A business plan is a tool with three basic purposes: communication, management and planning.

As a communication tool, it is used to attract investment capital, obtain loans, convince workers to hire, and help attract strategic business partners. Developing a comprehensive business plan shows whether or not a business has the potential to generate profit. It requires a realistic look at almost every phase of your film project, particularly distribution and the subsequent revenue streams required to recoup your investment. Also, it shows that you have solved all the problems of your project.

As a management tool, the business plan helps you track, monitor, and evaluate your progress. The business plan is a living document that you will modify as you progress in your project. By using your business plan to set timelines and milestones, you can assess your progress and compare your projections with actual accomplishments.

As a planning tool, the business plan guides you through the various phases of your business. A well thought out plan will help identify roadblocks and roadblocks so you can avoid them and establish alternatives.

But even more important, in a film project, the business plan also serves another important purpose; you need it to attract investors to finance your project. No one will invest in your project unless they can see how you will be paid and, more importantly, how you will make a profit.

“Anyone looking for financing for anything should have a business plan, period,” says talent manager Glenn Rigberg of the Rigberg, Roberts, Rugalo firm in Beverly Hills. “An Independent Film Business Plan [without money and a hard offer to go with it] will not get attached actors. But a solid and compelling plan can give a filmmaker some degree of credibility in the fundraising arena. That’s where it counts.”

What should be included in a film business plan? Your business plan should always be simple and to the point. Don’t spend a lot of time developing a 40-page document that no one will read. Keep it to 10-15 pages max. Generally, each plan includes the following;

* The Executive Summary: A cover page that lists the credits of the producers, director, and talent and outlines the budget, start date, and other key information in short, succinct paragraphs.

* A synopsis: a short version of the story followed by an “investment merits” section, which breaks down all the positive elements of the project, but doesn’t include the ending (you want them to read the script). These elements may be established talent, distribution guarantees, or large potential audiences for the film.

* Environment – A brief summary to educate your reader about the industry and opportunities within the industry. You can also describe who your potential customers are and you can mention some movies that are similar to your project.

* Operations: Description of how your internal top-down operation will be structured to produce the project. Indicate what support services, casting, equipment, facilities, locations, legal advisory services, subtitling, etc. will be necessary to successfully execute the project. Document any key capital requirements necessary to deliver your project. Describe the sources and terms of funding. Please indicate what funding has been obtained and how much is still required.

* Marketing: Describe your company’s approach to finding the market to distribute your film and earn revenue. Outline your distribution channels and strategy.

*Financial Projections: Please provide an analysis of what it will cost to produce the film addressing the total funds required, the source of funds, and the balance to be financed. Include a budget summary with projected costs above and below the line. List your sales projections and briefly describe how you got them.

*Financial Statements – Prepare a cash flow statement showing the cash inflows and outflows from month to month for the first year. Prepare a balance sheet that reflects the assets and liabilities of the project. Prepare an income statement showing the income, expenses, and profitability of the project.

In these times of recession, cash is hard to come by. It’s no longer enough to come up with a great script and a great pitch. In this new indie movie economy, people who still have money want to see payback projections, marketing plans, internal rates of return, and multiple sources of income. A well-prepared and informative business plan will go a long way in helping you obtain financing for your project. It can also be a valuable tool in ensuring the timely and efficient completion of your film.