Independent FilmmakingThe processes behind independent (indie) filmmaking have led to a unique problem. Perhaps surprisingly, this is not due to ethical or legal issues with indie filmmaking; it is based on the fact that certain parties feel they can take advantage of the process due to independent films’ reputation for being low budget, having naïve and novice crews, and generally being unrepresented legally.

The issue is likely due to stereotypes of indie films being vanity pieces, or made by artists and an auteur that have no business acumen, plans, or vision beyond the basic concepts of “film” or “cinema.” It is unfortunate that these stereotypes exist. However, they are easily combated with familiarity in planning phases of the film in a business sense: know who you want, who you are working with, how long the production will take, how it will be marketed, and to whom it will be marketed. This type of plan shows investors, crew, and cast that the filmmakers are in control of production and have a clear vision for the film.

Interestingly, issues may arise with cast members rather than with individuals at the investor or production stages. This was the case in an incident that occurred during the making of an independent, low-budget film (no names will be given) in which a relatively unknown actor, who had been secured a part in an independent film, revealed after getting the part that he and his wife (relatively well-known) were a package deal.

While the actors believed they had outmaneuvered the filmmakers, the production team’s tenacity wasn’t expected by the duo. To the actor couple, it may have looked like the film team was easily cornered and defeated – they were low budget, off schedule, and the crew had been locked into salaries and begun working. Rehearsals had begun with the lead actor while his wife was already going through the art department’s budget on her wardrobe. However, they had not accounted for the outrage caused by the unethical way they treated the project and everyone involved.

The filmmakers were willing to shut down production to re-examine their choices, no matter the consequences of said actions, and no matter how terrible and defeated they felt. They did feel it might be necessary to deal with the couple’s sheer duplicity as well, however. The sort of ambush this couple attempted is a relatively new problem that seems be due to the new wave of indie filmmaking over the past several years.

This problem very well could have taken control of the film. Not only would the couple likely have increased the amount of money and points they received, but it would have set a precedent that they could get away with whatever they wanted. They could issue demands and if they were not met, halt production to the point of shutting down the film. The actor and his wife demanded, through their agent, that the remaining sixty percent of their Screen Actors Guild (SAG) salary be added to a protection fund. While SAG agreed with the filmmakers that the couple’s maneuver was devious at best, the filmmakers should have acted sooner to prevent the issue from going as far as it did; SAG wasn’t aware of the situation until well after the couple had made their demands.

The lesson to be learned from this scenario is simple; a situation where one will be taken hostage should never, ever arise. In hindsight, the filmmakers should have called the actors’ hand two weeks before they began shooting, as their producer had urged them to do. Remember to negotiate in good faith – don’t always assume the worst – but when it is two weeks before shooting deadline and certain actors’ terms are not defined, give an ultimatum; either sign now and finish production, or we move on to someone else. The team learned not to let the actors and agents convince them to continue negotiations Instead, they should have looked for support and reserves of any kind immediately and terminated the negotiations with the couple completely.

Names and notoriety of actors on the indie level are less essential than one may think. A film’s notoriety has more to do with its nature and quality than star power. Having a big name is great; it can help raise funds, get cast and crew excited, keep rapport and energy up, help DVD sales internationally, keep the DVD on shelves in stores and rental shops longer, and more. However, it isn’t essential to have a big name on the film, and certainly isn’t worth risking the entire film over. In fact, when the filmmakers sent the memo to their investors, the stars’ names weren’t mentioned, as the investors hadn’t even signed on yet.

The Business Plan

This brings us to the business plan. Directors and producers with proven viability and/or profitability may not need outside investment. Yet new filmmakers, whether they are up-and-coming, making a film for the first time, or even those who make few films but are not beginners, must consider outside investment. This is why we must consider business plans when budgeting for a film.

A business plan needs to contain certain information for all parties.

  • A statement of risk
  • The screen treatment
  • Information about the filmmakers
  • A budget top sheet
  • A timetable showing the length of time between investment and release
  • An overview of the market
  • A comparison of other films in the genre that performed well
  • Any information unique to the project that increases its value

The pages detailing risk and timetable are always dreadful to include in the plan by their nature. The first thought with these topics, as well as most filmmakers’ worst fear, is that potential investors will read them and quickly drop the project. However, investors normally understand that the filmmakers will be held legally responsible if investors have not been sufficiently informed, or warned, in some cases.

