Business Plans for Filmmakers
Publication Year: 2010
With simple yet thorough detail and clarity, Cones outlines the legal requirements affecting movie proposals, including ways to evaluate the necessity for a business plan or a securities disclosure document, as well as the legal definition of "an active investor." Also addressed are the numerous subjects filmmakers and students must consider before a film offering, including the efficacy of a business plan to fund the development, production, and distribution phases of a film; common elements of fraud of which fledgling filmmakers should beware; the intricacies of revenue sharing; and how to render financial projections. Cones also imparts useful distinctions between such industry terms as "company financing" versus "project financing," along with many others.
This book also includes in-depth guidance through the murky paths of investor analysis and key strategies to find and attract parties interested in financing film. Drawing upon his many years as a securities and entertainment attorney, and his experiences advising independent film producers, Cones offers the tools necessary not only to understand investors' motivations but also to use that knowledge to the filmmaker's advantage. Also provided are perceptive studies of the investment vehicles commonly used in business plans seeking investors, with analysis of each method's pros and cons. Throughout the volume, Cones uses sample plans to offer a real-world grasp of the intricacies of the business.
In the business of this art, knowledge is power. Business Plans for Filmmakers dispels the myths and misinformation circulating among filmmakers to provide accurate and useful advice.
Published by: Southern Illinois University Press
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Title Page, Copyright
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Considered from a broad perspective, this book is written for a fairly customary reason: to fill a perceived gap in the film-industry literature. More specifically, however, the existence of this gap is primarily due to a failure on the part of business-plan consultants, entertainment attorneys and film-industry association executives to provide ...
1. Preliminary Considerations
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The first of several important preliminary considerations for a filmmaker thinking about preparing a business plan is to determine whether he or she really needs a business plan or not. Unfortunately, filmmakers are often advised to create a business plan to help them raise money, even when a business plan may not be appropriate. In all fairness, the business plan is not a financing vehicle or entity, and investors cannot invest in a business...
2. Cover Page and Table of Contents
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What are the essentials that must be on the cover of a business plan, and who has the authority to make such rules? The answer to both questions is that there are no requirements relating to what must be on the cover of a business plan, because there is no authority that either makes or enforces such rules. This is one of the many differences between a business plan and a securities disclosure document. Both the federal and state governments...
3. Executive Summary
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In the context of a business plan being prepared for a film or film slate, this section may be called the “Business Plan Summary.” After all, it may or may not be prepared for or read by executives. Thus, again, the “executive summary” language appears to be a carryover from business plans drafted for corporate funding. Executives are closely associated with corporations. Other businessplan preparers also suggest the alternative title of “Statement of Purpose” as either a substitute for the entire...
4. The Company or Investment Vehicle
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Once again, the more traditional major section of a business plan called “The Company” (or sometimes “Company Description”) appears to be a carryover from the corporate business plans, in the sense that it is important in such business plans to spend some time talking about the company in which the investors are investing. In project financing, where investors may be investing in the revenue stream of one or more films...
5. Management: People Committed to the Project
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Once again, we first have to ask, “Does this section have to be entitled ‘Management’?” which is the traditional corporate-type business-plan title for this section dealing with the people involved. The answer is “No.” In fact, under some circumstances using the term “Management” as the title of this major section in a business plan could be confusing or misleading. For example, if the investment vehicle is a member-managed LLC, and the filmmaker wants to include the narrative biography of a film’s proposed...
6. Market Overview/State of the Industry
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Once again, a variety of titles might work for this major section of a business plan, including “The Market,” “Description of Business” and “Plan of Business,” although each implies a slightly different bit of information. “The Market” and “Market Overview/State of the Industry” suggest that the discussion will be about the marketplace itself and not about the venture’s actual plans. That’s saved for another section. The section headings “Description of Business” and “Plan of Business” imply that some of...
7. The Product or the Film Project
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As with the other traditional headings for the major sections in a business plan, “The Product” is a bit too generic for a film-related business plan. The section may be more appropriately referred to as “The Film,” or “The Films,” “The Motion Pictures” or “Description of the Film Project,” but something more specific than “The Product” and more directly related...
8. Motion-Picture-Industry Overview
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As noted earlier, the courts have determined that active investors need to have specialized knowledge and experience in the industry in which they are being asked to invest (see chapter 1). A strict interpretation of that requirement pretty well eliminates the use of a business plan with prospective investors who have not worked in the film industry; working...
9. Financial Information
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Financial information is another section of a traditional business plan that is confusing, partly because of the varying titles used or recommended. The more general title “Financial Information” is often used and can work because it covers all possibilities within the topic. Some business-plan consultants suggest that this section be referred to as “Financial Documents...
10. Financial Projections
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Financial projections are estimates of the future economic performance of a proposed business or venture. Financial projections are not required for investor offerings for film projects regardless of whether the selected investment vehicle involves the sale to a few active investors in a nonsecurities transaction or the sale of securities to a larger group of passive investors. However, investors seem to prefer that a presentation of financial projections...
11. Risk Factors
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Some business-plan consultants state that a “Risk Factors” section is required for a business plan. That is not true. A “Risk Factors” section is required for a securities disclosure document, and it is even required to appear in the “forepart” of that securities disclosure document, but there is no one with the authority to impose such a requirement on a business plan. Others may take the more moderated and accurate position that a “...
12. Miscellaneous Provisions
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this section, which would typically appear at the end of the main body of the business plan, a filmmaker would include various items of information that might not otherwise be covered in the other sections of the document. Subsections of the “Miscellaneous Provisions” section may include “Reports to Active Investors and Others,” “Pending Legal Proceedings” and “Access to Additional Information...
13. Appendixes to the Business Plan
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A variety of documents may prove useful as appendices or exhibits to a business plan being used to help raise investor funds for a film project. A general question that may serve as a good guideline for determining whether a document ought to be included as an appendix to the business plan is, “Would the document be important to a prospective investor in deciding whether or not to invest in the venture?” Another counter consideration...
14. Where to Find Investors
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One of the most commonly asked questions relating to investor financing of film companies or projects is, “Where can I find prospective investors?” Often, the question is based on one or more false premises. Such a question may assume that investors likely to invest in risky film ventures gather at a particular physical location or that the investors who invest in independent film often return to invest again after their first investment. Neither...
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The most accurate statement to make about using a business plan to seek film financing is to say that it may be used with an appropriate active-investor investment vehicle to raise money from active investors. However, the federal courts interpreting SEC regulations have narrowed the definition of active investors to those with “knowledge and experience...
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Page Count: 186
Publication Year: 2010