Table of Content

    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:

    Magazine Publishing Business Plan - 3 Years Profit Forecast

    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:

    Magazine Publishing Business Plan - Startup Cost

    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:

    Magazine Publishing Business Plan - Marketing Segmentation

    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

    Magazine Publishing Business Plan - Sales Monthly

    6.4 Sales Yearly

    Magazine Publishing Business Plan - Sales Yearly

    6.5 Sales Forecast

    Our forecasted sales on a yearly basis are summarized in the following column charts:

    Magazine Publishing Business Plan - Unit Sales

    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

    Magazine Publishing Business Plan - 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

    Magazine Publishing Business Plan - Profit Monthly

    8.3.2 Profit Yearly

    Magazine Publishing Business Plan - Profit Yearly

    8.3.3 Gross Margin Monthly

    Magazine Publishing Business Plan - Gross Margin Monthly

    8.3.4 Gross Margin Yearly

    Magazine Publishing Business Plan - Gross Margin Yearly

    8.4 Projected Cash Flow

    Magazine Publishing Business Plan - 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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