Interviewed by the Compulsive Creative, July 2004

Louise Levinson is the author of Filmmakers & Financing: Business Plans for Independents, 4th edition

Visit Louise Levison's Web Site

Louise Levison is President and Founder of Business Strategies, a consulting firm, which specializes in writing business plans for film, Internet and other entertainment related companies, developing corporate strategies and guiding entrepreneurs in looking for and working with equity financing.

Among her clients' recent films are "The Blair Witch Project," the most profitable independent film in history; "Hoover," starring Ernest Borgnine; "The First of May," starring Julie Harris and Joe DiMaggio; "The Secret;" "Dinner Rush;" "Extremedays;" and the European films "Olivetti 82" and "Charles The Fifth: The Emperor and the Girl."

Among her corporate clients are Tokuma International Ltd, the Japanese conglomerate responsible for "Shall We Dance" and "Princess Mononoke," the Pamplin Film Company, the Ilya Salkind Company, Whitelight Entertainment, Gabriel Film Group, Gener8xion Entertainment and Landmark Global. Ms. Levison is the author of Filmmakers and Financing: Business Plans for Independents and publisher/editor of "The Film Entrepreneur: A Newsletter for the Independent Filmmaker and Investor."

Ms. Levison has taught classes for filmmakers at UCLA and presented seminars for the USC Entrepreneurial Program, The Independent Feature Project, the Sundance Film Festival, ShowBiz Expo, the Florida Motion Picture and Television Association, the Arizona Film Commission, the Cincinnati Film Commission, Women in Film, California Lawyers for the Arts, the Hollywood Film Festival, the Hollywood Black Film Festival, the Learning Annex, the Brunico Creative Financing Conference, the Los Angeles Venture Association and the National Association of Women Business Owners.

Prior to working in the entertainment industry, Ms. Levison was a market analyst for the American Iron and Steel Association, an Economist at Stanford Research Institute (SRI) in Palo Alto (CA) and Director of Corporate Planning for both Torrance Memorial Medical Center and the City of Hope. In addition, for three years she co-hosted a call-in radio show for entrepreneurs on the Business Radio Network and is a former registered stockbroker. She holds an M.A. in Asian Area Studies from New York University and an M.B.A. in Finance from California State University.

CC: Can you tell us very briefly what your book is about?

LL: The book explains in detail how to write a business plan including how to forecast numbers showing how much money a film could make. The new edition (4th) includes a CD, which makes it two books for the price of one. The CD has additional information for each chapter including lessons in the methodology that I use for forecasting.

CC: Why do independent filmmakers need business plans?

LL: To raise money from private (equity) investors, a filmmaker needs a business plan. All investors, no matter what their reason for wanting to make a movie, want to know the answers to two questions: how much money am I going to make and when am I going to make it? Many are businessmen and women who know what a business plan should look like and include.

CC: I don’t know anything about accounting. What should I do?

LL: Nothing. I’m not an accountant, either. As long as you can add, subtract, multiply and divide, you can do this. It does require understanding the relationships between numbers, however. For example, if you take ten films and divide each film’s box office by its budget, you will end up with an idea of how the box office relates to budget. This isn’t high math, but it does require a certain amount of common sense. Assuming that you haven’t used extraordinary films like “The Blair Witch Project,” My Big Fat Greek Wedding” or “The Passion of the Christ,” you’ll be able to come up with an average (e.g., 3.5, 2.8) by which you can multiply your budget to get a box office forecast. Of course, this assumes that you have used films in a budget range close to yours and with a theme that relates to some aspect of your film. It is unlikely that there will be many films with the same story.

CC: I’m afraid someone will steal my ideas. How do I write a plan without giving away my intellectual property?

LL: You can’t copyright ideas, but you can protect scripts. If you are going to ask people for money, you have to tell the story of your film. A synopsis is all that has to be in the business plan However, the synopsis should tell the story (beginning, middle and end) with the main plot points and be short, usually no more than one page. It is not necessary to give out the script with the business plan. For one thing, it is more detail than many investors want.

CC: Why do I have to describe the industry in my plan? Don’t investors already know what’s going on?

LL: The short answer is, “No.” There are professional film investors who understand. It is more likely that you will be raising money from people in other businesses or not business at all. If you don’t tell them how the industry works, they will make up their own incorrect version. For instance, I have seen cases where people have raised money from one investor without describing how distribution works. In each case, the investor made up his own version, which was that the distributor would pay out the whole budget cost up-front. When that didn’t happen, the investor simply refused to release the project. In a worst-case scenario, they could sue for their money back, because you didn’t tell them.

CC: What type of film is most likely to get funded?

LL: Any script that appeals to the investors you are approaching. Funding is relative depending on the subject, the budget and the people involved. The higher the budget, the wider an audience the film needs to appeal to and the more experience the filmmakers have to have.

CC: What are the best sources of funding for an independent filmmaker?

LL: Individuals. Finding them isn’t easy. As the saying goes, if it were easy, everyone would be doing it. If you are making a documentary or have a fictional film with some special social significance, there may be grants or non-profit groups that will invest. Otherwise, you have to find people - either one rich person or a group of people through an investment memorandum. Keep in mind that business plans don’t always stand alone. If you are approaching more than one investor, you need an investment memorandum, which sets out how eventual profits will be distributed and includes subscription documents to sign. For the investment memorandum, an attorney is necessary. Do not try to write your own.

