Modern Filmmaking Business Plan

Figure1. Cognitive channel preferences of targ...

Image via Wikipedia

Most filmmaking business plans are stupid. Why? Because most filmmakers have no idea how to project a possible return on investment.

Don’t feel bad. It’s not your fault.

Until five years ago, distribution was discriminatory, abusive and monopolistic. As a result, the old business model for indie filmmaking relied heavily on some 3rd party, middle-man distribution strategy. “If we are really lucky we will get into Sundance and get rich.”

These days, relying on a 3rd party middleman to buy your movie is like waiting for the Tooth Fairy. It’s a nice thought, but it’s not solid business. Instead, I recommend you answer these questions before you go into any production:

  1. Who Is Your Target Audience?
  2. How Large Is Your Target Audience?
  3. How Will You Reach Your Audience?
  4. What Is Your Marketing Strategy?
  5. How Many VOD Sales to Break Even?

After you answer these questions, then make sure you incorporate your marketing costs into your initial budget.

You might ask: “What if I just want to make movies and sell my movie?”
My response: “1995 called and they want their dumb distribution plan back.”

Like it or not, the world of filmmaking has changed.

If you hate asking permission to become successful in your own moviemaking business, then make sure you sign up for the filmmaking stuff newsletter.

How To Break Down and Schedule Your No-Budget Movie

If you’re a first time feature filmmaker, you do not need a gazillion dollars to join the feature club. But you will need to learn how to replace money with ginormous creatively. And once your screenplay is complete, then the next step in the filmmaking process is your initial breakdown and schedule.

Breaking down the script means you go through your screenplay, number each scene and highlight each element, including locations, characters, props, make up, wardrobe, picture vehicles and special FX…

All of these things cost money. And once the script is locked, any modification you make to the story or schedule, no matter how minor or major, will subsequently impact the budget.

My producer friend Forrest Murray always says the script, schedule and budget are the same document. You’ll need all three to make a movie… But in the process, if you change one document, you’re actually changing all three.

I’ll chat about this some more later. For today, let’s focus on your initial schedule so you can eventually get to your budget.

Schedule Your Movie And Save

1.After you highlight each element, you’ll want to figure out when you want to shoot your movie and how long you plan to shoot.

2.You can determine this by choosing how many pages you want to shoot per day. Then you can decide if you want to shoot 5 days on and 2 days off, or 6 days on and 1 day off. Or maybe you want to shoot your movie over a few weekends.

3.Everything in the script will impact your budget. There is software for this. Final Draft offers an add-on called Tagger. Tagger allows you to go through the script and pick out elements and highlight them in various colors. Once all elements are selected, you can eventually import this list into your budget and schedule software program.

4.After giving this your best effort, if you still feel stuck, seek expert advice.

5.Eventually, these elements will have a price in your initial budget. What is the price of each element? How much does your movie cost?

Many motion picture professionals make a living just breaking down, scheduling and budgeting movies. So it’s a pretty complicated and creative area. As a first time feature filmmaker, it save you many headaches if you partner with an seasoned 1st AD or Line Producer who could guide you through the process.

If this is not possible for you, I suggest reading every article on the subject as well as watching every YouTube video. This will teach you how to think like a cost conscious, responsible producer.

Regardless of your decision to complete your own breakdown or hire someone else for the job, the reason you’ll need an initial schedule is because this will give you a good starting point… You’ll utilize this information to figure out your budget. You’ll also be able to figure out if you need to cut an element or two, or not.

Cut Your Budget

Once you have your initial schedule, (and assuming this is your first feature), I suggest you create a budget for your movie in the neighborhood of $500K. Before you go crazy thinking this is a lot of money (or a little money), I want you to know you don’t actually have to spend $500K in hard cash to meet the needs of your budget.

In fact, once you determine you’ll make your movie at $500K, you are going to spend the next few weeks working backwards to see how much hard cash you can replace with sweat equity, discounts and favors from friends and family. Why $500K? Because if you actually have the elements budgeted, there is a good chance your movie will look better than if you budgeted for a mere $50K.

The reason for this is mostly psychological. By setting your budget at 500K, you’re going to start out with goal that forces you to get a higher production value than if you simply settled for pocket cash.

Later, with the application of tremendous creativity, it will be possible to reduce a $500K budget after discounts, free food, locations and salary adjustments quite significantly.

Do you have friends who own locations you can utilize for free? Do you have access to discounted equipment? Can you finish your movie faster than scheduled?

Do you have a friend with an edit suite?

Can you shoot some scenes outside during the day to reduce the need for extra lights? Can you find free food for your cast and crew? These are just some of the ways you can reduce that $500K budget.

