Post 1000 - State of the Union
Hey, it's SnowBlog post 1000! Whoop!
For post 500, I wrote about the genesis of Snowbooks. This time, here's a State of the Union - a full update on how things are going. Warning - mammoth post with many tangents. Get a nice big cup of coffee first. I can't quite believe that it's nearly June 08. A glance out of the window supports my conviction that my calendar is broken - there's cloud to the ground and a decided nip in the air. Still, it does appear we are nearly half way through the year, and it's true to say that it's been a very good year so far on many fronts. We got our first major book-related prize shortlisting, for Matthew de Abaitua's The Red Men for the Arthur C Clarke award. We've won a couple of industry awards too: Independent Trade Publisher of the Year and Innovation Nibbie, as well as being shortlisted for the Small Publisher Nibbie. I had a mild sense that it was a long time since we'd won something - the last prize we won was in 2006, and you can't keep rolling that story out in perpetuity - so it was a good feeling to start the clock again in 2008.
On the editorial side, I think we're much more confident in our publishing. That probably comes from having a smaller team with more aligned views of what's good. Whilst we don't have a fixed editorial strategy, our focus on horror and fantasy - werewolves, zombies, vampires and apocalyptic horsemen - has been a result of our personal taste and has also been a shrewd commercial move, turns out. Certainly compared to last year, when we had a focus on thrillers and edgy fiction, our frontlist sales on our horror are much stronger. Historical fiction is also an area that has done well, and Sarah Bower's latest The Book of Love has got off to a fine start. And four colour non fiction is a fabulous idea - pretty much all our colour books pay their way and then keep contributing every month. Where we've struggled more is on the general commercial fiction. Two books that we adore, have designed really well (judging from people's feedback, not just my own ego) and have done a good sales job on have underperformed against expectations and compared to what we'll call the genre fiction. Is it that the general fiction market is so competitive? Is it that they've actually performed as well as they would with a large publisher, and general fiction really needs a prize shortlisting to sell in quantity? Are we just spoilt because horror and fantasy are so much more lively? As with much in publishing and selling books, who knows.
I mentioned that we don't have an editorial strategy. Sure, it's not written down or set in stone, but we talk about what sort of books we like, what we're interested in publishing and what we think will do well. Overall, we unashamedly aim to publish books that we think we can sell, and we don't feel bad turning books down if we think the reverse -we'd be doing no author a favour if we couldn't sell his book (although sometimes I do get the sense that some authors aren't as passionate as we are about the actual 'selling books' bit and are more interested in the concept of being published.) One of the things I like the most is when we get a book submitted to us which has pretty much none of the features we may have discussed in our editorial chats. The zombies, for instance - we didn't make any plan at all to publish zombies, but David Wellington's books are so astonishingly good, so captivating and just so enjoyable, that we signed a three book deal - something we'd not considered a possibility before. Ditto a book we've just signed for 2009 called The J-word - a wonderful piece of commercial fiction about Jewish identity. I'm not Jewish, and neither is Anna nor Rob, and I have to say I've not really stopped to think very hard about Jewish identity. This book utterly drew me in to an area that I had no real interest in. If we had to have any editorial strategy, it would be this - a book has to be so good that we may never have considered publishing something like it before we read it. (That is not carte blanche to submit your poetry/illustrated kid's book/spiritual self help/crappy overwritten YA fantasy stuffed full of elves, by the way.)
Regarding the process of sales, we've teamed up with Allison and Busby who now manage all our sales, which is working out very well. Certainly I'm never satisfied, and we always need to sell more books, but the adminstrative load they've taken from me is worth their x% on its own. The really annoying thing about selling is that it's very difficult to automate it (if you've been reading the SnowBlog for any amount of time you can imagine how much that rankles). Every retailer has a different timescale for buying and a different way of receiving bibliographic data. Maybe one day in the future they'll all accept ONIX feeds, but at the moment they use a mixture of CSV files from Nielsen (who collect my ONIX data then wrangle/mangle it into the right form for each customer - not actually their fault if customers insist on using the same method they used 5 years ago), excel spreadsheets with drop down menus (the curse of the automater) and email. And of course, there's the chasing. It's not enough to send off the data, on time - you have to endlessly chase. I find that trying, but the lasses at A&B are masters of it.