CC: I’ve never produced a movie before. Do I have a chance at getting funded?

LL: You always have a chance, but we are dealing with probabilities. My advice is to partner with someone who has producing experience. The producer is in charge of the investors’ money. It may make potential investors uneasy that you don’t have previous experience; therefore, your probability of being funded is higher.

CC: What happens to my chances next time around if my film loses money?

LL: In theory, it becomes less likely that people will feel secure about giving you their money. Again, anything is possible.

CC: If so many films lose money, why do people continue to invest in them?

LL: People have many individual reasons for investing in film. For many, it’s like going to Las Vegas and hoping for a jackpot. With the success of many independent films in the last few years, people seem to want to take the chance. Others may want to see a film get made for subjective reasons. For example, “The Spitfire Grill” was financed because a secular, non-profit Catholic group wanted to make a film about redemption.

CC: What is the biggest mistake independent filmmakers make when writing business plans?

LL: I have to mention two major errors.

1. Not knowing the business well enough to explain it to others. Filmmakers are creative people and often don’t look at the business side of “the business.” A saying that may have originated with screenwriter/playwright Garson Kanin is that there is a reason it is called “show business” and not “show art.”
2. Putting in a wish list of actors or actresses. No matter how you state it, investors can sue later saying that they invested because they assumed that so-and-so was going to be in the project or at least knew about it. Only put in cast from whom you have a letter of intent. Normally, you won’t have a contract until there are funds.

CC: I don’t have a script. Does that matter?

LL: We are always are working with probabilities. Investors are likely to feel more confident what film is going to be made and when it will be made with a script already written. Having a script is especially important if you are a first-time filmmaker. However, there are exceptions to every rule. One example is “The Blair Witch Project.” Their outline was so tight that I could write a synopsis that showed exactly how the film was going to work. The investors knew that the actors would be improvising. On the other hand, it was a very low budget. I don’t think they could have raised $5 million based on the same business plan.

CC: You describe one of the best resources for the independent filmmaker seeking financing: the trade publications. What are some of the advantages of reading and using these tools?

LL: I don’t want anyone to think that they are going to find financing through the trades. Filmmakers should read the trades to become familiar with the industry, track the box office results of films and research budget information.

CC: Do people plagiarize the wording in your book, and if so, what happens to them?

LL: Business plans are private documents. People use my words all the time. If it is original, it is nice if they credit me. However, if they use material (usually tables) that I have credited to some other person or group, they should also give the same credits. However, if someone is writing their own book or expounding at length on an Internet site and plagiarize my words or tables, they have broken the law.

CC: What’s the relationship between investors and the screen credit for Executive Producer?

LL: Too often people give away the title of Executive Producer to anyone who makes a promise of money, stars or even locations. With independent film, the title should be reserved for the money source or for a well-known producer (who doesn’t want to be the hands-on producer) whose name will help you raise money. As for the latter, there isn’t a rule I can apply. Everyone who ever produced a movie thinks that they are important. It is a matter of judgment on the part of the filmmaker.

CC: What do I do with my plan when it’s complete?

LL: Unless you are sure that you can raise your money from one person, the next step is to get an investment memorandum — an LLC or limited partnership. In this case, the LLC is not the formation of your company name with the state. This legal document, which must be written by an attorney, has subscription documents for an investor to sign and describes how any revenues will be distributed. Do not write it yourself. The laws in the various states are too complicated for a filmmaker to cut and paste one that he finds on the net or is given by another person.

CC: How often does implementation of a film differ from its business plan and if it does, why have a plan in the first place?

LL: Business plans are a roadmap, a way of charting your course. If you were putting up all the money, you probably wouldn’t write one. However, to raise money, you need to write one. The way a film might differ from the business plan usually is in the synopsis , the cast and/or the cost. If the story changes significantly, it is a good idea to inform your investors of the changes. They will usually give their approval of a change. Sometimes you are able to get an actor or actress who is more expensive than you had originally planned. Or you go over your budget. If you have to raise more money, go to your original investors first. Once you get money from additional sources, you are lessening the equity interest ( the percent of the total profit) that your original investors will receive. You must have them sign off on bringing in additional investors. In most cases, they will agree to it as 50% of nothing is nothing.

CC: How is a business plan for a film different from other plans?

LL: I spent 18 years working in corporate planning and writing business plans in other industries. This format was originated for manufacturing sometime in the 19th Century and is used across industries. My version has been tweaked to take out unnecessary sections and add items that are pertinent to film. The general outline, however, is recognized by people who see business plans in other businesses.

CC: I put 110% of myself into my filmmaking, but I can’t stomach the prospect of doing a business plan. What should I do?

LL: Hire me!

CC: Why are distributors so important in the film industry?

LL: If you think writing a business plan and raising money is hard, wait until you try to distribute a film! Distributors know how to negotiate contracts in different kinds of revenue-producing media (theatrical, video/dvd, television) and have contacts with the decision makers in those area. On the other hand, be sure to have an attorney who has experience negotiating your contract with the distributor.

CC: What’s the magic thing to say to get funded?

LL: If I knew a magic word, I’d be very rich! Understand as much as you can about the person you are approaching for money, be able to explain your business plan (especially the forecast) and be pleasant. On sure way not to raise money is to act as if the investor owes it to you, because you are a creative genius.