be honest with yourself when identifying your company’s failings. This exercise saves many companies from later failure. By converting the strength statements to negative statements, you can spot problems. Write them down on a piece of paper to review:
- No one in this company possesses unique skills or experience.
- Our projects have no distinctive characteristics that set them apart from our competitors’ products.
- We have no special relationships with distributors or other professionals in related fields.
- There are no other unique aspects of this business that will help us in any way.
Being good in one area of business does not guarantee success in another. For example, suppose an entrepreneur from one area of entertainment, such as commercials, decides to go into theatricals, an area in which he has no experience. Although he knows how to manage a profitable business, feature filmmaking has its own unique set of concerns. The business requires larger sums of money per project than do commercials and involves greater risks in terms of market. Commercials are done on order from a customer; feature films are made on speculation of finding a customer. In addition, designing a good commercial is not related to knowing what makes a good script. Successful executives often rush into new businesses without preparing properly. Used to calling all the shots, they may have trouble delegating authority or may hire lower-level development personnel rather than experienced producers in order to maintain control. The producer can counter these weaknesses by studying the new industry first and hiring seasoned film people.
Running through this exercise will help you in two ways. First, you will locate the holes in the dike so that you can plug them before any leaks occur. Second, you can use it to assess how much confidence you or anyone else can have in your organization. In addition, pointing out the obvious to readers never hurts. You should not make readers work to see the good points. As to weaknesses, most investors are sophisticated executives and will see the problems themselves. If you do not mention how you will overcome the obstacles your company faces, the investor may question your ability to understand them. Being frank may help your cause rather than hurt it.
Start Small and Think Big
Since the first edition of this book, Business Strategies has worked with filmmakers with all kinds of experience, from none to 40 years. Trying to have a start-up company with more than one product is difficult. Often clients want to do films, distribution, videogames, and music—all at the same time. My advice is to start small and expand as the company becomes successful. Make a few films first, then start your own distribution division or become a developer of videogames. For a new company, you need to have focus. An array of products stretches everyone’s attention and energy.
The same advice goes to people who want to create a film company with the goal of 10 to 15 films in the first five years. A business plan is great, but the word “plan” is operative here. The new owner doesn’t know for sure how long it will take to get up and running.
In addition, running a company as opposed to being a studio producer or an independent working on one film at a time requires different skills. New Line has been in business for more than 20 years. The Weinstein brothers (who many clients want to emulate) started Miramax as a small domestic distributor in the 1980s. Many successful years later, the company became the proverbial “800-pound gorilla” in the indie world. (See Chapter 4 for more on the brothers and their emergence from the Disney fold as The Weinstein Company.) The point is that these companies started small and grew to multiple films per year and assorted ancillary divisions through making profits over time.