We all hope for a breakout book. When it happens, though, it can feel like a runaway roller-coaster. I was lucky enough to have that experience as a company’s new head of finance and administration. It was quite an introduction. This wonderful book sold 350,000 copies in hardcover, many times what we had hoped it might. It might have sold another few hundred thousand copies–if we had been ready for our success.
From that experience, I learned that you have to be prepared to support your books at all times, because you never know when success will strike. Preparation breaks down into three phases: steps to take now, key things to do while on the roller-coaster, and steps to take afterward to ensure that you reap all the rewards due you.
Do It NOW
Develop sources of financing, improve the efficiency of your back office, find sources of temporary help, and hone the financial analysis techniques you will need.
To develop sources of financing, cultivate a relationship with the commercial lending officer at your bank. Lending officers aren’t just bankers; they’re people. Introduce yourself and become a familiar face. You want not only to help the lending officer understand your business–reducing the need for explanations later when time pressures are severe–but also to find out what the officer’s interests are so you can offer books and information about books in that area if you have them. Comp lending officers as part of your PR. Give them glimpses inside this “glamorous” world of publishing.
Also, take small loans when you don’t need them, and then pay them back to help establish your credit rating.
To improve efficiency in your back office, don’t make all possible changes. Instead, make only those changes that reduce expenses by more than they cost. Doing a formal cost-benefit analysis is a twofer, because you are also honing your financial analysis techniques. Keep the cost-benefit analyses, the list of sources for equipment, etc., and a list of prices in a file and update it often. Some prices may drop low enough for your budget, and the rest will be accurate if you need them.
To find temporary unskilled help, try local colleges, and even high schools. Yes, I mean interns. They’re inexpensive, relatively intelligent, and don’t expect to be on staff permanently. For skilled help, cultivate freelancers and consultants whom you can hire for short- to midterm assignments, with the understanding that this is not permanent.
To hone your financial analysis techniques, do cost-benefit analyses and what-if analyses using your title P&L, and make sure you have a working familiarity with concepts such as fixed and variable costs, sunk costs, and incremental costs and revenues vs. core costs. When success strikes, your schedule will be even tighter than it is now. You will be making less-familiar decisions about exotic rights deal structures, high-volume sales opportunities, and other new options, and you will be doing it under pressure. Now, on the other hand, you know approximately how the answers should look; any mistakes will have a smaller impact as they teach you lessons.
When the Avalanche of Orders Hits
Feed the Beast! By that I mean, be sure to fuel your marketing efforts as long as they are paying off, and be sure you have books to fill your orders. Use the analytical techniques above to decide how much to put into specific efforts, and when to spend as well as when to stop.
Use rights sales income to fund less-predictable efforts, such as marketing. And remember that they can pay off in publicity too, by getting other companies interested in your book. Announcing such deals to the media can also lead to greater buzz.
To bridge the gap between the printing bill and collecting on those orders, contact the loan officer mentioned above. This is the kind of low-risk loan banks like. You have orders to fill, and a low probability of bad debt.
Implement back-office improvements from the list you prepared earlier. But don’t increase your permanent overhead in the process. This level of sales won’t last. You also want to conserve your capital, so do the things that don’t take much money first. Consider short-term leases for items like improved mailing systems, or software.
Add temporary, not permanent staff. Start with interns and delegate the detail-bound time-killers. Hire experienced pros to help with skilled tasks that aren’t your strongest suit. Focus on the most rewarding ways to use your limited time. For example, if you are skilled at copywriting, do that, and hire a pro to do the follow-up phone calls or to create the visuals for your mailings.
The Retrenching Phase
The rush is over, and it’s time to clean up. First, reduce your temporary staff. You aren’t laying people off, as everyone was hired on an explicitly temporary basis. No guilt is necessary. Reward your freelancers. Report back to your source of interns on their importance to your success. Keep relationships good. If you’re lucky, you’ll need them all again soon.
You should have quite a bit of cash left over even after returns, closing out that bridge loan, and paying your vendors. Invest your profits in the assets with the highest possibility of future payoff. Start with manuscripts with breakout potential. Contact agents now–you have more credibility and more money to invest than you will later, unless you get another hit. Try to develop a catalog with a reliable number of solid titles, and a reputation for your company. Add resources to those projects that begin to prove themselves.
Review your operational improvements list–implement changes that require capital you lacked before, but that can pay for themselves at a relatively low level of sales. Assess every aspect of your business for sustainability. Remember that you probably won’t have that increased level of sales again for many years.
Plan to allow for expansion, but not require it. For example, lease software licenses by the number of simultaneous users (a.k.a. “by the seat”), as you can expand your usage on a temporary basis very quickly, and contract again just as quickly.
Most important, enjoy what just happened! Take a few moments to appreciate it. You have just found the Holy Grail of Independent Publishing. Yes, luck may well have been involved, but so was skill.
Marion Gropen can be found at Gropen Associates, Inc. (www.GropenAssoc.com), where she provides financial and management advice to publishers. She has served three terms as president of the Publishers’ Financial Round Table and she moderates two email discussion groups for small publishers, Self-Publishing and Pub-Forum. For more information, e-mail Marion.Gropen@GropenAssoc.com.