10

The Financials

Forecasting Without Fear

Being in the Prediction Business

When I first started in the film business, several accountants insisted that I couldn’t predict the future. I said, “Yes, but it is a lot of fun trying.”

The truth is that we don’t know the future. Then why do we attempt to forecast? No one can afford to run a country, school, or film business without having an educated guess about what will happen based on current and past results. Math is just a device to organize this data into a rational picture. Whether you are planning one film or a slate, only when you have a clear picture of future results can you proceed with a feeling of confidence. In the past 183 years since moving images were shown on a zoetrope (moving drum for animation created by a British mathematician), little has changed except the technology and net profits. In the beginning, there was no sound. Now actors talk, and we have 3D.

For filmmakers, predicting the revenue and costs associated with films to be made is a necessity. As long as you have a good rationale, you can’t let fear stand in the way. Will you be right? Chances are that audiences, critics, and other forces out of your control will interfere. Yet you need to have a logical basis for going ahead with the project and asking other people for money. This chapter reviews how to find data, what to do with it after you find it, and how to create your own financial forecasts.

“I can’t do math” is a statement I have heard for years from students. In reality, they can but just don’t want to. Their idea of a business plan is a synopsis of their film and, possibly, an idea of who wants to see it. Although important, these items are the given quantities on one side of the equation for estimating revenues and costs. Remember the investors? They are going to read the Executive Summary first and then go quickly to the financials. Money is the glue that holds these building blocks together. As I indicated on page 1, the math is simple. What you will learn is how to analyze the answers.

A filmmaker recently asked me whether my business plans only showed films making a profit, no matter how low. The short answer is “Yes.” Before investors hand over hard cash, they want to believe that your project will be profitable. A Mark Twain quote that I used to use at the beginning of this chapter is, “Get your facts: then distort them as you please.” In rethinking the quote, I became concerned about the phrase “as you please.” Partially, this is true. However, keep in mind that whatever the forecast, it has to look reasonable to “the person who has the gold.”

Forecasting is an art, albeit not a precise one. Sophisticated business writers like to say that the one sure thing about a prediction is that it will be wrong; they are probably right. The value of a forecast is as a guide for making decisions; the better informed the forecaster, the closer to actual events the forecast will be. By researching history, obtaining the best data possible, looking for relationships among the data you find, and making assumptions about the future based on those relationships, you hopefully have a rational basis for your forecasts.

When writing your business plan, you have to decide which group of numbers tells your story best. The most recent data may be a year or two behind because of the flow of revenues. Rather than putting whatever spin on these statistics appeals to you, a few more years of historical information is needed. Remember our discussions about investors in the previous chapter? They value two things most of all: facts and common sense. Your goal is to show that the independent film market is robust and that profits can be made.

Anyone Can Do It

There is no mystery to forecasting revenues and expenses. You do not have to be an accountant or hold an MBA. You do not need previous knowledge of regression analysis or internal rate of return. This jargon is used by financial whiz kids to speak to one another; life can go on without it. You can take numbers from the most credible sources and create projections that look feasible. You will take the elements that seem to influence the outcome of a film—genre, stars, director, distribution, revenues, and costs—and analyze how much you think each will influence the resulting revenue. The only math skills you will need are adding, subtracting, multiplying, and dividing, as well as an elementary understanding of ratios. For example, how much times the budget is the box office? Mix these skills with some good judgment and you have a forecast. If you can balance your checkbook, you can create a forecast. If you actually can’t balance your checkbook (which is different than just not bothering to do it), hire someone else to do the analysis.

The word trend is another word that seems to bother filmmakers. You will see it a lot in the online instructions on forecasting. If I asked you what genres are currently popular with audiences, you would have an answer. If I asked what genres are trending, you might or might not recognize it as the same question. It is simply showing a tendency in what the audience may like. In forecasting, we use the ratios to show the tendency of revenues and costs to go up, down, and remain the same over a few recent years. The book’s companion website takes you through easy steps to calculate the trends.

Finding the Data

What Are Comparative Films?

Forecasting requires that you use films that reasonably can be compared by theme, budget, and release date. Due to inflation, audience tastes, numbers of screens, and other film business trends, the industry standard has been five to seven years including the current one. I have always used the five most previous years plus the current year.

