A Winning Strategy for Achieving your Film-Making Goals

I'm guessing I'm not the first aspiring indie film-maker to hold down a day job while at the same time trying to get a film made. So how do you look after your P&L while strengthening your Balance Sheet - which is essentially how I view it.

I've never thought about making a film so that I can pay the bills (at least at this stage in my film making career) - frankly in my opinion there are too many variables outside of my control. I see making this film as an opportunity to create and market a product that is of exceptional quality, an interest to a broad audience and also inspires people - if you can do this then you increase the likelihood of yielding a highly favourable return.

I'm also thinking that if I can create a success recipe for film production then that's got to be worth something right?

So developing this film has and will require a huge amount of discipline and effective time management, given that I run another business that demands my time, energy and concentration. I don't think my strategy is rocket science nor do I think its revolutionary, it's just something that works for me.

Here's my strategy in three easy steps;

End, Performance & Process Goals

Step 1 - Create a compelling End Goal, one that when the chips are down will keep you focused, committed and motivated.

Step 2 - Figure out your Performance Goals, the key milestones that are mission critical. For example, a polished script is mission critical - without one I have nothing to produce a schedule, budget, nothing to show investors that I'm serious and that I have a knockout product. Without a script I'm unable to get a Director or any serious minded cast on board.

Step 3 - Plan your Process Goals & Daily Disciplines. What activities can you do that are within your control that will move you closer to achieving your Performance Goals and in turn your End Goal. So if one of my Performance Goals is to get a polished script then I need to start reading about how to get that done, I need to pick up the phone and start calling writers agents, I need to start researching all the resources available on line to help me with my endeavours (Script Factory etc.) Your daily disciplines are the things you have direct influence over; make a phone call to an agent; write a blog; read a book; go on a course. These are the only things that you can control, have influence over and crucially the only things that will help you manifest your goals into reality.

By applying this strategy to the different goals I have in my life it becomes easier for me to organise and prioritise my time and my activities and do the things that create and sustain the momentum to move me forward.

Lesson No. 4# The things in life that are easy to do (like your daily disciplines) are also the things that are easy not to do. So focus on the actions that drive you to your goal.

Once you know where you're heading and the road you have to travel it just makes the whole journey quicker and smoother.

Sources of Production Finance

Once you've sucesfully raised enough money to transform your idea into a script, produced a business plan attractive enough to lure an investor and have signed up your Hollywood A-list cast then you are ready to rasie Production Finance. Out of this money you will fund the film's production right through until you have a finsished product ready to sell. Unless of course you plan to sell and distribute the film yourself, in which case you might need to aacount for this in your plan.


Where to Find Production Finance

There are numerous sources of production finance available to the independent producer and most independent film funding will be made up from a number of these different sources, broadly speaking they are;

Private Equity/Venture Capital – This is recoupable investment provided by individuals, specialist funds, VCT’s, or Enterprise Investment Schemes in return for a share of the profits.

Co-Producer Financing – A partnering producer may provide some equity finance in return for certain distribution rights. Co-producers are often sourced from different countries so that they are able to access a wider pool of Soft Financing options.

Soft Finance – This is finance that often doesn’t require recoupment and comes in the form of Grants, Product Placement, Tax Incentives, Crowd-sourced Funding;

• Grants – There are a number of grants available for British Films but these quite often involve jumping through a number of hoops. (Which one would naturally expect)



• Product Placement – This is sought from companies that provide cash or in-kind services in return for screen-time or marketing associate with the film. Examples include Aston Martin and Omega whose products are associated with the Bond movies.



• Tax Incentives – This is funding that is based on legislative tax breaks aimed at producers. Currently in the UK there is film tax relief offered to British Qualifying Films - Films that must be certified by the British UK Film Council. (This will be the subject of a blog entry as soon as I can get my head around all the details!)



• Crowd-Sourced Funding – Some producers have successfully raised finance for their films via the web by offering credits or roles as extras in a film to all that donate say $10. Your success at raising this type of funding largely depends on your creativity and web-savvy.

Gap Financing – Banks often provide a gap loan to help the producers get the production across the line. Banks will typically use projected sales income as collateral.

