Film Production Business Plan
Shared by: DJPaparazzi
An introduction to Business Planning AKMI MEDIA Programme The most interesting comment I have ever heard about business planning is from P. F. , 77 years old, former executive in the German Aircraft industry when I asked his advice while I was writing a business plan for a small company based in Athens. - “Today, one person can press some keys on a keyboard and change the situation on the market all over the world by buying or selling shares in a minute. No business plan is really realistic because reality is beyond imagination today" - “So what should I do?» -“Stay small and create good interpersonal relations with the people of your neighbourhood, the grocer, the green grocer, the butcher, the barber. This is realistic for the moment.” Before reading the following lines, please keep in mind this conversation. It is a mystery why people enter the film business, either independently or with others. Each year many new businesses start up, while more than six to seven times that number don’t go beyond the planning or thinking stage. Film Production companies come and go, but it is not noticed since production companies do not put up a sign saying “Going OUT OF BUSINESS SALE”. Statistics are very pessimistic: 9 out of 10 new businesses will fail or close within 2 years. The main reasons for this evolution are similar to the reasons that affect other businesses: - Poor Management - Low Sales Volume - Insufficient Capital - Wrong Location - Strong Competition - Ineffective Advertising - Changing Market Conditions - Lack Of Know How - Problematic Products One way of thinking about all those variables when starting a new company and even when continuing with a current ongoing successful business is to have a business plan. The three main functions of a business plan are: · Provide a communication tool of your vision. · Create a basis on which to manage your business. · Create a yardstick by which to measure progress and evaluate changes. Writing a business plan has two main dimensions: 1st dimension: To know what a business plan is and how to go about writing it. There are many software tools available today that may help you to write your plan clearly. 2nd dimension: To be serious about what is stated in your business plan. To develop the right strategy. This is not something that can be taught in a classroom. It is rather something that can be based on your personality, your skills and your experiences. If you define your personal goals clearly and know your weaknesses and advantages then you will be able to place your self in the context of the business you are involved in. If you define your weaknesses at a very early stage, then you can ask more experienced experts to help you. But be careful: There are very few experts worldwide who really know the film industry and how to write a business plan for a film production company. Basic tips for the business plan: - Set realistic and quantifiable goals Every business consultant specialised in the business planning field agrees: A business plan must help you achieve realistic quantifiable goals and explain the way you will combine your company’s assets to reach those goals. Widely defined or wordy mission statements do not add anything to your business plan. A Business Plan is like a cooking recipe. It is a How-to-Do List that coordinates everything in your business to meet your objective. - Define Your Objective Clearly The definition of your main objective is one of the most important aspects in writing a business plan.Τhe more specific your objective, the easier to keep to the relevant information when you write your business plan. - Define Your Readers Business Plans are still evaluated by human beings with certain characteristics. Are you writing your business plan to: attract venture capitalists to fund a start-up business or to Gain a bank loan or other financial backing or to Help guide you in running your business for the next five years or to list the business on the stock market, or to Recruit top-quality personnel to join your company? Most experts agree, “ Depending on your reason for writing, your readership will differ. Writing to attract venture capitalists needs a concise, accurate and realistic description of the business idea, the potential market, the advertising and sales budgets and the key personnel. Writing a business plan to recruit personnel will have detailed descriptions of salaries, stock options, and conditions of service. Writing a plan to explain to employees the planned changes to the company needs a breakdown of how changes affect each department”. (Bplans.com). - Two Parts Most business plans can be divided in two parts: 1. The key objectives. 