What makes a comparative (comp) film is a combination of factors. First of all, making an independently financed film does not mean that you can only use independent films. For low budgets, most of the films within a reasonable budget range are likely to be the only ones available; however, that has changed over the last four years. If you recall, we mentioned that the studios have been moving back into the low-budget arena by making deals with successful filmmakers. Nevertheless, if you were forecasting a film with a budget of $1 million, few if any comparatives would be studio films. On the other hand, a film with a budget of $40 million is going to have more of a mix. The more independent films you can use, the better. What you are trying to show, however, is what films with a mix of certain genres and themes have done whether or not they were made independently.

Secondly, what is a reasonable budget range? With a $2-million budget, I would like all comp films to be at $8 million or below on the high side. To find enough films, however, you may have to move the upper limit of budgets that you are using. In recent years, I have had to go to $10 million depending on the genre of the film. Nevertheless, as talented as you may be, don’t use a $15 million film in this comparison. Production quality and cast become more important the higher you go. With the advent of digital film, the concept of having a budget that includes a transfer to 35mm is important. I have found it is often difficult for filmmakers to comprehend. At this point, of course, there aren’t enough films to compare. As discussed earlier in the book, despite the number of digital screens, all the profitable low-budget films that I have found were released theatrically in both digital and 35mm. What if you are shooting on 16mm film? What will your film look like when it is transferred to other formats and shown on the big screen? When comparing your film to other movies, remember that the audience doesn’t care what technical format you used to make the film, they care about what the film looks like and who is in it.

On a statistical basis, I feel that at least four to five films per year are required over the three years for which worldwide data are available. Since it takes up to two years for all the worldwide data to be in a credible database, in 2016 I am using films released in 2012 to 2014 for the worldwide data. For the two current years of 2015–2016, I am using the domestic box office and budget only. (Different timeline assumptions that apply to documentaries, animated films, and large format are discussed in Chapter 12, “Breaking the Rules.”) Now that you have decided your time span and budgets, you can then start looking for films that fit.

Matching Your Film

Do they all have to be just like your film? Films can be similar in genre and subthemes; however, it is unlikely that at any budget you will find 15 films “just like yours.” After all, your film is going to be unique. Therefore, start with your overall genre. You may have a crime drama. The film also could have action, romance, gay themes, coming-of-age, or a host of other themes.

The goal is to use films that relate to at least one of these. To fill out your list, budget is also a consideration. Since you are likely to be asked by an investor why you used certain films, have a reason for each film that you use. All you can do is your best to have a rationale for each film. There isn’t a rule as to what will seem reasonable to a given investor.

The data that you gather about previously released films will serve two purposes: (1) show the profits of films recently released and (2) supply a basis for estimating the revenues and total costs for your films. The first part of your numerical story consists of showing what has happened with films that have already been produced and released. You use these examples to build a case for the ultimate success of your film. Select recent films that have a relation to your planned production in terms of genre, budget, or other common factors.

Genre is a common way to group films; however, use whatever characteristic you feel links these films together. But whatever your rationale for grouping films, use budget clusters that make sense. The films you include in your business plan depend on what is available. It is your choice whether to include films that have lost money. There is no database that includes all the films ever made, so you can’t have a “fair” sampling no matter what you do. However, if you use only three films with extraordinary results for your projection—for example, Paranormal Activity: The Marked Ones, The Purge: Anarchy, and The Gift—you are being unrealistic; and you will be recognized as such by most investors. Of course, with those films, you can’t use Mad Max: Fury Road, either. What is that? You think I am being facetious, because it doesn’t relate in budget or genre. You would be surprised at the comparatives I see in the business plans that filmmakers ask me to critique.

Recently, I did a business plan for a $3 million-thriller film that was not horror. I went to IMDB and used the “Titles” feature to look for thriller films released between January 2012 and December 2014. A list of 3,843 films came up. Of the films that were less than $10 million in budget, many had either no U.S. box office or one that was too minimal to use. There were four films that I felt I could use for forecasting in this particular business plan. I could use the higher budgeted films in the Markets section, where you can use a film of the same genre regardless of budget. For the comps, though, there still were crime and romantic drama films that were reasonable (notice how often that word pops up) to use, as the story lines and budget ranges fit this particular movie.

Where Do You Find Information?

The first step is to see what films you will want to use. I always use IMDb Pro. The site is the best way to search for likely films by genre and keywords. For example, Crime is a genre and murder and bank heist are keywords, as are many others not included in the “main” genres that you can click when using the “Titles” category on the home page. It is the best way to know what films might be available.

