One of my favorite phrases of all time is ‘man plans and the universe laughs’ – a not so subtle wink at how little we control in our lives. Still, as Winston Churchill once famously said, “He who fails to plan is planning to fail.” Here at TPC, we have grand plans, masterful plans, insert superlative here plans! We plan to shake up the publishing world with our innovative business approach, collective talent, and unwavering support from our fans. When we set off on this independent publishing journey, we knew it was going to be a lot of work, and thought we had most of our bases covered. But we aren’t psychics and it is impossible to predict every curve and bend on this winding path to greatness.
One thing we planned very deliberately were specific financial investments designed to establish ourselves as a legitimate business, build our web presence, conduct photo shoots and the like, attend conferences, and purchase the materials necessary to publish Sellout and other future TPC Books. But that rosy façade began to crumble as the expenses began piling up. We quickly realized that for all our careful planning, we had grossly underestimated our start-up costs. Like a newlywed couple building their dream house from the ground up we had sunk a lot of cash in the money pit and still had no roof over our heads to show for it.
When I talk about start-up costs, I’m speaking specifically of the activities needed to run our business. These costs were all incurred up front, outlays we had to make before we have even printed and sold book 1. Still, it’s all good. The great thing about plans is that like leaves in fall – they are designed to change. As small business owners, we know that the key is to remain flexible while employing out of the box thinking to find creative solutions to our problems. This is one of our greatest assets. And besides, with the launch of Sellout just six weeks away, we’re in way too deep to turn back now!!!
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I’m curious now for juicy specifics! Re: unexpected costs and other surprises: i didn’t know that when I was self-publishing my book, The Writer’s Adventure Guide, that I’d have to handle the long-term care and feeding of my book, yes, i.e., marketing. Well, I already knew that I’d market it as a function of my presentations, but I really didn’t know what that would actually mean. What that means for me is learning how to sell well from the front of the room. Since I’m a coach and a consultant, this action has been a part of my business plan for a while. But I had no idea how expensive learning to do this was (in the $1000s), nor the emotional cost of actually doing it well (turning my self of self 180 degrees). I’m paying that cost now. I’m not 100% sure the rate of exchange is favorable, though I’m persevering, like you. So I’m banking on that the exchange will be well worth it. Good luck on your book launch!
Most of the “up-front” costs of producing a book should be recorded as something the book business calls “plant costs.” This term is NOT the same in our business as it is in every other business.
But the important point is: they’re one of the 3 elements of Costs of Good Sold, but they do NOT go into your unit cost or run through your inventory accounts.
Break this accounting rule at your peril. It’s there because it keeps you from making some expensive mistakes later.
You may not have known, but you can expect the working capital required to run a book publisher to be almost the same size as your annual sales. And initial costs to found one, and have a business at all, are not included in that.
I answer financial questions about the book business on my blog and on most of the major book industry listservs, if other questions occur to you.
Best of luck.