2. The strategy. The reader has to understand very quickly what your plan’s proposal and the benefits that will be gained. Next, you need to work through your business strategy in detail, showing why it will work and how it will affect your products and services, personnel, funding etc. Sample Business Plan Outline 1. Cover sheet 2. Executive Summary 3. Table of contents 4. Business Idea and Description - Description of business - Marketing and Competition - Personnel 5. Market Analysis 6. Financial Position and Forecast - Past Performance - Existing Finance and loan applications - Capital equipment and stock - Balance sheet Break-even analysis - Income projections • One-year, three-year and five-year summaries • Detail by quarters, second and third years • Assumptions made. - Profit-and-Loss Statement • One-year, three-year and five-year summaries - Cash-flow summary • Current position • One-year, three-year and five-year summary projections • Detail by month, first year • Detail by quarters, second and third years • Assumptions made - Funding Needs - Current funds available - One-year, three-year and five-year summary projections - Other sources of finance - Assumptions made 7. Management Team - Organisation Structure - Management Team - Other Support Staff 8. Attachments - Articles, brochures - Copies of contracts, leases, letters of intent. - Financial charts and breakdowns - Personal financial statement - Tax returns However, there’s no one correct way that applies to all business plans. Think of the business plan as a clear expression of your industry, your business and your future and it will help you draw together and order the essential information. Writing Tips 1. Write tightly and concisely 2. Use attachments for more detailed and non-essential information. 3. Use numbers. Numbers are clear even if you have been overtly optimistic in your forecasts. If you are a start up use industry averages or your competitor data. 4. Write in a Clear way and work on the presentation. Tables, Charts, photographs and so on have strong communication appeal. 5. Avoid technical jargon, abbreviations and acronyms. 6.Use short sentences and a conversational style. Do not exaggerate with your adjectives. Use structures. 7. Use your spell checker and watch out for grammatical and punctuation slips. Key Parts of your Business Plan The Cover Check that you have included the company Logo and Business Name, Title, Address, Contact Details and date. Executive Summary (not more than 300 words) Explain your aim and include essential facts such as the main objectives, business ideas, key financial and marketing facts, income projections and capital requirements. Keep your summary short—to a maximum of 300 words. Imagine that you must explain and sell your business idea in 45 seconds? Keep this idea in mind and it will help you concentrate on the most relevant 200-300 words to put in your executive summary. Business Idea In this section you must describe your business idea, the product or service you will sell and its markets. Set out the competitive advantage the business idea offers. This is one of the most difficult part of a film production business plan, because all the above have to be translated in quantifiable terms. Business Description A business description places your company within the context of the current state of the industry. You’ll need to look at the trends in the industry and your company’s size, products or services and the main market. If you are writing this description for potential investors, don’t assume they know as much as you. If you are writing the description for your own working plan, don’t ignore this section – you may need it later. Market Analysis It is essential that you understand the industry you will operate in, your target market and most importantly know your competitors. A thorough analysis of your market essentially clarifies your strategy. It looks at the conditions and trends in the industry, reviews the market for your product or service, and describes the competition. Financial Position and Forecasts Your financial forecasts are critical. They must be realistic and plausible. Be honest and show potential problems and pitfalls. Usually, you should present worst-case, expected-case and best-case scenarios. Wherever possible, back up current financial positions and forecasts with marketing data. Be very thorough on the three most important financial breakdowns. - Cash-flow Projection and Break-even Point - Profit and Loss Statement - Balance Sheet Don’t forget to give historical as well as current and projected data. Include any current debts, funding sources, start-up costs for a new business, return on investment and so on. Include all the information the reader needs to understand your business, its history and its prospects. Funding Needs If you’ve designed your business plan to raise money, state the amount of money required and how these funds will be used. Include information on existing finances, alternative sources of finance, collateral etc. If you are an existing business, list your main customers, expected contracts, past sales performance and so on. Management Team A competent management team can make the difference between success and failure. In both new ventures and established companies, don’t forget to look at the strengths and weaknesses of your management team and others contributing to the business idea. Describe the team that will run your company and new positions that will need to be created in order to accomplish your business objectives. Finally, make sure the board; advisers, such as accountants and advertising agency; workforce and industry-specific backup is there to support the aims of management. Attachments You can attach information that’s not central to your business plan but is useful. Information could include: articles, charts, contracts, detailed financial information, price lists, brochures, and newsletters. But remember, the most relevant information must be include in the body of the business plan.