Pre-sales – This is where a distributor is willing on the strength of the proposition to offer to buy the rights to distribute the film in a certain territory before the film has been made. This can be used as collateral to borrow money and put towards the finance of the film.

Deferments – This is where cast and crew part-finance the film by deferring their fees to the end and recovering them from sales revenue, naturally with an enhancement for taking some of the risk.

I've said this before; the key is to maximise your Soft Financing streams so that you and your investors move quicker into Net Profit Distribution. Each one of these sources of revenue deserves a separate post and I shall endeavour to write about my experiences with each one as we move forward.

Getting Started - Finding Funds to Get Your Film Off the Ground

There are many avenues open to producers who are trying to raise finance for their films, securing funding is on the other hand another matter. When raising finance for your film you will generally be looking for it in two tranches; Development Finance and Production Finance.

Development Finance

Getting that all important helping hand during the early stages of a project can sometimes be the most difficult source of funding you will ever have to raise. Having raised finance for other projects in the past - that has been my experience at least! In other industries this stage of finance is often called 'Start-up' or 'Seed' capital.

The film equivalent is called 'development funding' and is used to develop your idea into a fully polished proposition that an investor can evaluate. You will then aim to raise Production Finance on the strength of your proposition. As you might imagine on a feature film, the Development Finance makes up only a fraction of the total funding raised. Investors that would typically put up the Development Finance include the Producer themselves, friends, family and people from your close network. They might invest because they believe in you, believe in your idea or have some desire to be involved in an exciting and unusual project. They will and should expect a decent return on their investment because quite often they take the biggest risks. Investors bank rolling the Development Phase will expect to recoup their initial investment along with a 50% uplift on their stake. In other words if someone invests £1,000 they will expect to get this back and another £500 for taking the risk. Investors will recoup their Development funding from the Production Funding and might also be given option to roll their stake over and/or contribute further to the Production pot.

As a Producer you should also be clear to your investors when they can anticipate receiving their return because if your plan is to start looking for Production Finance in 15 years when the idea is fully developed that might not seem like such a good rate of return! It also helps you to focus your mind on an end goal.

So what do you do spend your development money on?

Here are some of the cost items that will come under your Development Budget;

•Script option fees

•Writer's fees

•Producer's fees (the most important one!)

•Travel & Entertainment

•Location scouting

•Budget & scheduling

•Script reading with cast

•Script editing

•Duplication & postage

•Website

•Legal (yes they get involved early!)

•Casting Director

•Director final script

•Office overheads

..the list goes on but you get the idea, there is a lot to think about. You will have noticed at the top of this list I referred to the Development Budget and the reason for this is simple. When planning any project it is crucial to be aware of any and every potential cost that one might incur and budget for this in your financial plans and cash flows. It doesn't necessarily mean that you will end up spending or indeed be compelled to spend every penny of it, so for example it might be desirable to receive a Producer's Fee whilst developing your idea. The reality however is you would normally forego this fee or at least an investor is likely to expect you to do that. Unless of course you can provide sufficient reasoning and justification for it's inclusion, otherwise be prepared to compromise.

So what's the lesson?

Lesson No. 3# Get as far down the track as possible before you ask anyone for any money - doing this will demonstrate to any investor your initiative, commitment and work ethic.

Raising Film Finance - Rule Number One

Raising Film Finance Rule No. 1 - There are no rules! (Well one or two..)

The second module in my 'How to Produce a Feature Film' class was all about Film Finance. As an aspiring producer this subject is close to my heart and one that has really interested me from the very beginning. As any Producer will no doubt testify, this subject is vast and complex (or is that just me?) I could quite easily devote an entirely separate volume of blog entries on the ins and outs of film finance, in fact I might well do that .

So after numerous aborted attempts to write a succinct and coherent post on this subject I decided to break it down into easily digestible chunks if not for your benefit then definitely for mine;

Starters

• Types of Film Finance
• Sources of Film Finance

Main

• Recoupment
• Financing Models
• Cash Flow Projections

Side Orders

• UK Film Tax Credit
• Garlic Mushrooms

Desert

• Sales Agents
• Sources of Revenue
• Maximising Producer's Profit

I appreciate that for most seasoned Producers all this stuff is second nature. So if you happen to fit into this category of Producer and stumble upon this and are able to add your comments, or maybe you view things differently - then I'd appreciate your counsel. I'm most curious to discover how the reality of avidly searching for film finance will compare to what I learn in the classroom and through books. I'm guessing that it's going to be somewhere in between.