In fact, illustrated or detailed forms dealing with the main ideas, themes, and perhaps visual aspects of the film should be presented within the business plan to show investors every part of the project. This should run about three to five pages long. A shorter plan is better than giving them a sample or rough cut of the entire screenplay; investors may consider it a waste of their time to read a screenplay, or the format may throw them off. Seemingly the worst is when investors offer criticism of the film and treat a meeting like a workshop. It’s best to not even show a sample of the screenplay. Instead, visualize and summarize the film in ways that help them see the overall project. Even more importantly, do it in ways that help them see the film’s marketability.

The Filmmakers section of the plan needs to include professional biographies of the producer, director, screenwriter(s), actors, and anyone else on the project. These can be people involved in the production, such as the composer(s), cinematographer, art designer, and so on, especially if their experience is noted or remarkable in some way. Be sure to include if members of the crew have their own equipment or specific reputations. In some cases, examples should be provided for work technical crews have completed, or you can provide detail about their tools or previous work experience, including what makes it viable. Any of these topics may appeal to investors – all of whom have varied interests and areas of knowledge that may be intrigued by the information in these sections.

For example, a film may have a new or beginning director working on the film, so the producer will hire a cinematographer credited with several (perhaps fifty) films, and then include the cinematographer’s resume in the business plan. This shows investors that whatever experience the director has, or doesn’t have, the cinematographer’s experience can create a visually superb film. With this, the producer can discuss the balance of the positives and negatives in the plan, or during a personal meeting. Another good idea when working with first-time directors is to show or discuss other directors whose first films are now considered classics or great films, such as Citizen Kane (1941), Blood Simple (1984), or The Night of the Living Dead (1968). This helps reassure investors that “first-time” doesn’t mean “terrible.”

The budget top sheet is a one- to two-page outline and summary of all categories in your budget. This is all a potential investor should see at this point. The actual budget may range anywhere from ten to forty pages long and shows many weeks’ worth of work. Don’t give up the budget’s exact information. The danger here, albeit an unfortunately cynical outlook, is that many potential investors are trying to learn about the business and may want to start something themselves. When they receive a full budget description, they can use your information as groundwork for their own project. Be careful if the investors request to see more, even after they show interest in your one-to two-page budget outline. Find an opportunity to ask the investors to see their accounts to make sure their capital is real. Basically, you need to get them to make a commitment before you give them any sensitive information about your project. Don’t be unfriendly, by any means – but do be assertive and assured.

Regarding timetables, make it clear to the investors that they will not see any returns on their investment for some time (usually at least a year, if not longer). This is normal and part of the overall process of pre-production, production, post-production, and marketing. Then, the film is tested at festivals and screened for distribution, after which there is publicity, general release into theatres and stores, television, and so on, until there are international revenues coming in. Inform investors of these kinds of timetables from the beginning and give honest assessments of how long the process will take.

You can relay all this information to investors so they have a clear idea of returns. Budgetary zones are also available in Variety magazine, showing films in various markets, such as films that were made on $500,000 and may have a different market range than films made for $3,000,000. A way to assuage a possible investor is to show them the Top 50 chart from Variety and compare films that are similar in genre or budget. If they happen to be on the chart, it’s a great sign, and will be positive reinforcement for your project.

Any financial and legal information is generally terse and written strictly to inform for contractual purposes. This is necessary for all parties, and because of its nature, it is placed last in the plan. Thankfully, by the end of the document, the investors are not interested in reading the legalese as thoroughly.

Finally, several types of corporate entities can be structured in the memorandum, depending on how financing is obtained. S-Corp, Limited Partnership, or LLC are advantageous in that the corporate entity does not pay income tax while the partners, shareholders, members, etc. do. This is different than a C-Corp, which involves double income taxation, first on the corporation, then on the shareholders. With the LLC, however, one corporate entity is formed where the producer has the same liability as a corporate officer. In this way, the income tax is distributed not based on the business entity but instead on individuals and dividends thereof.

Overall, make sure you know the business aspects of your film when searching for investors or negotiating with cast and crew. It shows all parties involved that there is an informed, driven personality with a clear vision for the film running the production. Otherwise, especially in cases of independent filmmakers, one runs the risk of looking like a naïve beginner, where much more cynical parties may try to take advantage of your work for themselves.