Creating a Business Plan for the Indie Writer
Copyright 2012 by Suzan Harden
Second Edition
All rights reserved
Published by Angry Sheep Publishing
Houston, Texas
Smashwords Edition
Cover Design by Suzan Harden
WARNING: This book is for general information purposes ONLY! I am no longer a licensed attorney, and the following cannot be construed as legal advice or legal representation. If you have specific legal and/or accounting concerns, please consult a licensed attorney and/or certified public accountant in your area.
This book would not exist without the encouragement and support of Joan Reeves and Diane Holmes and the fabulous editing skills of Susan Helene Gottfried. Thanks, ladies!
Creating a Business Plan for the Indie Writer
Suzan Harden
Introduction
Wow! It’s hard to believe it has been a year since I made a public commitment on my blog, Wild, Wicked & Wacky, to publish my own fiction. I’m an ex-attorney so I knew I needed to write a formal plan for the new business. What started as a journal of my research quickly escalated to something else entirely.
In May of 2011, I wrote a guest post for Joan Reeves over at her blog, Slingwords, about creating a general business plan for writers. Diane Holmes, the lead alchemist of Pitch University, thought the business plan needed expansion, especially with the massive upheaval in the publishing industry by July. She invited me to expand the business plan further in a blog series at her new spin-off, Indie University.
After much discussion between Diane, her Despicable Indie U minion Tara McClendon, and me, we decided that our target audience—writers looking to publish their own works—needed a solid reference guide at the end of the series. So, the little book you’re now looking at is a culmination of the Indie U series, some posts from my own blog, Wild, Wicked & Wacky, and some extras such as lists of resources.
“But who are you to give business advice?” I hear you ask.
I started with a Bachelor of Science in computer science with a physics minor. After years of working at places such as the Nuclear Regulatory Commission, DuPont, and the Corporation for Public Broadcasting, I…well, frankly, I got bored and decided law school was more interesting. I practiced in business and probate law until forced into retirement a few years ago by my own screwed-up genes. Through it all, I gained more practical experience in accounting and business practices than I think I would have in an MBA program.
A lot of what you’re about to read is my personal business plan I created when I decided to indie publish along with my subsequent experiences. Please remember that YOU need to tweak the plan to suit your own style and career goals. Our goal with the blog series and this book is to help You the Writer become You the Publisher. If you do the exercises, by the end of the book, you’ll have your very own publishing business plan and be ready to tackle the world of indie publishing.
One caveat: This is not a technical how-to manual for the actual writing, formatting, uploading, etc. This guide is for beginners who’ve never owned their own business before.
Owning your own business (Make no mistake, publishing your books IS owning and managing a business!) is a lot of work over a lot of time. This is not a gateway to fame and riches. However, it can be very rewarding.
Just remember this one tip most of all—HAVE FUN!
Chapter 1 – Why Go Indie?
“Do what you love and the money will follow.” — Marsha Sinetar
Why have so many writers slung on the indie mantle? In a word—money.
For reality’s sake, let’s look at a typical mid-list author, i.e. NOT Stephen King or J.K. Rowling. The simple breakdown goes like this:
Scenario A: Writer sells first book to traditional publishing company (“TPC”) and contracts for 8% royalties (which is actually high for a first novel, but let’s roll with it) on a mass market paperback book (or MMPB). TPC sells the book for a suggested retail price of $7.99 each. This means Writer gets eight cents out of every dollar, or in this case, she’ll get $0.64 for every book sold.
Scenario B: Writer publishes her own book on Amazon, who takes a 30% cut to cover their overhead plus a $0.01/kilobyte transmission fee. Writer’s book is four kilobytes (roughly the size of a standard 90,000-word novel), and she sells her book for $2.99. Now, Writer gets $2.05 for every book sold.
Writer would only have to sell one Scenario B book for every 3.2 Scenario A books to make the same amount of money.
If you want a more extensive take on numbers, check out Dean Wesley Smith’s blog post on The Math of It All, a breakdown of what it takes to make money at indie publishing. (For those who may not know, Dean is an award-winning author, a former editor with Simon and Schuster, and a publisher who’s been in this business for 30+ years.)
Another thing to consider is “the long tail,” as Dean puts it. Digital books are not removed from the virtual shelf to make room for incoming shipments like they are in a physical store. In other words, your book can literally NEVER GO OUT OF PRINT. By making your book available FOREVER, you could conceivably be making money FOREVER.
