Do you want to start magazine publishing business?
Do you want to start a magazine publishing business? Although this business requires a lot of initial capital, the rate of return which it yields on investment is extremely high. Magazine companies generate incomes from various sources such as from the advertisements which are featured in them, from the people who sign in online, and of course, from their sales in newsstands.
But starting a magazine isn’t an easy job and you will have to effectively plan everything. In the United States, 9 out of 10 magazine businesses fail due to poor planning. That’s why before you consider how to start your own magazine, you will have to prepare a comprehensive business plan. If you are wondering how to write one, here we are providing you the business plan of a magazine publishing business startup named ‘The Reader Monthly’.
Executive Summary
2.1 The Business
The Reader Monthly will be a lifestyle magazine owned by Martha Martin, a passionate writer. The company’s main office will be located in Dallas.
2.2 Management
The success of a startup heavily depends on its staff and management that’s why Martha planned it before considering how to start a magazine business on your own. The main management of the company will comprise of sales executives, graphic artists, and journalists. The staff will be hired one month before the launch of startup and will be trained by Martha.
2.3 Customers
We will target the young adults, adults and senior citizens of the United States. Our readers can read our magazine either in printed form or in digital form on any device.
2.4 Business Target
Our business targets, as outlined by our publishing company business plan, are as follows:
Company Summary
3.1 Company Owner
The Reader Monthly will be owned by Martha Martin, a passionate writer. Martha has been associated with some of the biggest international magazines including TIME and PEOPLE for more than 13 years.
3.2 Why the Business is being started
The business is being started due to two reasons. The first one is to make profits in this industry. The second one is Martha’s passion for writing and her desire to add something better to the society. Martha herself described the reason for starting her venture in the book launch ceremony of her latest book The Dying Angel as, “starting my own magazine is something I am born for.”
3.3 How the Business will be started
The company will be started in an abandoned press office in Dallas which ceased to function a few months before. The company will initially procure following things for the startup.
- Office furniture including filing cabinets, work desks, roundtables, couches and chairs for the meeting area
- Computers with color printers and scanners
- Press machines
- Graphic designing software including Illustrator, Freehand, and Photoshop
- A strong internet connection and office telecom systems
- Assorted office stationary and brochures
The financial experts have forecasted following costs for the startup:
The detailed startup requirements are given below:
| Start-up Expenses | ||
| Legal | $55,300 | |
| Consultants | $0 | |
| Insurance | $32,750 | |
| Rent | $32,500 | |
| Research and Development | $32,750 | |
| Expensed Equipment | $32,750 | |
| Signs | $1,250 | |
| TOTAL START-UP EXPENSES | $187,300 | |
| Start-up Assets | $220,875 | |
| Cash Required | $332,500 | |
| Start-up Inventory | $32,625 | |
| Other Current Assets | $232,500 | |
| Long-term Assets | $235,000 | |
| TOTAL ASSETS | $121,875 | |
| Total Requirements | $245,000 | |
| START-UP FUNDING | ||
| START-UP FUNDING | $273,125 | |
| Start-up Expenses to Fund | $151,875 | |
| Start-up Assets to Fund | $123,000 | |
| TOTAL FUNDING REQUIRED | $0 | |
| Assets | $23,125 | |
| Non-cash Assets from Start-up | $18,750 | |
| Cash Requirements from Start-up | $0 | |
| Additional Cash Raised | $18,750 | |
| Cash Balance on Starting Date | $21,875 | |
| TOTAL ASSETS | $373,125 | |
| Liabilities and Capital | $0 | |
| Liabilities | $0 | |
| Current Borrowing | $0 | |
| Long-term Liabilities | $0 | |
| Accounts Payable (Outstanding Bills) | $0 | |
| Other Current Liabilities (interest-free) | $0 | |
| TOTAL LIABILITIES | $0 | |
| Capital | $620,125 | |
| Planned Investment | $620,125 | |
| Investor 1 | $0 | |
| Investor 2 | $0 | |
| Other | $0 | |
| Additional Investment Requirement | $0 | |
| TOTAL PLANNED INVESTMENT | $620,125 | |
| Loss at Start-up (Start-up Expenses) | $313,125 | |
| TOTAL CAPITAL | $251,875 | |
| TOTAL CAPITAL AND LIABILITIES | $251,875 | |
| Total Funding | $255,000 | |
Services for customers
Before you start a publishing business or even think about how to start a publishing business, you must decide what type of magazine will you be publishing and which niches will it cover. You must also plan what other services for business will you offer, for instance, sending magazines to subscribers by mail.
