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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