BUSINESS PLAN MISTAKES
By Scott Macaulay
Handing a business plan to potential film investors may not convince them that you are Warren Buffett-style visionary, but it shouldn’t type you as a P.T. Barnum either. Believe it or not, serious investors will respect you more if tone down the hype and give them the dirty truth about indie-film investing. Below are some common "business plan" mistakes that might swindle an elderly window out of her life savings but will only produce door-slams from seasoned equity players.
1. SPECIOUS REVENUE PREDICTIONS.
Bar graphs speculating return on investment by noting the domestic box-office performance versus their production costs of films like sex, lies and videotape, Clerks and The Brothers McMullen litter business plans but are practically meaningless. Once advertising costs, distribution fees and the theaters’ share are deducted, little, if any, of the gross is actually returned to investors. An investor’s best hope of quick recoupment actually comes from receiving a quick and healthy domestic advance, international minimum guarantee, or a television sale.
2. MISLEADING FOREIGN-SALES CHARTS.
Every year the Hollywood Reporter prints charts detailing a "typical" acquisition price per country of independent films of various budgets. Often found in the appendix of independent business plans, these charts fail to note that many independent films, and certainly most without domestic distribution, do not sell at all to any foreign territories.
3. HYPING THE BUILT-IN AUDIENCE.
"My film is about bowling. One hundred million people bowl regularly in America." Filmmakers often cite demographic statistics to buttress their claims that a large audience exists for their films. However, just because a person bowls doesn’t mean that he or she will pay $10 to see an independent feature about bowling. A more impressive approach would be to describe in the plan how a film can be cost-effectively marketed to this audience.
4. THE ACTOR’S UNDUE INFLUENCE.
Henry Thomas and Jeff Goldblum may have starred in some of the biggest grossers of all time, but that doesn’t mean that their presence in your film will produce the same results. Every independent film is a unique animal, and attempting to extrapolate a specific revenue prediction from a less-than-A-list cast or the fact that your film was shot on video in a dark forest will peg you as an amateur.
5. MENTIONING THE BLAIR WITCH PROJECT.
In fact, any reference to The Blair Witch Project in a business plan is probably a bad idea. It’s best to keep your investors’ — and your own — expectations firmly esconced in the real world.
6. IT’S A PLAN, NOT JUST A PROMISE.
While your business plan can in the short run help to attract potential investors, it should be written for the long haul. After all, the reason for writing a business plan is to force you to commit to an effective long-term strategy for completing your project.
Also see: Best Laid Plans by Reed Martin.
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