Majestic, self-amortizing canals • 14 November 2006 • The SnowBlog

Majestic, self-amortizing canals

          a hat fit for a banker

Scott over at the Friday Project is always going on about music, so now it's my turn. D'you remember this?

Mr. Dawes Sr, Mr. Banks and Bankers:
If you invest your tuppence
Wisely in the bank
Safe and sound
Soon that tuppence, 
Safely invested in the bank,
Will compound

And you'll achieve that sense of conquest
As your affluence expands
In the hands of the directors
Who invest as propriety demands

You see, Michael, you'll be part of
Railways through Africa
Dams across the Nile
Fleets of ocean greyhounds
Majestic, self-amortizing canals
Plantations of ripening tea

All from tuppence, prudently
Fruitfully, frugally invested
In the, to be specific,
In the Dawes, Tomes
Mousely, Grubbs
Fidelity Fiduciary Bank!

Fleets of ocean greyhounds indeed. I'm please to say that no-one's given us any tuppences to be invested in Snowbooks - it means that all this hard work is for us, and us alone, and that's another story. The current reason for the bowler hat and the bank song is because that's what I feel a publisher is, sometimes: a bank. Here is a graph that shows the typical cash flow for a typical publisher: 


So you start at zero profit. A is an advance. B is the cost of payroll whilst the team is creating the lovely book. C is the cost of print (which has varying repayment terms but you can guarantee you're going to need to pay the printer before you've received any money from sales). C-D is the time during which you lend retailers money in the form of stock assets for 90+days. At D it gets interesting - how successful is the book? Path E is a steady earner, maybe niche non-fiction, slowly but steadily earning its way back to profit - even though on this graph it looks like it will take about twelve years. F is depressing - a brief spurt then plateauing waaaay below breakeven. G is what we hope for every time - a runner that storms past breakeven and pays for E and F. 

Point is, that's a hell of a long time to be paying money out before getting it back again - 18 months in this made-up example - and these are only a few of the costs; don't forget rent, marketing, postage, blah. You're either paying out or lending money without any sort of guarantee that you'll get it back. Compare that to the cash flow model for, for example, my parent's old business, a primary school. Cash comes in on the first day of term; it gets spent over the course of the next few months then the cycle starts again. The graph is always positive. 

So that's why I feel like a bank. Although, of course, banks can foreclose, call in their loans, securitise their lending on assets... We're a mix between a bank and a charity. Good thing I love my job, isn't it.  


The SnowBlog is one of the oldest publishing blogs, started in 2003, and it's been through various content management systems over the years. A 2005 techno-blunder meant we lost the early years, but the archives you're reading now go all the way back to 2005.

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