One of my buddies was able to do this on the cheap. He had a location budgeted for $5K. However, after my buddy spoke with the owner of the location, the fee was reduced to zero. How? My buddy (a creative producer) agreed to shoot a promo for the owner’s business. Another filmmaker friend got free food for his entire shoot simply by asking.

The food supplier was thanked in the credits.

Deals like this happen. But it takes creativity to find opportunity. Here are some questions to ask:

How much money do I have?
How can I reduce expenses?
Can I get free food?
Who do I know who has the location I’m looking for?
How much money will I need?

The other reason you want to keep your first feature budget low is to allow greater opportunity for return. In the event you get a standard distribution deal (which is becoming more and more rare), your movie should look expensive.

If your budget is $500K and the movie looks like $500K, but you only spent $50K or $30K $15K in ultra-low-budget hard cash, and someone pays you back your budget, then you just made a crazy profit!

Nice work.

And in the event you do not get a standard distribution deal, then you’re not quite as deep in the financial hole as you otherwise would be.

Sell Your Movie

Lasky's original studio, aka: "The Barn&q...
Lasky’s Original Studio, AKA The Barn —  Image via Wikipedia

If you’ve made a movie or you’re working to make your movie (and I hope you are), you might also be thinking about how you’re going to sell the sucker.

I mean, despite the fact that filmmaking is fun there is a business component to it. If you fail to think in terms of Return On Investment (ROI), then getting money for your next movie is going to be even more difficult than the first, for two reasons:

  1. You’ll need to worry about money to put food on the table.
  2. Your prospective investors will want to see your track record.

As a filmmaker, the other factor we have to consider is our initial budget. Go too high and the chance of return could diminish. Let me explain.

I’ve chatted with a few heavy-hitting friends in the industry (that I hope to interview soon) and there is talk about what I’m going to call the “no-man’s-land” of indie movie production. That is, there is a budget range from roughly 2.5M-10M that is becoming increasingly difficult to finance.

Tax credits and other deals aside – What I’m suggesting is due, in large part to changes in movie distribution and the subsequent challenge of generating enough revenue to recoup the initial investment.

Indie film financing was always a crap shoot – but take away potential sales channels and add the fact that technology now permits virtually anyone to make a decent looking movie and you can begin to understand why this is happening.

While I’m on the subject, I’m not just talking about the indie movies. I’m including studios as well. Thanks to the success of Paranormal Activity,  there is now word that Paramount is going to launch a micro budget division and begin to churn out movies under 100K.

From a business standpoint this makes sense. You invest 100K and you get 100M – That’s pretty good! (Understatement).  But from holy crap perspective, the ripple effect of a studio churning out no-to-low budget movies could potentially rip a hole in the ways Hollywood traditionally operates. (BTW, Paramount is not the first studio to attempt this. But thanks to VOD outlets and more digital projectors in theaters, what didn’t work at this budget level in the past could very well work now.)

Lets talk some numbers…

Traditionally, when movies are financed most people including grips, gaffers, craft services and other crew – they get paid on the front end as part of the movie’s budget. We can also include some agents, managers, lawyers, Teamsters, writers, actors – and mostly everyone else too.

On the micro budget level however, there isn’t enough money up-front to pay these folks what they were formally worth. So there are a few options. Hire less people. Hire non-union folks. And offer to pay Teamsters deferred pay with the added bonus of copy and credit. (I’m adding some humor here – but can you imagine Paramount trying to offer a Teamster deferred pay?)

Ok, so what does this mean for you and your movies? Well just look at the music industry. Recording studios and record companies took a nose dive. But that hasn’t stopped people from making music or making money making music.

Instead of asking some idiot in a suit for permission to make music, musicians can now find their audiences, build a following and sell their music… Without a middle man – globally. That’s pretty amazing.

The same wide open world applies to your movie. Do good work and people will notice. Do bad work, and well, you still have the opportunity to find the 20 people in the world who think you’re brilliant. And in terms of pay structure – I made a joke earlier about deferred pay. But I am not totally opposed to some well structured back end deals. I mean, 1/4th of 1% of 100M is – it’s nothing to sneeze at.

Of course, as we all know there is no guarantee that any movie project will make money. So for you and me and most indies, it will take roughly two years of hustle to churn out a movie that we can be proud of. For the studios, they are going to churn out micro-budget movies like widgets in a factory.  The odds of success, for both of us  – the indie filmmakers and the studio are getting closer equal.

And I think that is something worth celebrating.

Is anyone else excited about this? Please feel free to comment.