Once you have picked the films you want, including budgets can be another question. Hopefully, most of the films you use will have budgets from the same source. Often you have to go to other sites. Since I recommend checking the total box office grosses at boxofficemojo.com, I would look there first. Otherwise, check for interviews with filmmakers and reviews in the public press. For current films, check television and radio shows for the appearance of a filmmaker. They often appear on the daytime and evening news and talk shows to promote their films. The film festivals are another place where you can gather extensive financial information. Many producers and directors of independent films attend, and they will usually answer questions about not only the cost of their films but also the source of their financing. People often feel more comfortable about revealing proprietary data when face-to-face.

For the total domestic box office data, I double-check boxofficemojo.com. Since the box office dollars include Canada and Puerto Rico, I refer to the grosses as domestic or North American rather than United States.

Revenues for ancillary dollars, both domestic and foreign and foreign box office, as well as the amount of the prints and ads (P&A) costs are harder to find. If you see this information on the Internet for free, the chances are that it is wrong. You need to have crediblesource for the data to withstand any challenge from an investor. To find all the data you will need for your three years of worldwide numbers, you will need to buy the information. The source I currently recommend is Gracenote: http://www.gracenote.com/video/studio-and-celebrity/. Scroll down to “Studio Intelligence” and then fill out the form and mention FRCEs. Someone from Sales will contact you. As Gracenote recently bought the Baseline database, this contact and the prices may change. At the moment they appear to be $100 to $200 per film. I will keep track on my website.

In previous editions, I had a separate section for average foreign revenues. The section included a table of typical revenues from individual foreign territories for a $1.5-million film. With presales in flux and foreign territories giving more and more screens over to their locally made films, I don’t feel it is appropriate to put together such a table at this time. Distributors either are giving very low numbers or saying that there aren’t any foreign sales at all for low-budget independent films. As always, the foreign value of any film depends on the story, cash, etc. In addition, the trade papers have been reluctant to estimate such sales since. The trade papers used to have charts of foreign revenue with titles like “The Going Rate” and “Global Revenues.” The last of those charts appeared in 2007. Note their names in case they reappear when the world economy gets on a better footing. When I feel there are real numbers, I will include the information on the book’s companion website.

When forecasting, you always want to be conservative, so you would use the average return of dollars. For example, in Japan, you see that the high is $70,000 and the low is $20,000. This does not mean that all distributors will pay you $70,000; generally, the most they will pay is ten percent of the budget. Use the average figure, which is $45,000. You have to go with the best information you can get. Whatever tact you take, heed this warning: DO NOT INVENT NUMBERS. If lying does not bother you, getting caught in a lie will. Then the game will be over. If telling the truth isn’t reason enough, you may have investors check some of your sources, which will be listed at the bottoms of your tables. Or, as I have seen many times, some friend of theirs will claim he saw “something somewhere that was another number.” Worse yet, your potential investor may have a relative or friend in the film business who can check the data. All sources will not necessarily have the same information; however, you want to be able to point to your sources as the most credible you could find.

Analyzing Those Pesky Numbers

Did I say “without fear” in the chapter title? You must analyze the data before putting them into your proposal. Be strong. You can do it. When collecting and analyzing, keep in mind another favorite quote from Mark Twain: “There are three kinds of lies: lies, damned lies, and statistics.” The discussion of financing and your presentation of comparative films, projections, and cash flows is the single most important section of your business plan. The filmmaker’s job is to be honest and use common sense.

I have said it before, but filmmakers have convinced me that I cannot say it too often. This analysis is your job, not the investor’s. Do not expect the investor to accidentally happen upon useful information while browsing through the 15 or 20 pages that you have photocopied or downloaded from a website. It is your duty to find useful information and present it in an easily understandable way.

Tables 11.3 through 11.6 included with the sample business plan (see Chapter 11, “Sample Business Plan for a Fictional Company”) are examples of methods for presenting comparative films. The films listed in these tables are fictional but are based on the results of real films. These sample tables include the following items:

1. Domestic theatrical rentals: Domestic rentals are the portion of the North American theatrical box office that reverts back to the distributor (or producer). (The tables in the trades include Canadian box office figures in this total.) There has been confusion in recent years, as we also refer to DVD rentals. The term domestic theatrical rentals is the industry standard and should be used. As mentioned earlier, when working with numbers, you should avoid factoring in exceptional movies that would make all your averages too high. If you want to include Fireproof, list it and indicate in a footnote that it is in your chart for reference only. Just as on any given day any team can win, it is theoretically possible for any film to be a breakout hit.
2. Domestic ancillary revenue: The ancillary revenue includes all nontheatrical sources, such as DVD/Blu-ray, streaming, cable, free television, syndicated television, pay-per-view, and digital. Distributors have been trying various formulations of revenue sharing as opposed to paying per unit. In addition, there are ongoing changes in the newer ancillary forms. However, new standards have not been set, and it is too early to know their effect on independent film. Pay-per-view is growing, although not as quickly as analysts have expected.