The Reader Monthly will be a lifestyle magazine but it will also contain a few sections featuring health, entertainment, and technology. We will offer following services to our customers/readers:
- Magazine Retail Sales: Our readers can get our latest magazines from any newsstand or bookshops located across the United States. Retail sales will be the biggest generator of our revenue in our annual sales from the magazine readers.
- Magazine Subscription: Our readers can also subscribe us to get the latest magazine delivered to their doorstep in printed form.
- Magazine Online Subscription: Our readers can also subscribe us to get a copy of the electronic magazine which can be read on any electronic device.
- Advertisements: We will offer advertisement services to the various companies and businesses located across the United States. Advertisements will be our biggest source of revenue.
Marketing Analysis of magazine publishing business
The most important component of successful magazines business plan is its accurate marketing analysis that’s why Martha acquired the services of marketing experts to help her through this phase. It is only after this stage that a good magazine business plan could have been developed. If you are starting a magazine on a smaller scale, say an online magazine, you can just take help from this magazine business plan sample or the other magazine business plans available online. Marketing analysis is an extremely important component of all publishing business plans, therefore, it must be considered before starting a magazine business plan.
5.1 Market Trends
The American magazine industry contributes $28 billion in revenue every year and the magazine advertising are alone responsible for generating more than $15.2 billion. There are more than 21,000 publishing businesses in the United States that employ more than 117,000 people across the country. However, the magazine industry declined rapidly with the increasing popularity of the internet and the smartphones which completely eliminated the need for printed magazines. The industry nowadays is truly struggling for surviving in America as well as in other countries.
A 2012 survey revealed that only 3 percent of Americans read magazines on a regular basis. Statistics has it that in 1985, there were more than 1,676 dailies in America but in 2011, the number dropped to below 1,400 and is still dropping. While the popularity of printed magazines keeps falling, people are paying more attention to electronic magazines which can be read on any device like laptops, mobile phones, kindles. You also need to create a magazine in a mobile application that will allow users to quickly learn about the release of new materials, but for this, you will have to write a business plan for mobile applications. After identifying these trends, it is clearly evident that it is not easy for a startup to survive in the magazine industry unless it is properly planned and adds value to its readers.
5.2 Marketing Segmentation
It is very important to analyze the market segmentation of the readers which will be buying your magazine because a successful and efficient magazine marketing plan can only be developed after we completely know our potential customers. Our experts have identified the following type of audience which we will be targeting:
The detailed marketing segmentation of our target audience is as follows:
5.2.1 Young Adults:
Our first target group will be the young adults in the United States who are between 18 to 25 years of age. This group mostly comprises of college or university students who like to read magazines in their free time. According to a recent survey by Statista, young adults read more magazines than any other age group in the United States that’s why this group will have the biggest contribution in our revenue from the magazine’s sales.
5.2.2 Adults:
Our second target group comprises of adults from 25 to 60 years of age. These people lead a busy life due to their employment and other engagements that’s why they don’t read as many magazines as the young adults or the senior citizens.
5.2.3 Senior Citizens:
Our third group comprises of senior citizens aged above 60. These people are usually retired and have a lot of spare time that’s why they also read magazines.
