Do you want to start a film financing business and need to write a plan? If YES, here is a sample film financing business plan template & feasibility report for independents. There are several legal channels through which an individual can earn money or continue to increase his or her wealth without having specialized business skill or opening a shop/office and one of such avenues is to start film financing business.
Table of Content
- 2. Executive Summary
- 5. Job Roles and Responsibilities
- 6. SWOT Analysis
- 7. MARKET ANALYSIS
- 13. Startup Expenditure (Budget)
Why Finance a Movie?
If you have always wanted to become an investor but don’t know exactly how to go about it or where to start from, then you should consider starting a film financing business or even starting your own investment club with people of like minds.
One major factor that will count for the success of your film financing business is the ability to know the film or television series that has the potential to become profitable. The truth is that if you invest your money in a film that run at a loss, you might not recover from it and that might lead to the end of your business. The sample film financing business plan template below will guide you on how to draft yours with little or no stress.
A Sample Film Financing Business Plan Template for Independents
1. Industry Overview
Film finance is a subset of project finance, meaning the film project’s generated cash flows rather than external sources are used to repay investors. The main factors determining the commercial success of a film include public taste, artistic merit, competition from other films released at the same time, the quality of the script, the quality of the cast, the quality of the director and other parties, etc.
Even if a film looks like it will be a commercial success “on paper”, there is still no accurate method of determining the levels of revenue the film will generate. In the past, risk mitigation was based on pre-sales, box office projections and ownership of negative rights.
Along with strong ancillary markets in DVD, cable television, and other electronic media such as SVOD, or streaming video on demand), investors were shown that picture subsidies (tax incentives and credits), and pre-sales (discountable-contract finance) from foreign distributors, could help to mitigate potential losses.
As production costs have risen, however, potential financiers have become increasingly insistent upon higher degrees of certainty as to whether they will actually have their investment repaid, and assurances regarding what return they will earn. Major niche ideas in film financing are Pre-sales, Television pre-sales and Negative pickup deal.
Pre-sales is based on the script and cast, selling the right to distribute a film in different territories before the film is completed. When the deal is made, the distributor will insist the producers deliver on certain elements of content and cast; if a material alteration is made, financing may collapse. In order to gain the “marquee names” essential for drawing in an international audience, distributors and sale agents will often make casting suggestions.
Pre-sales contracts with big-name actors or directors will often (at the insistence of the buyer) have an “essential element” clause that (as per the example above) allows the buyer to get out of the contract if the star or director falls out of the picture and a marquee equivalent cannot be procured.
Even though it is more usual for a producer to sell the TV rights of a film after it has been made, it is sometimes possible to sell the rights in advance and use the money to pay for the production. In some cases the television station will be a subsidiary of the movie studio’s parent company.
A negative pickup deal is a contract entered into by an independent producer and a movie studio wherein the studio agrees to purchase the movie from the producer at a given date and for a fixed sum. Until then, the financing is up to the producer, who must pay any additional costs if the film goes over-budget.
Generally, a producer will have a bank/lender lend against the value of the negative pickup contract as a way to shore up their financing package of the film. This is commonly referred to as “factoring paper”. Most major North American studio and network contracts (incl. basic cable) are collateralized/factored by the bank at 100 percent of the contract value, and the lender just takes a basic origination/setup fee.
Splitting the roles of studios and networks necessitated a means for financing television series appropriate to the varied risks and rewards inherent in the separation.
With the daily production and release of films in the united states and all over the world, starting a film financing business is just the way to go especially if you have the required capital, good business network with film producers and of course expertise to know films that have the potential to do pretty well in the market.
2. Executive Summary
Job Clinton® Film Financing, LLP is a registered, licensed and accredited investment club with bias in film financing that will be based in Los Angeles – California. We are an investment club that will only attract people with same investment ideology.
Job Clinton® Film Financing, LLP is a smart investment team that will major on financing different types of films and television series in Hollywood and all across the United States of America.
At Job Clinton® Film Financing, LLP, our member’s best interest would always come first, and everything we do will be guided by our values and professional ethics. We will ensure that we hire professionals who are well experienced in film financing and other investment portfolios with good track record of return on investments.
Job Clinton® Film Financing, LLP will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our member’s needs precisely and completely.
Job Clinton® Film Financing, LLP is founded by Job Clinton and other investors. Job Clinton is an astute investor with key interest in the film production industry. He has a BSc and MSc in Finance from the University of California, Berkley and with over 17 years’ experience in investment banking.
