Friday, February 25, 2005

Common mistakes of small magazine publishers

As a consultant to the Canadian magazine industry, I've learned a thing or five...

1. Over-estimating revenue, underestimating costs

The single biggest, over-arching mistake that magazine publishers make is being too optimistic about revenue and not pessimistic enough about costs. Whatever can go wrong, will. Whatever you think will happen with revenue, it will never be as good as you think. People who start magazines are natural enthusiasts, and can therefore be optimistic to a fault. Often they start from an editorial perspective, ignoring, forgetting or not understanding the hard-headed realities of the marketplace. No matter how little, how precious, how literary, how niche-oriented, how noble your magazine is, no matter whether its revenue sources are advertising, subscriptions, single copy sales government grants, fundraising, personal wealth or various combinations, successful magazines spend less than they make.

2. Assuming that revenue means positive cash flow

Magazines, like all other businesses, move with transactions. In virtually every transaction, there is almost always a lag time between the deal and the completed cash collection. This is a fact of business and life and should not be a problem, assuming you are prepared. Unfortunately, many magazines get into trouble when they spend money they don't yet have, even when these transactions could easily have been delayed for 30 days, when the money is in the bank. Nobody ever went broke exercising wisdom, discretion and foresight.

3. Forgetting about Revenue Canada

You have to pay the taxes, you have to pay them when they’re due (or they get to be more expensive than they need to be) and magazines which forget that the Goods and Services Tax money or the payroll tax doesn’t belong to them, can wind up in hell…

4. Mismanaging the timeline

Surprisingly, many small publishers manage on the edge of madness – fighting each fire as it comes up and, as a result, having one fire to fight after another. As with cash flow, and the flow of transactions, almost everything in a magazine happens earlier or later than some publishers realize. For instance, you need a rate card and media kits as supporting tools for your advertising sales. But you wouldn’t start the calculation, design and printing of the kit the day you make your first sales call. You’d know that you would have to work back to have those critical tools available when you need them. Similarly, for magazines that have to advertise or promote themselves, it doesn’t do any good to start once the issue has been published. To do any good, you needed to start 6 to 8 months ago and have the campaign preceed the issue by a couple of months. Similarly, if you need to renegotiate your line of credit, or your printing contract you don’t want to start figuring it out the day before you go and call on the bank or your printer. If you’re going to make price comparisons, you need to put the book out to tender before youre printing contract runs out.

5. Avoiding the icky stuff

Many publishers get into small magazine publishing because they have something to say as much as that they want to be commercially successful. This is particularly true of editors who are also publishers. They frankly don’t like “the money stuff”. As a result, they put off to tomorrow that which they should deal with today. The result is sometimes that problems are more intractable and difficult than they neeed to be. Dealing with an issue while there is still time to fix it and consider various options is always preferable to having to make a snap judgement. Being decisive can be a considered process when time is on your side. This is nowhere more true than in managing subscriber renewals. Time and again, publishers come to grief because a renewal series is not properly managed, is late, or is missed altogether. The economics of magazine circulation is such that if you don’t ask for the order today, you won’t get the money tomorrow and by the time you realize your mistake, it will take you months to recover, if you ever can.

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