How do you plan for the future? How many books should you print? What income might you anticipate in the next year? From which customers will it come? Wouldn’t it be great to know the answers before you commit to a print run, calculate your annual budget, or plan your marketing strategies?

Proper forecasting can help you resolve these issues so you can run a more profitable publishing company. It can also help you control your inventory costs, time the introduction of new titles, exploit areas of opportunity, decide when to pull or reinforce ailing titles, predict the timing and amount of cash flow, control your expenditures, and adapt to change with new marketing strategies.

The forecasting system outlined here is designed to help you get these benefits. It not only points out the number of books you may sell, but also shows you the customers most likely to buy them in existing and new markets.

Step 1: Begin by determining the source of existing sales for a given period.

Calculate the total purchases by each of your customers. (Hint: Set this up as an Excel file to easily add the rows and columns, and convert the dollars to percentages and then to unit sales.)

Step 2: Calculate your existing sales to current customers by title.

This step has a couple advantages. First, it will point out your strong and weak titles. It will also allow you to review your activities so you can see what worked and what didn’t work–providing information to prepare future marketing strategies.

Some publishers might stop the forecasting process here and begin making their new marketing plans. For example, given the table above, a publisher might increase bookstore promotion for Title C and decrease support for it in library markets. The publisher might also decide to take Title F out of print. This same publisher might even create the next period’s forecast simply by increasing last period’s total sales by a given percentage, and then apportioning that amount among the titles and customers.

However, if you add two steps to the process you may see a different and perhaps more profitable picture.

Step 3. Discover new sources of revenue.

This step adds a proactive dimension to your forecasting. Instead of trying to market your existing titles to the same people who bought them last year, evaluate new markets in which your titles might sell.

Perhaps you could double your sales by selling to libraries, associations, government agencies, book clubs, museums, or catalogs. You might sell your job-search books to prison libraries, your mystery books in hospital gift shops, or your children’s books to nannies. Are your titles of interest to business travelers? Then try to get your books into hotel gift shops or airport stores.

Use the same chart you used in Step 1 to estimate the likely sales in each sector. The beauty of non-bookstore marketing is that your backlist gains new strength as many potential customers seek valid information regardless of the year of publication, and frontlist titles with little potential in bookstores may create a stream of revenue.

Other benefits to creating a strategy that includes non-bookstore markets are a broader sales base, reduced returns, increased profitability, and a shorter period for accounts receivable.

In the following chart, the publisher has decided to target increased sales overall through book clubs.

Step 4. Determine your new sales forecast.

Foretelling sales is more an art than a science, a skill honed through trial and error. But your forecast may be most accurate if you prepare a series of monthly or quarterly plans, and then add these together to calculate the total number of books you expect to sell in a year. Make sure you factor in a percentage for returned books, particularly from bookstores. In general, be conservative in your sales estimates since it is better to be pleasantly surprised than it is to be disappointed.

This forecast shows a different set of circumstances than Step 2 portrayed. Title F, which had seemed a candidate for deletion, now appears to be a strong contender in special-sales markets. Perhaps this is because it has good content, but its price or cover design is not conducive to bookstore sales. Title B seems to be destined for sales only through bookstores and the earlier decision to put more promotion behind Title C is reinforced.

Also, this analysis indicates that even though some niches may be good for increased sales (via channels such as gift shops or book clubs), some potential customers may be more deserving of your marketing support than others are.

Of course, forecasting should not be done in a vacuum. It’s important to confer with your distribution partners about your plans. Discuss your marketing tactics with them, and talk about how you can best promote your titles. Work with them to prepare a suitable forecast, agree on how you can best support their sales efforts, and make your forecasts congruous with marketing plans. An aggressive forecast demands an equally vigorous investment in promotion. Customers in special-sales markets may demand a different product format, such as booklets, an audio program, or spiral binding. They may require pricing incentives or promotional tactics that are new to you. Use your sales figures to create a cash-flow analysis to determine if you have the funds available to support the marketing efforts necessary for success.

[subhead] Assessing Accuracy

Without a system for accountability, any forecast can become an exercise in futility. Fortunately, it’s easy to set up an Excel spreadsheet that compares your actual performance to your forecast and tracks your progress quarterly.

Here’s a sample template that you can use to track your sales on a quarterly basis (1Q = First Quarter). It can easily be adapted to a monthly system.

1Q 1Q Diff* Diff YTD YTD Diff Diff

Forecast Results $ % Forecast Results $ %

Current Bookstore Customers

Distributor A

Wholesaler A

Online Bookstore A

New Markets

Libraries

Wholesaler A

Customer A

Gift Shops

Customer A

Customer B

Current Titles

Title A

Title B

Title C

Title D

* “Diff” stands for difference.

As you examine the spreadsheet, ask yourself: Where are deviations the most severe? Are these deviations seasonal, or are some adjustments necessary? Which customers or titles are straying from predicted sales? Why is that happening? What trends are developing? How must your forecast be changed for the remaining periods in order to reach your annual goal? This analysis will give you advance warning of potentially dangerous trends and the chance to respond effectively.

Plenty of Payoffs

Proper planning and forecasting will enable you to control your business better and not just “wait to see what happens.” And as it helps you analyze and trim your product line, work more effectively with your distribution partners, prepare creative marketing strategies, find new customers and markets, resolve potential problems before they become calamitous, discover fresh product opportunities, and plan your expected revenue and expenses on a more timely basis, it should allow your entire business to flourish and become more profitable.

Brian Jud is an author, seminar leader, book-marketing consultant, and creator of the Book Market Mapä
directories for special sales. Contact Brian at P.O. Box 715, Avon, CT 06001; 800/562-4357; brianjud@bookmarketingworks.com; or visit

http://www.bookmarketingworks.com.