As I travel along the filmmaking journey a number of awesome people have kindly shared their specific knowledge on particular aspects of the filmmaking process from sending me test footage from different cameras to the casting process to sound recording advice, so in the interest of cosmic karma I figured I’d share some knowledge I have gathered over my career in regards to general business and finance that might help other filmmakers as they prepare to take the cinema world by storm. What follows is based on years spent in management consulting and as an entrepreneur and the accompanying hard earned experiences gained from trial and error, success and failure that goes along with it.
JOB ONE – BE A GOOD STEWARD OF YOUR RESOURCES
Anytime you take on the responsibility of running anything you have to look at that as a privilege and with that privilege comes the responsibility of being a good steward of all your resources. Whether it is money, time, your equipment, cast or crew you must manage all your resources in the best way possible. This requires having a high level of respect for the value of these resources and then managing them to not only protect that value but also achieve the highest return on that value. Essentially your job comes down to figuring out how to best manage your finite resources to achieve the highest possible return from those resources. In practical terms you want to make decisions based on maximizing your ability to capitalize on the value of your resources while actively protecting and maintaining that value.
JOB TWO – KNOW THE RIPPLE EFFECTS OF YOUR DECISIONS
Every business decision you make will have a ripple effect on other aspects of your production and your business. On the simplest of terms if you spend a dollar on X that is a dollar less that you have to spend on Y. So money or time spent on one aspect of your business is money and time you won’t have to spend on another aspect. Give every decision the consideration it deserves because every decision is important because it will come with a ripple effect on the rest of your production. Don’t get lazy and just brush off items that deserve your consideration. Anytime you make a decision you should have a good and clear reason why you made it and a full understand of the accompanying ripple effect.
JOB THREE – UNDERSTANDING THE DIFFERENCE BETWEEN PRICE AND VALUE
If you are going to run a business including a film business you need to get beyond price and look at the value of items. Sure a fancy new camera may boost 8k raw for $10k but with the product you are producing what is value that piece of equipment is adding to your productions? Are you getting a return on your investment that well exceeds the price you are paying or are you just getting forum bragging rights about your cool new camera. Think about it Absentia & Tiny Furniture two very different movies but both big successes were both shot with readily available DSLRs (a Canon Mark II & 7D for Absentia & a 7D for Tiny Furniture) so you need to think about your product and your final distribution plan and make sure you are getting the equipment you need and not the equipment some magazine or forum troll tells you is the latest and greatest filmmaking tool, wait to buy those cameras when your spending studio money.
Your job is to understand exactly what you are trying to accomplish and to make sure every resource is generating the highest value towards that objective. Or in simpler terms make sure you don’t spend more than you need of any resources to achieve the results you are aiming for. This starts with a thorough understand of your target audience and your distribution plan so make sure you spend some serious time thinking about who is going to see your product and how they are going to see it before you make any production equipment decisions. Look at it this way a movie that looks pretty good and generates the profit required to make another movie is a lot better for your team than a movie that looks great and breaks even without providing any profit to fuel the next film or any return for your investors.
JOB FOUR – KNOW YOUR NUMBERS
For most business owners, and I can comfortably guess most filmmakers the least favorite part of their job is getting cozy with their financials. I mean we didn’t take this leap into the nothingness to manage a spreadsheet we want to make films right? But the only thing that will allow you to continue to make films (unless your just spending your trust fund) is managing your numbers and generating a reasonable profit from your efforts. A good way to build your budget is to start backwards, who is your target market, how big is that market, how many sales can you reasonably expect from that market and what is it going to cost you to let that market know you exist. Once you have a reasonable idea of how you would answer these questions you now have an idea of your projected revenue and marketing costs a good building block for any budget. From here you can begin to build your preproduction, production and post-production budgets. There are a couple ways to begin to build these numbers first you could take a divisor of the projected revenue and then figure out the ROI you want and use that as your starting budget. So if you can reasonably project making 500k assuming you do everything right (and since these are projections you might as well assume your going to do everything right, no need to project failure into the future) and you want a 10x multiple on your investment you can aim for total budget at 50k. Assuming you know you can reach the target audience to generate the projected 500k in revenue for 30k your preproduction, production and post-production budgets can total 20k. You can adjust the multiple as you see fit, most first time filmmakers are probably happy just to get most of their money back but the goal of this process is to help you make the best possible decisions so that you can enjoy the highest possible return if you do everything right and the universe shines upon you, breaking even ought to be a worst case scenario.
Once you have an idea of how much you can spend to create the best possible outcome for you and your investors now you can begin to build a budget. There is a ton of software and templates out there for film, production company and general business budgeting but all you really need is any spreadsheet program. Simply take the main aspects of your business: preproduction, production, post-production and marketing and write them at the top of separate columns. Then begin to break down each aspect into subsections, for instance on my spreadsheet under preproduction since I live 80 miles south of LA and all my cast is in LA, I have casting travel, rehearsal space, location scouting as general subsections then I have particular dates/events as line items under the subsection. Break down all your expenses into subsections (for equipment you can have cameras, rigs, lighting sound, etc. for example) and then line items (for camera you can have camera A, extra battery, media cards, lenses) and next to those line items put the expected amount you will send for each item. Once you have these numbers in place total each column. Then create a new column and list the aspect columns and their respective total and then total that. There you have the basis for a film budget (or really the budget for any business). With the basics down you can start manipulating numbers to see how you can get the best results and make sure you are properly allocating your resources (this is the art of finance, and trust me it is a lot more fun than the first part). A quick spreadsheet tip make sure your adding is done with formulas so you don’t have to go back and re-add everything up every time you make a change. Typically I will have a starting budget then a series of revised budgets till I get the results I am looking for. Another quick tip – I have spent years telling all sorts of startups that you should expect to spend twice what you spend to make your product on letting the world know your product exists, each film is a startup so plan accordingly. One last tip you should have a coverage line in your totals column that is 1 – 10% of the total budget (smaller the budget greater the %)this allows individual costs to run over budget while you stay on budget then what I do is add a fuckup line, I figure if we fuck up how much will that cost us (think of a broken camera and having to rent one quickly, a lost day of production, breaking something on location and not wanting to use your insurance, an actor drops out at the last minute, someone gets food poisoning, the sound recording sounds like shit once you upload it, etc..) lots of things can go wrong so this cushion allows the show to continue even when they do.
Sure all of this is boring compared to filming a movie but it is an essential aspect of any business including the business of film. You owe it to your investors, your cast and crew, your audience and yourself to create the highest derive the highest possible value from the dedicated resources.
Next up for us is our first full cast meeting (a casual happy hour) and our first full table read which I can’t wait to do. Make sure you connect with me on twitter @ to stay up to date on the latest happens as we progress down the road of our first feature film!