3. Our Products and Services
Job Clinton® Film Financing, LLP is going to offer varieties of services within the scope of the financial investment services industry in the United States of America. Our intention of starting our film financing business is to work with film makers/film producers. We are prepared to make profits from the industry and we will do all that is permitted by the law in the United States to achieve our business goals, aim and ambition.
4. Our Mission and Vision Statement
Our vision is to build a film financing brand that will become one of the top choice for film makers/producers in the whole of Hollywood, Los Angeles – California and all across the United States of America.
Our mission is to position our film financing business to become one of the leading brands in the industry in the whole of Los Angeles, and also to be amongst the top 20 film financing companies in the United States of America within the first 10 years of operation.
Our Business Structure
Being an investment club with strong bias in film financing, it would not have been out of place to hire only two or three full staff members, but as part of our plan to build a standard film financing business in Los Angeles – California, we have perfected plans to get it right from the beginning which is why we are going to ensure that we have qualified, competent, honest and hardworking employees occupying all the available positions in our firm.
The kind of investment club we intend building and the business goals we want to achieve is what informed the amount we are ready to pay for the best hands in and around Los Angeles, California and environs as long as they are ready to work with us to achieve our business goals and objectives. Below is the business structure that we will build Job Clinton® Film Financing, LLP;
- Chief Executive Officer
- Fund Manager/Portfolio Manager
- Admin and HR Manager
- Risk Manager
- Customer Care Executive/Front Desk Officer
5. Job Roles and Responsibilities
Chief Executive Office:
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization
Fund Manager/Portfolio Manager
- Provides market research and implement new financing and investment product and strategies
- Creates research and review platforms for new, existing and potential investment products
- Excellent expectations with returns on investments
- Works closely with film analysts and traders to ensure trading strategy is carried out correctly
- Constructs and reviews performance reports to show to investors
- Works directly with marketer to relay investment strategy and risk measures for website and other forms of marketing for the films we invest in
- Performs due diligence visits and assessing investment management firms and quantitatively analyzing investment pools
- Has extensive knowledge of industry policies and regulations set in place by the SEC
- Focuses on capital introductions and networking to sign up new investors to our fund
- Plans, designs and implements an overall risk management process for the organization;
- Carry out risk assessment, which involves analyzing risks as well as identifying, describing and estimating the risks affecting the business;
- Carry out risk evaluation, which involves comparing estimated risks with criteria established by the organization such as costs, legal requirements and environmental factors, and evaluating the organization’s previous handling of risks;
- Establishes and quantifies the organization’s ‘risk appetite’, i.e. the level of risk they are prepared to accept;
- Conduct risks reporting in an appropriate way for different audiences, for example, to the board of directors so they understand the most significant risks, to business heads to ensure they are aware of risks relevant to their parts of the business and to individuals to understand their accountability for individual risks;
- In charge of corporate governance involving external risk reporting to stakeholders;
- Carries out processes such as purchasing insurance, implementing health and safety measures and making business continuity plans to limit risks and prepare for if things go wrong with the films
- Conducts audits of policy and compliance to standards, including liaison with internal and external auditors;
- Provides support, education and training to staff to build risk awareness within the organization.
Admin and HR Manager
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Designs job descriptions with KPI to drive performance management for clients
- Regularly hold meetings with key stakeholders to review the effectiveness of HR Policies, Procedures and Processes
- Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Defines job positions for recruitment and managing interviewing process
- Carries out induction for new team members
- Responsible for training, evaluation and assessment of employees
- Responsible for arranging travel, meetings and appointments
- Oversees the smooth running of the daily office activities.
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- creates reports from the information concerning the financial transactions recorded by the bookkeeper
- Prepares the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
- Provides managements with financial analyses, development budgets, and accounting reports; analyzes financial feasibility for the most complex proposed projects; conducts market research to forecast trends and business conditions.
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting for one or more properties.
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensures compliance with taxation legislation
- Handles all financial transactions for the company
- Serves as internal auditor for the company
Client Service Executive/Front Desk Officer
- Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
- Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with clients on the phone, uses every opportunity to build member’s interest in the company’s products and services
- Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
- Receives parcels/documents for the company
- Distributes mails in the organization
- Handles any other duties as assigned by the manager
6. SWOT Analysis
Job Clinton® Film Financing, LLP engaged the services of a core professional in the area of business structuring to assist our organization in building a well – structured film financing firm that can favorably compete in the highly competitive film financing and investment services industry.
Part of what the business consultant did was to work with the management of our organization in conducting SWOT analysis for Job Clinton® Film Financing, LLP. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Job Clinton® Film Financing, LLP;
We can confidently boast of having pool of cash to invest in films and we have a robust business network with some of the leading film makers/film producers in Hollywood. We have a team with same investment ideology; a team that has been able to cut their teeth when it comes to accurately forecasting the performance of films in the United States of America and all across the globe.
