Small Press Publishers | Small Business | Business Plan | Monica Valentinelli

I’d like to start shining the spotlight on small press publishers, and talk about some of the behind-the-scenes factors that affect writers, editors and business owners. Many of these mistakes can be applied to other small businesses as well, but in the publishing world — these pitfalls can affect how and when contributors get paid, the success of a book and the financial solubility of a publisher. One of the most common scenarios, is when a publisher either doesn’t create a business plan, or neglects to revisit it even when there are changes and fluctuations within the industry.

It’s not uncommon for a small press publisher to produce books for the sake of producing books or for a small press publisher to regard their business as a “hobby.” From all outside appearances, it appears that the small press publisher knows what they’re doing — they publish a book or imprint that appears to be of decent quality, and they do so when they can. While we writers may never know if their numbers are “there,” if the small press publisher doesn’t have a plan, anything that happens beyond the status quo (success or failure) can hurt their business. A huge spike (or drop) in sales can cause small press publishers to have knee-jerk reactions that affect everyone involved with the business. Reactions can range from cutting communication to public attacks or halting production, affecting more than just the people that are involved with the business.

Creating a Smarter Business Plan

Maybe the publisher created one when they first started their business; maybe they didn’t. Tearing apart how the business functions on a financial level may sound pretty difficult, but it’s really not because a smaller business has the advantage of being “small.” There isn’t a lot of departmental noise or red tape for a small press publisher to get caught up in. Here you simply have a small, dedicated core staff, outside contractors and a few vendors all working together to produce, sell and market a handful of products.

I feel that small press publishers can use their size to their advantage by taking a closer, financial look at their business to wrap it into their business plan. Three essential prongs of a small press publisher’s business are sales/marketing, production and operations. By analyzing these segments, publishers can plan for growth, navigate through industry changes and establish “staying power.”

Sales and Marketing

Sales is one of the areas that a publisher knows best, because they know what the sales cycle is for their product. Typically, books have a longer shelf life than most other products with a few exceptions. Topics that can become dated rather quickly have a shorter shelf life; technology, for example, has a shorter lifespan because there’s always something shinier on the horizon as that vertical evolves. Add in marketing to the mix, and provided publishers plan to “measure” the results of their efforts (online marketing campaigns and conventions for example) you have the makings of a steady baseline for book sales.

To integrate this aspect into a business plan, the first scenario — as any publisher knows — should answer the question, “How many books do I need to sell to cover costs?” For first-time publishers, putting together a sales model based on this aspect can help determine how much the publisher can afford to pay writers and editors.

Marketing and buzz is essential to selling books, but just throwing up a website isn’t going to drive people to the site. However, there’s a lot of free options that can be included in a business plan: free chapter samples, free publicity sources like HARO and other measurable actions integrating free web analytics packages like using Google Analytics can supplement the business plan and create a nice to-do list for promoting their product.

The best case scenario is if the publisher either sells out of books (if the publisher took the short print run book) or if they sell enough print-on-demand products to cover the cost of a short print run or the next publication. Worst case scenarios may include unforeseen circumstances related to poor printing or shipping confusion that can’t necessarily be tacked into a business plan, but can be accounted for in an “emergency” fund for the overall budget, if available.

Production Costs and Editorial Calendar

Before small press publishers spend a single cent on producing a book, several of them work on an editorial calendar based on their fiscal year, corresponding to their business plan. Some don’t. From talking to more than a few of them, some publishers put a lot of their energies into the product life cycle (i.e. when they cover the costs of the first book, then they’ll product the second). This isn’t necessarily a bad way to go, but an editorial calendar can be structured to include those “what if” scenarios. Having a generic schedule on that high level to show tentative release dates can help reign in the business because it helps provide the publisher with a “soft deadline.” These “soft” deadlines can be adjusted with the sales cycle and market research, but can provide a loose structure to help set financial goals for the business based on production costs.

Production costs range from printing costs to graphic design and can be scoped out before the publisher spends a single dime on these areas. From the conversations I’ve had, there are a lot of decisions to be made when looking at printers. Print quality, profit margin per unit, ISBN numbers, built-in distribution, reputation and inventory are just a few aspects publisher look at when figuring out print runs. This decision is, by far, one of the most important ones a small press publisher can make because it’s the physical product they are selling.

Once a publisher knows how much it costs to print and ship their books, they can reverse engineer how much it will cost them to produce the product. From there, they can determine contractor pay rates for writers, layout and design, editors, etc. Many publishers have been sharing with me that it isn’t smart to rely on a print-on-demand service like http://www.lulu.com for their printing because the profit margin is smaller per unit, and because it costs more to print a higher quantity. If the small press publisher has future plans to utilize a book distributor, their costs would skyrocket if they relied solely on POD.

Weighing the pros and cons for different methods of production is a great way to bake in another “goal” for the business plan. To keep up with rapid, market changes, I recommend building a competitive table with method of printing, pricing comparisons, setup fees, reputation, etc. to track how the different print services are holding up over time.

Operating Budget and Costs

Many small press publishers run their business out of their own home and might be set up as a self-proprietor. This type of business structure means that whichever individual owns the business is personally liable for anything that goes wrong. Other publishers opt to set themselves up as a limited liability corporation or an LLC, which creates a certain amount of distance between them and the business. However the business is set up, there are a number of other “costs of doing business” involved like:

bookkeeping/accounting
paid online/offline advertising
copyright, IP and licensing fees
legal fees related to contracts
website design, hosting and maintenance
online store fees
bank fees
equipment (computer, printer, scanner, software)

Besides these operating costs (which some publishers wrap into the cost of the book), there’s also the one cost that most small businesses have a really hard time quantifying — time. Many small press publishers and the people who work for them have a “day job” that eats up a lot of their time and their ability to work on the business side of things. While it can be next-to-impossible to estimate how long it would take to produce a book if you’ve never done it before, figuring in an operational budget and estimated “time” of doing business (rather than just “cost”) to a business plan can help. For example, if you’re only able to put in–realistically–15 hours a week to the business, what might that equate to? Six hours wrangling your production staff? Five hours of emails and phone calls? Two hours for online marketing?

By setting some guidelines for how a publisher might run their business, it will help establish how much time they’ll have. No time? As Timothy Ferriss often proposes in his four hour work week, that’s where delegating comes into play.

Regardless of how a small press publisher decides to run their business, the point I’m trying to make here is that having a business plan based on a combination of higher-level decisions and some of the minutia involved in the production cycle are really key to weathering storms and freeing up more time to work on the business.