   When specific numbers do not exist for individual films, some analysts use a general estimate. Those estimates are derived mostly from studio films, so they are more appropriate for budgets over $15 million than for other films. Although release times (windows) into home video have become shorter for studio films, the windows for indies have remained the same on average. Cable and the premium channels are getting movies sooner than they used to, also. Be aware that although a few of the indie films financed by cable networks have had a U.S. theatrical release, most do not. In the past, PBS has also financed documentaries that have had a theatrical release prior to being shown on television.

3. Foreign theatrical revenue: The distributor is responsible for collecting money from other countries. In the United States, the industry assumes that the North American box office drives all the other windows. If a picture does not perform well in U.S. theaters, therefore, all other theatrical and ancillary venues may be worth less money. On the other hand, some films that have only moderate results in the United States do much better overseas. In addition, it is more frequent than earlier for an independent film to be released in either multiple countries at the same time or overseas before the United States.

   To make the picture even murkier, there are films that do very well at the domestic box office and in domestic ancillary revenues but have virtually no foreign revenues that are recorded. Depending on the gross profit of those films, they can still be used. The type of film and the stars often have a lot to do with these results. For example, Tyler Perry’s Madea films have historically made big profits; however, the databases show little foreign revenue for them. On the other hand, certain U.S. television stars whose shows are marketed worldwide are important to filmmakers for the foreign markets. Before making any assumptions about the value of actors, however, it always is good to check with distributors.

4. Foreign ancillary revenue: Foreign ancillary presents a great opportunity. Television companies often buy exclusive product. The potential revenues for English-language films, even small ones, in other countries remain much stronger than for foreign-language films in the United States. Markets have opened up in Eastern Europe and Asia. China began to expand the number and types of U.S. films they would accept in 2011. Independent film companies established alliances with Chinese companies. For example, Chinese private-equity firm Hony Capital and Huayi Bros. Media Corp invested in STX Entertainment; China’s Fosun Group in Jeff Robinov’s Studio 8; Chinese conglomerate Citic Guoan Group Co. Ltd in Dick Cook Studios; and China's Meridian Entertainment in James Schamus’s Symbolic Action. In addition, China's Dalian Wanda Group bought Legendary Entertainment and AMC Theaters, North America’s second largest theater chain.
5. Total revenue: This is rentals plus domestic ancillary plus foreign equal total revenue. The foreign dollars are assumed to have the exhibitor portion removed and, therefore, can be added to the domestic dollars to find total revenue. Always be sure that you are comparing apples to apples.
6. Negative cost, P&A, and total costs: We have already discussed finding the production, or negative costs, of the film. These are not the total costs, however. P&A are an important expense. It is necessary to include these costs to get a total profit picture. As films stay in distribution, the P&A costs grow. Therefore, if you are forecasting the initial release cost, indicate it. The most credible source for this type of information is still Baseline.
7. Gross profit (loss): Gross profit (loss) equals the revenue minus the direct expenses before the company’s operating expenses. In this case, direct expenses are the negative and P&A costs. They relate directly to your film, as compared to the company overhead costs, which exist whether a film is in production or not. Notice the parentheses around the word loss. When preparing financial statements, use parentheses rather than minus signs to indicate negative numbers. Both words can be written on the profit line. However, if there isn’t a projected profit, you may want to rethink the whole idea.

Forecasting Without Fear

Now we come to your film. Here are two guidelines for projecting your revenues. First, be conservative. A generally accepted business principle is to forecast your income on the low end and your expenses on the high end. Probably, all filmmakers who have ever done a budget have padded it to be sure that they did not run out of money. You want to take the opposite path for revenues. If you are making a $1-million Indian-themed film, you would be fooling yourself to assume that the film will gross $141 million, as Oscar-winner Slumdog Millionaire did. It is nice to aspire to be an Oscar winner, but you can’t plan on it.

Second, be honest. As long as the data of your historical films are as accurate as possible and the films you choose are comparable to those you plan to make, you should be all right. The type of comment I’ve heard most often from filmmakers with an inspirational film is, “Include The Passion of the Christ as an average film.” Yes, here we are in 2016, and filmmakers with inspirational dramas want to include an extraordinarily successful movie from 2004 in the comparatives. Feel free to discuss it in your analysis as an example of an iconic film with an exceptional result to hold out the brass ring as a hook for the investor.