As a new film financing firm, it might be an initial struggle to finance Oscar award winning movies. For now, that is the only perceived weakness that we can identify in our business. Be that as it may, we have perfected strategies that will help us overcome this challenge in no distance time.
The opportunities in the film financing industry is massive considering the number of new film producers with great scripts and without finance to produce their films. As a standard and accredited investment club cum film financing firm, we are ready to take advantage of any opportunity that comes our way.
The major threat that will confront a business such as film financing is the likelihood of a film that was projected to be profitable to run into a loss. With that, it will be difficult to recoup the money invested and may lead to the shutdown of the business. In essence, the risk involved in this line of business is a threat to the business.
7. MARKET ANALYSIS
- Market Trends
Film finance is an aspect of film production that occurs during the development stage prior to pre-production, and it is concerned with determining the potential value of a proposed film.
In the United States, the value is typically based on a forecast of revenues (generally 10 years for films and 20 years for television shows), beginning with theatrical release, and including DVD sales, and release to cable broadcast television networks both domestic and international and inflight airline licensing.
A recent trend shows that relatively new method of financing film as emerged and it is called slate financing. Slate financing “involves an investment in a specified number of studio films ranging from a mere handful to dozens of pictures”, typically by private equity firms and hedge funds.
Slate financing’s proliferation typifies the “complex relationship that has developed between the studios and Wall Street”. Between 2005 and 2008, hedge funds invested an estimated $4 billion in studio film slates and private equity firms invested $8 billion.
So also, bridge finance has increased in prevalence in filmmaking in recent years. Bridge financing is an answer to the common “catch-22” problem of needing funding to get the actors, but not being able to get the funding without actors.
Bridge financing, for example, can be used in scenarios where a filmmaker has a promissory note from an investor to finance a film provided the filmmaker can attach an approved actor, however without money to escrow for the actor’s payment, the filmmaker is unable to meet the investor’s criteria.
Lastly, with the rising popularity of online crowdfunding, more and more films are getting financed directly by their consumers this way. The crowdfunding platforms Kickstarter and IndieGoGo have their own categories dedicated to films.
8. Our Target Market
For a business such as ours, our target market cuts across wide range film makers/film producers in Hollywood and all across the United States of America. So also, we are coming into the industry with a business concept that will enable us produce good returns on investment for our members.
Despite the fact that financing films give huge returns on investment, it is indeed risky venture. If you drive through the street of Los Angeles, you will come across several film financing firms; that goes to show you that there are competitions in the industry.
For you to survive as a film financier, you should be able to come up with workable investment strategies; strategies that will help you attract the required cash/capital and above all you should be a good risks manager and someone with an eye for forecasting movie scripts/films that will be profitable.
We are quite aware that to be highly competitive in the film financing and investment services industry means that we should be able to give good returns on investments to our clients, deliver consistent quality service, our clients should be satisfied with our investment strategies and we should be able to meet their expectations.
Job Clinton® Film Financing, LLP might be a new entrant into the film financing industry in the United States of America, but our members are highly qualified film production experts in the United States. These are part of what will count as a competitive advantage for us.
Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and objectives.
9. SALES AND MARKETING STRATEGY
- Sources of Income
Job Clinton® Film Financing, LLP is established with the aim of maximizing profits in the film financing and investment services industry and we are going to ensure that we do all it takes to invest in profitable films on a regular basis.
Job Clinton® Film Financing, LLP will generate income by the returns we get from the sale of films and royalties from the films we financed.
10. Sales Forecast
.We are well positioned to take on the available market in Hollywood, Los Angeles and other key cities in the United States of America and we are quite optimistic that we will meet our set target of generating enough income/profits from the first six months of operation and grow the business and our clientele base beyond Hollywood, Los Angeles to other cities in the United States of America.
We have been able to examine the film financing market and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast.
Below are the sales projections for Job Clinton® Film Financing, LLP, it is based on the location of our business and the wide range of movie makers/film producers that we hope to work with;
- First Fiscal Year (FY1): $500,000
- Second Fiscal Year (FY2): $1 million
- Third Fiscal Year (FY3): $2 million
N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown. Please note that the above projection might be lower and at the same time it might be higher.
- Marketing Strategy and Sales Strategy
We are mindful of the fact that there are stiff competitions amongst film financing firms and the movie investment space in the United States of America, hence we have been able to hire some of the best investment gurus. Our sales and marketing team will be recruited base on their vast experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization.