Cash has always been something I've kept a very close eye on, and over the last half year we've also worked really hard to add profit to that focus. (Less of the corp-speak - Rob has gone on and on and on and on at me to sort my act out and do some decent reporting and has sat with me and written code and access queries and has reassured me and kept me going and talked me through the pain of just sitting down and tackling it until - finally - it's done, and useful.) Other small publishers reading this - and probably large ones, too - will know that it's quite difficult, really, to calculate exactly how profitable a title is, and as our list grows if that's a manual calculation then it becomes a huge burden to keep tabs on each title's performance. So now we have an all singing, all dancing MS Access database that automatically grabs the latest reports from our distributor LBS, processes them into a useful file and runs a bunch of queries over them, so we can run reports at a title and weekly level that give our profit. It's not quite as simple as that, actually: here's what we report on for each title, if you care:
* Number of copies shipped
* Net receipts (how much money we get from the retailer for those copies, after discount)
* Other costs related to the title - like the cost of artwork, if there was any
* Cost of sales (how much it cost to print the copies shipped - not the full print run price, the price per unit, which needs to be averaged out across multiple print runs)
* Take those costs from the net receipts and you get the gross contribution - the margin from the book sales that we can put towards covering non-book-specific costs like payroll, office costs, and other overheads.
* Then we report what our returns volume and value has been for that title, and from that figure out how much it's cost us to pulp or process the returns. Remember, it's not as simple as the retailer just asking for a credit; LBS charge us to process returns and we have to take a hit to the balance sheet on stock that can't be sold again.
* That gives us our net contribution after returns.
* We also look at our stock position - what the value of stock is in the warehouse, and what the value is on the balance sheet.
So that's how we manage our finances. Regarding the actual state of them, well as I've said in the past we have no external debt, no equity and the associated shareholders to keep happy, or otherwise, no bank debt, no overdraft, no loans - in other words, no reliance on outside lines of credit to keep us secure. That's a nice place to be, especially as banks are getting twitchier at the moment. But I do moan about cash flow a lot. I think partly it's because I like to have a large, twenty thousand pound minimum buffer to rely on in case weirdness happens. Sadly LBS find it near impossible to forecast how much money we are going to receive in from month to month, so I don't think I'm being too paranoid and control freaky about needing a buffer, as some months I can be expecting 15,000, say, and receive nothing. Those months are fun to manage, although we haven't had one of those so far this year.
My overall sense of this year is that we have really improved and stabilised our financial performance compared to last year, thank god. As we've said before, the fallout from Christmas 2006 resulted in a very tumultuous 2007, but from October 2007 onwards things have been a lot smoother. Our Christmas strategy of fewer upfront sales - with the threat of high returns - has resulted in a really pleasing, low returns rate, which I think I can safely say now we're nearly in June (though never say never - I got returns from May 2006 the other day from one major retailer). Our costs are much lower, too - 30% down - having shed a couple of members of staff but upped the amount of automation we do, as well as switching 100% of our print to Haynes the printers, a magnificent printer with whom we have a great relationship and who don't shaft us on price like our previous printers appeared to do. Our main aim is to sell, sell, sell. On high sale titles, the metrics sort themselves out: we enjoy a high print cost to sales multiple, a high average sale price and a low returns rate on all our titles which sell over 10,000 copies. This is not about increasing the number of titles we do. It is about getting more titles onto promotion, in more stores, and achieving higher sell throughs.
Speaking of key metrics, this is how our titles published in FY2007-8 have performed (figures drawn from the TPS report - Trading Performance of Snowbooks - which I've finally sorted out the cover sheet for. Thanks for the memo, Rob):
Average Sale per unit 2.26
Average margin per unit 0.88
Stock value: 35k
Sales/print multiple: 1.9x
Do share your own metrics in the comments if you want to get a benchmarking thing going.
We're hardly rolling in money - our salaries and drawings are still pitiful, but growing, at least, as we have each had a mini pay rise recently - which can get me down from time to time. But five years in we have a stable business that is successful on many fronts, and most importantly we're proud of it. Just a bit more money would be nice, but we have achieved what we once thought was impossible - escaping from the corporate world, working for ourselves on our own terms, without having to sell out. That is priceless.