So onto the basics of Film Finance.

Broadly speaking in the UK there are two different types of film finance; Soft Money and Hard Money. Soft Money relates to finance that either doesn't need to be recouped from sales revenue or at the very least has relaxed and highly flexible terms of recoupment. Soft funding can come in the form of grants and subsidies, crowd sourced finance and film tax breaks. I'll say a bit more about these later. Hard Money relates to finance that will need to be recouped from sales revenue and often accompanied with an uplift of some sort. So examples of Hard Money include, equity, bank or gap finance.

And I guess this was the first thing to throw me - 'What, free money- you've got to be joking, there must be a catch!' How can you move into net profit when your revenues are less than your capex? I've read about the peculiarities of film finance and now I understand how this one works. It's official, in UK Film Finance there are certain avenues of finance a Producer can exploit to enhance the profitability of a project.

Lesson Number 2# THE MORE SOFT MONEY YOU CAN RAISE THE SOONER YOU MOVE INTO NET PROFIT

I'll be revealing more about film finance and the vast array of UK Film Finance sources in the next post.

How to Produce a Feature Film - Diamond Diver Goes Back to School

The jury is still out as to whether I intend to part produce this film or whether I remain in the shadows and act as Executive Producer. Either way I thought I'd better learn the ropes so I enrolled on to a 10 week study programme at City University London, the course is aptly titled 'How to Produce a Feature Film' and began last Tuesday evening.

The programme is focused on the role of Producer and how one moves the project through the critical milestones of development, pre-production, principal photography and post production. I arrived at City Uni with all the enthusiasm of a 3 year old child feeding bread to herd of fowl (geese, ducks swans etc)!

Week 1 - The Development Phase and the Script

The first module looked at the various aspects of the development stage and it became clear very quickly that the script was an essential commodity of any producer. Now it's not that I didn't know this already but I guess I thought it was more of a formality, and I say this because I believe we have one heck of a Treatment and Step Outline.

So lesson number 1# SCRIPT IS KING

Finding the right scriptwriter can throw up a whole range of dilemmas for the Producer;

• Do you approach an accomplished scriptwriter?
• Do you try and catch one on their way up?
• Do you go with a rookie?

There are obvious pro's and con's to each dilemma but I suspect that our decision will be based partly on the availability of funds but also on our confidence in the scriptwriter. It seems to me a bit like trying to find a ghostwriter who can get inside the head of the storyteller and relive the experiences of his/her subject through their eyes and ears. So to what extent does one trust the scriptwriter to mesh their interpretation of the experience into the story? Another dilemma!

Other topics we covered last week were script writer's agreements, writer's agents, chain of title - all of which were fascinating and all had the potential to be incredibly complex.

But for me a couple of key things stood out and they were things that I drew a lot of comfort and confidence from. The first thing related to the different types of Producers that are often involved in a project, and how each one plays to their individual strengths. Some Producers have an eye for and ability to work with the talent, others have an eye for and an ability to identify, develop and see potential in a script and others are more entrepreneurial and help shape up the deal. I fit without doubt into the last hole, it's what makes me tick.

Finally the 5 Key Questions a Producer should Ponder when evaluating an idea or script;

1. Is the idea any good?- this is more about the producer's intuitive feel for the idea as well as their knowledge of what makes an idea good.
2. Is there an audience for it? - who will come and see this? If it's a film about a Yorkshireman and his whippet then you might potentially alienate an important chunk of your audience. (nothing against Yorkshiremen or whippets i might add)
3. Is the budget right? - what, $300million to shoot 'One Man and His Whippet' in Barnsley? Get my point.
4. Can I raise the money for this? - where is the producer likely to get the funds together to make this film.
5. Is this idea a film or television? When you imagine this film, can you see it on the big screen?

Was it worth worthwhile, travelling across London to sit through 3 hours of evening lectures? Module 2 tomorrow - I cant wait!