Recently came across this Indie Slate magazine article on my old company, Treasure Entertainment, from about a decade ago. The advice and principles contained therein still hold true today. If you're building an indie shingle, give it a read for some insight on best practices...

Production “Shingle”: Stable Roof or Flimsy Shack?

IndieSlate’s first in an ongoing series of articles profiling established Production Companies.

Take a look inside the Hollywood Creative Directory (the indispensable guide to producers both large and small) and one is struck by the plethora of production companies that exist in some form throughout the country. Many of these production entities are often fly-by-night ventures that are here today, but gone tomorrow. Yet, despite the presence of these few bad apples, the reality is that legitimate production companies are ground zero for both studio and independent moviemaking.

Naturally, it has become increasingly common for independent moviemakers to contemplate forming their own production company at some point in their careers. However, the decision to launch any such enterprise should be undertaken with the same due diligence and precautionary planning required by any serious business venture. Similar to a movie, the difference between success and failure most often depends on the amount of creative and entrepreneurial forethought an individual invests into his or her vision.

In order to further illuminate the complex machinery required to wind up a production company and keep it ticking, IndieSlate will be reaching out to established producers throughout future issues in order to get a first-hand look under the roof of their so-called production “shingles.” In this issue, Mark Heidelberger and Jesse Felsot of Los Angeles based Treasure Entertainment have generously contributed their insights.

In just five years, Treasure Entertainment’s principals have grown their company from a small producer of music videos to a full-service entertainment company that produces feature-length movies, documentaries, music videos and commercials. They recently co-produced David Ayer’s directing debut, “Harsh Times.” The movie stars Christian Bale and was picked up for by Bauer Martinez Distribution at the Toronto Film Festival this year. Treasure has also produced the feature documentary “Flintown Kids” which was picked up during Cannes 2005 for DVD distribution. The company is currently prepping the horror feature, “High Midnight” with Mary Lambert (“Pet Cemetary”) attached to direct. Daily Variety recently reported that the $5 million budget will be fully financed by New Mexico's interest-free loan program- the first such deal of its kind since the state recently introduced aggressive incentives to attract independent producers. “High Midnight” is scheduled to shoot in April.

Felsot and Heidelberger address important aspects of their company’s evolution in the following primer for production company dos and don’ts. Throughout, keep in mind the following mnemonic to visualize and strategize your own path to success:  

S.H.I.N.G.L.E.

Soul Searching

Have A Plan

Incorporate

No Job Too Small

Good Projects

Leverage Your Assets

Entertain

Soul Searching:

The most important thing anyone can do before taking the first steps toward launching a production company is to be honest with themselves. Heidelberger, Treasure Entertainment’s Chief Operating Officer, strongly encourages aspiring producers to “Ask yourself some hard questions. Do I really want to be a producer? Am I fully aware of everything a producer does? Do I have the emotional fortitude and passion to persevere despite the inevitable challenges? Am I doing this for the right reasons?”

Countless fly-by-night production companies were formed by shallow individuals hoping to cash in on “easy” Hollywood money in order to fast-track themselves into a world of fame and fortune. The reality is that producing movies is an extremely difficult, often thankless job. Ask most non-industry people who produced “Pulp Fiction” and you’ll receive a blank stare. In fact, ask most industryites for that matter and the response will likely be identical. (No worries, the answer is Lawrence Bender.)

Felsot, Treasure’s President, further emphasizes, “Take it seriously. The conviction you put into your work will not only correlate to the quality of your productions, but also the quality of your reputation. And in an industry built on relationships, reputation is critical.”

Have A Plan:

As with any enterprise, it is essential that one develops a plan- both figuratively and literally. Formulating sound plans and implementing well thought out strategies over time are the most prudent safeguards to ensure long term success.

Heidelberger and Felsot began devising a strategy to form a production company together as undergrads at UC Santa Barbara in the late-nineties. Both had studied film and made some short films, but, upon graduation, they moved to Los Angeles determined to expand their inherent skills and network of contacts. Both landed jobs working for producer Robert Newmyer on the movie “Training Day.” Shortly after, Heidelberger was accepted into the graduate Producers Program at UCLA and Felsot continued to work as an assistant- and eventually production manager- at film and video company  “A Band Apart” (Lawrence Bender’s company no less!)

