Note to self: Lock budget down asap.
Before a lawyer can finalize your financial offering documents for your show, you have to provide the attorney with a budget that spells out all the expected expenses, expected recoupment schedule, etc. It’s the final piece of the legal financing puzzle. You can’t go out and raise funds without it.
I’m a fan of locking that budget down as soon as possible, for two reasons:
First, the sooner you lock it down, the sooner you can finalize those offering documents and get out there and raise some cash. A Producer trying to raise money without offering documents is like a fisherman with a pole . . . but no hooks. And the longer lead time you have to raise money, the more relaxed of a raise you’ll have. Trust me, having just gone through a 4.5 million dollar raise for Spring Awakening in 86 days, it’s a little more fun when you’ve got more time.
Second, and more importantly, the sooner you freeze the budget, the more beholden you are to it . . . and the more beholden your whole team is to it. It’s so much easier to defend a budget when it can’t be touched, when it’s done, when it’s frozen. The investors are making decisions based on those numbers. You’ve got a rock solid foundation.
Too often I see Producers start to give away monies that wreck their original financial models just because . . . well . . . the budget isn’t finalized. What’s another few thousand here and a few thousand there? You’ll just make the changes to the spreadsheet. It’s all on paper anyway, right?
The fact is, all those few thousands put together make lots and lots of thousands . . . which make recoupment that much harder to come by (one trick I often use when deciding whether or not to spend more in a certain area is, “Will this expense sell me that much more in tickets?”). When a budget is finalized, it becomes almost biblical to me. I’ve got to respect it. And I can always refer to it when I need guidance.
Now look, that doesn’t mean I don’t draw outside the commandments every once in a while for the greater good, but when that budget is locked down, I stray from the financial path far less.
So lock your budget down early, and you’ll come in on budget, or even under budget, far more often.
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Ken created one of the first Broadway podcasts, recording over 250 episodes over 7 years. It features interviews with A-listers in the theater about how they “made it”, including 2 Pulitzer Prize Winners, 7 Academy Award Winners and 76 Tony Award winners. Notable guests include Pasek & Paul, Kenny Leon, Lynn Ahrens and more.