We will also ensure that our return on investment and excellent job deliveries speaks for us in the market place. Job Clinton® Film Financing, LLP is set to make use of the following marketing and sales strategies to attract clients;
- Introduce our business by sending introductory letters alongside our brochure to film producers and key stake holders in Hollywood, Los Angeles and other cities in The United States
- Advertise our film financing firm in relevant financial and business related magazines, newspapers, TV and radio stations
- List our business on yellow page ads (local directories)
- Attend relevant international and local finance and business expos, seminars, and business fairs et al
- Leverage on the internet to promote our business
- Engage direct marketing approach
- Encourage word of mouth marketing from loyal and satisfied clients
11. Publicity and Advertising Strategy
The uniqueness of film financing is such that it is the result they produce that helps boost their brand awareness. It will be out of place to boost your film financing brand if you have not proven your worth in the industry. If you have successfully proven that you have what it takes to forecast revenues, then your next port of call is to strategically engage the media to help you promote your brand and also to create a positive corporate identity.
We have been able to work with our brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the film financing services industry by storm which is why we have made provisions for effective publicity and advertisement of our film financing firm.
Below are the platforms we intend to leverage on to promote Job Clinton® Film Financing, LLP;
- Place adverts on both print (community based newspapers and magazines) and electronic media platforms
- Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, YouTube, Google + et al to promote our brand
- Engage aspiring and established movie makers/film producers
12. Our Pricing Strategy
At Job Clinton® Film Financing, LLP we will keep our expected percentage on returns on money invested for any film below the average market rate by keeping our overhead low. In addition, we will also offer special discounted rates to all our partners at regular intervals.
- Payment Options
The payment policy adopted by Job Clinton® Film Financing, LLP is all inclusive because we are quite aware that different members prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Job Clinton® Film Financing, LLP will make available to her members;
- Payment via bank transfer
- Payment via online bank transfer
- Payment via mobile money
- Payment via check
- Payment via bank draft
13. Startup Expenditure (Budget)
The cost of starting a film financing firm is in the two fold; the cost of setting up the office structure, and of course the capital meant for investment (financing films). The amount required to invest in films could range from 100,000 US Dollars to even multiple Millions of Dollars. So, you must employ aggressive strategies to pool such cash together.
As regards the cost of setting up the office structure, your concern should be to secure a good office facility in a busy business district; it can be expensive though, but that is one of the factors that will help you position your hedge fund firm to attract the kind of investors you need.
This is the financial projection and costing for starting Job Clinton® Film Financing, LLP;
- The Total Fee for incorporating the Business – $750.
- The budget for basic insurance policy covers, permits and business license – $2,500
- The amount needed to acquire a suitable Office facility in a business district 6 months (Re – Construction of the facility inclusive) – $40,000.
- The Cost for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $ 5,000
- The cost for purchase of the required software applications (CRM software, Accounting and Bookkeeping software and Payroll software et al) – $10,500
- The cost of launching your official Website – $600
- Budget for paying at least three employees for 3 months plus utility bills – $10,000
- Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
- Investment fund – 1 Million Dollars (which will be pulled from a maximum of 100 members)
- Miscellaneous: $1,000
Going by the report from the market research and feasibility studies conducted, we will need $150,000 excluding $1M investment capital to successfully set up a medium scale but standard film financing firm in the United States of America.
Generating Funds/Startup Capital for Job Clinton® Film Financing, LLP
Job Clinton® Film Financing, LLP is owned and managed by Job Clinton and other partners. They are the financiers of the firm, but may likely welcome other partners later which is why they decided to restrict the sourcing of the startup capital for the business to just three major sources.
- Generate part of the startup capital from personal savings
- Source for soft loans from family members and friends
- Apply for loan from the bank
N.B: We have been able to generate about $150,000 to set up the office facility and also each member that will make up the 100 – member team is expected to commit a minimum of $20,000 to invest in financing films. A member can afford to pick more than one stake ($20,000).
14. Sustainability and Expansion Strategy
The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and business structure. If all these factors are missing from a business, then it won’t be too long before the business closes shop.
One of our major goals of starting Job Clinton® Film Financing, LLP is to build a business that will survive off its own cash flow without injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning members over is to give them good returns on their investments by investing in highly profitable films.
We will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner of our business strategy.
As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check: Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Conducting Feasibility Studies: Completed
- Generating part of the startup capital from the founder: Completed
- Applications for Loan from our Bankers: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Promotional Materials: Completed
- Recruitment of employees: In Progress
- Purchase of the needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business (Business PR): In Progress
- Health and Safety and Fire Safety Arrangement: In Progress
- Establishing business relationship with movie makers/film producers and key players in the industry: In Progress
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