Felsot explains how he felt it was essential that he “…work for companies that were similar in scope to what he hoped to eventually accomplish with his own company.” Heidelberger adds that “UCLA encouraged me to work with writers in the school’s screenwriting program to gain practical story development experience while also reinforcing the importance of honing essential producing skills such as leadership and resourcefulness.”

Once the principals of Treasure had paid their dues in the trenches of academia and behind desks manning the phones of their mentors, they decided it was time to formally lay out the blueprint for their own production company. Heidelberger explains that he and Felsot spent weeks writing a very comprehensive document, which detailed every facet of their proposed business within the context of their company’s mantra, “Empowering Filmmakers.”

The creation of a solid business plan on paper is critical to articulate the vision of the founders not only to themselves, but also to potential investors, clients and partners.

While it may not be necessary for others to generate a biz plan as ambitious as Treasure’s, it is essential that any plan cover basic areas such as the Executive Summary, Management Team Overview, Marketing Plan, Company Financials and Cash Flow Projections.   Heidelberger further notes that their initial business plan was a key component in attracting initial members of Treasure’s current Advisory Board including producers Cindy Cowan and Mike Binder. For additional information on creating a business plan, reference the government’s Small Business Administration’s website- www.sba.gov

Incorporate

Formally organizing a company to be recognized by local, state and federal governments is the next logical step to becoming a legitimate business entity capable of receiving income, paying employees and reporting taxes. Depending on one’s overall strategy and timeline, it may even be advisable to organize prior to writing a business plan.

Upon proceeding, there are numerous business structures to consider adopting including, but not limited to, Sole Proprietorships, Partnerships and Corporations. Some states even have additional variations such as the “LLC” (Limited Liability Corporation). The advantages and disadvantages found within each structure can vary significantly and it is strongly recommended that one seeks out legal advice prior to filing organization papers.

Heidelberger reveals that he and Felsot, “…sought advice from both our future VP of Business and Legal Affairs and Chief Financial Officer and we decided to incorporate under the parameters of a “S-Corp” Corporate structure . We considered forming an LLC, but discovered that the “S-Corp” provided more significant tax breaks along the lines of a partnership while still allowing us to sell stock.” The www.sba.gov website is also a valuable resource to learn more about the various business structures.

No Job Too Small

When first starting out, very few businesses have the luxury of landing large clients and high paying jobs right out of the gate. Unless independently wealthy or funded by Daddy Warbucks, the most likely scenario is that neophyte producers will have to virtually beg, borrow and steal to keep afloat. In the feature world, even established producers can find themselves struggling to stay solvent during the downtime between projects, which can often stretch for years.

Heidelberger and Felsot foresaw these perils and purposely constructed a multi-media company that would enable them to cross-collateralize different divisions. As Felsot explains, “It made perfect sense for us to include a music video and commercial production component within our business plan. The cross-pollination of talent between these industries justifies our involvement in a variety of production mediums as an extension of our core business goal, which is to produce feature length movies.”

In turn, Treasure Entertainment initially gained a foothold by producing low-budget music videos and commercials. Sometimes the budgets were virtually non-existent, but they did manage to make enough to pay rent while gaining more practical experience. Felsot comments that “…the practical on-set experience of working on smaller shoots early in our career has proven invaluable to our ability to handle the much larger feature work currently on our plate.” Heideleberger adds that “…working with limited resources truly tests your ability to maximize value in order to literally make something out of nothing. And you have to be extremely passionate to get people excited enough to recognize the long-term value of working on a quality project versus merely the short-term gain of a fat paycheck.”

Good Projects

The most important asset any producer can secure is a quality project. A production company’s projects will serve as the pillars upon which the business will either support itself or collapse.  Many aspiring D.I.Y. producers are in a multi-hyphenate position where they are looking to form a company to serve as the legal backbone to produce a movie that they also wrote and plan to direct. Others, similar to Treasure, may be planning to form a production company that also serves a management function where the producer happens to represent their writer and director clients. Regardless of the scenario, the projects producers ultimately align themselves with better be solid. However, a common dilemma facing many newly formed production companies is the fact that bringing quality projects in-house can be difficult if the company has yet to establish a successful track record.

Felsot offers up a blunt solution to this dilemma, “You have to hustle. The primary reason Mark and I managed to get talented writers and directors willing to work with us is because we consistently produced results at every level. Initially, we were able to convince others to take a leap of faith based on our track record of converting small victories into larger opportunities. Our work ethic has impressed a lot of people along the way and we are continually striving to nurture meaningful relationships with the right people.”

