How to Write an Independent Film Business Plan Part 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 great impact on that section, and potentially other sections of the plan.  Each document should take up only a single page.
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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. 
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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. 
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Waterfall to Company (Expected Income Breakdown)

Louise Levison says you only need an expected income breakdown.  When I create pro-formas, I tend to include how the overall revenue that the film brings in will be split among  to the major stakeholders including 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.
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I 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. 
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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. 
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CashFlow Statement/Breakeven Analysis

This is a yearly/quarterly estimate of how 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.  By the end of 5-7 years after the initial investment, you’ll likely just want to end the cashflow statement since it’s unlikely your film will be producing that much revenue.
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Research/Sources

This is as it sounds.  it’s all the resource 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 the major platforms like IMDb pro, The-Numbers, Box Office Mojo, and Rentrack. 
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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.
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Email me about educational support

As I’ve mentioned in all other blogs, I actually write a lot of business plans like this with my clients.  If you need help with yours, then here are 3 options for you.   if you want me to help you draft your business plan from scratch, or help you build a package, or even help sell your completed film, use the submit button.  If you want to arrange something for me to review your deck or business plan and get back to you with notes, email me using the button below.   Finally, if it’s a quick question, I recommend booking a call on clarity, it’s billed by the minute, but it’s the least amount of hassle in terms of quick answers.
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Lastly, if you want to review any of the other sections of this 7 part series, here’s a guid for you below. 
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Executive Summary
The Company
The Projects
Marketing
Risk Statement/SWOT Analysis
Financials Section (Text)
Pro-Foma Financial Statements.

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