The detailed market analysis of our potential customers is given in the following table:
| Market Analysis | |||||||
| Potential Customers | Growth | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
| Senior Citizens | 35% | 11,433 | 13,344 | 16,553 | 18,745 | 20,545 | 13.43% |
| Young Adults | 45% | 22,334 | 32,344 | 43,665 | 52,544 | 66,432 | 10.00% |
| Adults | 20% | 12,867 | 14,433 | 15,999 | 17,565 | 19,131 | 15.32% |
| Total | 100% | 46,634 | 60,121 | 76,217 | 88,854 | 106,108 | 9.54% |
5.3 Business Target
We aim to see ourselves among the top ten lifestyle magazines of the United States within next six years of our launch. Our main business targets to be achieved as milestones over the course of next three years are as follows:
- To achieve the net profit margin of $10k per month by the end of the first year, $15k per month by the end of the second year, and $25k per month by the end of the third year
- To balance the initial cost of the startup with earned profits by the end of the first year
- To have around 99,000 subscribers through direct sampling and marketing by the end of the first year
5.4 Product Pricing
Our pricing strategy is as follows:
- Single issue: $0.65 per issue
- Yearly print subscription: $7.0 per 12 issues
- Yearly e-magazine subscription: $1.49 per 12 e-issues
We have strategically priced our e-magazines in extremely cheaper range due to two reasons. Most of the people prefer electronic magazines to print magazines, and it is costlier to send print magazines to the readers as compared to providing them the digital ones.
Strategy
Sales strategy is also an important component of an effective magazine business plan so make sure to plan it before you consider how to start a magazine business.
6.1 Competitive Analysis
We have a really tough competition because we will be competing with magazines some of which have been around for decades. Our biggest competitors are US Weekly, The New Yorker, Cosmopolitan, Esquire, Vanity Fair, Harper’s BAZAAR and GQ. Our competitive advantage will be our lower prices combined with quality content which will be no less than that of the top magazines.
6.2 Sales Strategy
After carrying out a detailed analysis, our experts came up with the following brilliant ideas to advertise and sell ourselves.
- Google search ranking is one of the most important factors in deciding the success of online magazines, that’s why we will put special emphasis on it. We would do our best to get higher rankings in Google search results.
- We will give away 3 free magazines copies to our readers upon subscription.
- We will carry out a large-scale social media campaign and will interact with our readers to promote their interest.
6.3 Sales Monthly
6.4 Sales Yearly
6.5 Sales Forecast
Our forecasted sales on a yearly basis are summarized in the following column charts:
The detailed information about sales forecast is given in the following table:
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Advertisements | 1,887,030 | 2,680,320 | 2,588,240 |
| Magazine Retail Sales | 802,370 | 815,430 | 823,540 |
| Magazine Online Subscription | 539,320 | 770230 | 1,002,310 |
| Magazine Subscription | 265,450 | 322,390 | 393,320 |
| TOTAL UNIT SALES | 3,494,170 | 4,588,370 | 4,807,410 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Advertisements | $140.00 | $150.00 | $160.00 |
| Magazine Retail Sales | $0.65 | $0.70 | $0.75 |
| Magazine Online Subscription | $1.49 | $1.79 | $1.99 |
| Magazine Subscription | $7.00 | $7.50 | $8.00 |
| Sales | |||
| Advertisements | $2,149,800 | $2,784,000 | $3,383,200 |
| Magazine Retail Sales | $120,050 | $194,500 | $268,500 |
| Magazine Online Subscription | $50,110 | $71,600 | $93,000 |
| Magazine Subscription | $139,350 | $194,600 | $249,850 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Advertisements | $0.70 | $0.80 | $0.90 |
| Magazine Retail Sales | $0.40 | $0.45 | $0.50 |
| Magazine Online Subscription | $0.30 | $0.35 | $0.40 |
| Magazine Subscription | $3.00 | $3.50 | $4.00 |
| Direct Cost of Sales | |||
| Advertisements | $989,300 | $1,839,000 | $2,679,700 |
| Magazine Retail Sales | $66,600 | $119,900 | $173,200 |
| Magazine Online Subscription | $17,900 | $35,000 | $52,100 |
| Magazine Subscription | $19,400 | $67,600 | $115,800 |
| Subtotal Direct Cost of Sales | $1,294,100 | $1,699,400 | $2,104,700 |
Personnel plan
Personnel plan, like all other plans, is an important component of an effective business plan so it must be planned before you think about how to start my own magazine.