And relationships are by far the most valuable resource a producer can mine to unearth those rare gems in the rough. It’s almost a cliché, but a grunt production assistant on the set today can become the hot young writer of tomorrow. Heidelberger emphasizes this point stating, “We often hire the same crews for various productions and there have been numerous occasions where good people connected us with good projects.”

Once a producer has pursued a project and gained the trust of a writer or director, it is essential that they formalize the relationship with a contract. At some point, a producer may confront someone hesitant to sign a typically dense, boiler-plate contract. Nonetheless, it is the producer’s responsibility to convey the importance of outlining the nature of the relationship on paper to protect both parties. Deal points within the initial contract may need to be negotiated and the scope of the contract may even need to be scaled back or expanded. Ultimately, no producer should invest extensive time or money into a project without protecting their position in writing.

Leverage Your Assets

Whether an established production company looking to expand or a fledgling start-up, the most critical strategy to minimizing ever-present growing pains is to leverage the assets you already have. Prior to acquiring tangible assets such as a slate of scripts in development, office space or a library of completed films, the resourceful producer must learn to leverage intangible assets such as knowledge, relationships and passion.

Heidelberger notes that, “Treasure managed to acquire numerous projects via “sweat equity” versus actually putting up option monies. Sometimes we would find a promising script that still needed work and we would simply offer the writer a comprehensive set of objective story notes along with the promise to protect the writer’s core vision if they wanted to explore working side-by-side. Based on that initial investment of time, the writer would often recognize our inherent skills as storytellers combined with our commitment to helping them develop the strongest project possible. We would gain their trust, outline the relationship on paper and then focus our shared energies toward getting the project made.”

Once you begin to acquire real assets, be sure to use them to help you secure additional resources. The fastest way to attract new opportunities is to expose upon your real accomplishments. Felsot points out that, “When we were starting out, we would direct people to our website. It was the only place where we could detail relevant information, but it was effective in creating an aura of legitimacy. As we grew, we would invite our growing network of contacts to small wrap parties or anniversary celebrations. Eventually, the parties were growing along with our reputation. As we expanded, various Treasure projects were being publicized in the industry trades and that attracted the attention of everyone from un-produced writers to powerful agents.”

Regardless if a producer is out their pounding the pavement or if potential clients are knocking on the door, the key is to continually demonstrate the ability to build upon the foundation you have already laid. Never rest on your laurels and always strive to have projects that keep you busy in a meaningful way. A successful producer is never bored.

Entertain

As a production company grows, it can be easy for a producer to get mired in the minutiae of running a company. Attending to the small details can often obscure the larger goals put forth when the production company was launched. But it is vital that a producer steps back and gains perspective from time to time to remember the answers to some of those soul searching questions from above. The likelihood is that most producers did not get into this business to be bean counters. Most of us had a burning desire to tell our stories and the determination to take whatever steps to bring that dream to fruition. In the end, a producer’s job is to entertain.  As both Felsot and Heidelberger confer, “Our goal is to tell the best story possible and, if we do our job right, keep people hungry for more.”

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In future issues, Indie Slate will continue to distill the practical advice and strategies of knowledgeable individuals and companies and we believe this information will be an invaluable reference for both experienced and aspiring producers- as well as writers and/or directors wishing to understand the business mindsets directly affecting their artistic pursuits.

To conclude, it helps to reiterate that producing movies can be a very unstable venture. However, if producers heed some of the advice offered in this series and invest the proper amount of time and energy into their dream, the likelihood is that the production company they form will be a stable roof to weather the inevitable storms of uncertainty.

At A Glance:

Treasure Entertainment

Core Businesses: Feature, Music Video and Commercial Production / Artist Management

Location: Beverly Hills, CA

Year Founded: 2000

Principals: Mark Heidelberger and Jesse Felsot

Credits: Harsh Times (feature – Felsot/co-producer), Flintown Kids (feature doc - producers),  Lil Rob/Summer Nights (music video/ TV commercial - producers)

Pipeline: High Midnight (feature)

Contact: www.TreasureEntertainment.net

J.C. Christofilis is founder/President of Los Angeles based Dilemma Entertainment.

Contact: www.onlineDilemma.com