Seven steps to obtaining development financing:
Develop a Business Plan
This is basic. Producers should evaluate their resources (operating team, stories, cash flow) and recommit to or redefine their mission statement (why they are in business, the kind of pictures they want to make, the way they want to make them, the style of doing business internally and with others, and so on). They should also provide the basic development planning, including the number of pictures to be developed within the new development company, the stories (if any) that the producer has and the most logical sources of development funding.
Prepare the Activity Projection
This is a list of the primary activities performed for the company’s picture during its development. They shall be presented in a month-by-month spreadsheet format, showing in a single Projection all activities for all the pictures to be developed. The chart shall tracks over several years and be broken into months.
Prepare the Cash Flow Projection
After the producer has projected specifically how development of a series of pictures will be accomplished, then a cash flow projection may be prepared. This projection allocates expense amounts to the activities in the projection and the related overheads, like rent, phones, salaries and taxes. Producers should prepare their projections with the assistance of their accountant or business manager and apply expense amounts appropriate for their organizations.
Select the Development Team and Advisors
The development operation/company will be operated by a team, including the development director(s), an operations person, and development assistants. There shall also be outside professionals, including an attorney, banker, completion bond company, physical production specialist (retained UPM), and a publicist. This team is usually populated by a time-apportionment of the production company team members.
Formulate the Development Company Investment
Even if the investment is completely internal, separate development operations should be planned and run by the production company. As this occurs, the terms of the investment or loan must be agreed between the companies. If there are private investors, they will need reasonable incentives, a great amount of protection and efficient tax consequences. This is usually performed by the producer’s accountant and attorney, who take part in the deal formulation, tax considerations and securities issues.
Prepare the Investment’s Documentation
Even if the production company is the only source of investment, investment documentation should be prepared and entered into legal agreement, including the producer’s income and tax consequences – that will facilitate the planed formal engagements.
The producer’s attorney typically prepares this documentation. If funds are raised from private investors, a securities attorney should be involved. No investment documentation should be distributed without the attorney’s review.
Make the Presentations and Fund the Development Company
Regardless of the sources of development financing secured, an offering or finance agreement shall be written, and, after acceptance, the documentation shall be completed and the funding obtained.
If the funding comes from private investors and this is the producer’s first private offering, it is commendable to make a list of potential investors, another one of people of influence who may reference to sophisticated investors to consider the offer, and still another list of brokers, investment counsellors and securities dealers. The sources in each category should be prioritized and a plan prepared as to how to approach each source.
Like production, development should be thoroughly planned, completely financed, and precisely executed by a skilled team to ensure each picture’s success.