Assumptions

Before opening a new Excel table, you should write down your assumptions. Unless you have concrete reasons for the forecasted revenues in your tables, people may assume that you invented them. There has to be a thought process leading to these numbers. Since you have just written 15 or 20 pages for the preceding sections, you have already gone through the thought process. In most cases, the crucial elements have already been mentioned, and the list is a recap for your benefit and for the investor’s. Do not expect readers to remember the specifics from the body of the business plan; you are not playing a game of hide and seek with the investor.

Explain your assumptions at the end of your Financing section, directly before the tables, to be sure that the reader knows how you came to your conclusions. If you do not do this, it may look like you have no rationale. Review the assumptions in the sample business plan both in the book and the files you have downloaded from the companion website before continuing.

Revenue and Expenses (Income Statement)

The Projected Income Statements (Tables 11.7 through 11.9), also known as the Statement of Revenues and Expenses, show the profit for each film. Likewise, the Summary Projected Income Statement (Table 11.1) indicates the bottom line for the company. In a one-film plan, you will have two tables of comparative films and Table 11.3 will show your net profit.

As I say in a preamble to the sample business plan, whether you are doing a business plan for one film or a company, the methodology is the same. In a one-film plan, you won’t have summary tables. On the book’s companion website, you will find a complete Financing section for one film using Len’s Big Thrill from Chapter 11, as well as a sample business plan for one film.

The sample shows a straightforward production company in which all the income is from films. If you are planning to produce other products or have additional divisions, such as direct-to-DVD or distribution, you will need other methodologies and types of tables for those items. You will have to provide separate assumptions and cash flows for those products because they function differently from film. Then make a combined statement that includes all the products. Unless you are a very experienced filmmaker who already has owned a film company, however, I suggest that you don’t diversify yet. Add other divisions after the initial film company is profitable.

Looking at our numbers, you can take the average or the median (the point above and below which half the films fall) of all the films, or you can give more weight to the more recent films. (Do not panic. The “how-to” is contained in the downloaded files.) It depends on whether you feel that the genre is gaining more audience approval or has been drawing the same amount of box office dollars for the past few years. You have to look at the available data and use good judgment.

Note that these tables show worldwide results. As you will not have these for the two most recent years, you want to include a table for each film (Tables 11.4 and 11.6) that shows the box office and budgets only for those years.

The net profit (loss) line is the sum of the company’s revenues and expenses. Commonly, the phrase “before taxes” is added to indicate that this is a preliminary income forecast. Do not let these phrases throw you. An accountant can easily prepare these statements for you.

Cash Flow Statement

A cash flow statement shows the timing of incoming revenue and outgoing cash. The dollars will not come in all in one week or one month. Table 11.10 shows the cash flows for the individual films, and the summary is given in Table 11.2. Notice that in the columns for the tables, I have used generic terms—Year 1, Year 2, Year 3, and so on. If you are looking for the production money, your year starts when that money is in the bank. To specify the first year—for example, 2017—could create a problem. What if you are still wandering around two years later looking for money? Finding money and getting the cash in your bank account is hard; no need to announce it to your current prospect.

In addition, each year is further divided into quarters. This seems to make the most sense for showing cash flow. I would shy away from individual months. There is no way to actually track each month. Unless you have the distributor’s monthly accounts for various films in front of you, there is no way to track such data accurately. You have to give your investor a readable document, even if you aren’t crazy about the idea. Use my formula. I retest it with each new edition.

In the sample cash flow statements, all of the production money is outgoing in Year 1. I have assumed one year from the beginning of production to the end of post-production. (The exceptions in this cash flow scenario are animated and large format films, which are discussed in Chapter 12.) I use six months (two quarters) before I indicate the release of the film.

An independent filmmaker won’t know the actual timing in advance unless she is doing her own distribution. There is no average length of time between end of post-production and the release date for an independent film. Even if you already have a distribution agreement in place, you won’t know. (I am making an assumption that vertically integrated companies like Lionsgate and The Weinstein Company aren’t buying this book to find out how to calculate cash flows.) In order to make the table readable, I skip the two quarters before distribution starts and make it clear that the plan is not promising a specific interval. Note there is the following comment at the bottom of the table: “For reference only. How and when monies are actually distributed depends on the contract with the distributor.”