7.1 Company Staff
Martha will act as the Chief Editor of the magazine and will initially hire following people:
- 1 Accountant for maintaining financial and other records
- 2 Sales Executives responsible for marketing and discovering new ventures
- 6 Graphic Artists for designing the magazines
- 10 Journalists for creating the content for the magazines
- 4 Technical Assistants for handling the company’s web and social media pages
- 20 Print Press Workers for publishing the magazine
- 10 Distributors for distributing the magazines to various outlets across the United States
7.2 Average Salary of Employees
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Accountant | $85,000 | $95,000 | $105,000 |
| Sales Executives | $45,000 | $50,000 | $55,000 |
| Graphic Artists | $410,000 | $440,000 | $480,000 |
| Journalists | $340,000 | $387,000 | $434,000 |
| Technical Assistants | $208,000 | $225,000 | $322,000 |
| Print Press Workers | $680,000 | $720,000 | $760,000 |
| Distributors | $560,000 | $600,000 | $640,000 |
| Total Salaries | $750,000 | $827,000 | $914,000 |
Financial Plan
As the last step for preparing a magazine publishing business plan, you have to prepare a detailed financial plan. The financial plan should craft a detailed map of all the expenses needed for the startup and how these expenses will be met by the earned profits. It is recommended that you hire a financial expert for guiding you through all financial aspects needed for starting a magazine business .
8.1 Important Assumptions
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 11.00% | 12.00% |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% |
| Tax Rate | 26.42% | 27.76% | 28.12% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
| Brake-Even Analysis | |
| Monthly Units Break-even | 5530 |
| Monthly Revenue Break-even | $159,740 |
| Assumptions: | |
| Average Per-Unit Revenue | $260.87 |
| Average Per-Unit Variable Cost | $0.89 |
| Estimated Monthly Fixed Cost | $196,410 |
8.3 Projected Profit and Loss
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $309,069 | $385,934 | $462,799 |
| Direct Cost of Sales | $15,100 | $19,153 | $23,206 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $15,100 | $19,153 | $23,206 |
| Gross Margin | $293,969 | $366,781 | $439,593 |
| Gross Margin % | 94.98% | 94.72% | 94.46% |
| Expenses | |||
| Payroll | $138,036 | $162,898 | $187,760 |
| Sales and Marketing and Other Expenses | $1,850 | $2,000 | $2,150 |
| Depreciation | $2,070 | $2,070 | $2,070 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $4,000 | $4,250 | $4,500 |
| Insurance | $1,800 | $1,800 | $1,800 |
| Rent | $6,500 | $7,000 | $7,500 |
| Payroll Taxes | $34,510 | $40,726 | $46,942 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $188,766 | $220,744 | $252,722 |
| Profit Before Interest and Taxes | $105,205 | $146,040 | $186,875 |
| EBITDA | $107,275 | $148,110 | $188,945 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $26,838 | $37,315 | $47,792 |
| Net Profit | $78,367 | $108,725 | $139,083 |
| Net Profit/Sales | 30.00% | 39.32% | 48.64% |
8.3.1 Profit Monthly
8.3.2 Profit Yearly
8.3.3 Gross Margin Monthly
8.3.4 Gross Margin Yearly
8.4 Projected Cash Flow
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $40,124 | $45,046 | $50,068 |
| Cash from Receivables | $7,023 | $8,610 | $9,297 |
| SUBTOTAL CASH FROM OPERATIONS | $47,143 | $53,651 | $59,359 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $47,143 | $53,651 | $55,359 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $21,647 | $24,204 | $26,951 |