Having the math thrown in my face is exactly what happened to me. My husband started researching the business side of things in the fall of 2010. (What can I say? He’s the supportive type.) He asked me point-blank what a traditionally published critique partner was making in terms of royalties. I told him. Then Mr. Practical stared at me like I’d grown a second head and said, “Why the hell don’t you indie publish? You’ll be farther ahead.”
Sometimes you can’t argue with common sense.
While you may be ahead of the game on a per-book basis if you indie publish, there are a lot of other things to consider:
- Do you have the time and energy to run your own publishing business?
- Are you willing to educate yourself on aspects other than craft in order to succeed as an indie writer?
- Do you have the seed money to get your business started?
“Wait!” y’all are shouting. “Money? What about Yog’s Law?”
Yes, Science fiction writer James D. Macdonald is totally correct. Money SHOULD flow to the writer. But guess what, folks? If you decide to indie publish, you’re now the publisher, not just the writer. And You the Publisher will be in the prime position to make sure You the Writer doesn’t get screwed. BUT (and this is a very big but as shown by the capital letters) there are NO GUARANTEES that You the Publisher will be able to make money for You the Writer. And You the Publisher will definitely have to cough up some dough to cover some production costs.
One of the major pluses of indie publishing is there’s a lot you can do yourself if you’re willing to learn. I’ll definitely give you some tips on saving money and cutting costs where you can.
Which brings us to the reason for creating a business plan.
Every business, even a publishing company, should have a business plan, a guide to what you hope to accomplish, how the daily business will be done, and what the business is looking at in terms of profit and losses.
Just remember that a business plan is a living, breathing document. It will need to change as external factors and your own desires change.
So, get out your pen and paper (or your laptop) and let’s get started!
I. The Executive Summary
This a fancy name for What I Plan to Do. Most business-plan guides suggest doing this last and working on financials first. To me, that’s like a New Yorker putting all her time into planning a car trip, then deciding to go to Hawaii. A little back-ass-wards, right? That doesn’t mean you shouldn’t refine it later when you got the details down.
Here’s an example from my own business plan:
Original Version: I will publish my fiction in both e-formats and print format through multiple retailers with the ultimate goal of making a living from my fiction.
Current version: Angry Sheep Publishing will publish approximately four new urban fantasy and/or erotica books in both e-formats and print per year with the goal of making X dollars per year.
See what’s the same and what’s different?
When I practiced law, I used the Small Business Administration’s business plan template, but you’ll see from looking at it, it’s geared more toward the manufacturing and service industries. In the next few chapters, I will discuss the tweaks I made to make it a usable outline for an indie start-up and give you some resources to check out.
Chapter 2 – It’s a Business; Treat It Like One
“The first thing we do, let’s kill all the lawyers.” — Dick the Butcher, Henry the Sixth, William Shakespeare
You the Publisher just wrote the first draft of your Executive Summary. Now, we’ll be going over business housekeeping and starting our business costs list.
Note: If you looked at the SBA template I mentioned in Chapter 1, you’ll notice Marketing is lumped into Business. Frankly, I don’t agree with that placement. For writers, marketing is a necessary evil deserving of its own Roman numeral. Therefore, Marketing and Promotion will have Chapter 6 all to themselves.
II. Business
For writers who go the traditional publishing route, the concept of becoming a business is foreign. The publisher takes care of registrations, licenses, sales-related taxes and so on. (Once again, I’m simplifying a complex system.)
When You the Writer becomes You the Publisher, you have to take care of all this (or at least have a clue whether you need to worry about it).
A. Business Formation
Most writers, whether traditional or indie-published, become what is called a sole proprietorship. This means one person owns and is totally responsible for all debts and legal obligations.
In the county where I live, I can file an Assumed Name form (also known as a DBA, which stands for Doing Business As) for my publishing company for $15.00. The rules in your local jurisdiction may be different for what’s needed to register a sole proprietorship.
You may need to look into something more sophisticated, such as a corporation, if you have significant assets you wish to protect. For example, multiple houses, stock investments, the Ferraris in the garage, etc.
If you are in this position, I strongly suggest putting your business plan together first, then make an appointment with your attorney. By seeing the entire breakdown of what you hope to accomplish, your attorney can better advise you on how to protect yourself.
B. Accounting
There’s a number of ways to keep track of your business expenses and income. I use Quickbooks, but you can use a spreadsheet, a notebook or any other accounting software you want.
Having a DBA filed will allow you to open a business checking account in your business’s name in most states. Even if you don’t file a DBA, you should have a separate bank account because some retailers, like Amazon, deposit your money directly into your account. Should some hacker get a hold of your bank information through Amazon, it could be disastrous for you personally.