The first rentals are shown during the quarter in which distribution begins. Throughout the year, we track domestic grosses week to week to find trends in the number of theaters and the amount of grosses. Going through that exercise will reveal a pattern that you can use. Average release “windows” give you an idea of the money flow from other sources. Most films don’t stay in the theaters longer than six months; however, due to some long stays in the theater, I have a small amount of revenue still coming in a third quarter. The median stay for independent films is about four and a half weeks.

We can track when films go into home video but not necessarily how long they are there. In addition, there may be a different method on how the dollars flow back to your distributor, the head of your revenue food chain. Therefore, I have chosen to include them, as the distributor normally does the accounting for money that is owed to the filmmakers and their investors—once a year.

For foreign revenues, all sources are grouped into one number. Not all films are released the same way. Some countries actually legislate the time period; in other cases, the distributor negotiates it. Some films go directly to home video, which is a more popular distribution method in Europe and Asia. Trying to figure this out country by country would be excessive. The timing has been very fluid lately, so it is a good idea to research the topic to keep current. The films go into foreign release in the third quarter of Year 2, approximately seven months after the domestic release date.

The total line is the sum of the incoming cash minus the outgoing cash. Do not panic over minus totals. While your film is being made, there is no revenue. The amount of eventual profit is the deciding factor. In companies, the minus total may last longer than in a one-film plan. As in Table 11.2, depending on how often you plan to start pre-production on the next film, the costs for the next film coming in, as well as the P&A money spent by the distributor, may keep a negative number in the cumulative total for several years. In a multipicture company, the cash flow statement allows you to see whether you will have enough money coming in to keep production going.

Overhead (Administrative) Expenses

This table is used only for a business plan with multiple films. In the overhead table (Table 11.11), I have not included specific numbers. It is meant to show you what line items you may have to use. These differ from film to film, city to city, and country to country. While the films are clearly fake, I don’t want to take the chance that the reader someone will copy the dollars in my overhead sample. You must research what those costs are in your community. In addition, add anything that is specific for you and leave out line items that don’t relate to your film. The total for your overhead expenses is then adjusted by the net profits for each of your films.

An ongoing company has its past history to report, along with a statement of its present position. Your accountant will do the serious reports for you, such as Sources and Uses of Funds, Balance Sheet, and so on. These go into your Financing section along with the other tables. As new companies have less to report, don’t worry. Just report what there is. There may or may not be a bank account worth mentioning. Present information that must be included in the business plan, even for a very small company.

If you are setting up a company, you will have ongoing expenses, far less than those of the studios, of course. These general administrative costs include salaries that are not attributable to a specific film budget as well as all of the company’s tools of the trade—office equipment, telephone charges, entertainment costs, and so on. Your company may have fewer people or no salaried employees at all. Before Year 1, there are generally start-up expenses. You may rent an office, option a script, buy a computer, or scout locations in the Dardanelles. Any expenses that are necessary to get your company going are shown in this table. Even if you wait for investment funds before doing any start-up, list these costs separately. Some of them—like the computer—are one-time costs.

Like everything else, administrative costs are projected over the time period of the business plan. Look ahead to the number of films that you plan to make three or four years down the road. You may need additional office staff, more office space, or increased development money. Everyone knows that these numbers are guesstimates; however, as a general rule, you should include all the expenses you can think of. On the other hand, do not give yourself a salary of $1 million. I see this item in a lot of companies that never get funded. Because you are partners with the investor, your salary should be moderate.

What If I Only Have One Film?

No matter how often I mention it in the book, filmmakers often don’t understand that the biggest difference between doing a one-film plan and a slate of films is more films and tables. A one-film plan has the same text sections with perhaps less text in each one. As a filmmaker (producer, director), you are the manager of a small company. The other big difference is that any expenses need to be in the budget of the film rather than a separate overhead. Don’t overburden this poor film with your car and house payments. Include only those things that belong in a film budget. You will be splitting those massive (let’s be positive) profits with your investors.

The layout is the same for one film as for multiple films, but fortunately you have less number crunching. Your first table will be comparative films for the past three years (or four if you need them) for which you have worldwide numbers. Your second table will be the two years for which you only have U.S. box office and budgets. Then you have an income statement (without the overhead) and a cash flow statement, which will be similar to any of the individual films in the sample business plan.

The Next Step

Review Chapter 1, “The Executive Summary,” and then study the sample business plan in Chapter 11. Work through the sample in the downloaded files from the companion website. Feel free to use this format as a guide in writing your own plan.

Have fun, and good luck!