| Bill Payments | $13,539 | $15,385 | $170,631 |
| SUBTOTAL SPENT ON OPERATIONS | $35,296 | $39,549 | $43,582 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $35,296 | $35,489 | $43,882 |
| Net Cash Flow | $11,551 | $13,167 | $15,683 |
| Cash Balance | $21,823 | $22,381 | $28,239 |
8.5 Projected Balance Sheet
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $184,666 | $218,525 | $252,384 |
| Accounts Receivable | $12,613 | $14,493 | $16,373 |
| Inventory | $2,980 | $3,450 | $3,920 |
| Other Current Assets | $1,000 | $1,000 | $1,000 |
| TOTAL CURRENT ASSETS | $201,259 | $237,468 | $273,677 |
| Long-term Assets | |||
| Long-term Assets | $10,000 | $10,000 | $10,000 |
| Accumulated Depreciation | $12,420 | $14,490 | $16,560 |
| TOTAL LONG-TERM ASSETS | $980 | $610 | $240 |
| TOTAL ASSETS | $198,839 | $232,978 | $267,117 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $9,482 | $10,792 | $12,102 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $9,482 | $10,792 | $12,102 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $9,482 | $10,792 | $12,102 |
| Paid-in Capital | $30,000 | $30,000 | $30,000 |
| Retained Earnings | $48,651 | $72,636 | $96,621 |
| Earnings | $100,709 | $119,555 | $138,401 |
| TOTAL CAPITAL | $189,360 | $222,190 | $255,020 |
| TOTAL LIABILITIES AND CAPITAL | $198,839 | $232,978 | $267,117 |
| Net Worth | $182,060 | $226,240 | $270,420 |
8.6 Business Ratios
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 4.35% | 30.82% | 63.29% | 4.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 5.61% | 4.71% | 3.81% | 9.70% |
| Inventory | 1.85% | 1.82% | 1.79% | 9.80% |
| Other Current Assets | 1.75% | 2.02% | 2.29% | 27.40% |
| Total Current Assets | 138.53% | 150.99% | 163.45% | 54.60% |
| Long-term Assets | -9.47% | -21.01% | -32.55% | 58.40% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 4.68% | 3.04% | 2.76% | 27.30% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.80% |
| Total Liabilities | 4.68% | 3.04% | 2.76% | 54.10% |
| NET WORTH | 99.32% | 101.04% | 102.76% | 44.90% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 94.18% | 93.85% | 93.52% | 0.00% |
| Selling, General & Administrative Expenses | 74.29% | 71.83% | 69.37% | 65.20% |
| Advertising Expenses | 2.06% | 1.11% | 0.28% | 1.40% |
| Profit Before Interest and Taxes | 26.47% | 29.30% | 32.13% | 2.86% |
| Main Ratios | ||||
| Current | 25.86 | 29.39 | 32.92 | 1.63 |
| Quick | 25.4 | 28.88 | 32.36 | 0.84 |
| Total Debt to Total Assets | 2.68% | 1.04% | 0.76% | 67.10% |
| Pre-tax Return on Net Worth | 66.83% | 71.26% | 75.69% | 4.40% |
| Pre-tax Return on Assets | 64.88% | 69.75% | 74.62% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 19.20% | 21.16% | 23.12% | N.A. |
| Return on Equity | 47.79% | 50.53% | 53.27% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 4.56 | 4.56 | 4.56 | N.A. |
| Collection Days | 92 | 99 | 106 | N.A. |
| Inventory Turnover | 19.7 | 22.55 | 25.4 | N.A. |
| Accounts Payable Turnover | 14.17 | 14.67 | 15.17 | N.A. |
| Payment Days | 27 | 27 | 27 | N.A. |
| Total Asset Turnover | 1.84 | 1.55 | 1.26 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.02 | -0.04 | N.A. |
| Current Liab. to Liab. | 1 | 1 | 1 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $120,943 | $140,664 | $160,385 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.45 | 0.48 | 0.51 | N.A. |
| Current Debt/Total Assets | 4% | 3% | 2% | N.A. |
| Acid Test | 23.66 | 27.01 | 30.36 | N.A. |
| Sales/Net Worth | 1.68 | =”13%”>1.29 | 0.9 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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