How to Write an Independent Film Business Plan - 7/7 Pro-Forma Financial Statements
In the final part of my 7-part series on writing a business plan for independent film and media, I’ll be going over all of the financial statements you’ll need in your business plan. This is a section that you’ll want to write before you write the financial text section of your plan, as it will have a great impact on that section and potentially other sections of the plan. Each document should take up only a single page.
Topsheet Budget
If you’re reading this, hopefully, you already know what a topsheet budget is. In case you don’t, It’s the summary budget of your entire film that should take up no more than a page. Unlike the rest of these documents which should be made by an executive producer, the top sheet budget is best made by a line producer or UPM. It’s important to note, that you can’t just make a topsheet budget, it comes as a byproduct of making a detail budget for your film. It’s not something that should be effectively created for it’s own sake.
Revenue Topsheet
This page is a summary of all the money that will come into your project, and how it will go out and come back to the production company and the investor, loosely organized by what comes in domestically vs internationally, and what media right types bring in what money.
This is not something that all people writing business plans for films include, however, I feel that it’s an important document that gives an angel investor a simplified snapshot of the entire revenue picture before diving into some of the more gory details.
Waterfall to Company (Expected Income Breakdown)
Louise Levison says you only need an expected income breakdown. When I create proformas, I tend to include how the overall revenue table that outlines where the money will be divided among the major stakeholders. This includes the distribution platforms, distributors, sales agents, producer’s reps, banks, and investors. It’s likely that if this is your first film, you won’t have all of those stakeholders, but it’s important to include the stakeholders you do have.
Additionally, I use this outline what cuts are standard for each of those stakeholders, and what remains from each right type to go to the production company and the investor.
Internal Company Waterfall/Capitalization Table
This is another document that not everyone includes, but due to my time in the tech industry, I find something like it is essential. The term capitalization table (or Cap Table for short) is taken from the tech industry and outlines who owns what part of a company.
This document goes further than a standard cap table, in that not only does it outline the major owners of the company, it also shows where the money goes once it comes back to the production company, and how it’s divided between debt, investors, producers, actors, and other people within your production company who made the film.
This document should calculate the investor’s expected Return on Investment (ROI) as well as how much is likely to go to producers and anyone else who has received profit participation. If you have more than one set of people on the crew receiving profit participation, then you may want to lump it into a cast/crew equity pool.
CashFlow Statement/Breakeven Analysis
This is a yearly/quarterly estimate of how the money will go out and come back in. Generally, your entire budget will go out before any money comes back in. If you’re using staged investments, you’ll want to outline when additional rounds of funding are likely to come into the company. Part of this is keeping track of the cash flow as you spend the money and as it goes back to investors.
I’ll generally make an assumption that it will take a year from investment to complete the film. After that, money will start coming back in about 3-4 quarters, and trickle in from each source according to however you think the film will be windowed. That’s actually the optimistic version timeline. By the end of 5-7 years after the initial investment, you’ll likely just want to end the cash flow statement since it’s unlikely your film will be producing that much revenue. Films are not evergreen.
Research/Sources
This is as it sounds. it’s all the resources for your comparative analysis that you used to make revenue projections, as well as any other sources you may have referenced in your plan. If you did a comparative analysis, you’ll want to include the details on the films you chose as well as where you got the data, as reporting is inconsistent across major platforms like IMDb pro, The-Numbers, Box Office Mojo, and Rentrack. I also have a useful whitepaper and some useful links in the resource pack.
Thanks so much for reading this blog. Thanks even more if you read all 7 parts! If you’re a film school teacher and would like to use this in a course, feel free to email me using the link below to get a free print-ready version of this series, or anything else you may want to reverence.
Making your pro-forma financial statements requires a lot of research. My resource package has a whitepaper and collection of links that will help speed that process up a bit, as well as other templates and related content. Grab it for free with the button below.
If you need a guiding hand through the process, I’ve written. few dozen plans. Check out my services page if this is just. a bit too daunting to do on your own.
Lastly, if you want to review any of the other sections of this 7 part series, here’s a guild for you below.
Executive Summary
The Company
The Projects
Marketing
Risk Statement/SWOT Analysis
Financials Section (Text)
Pro-Foma Financial Statements. (This Section)
