What Publishers Need To Know About Accounting and Finance

How big is your operation? How big do you want to get? The more ambitious you are, the more you will need to know in order to accomplish your goals.

Even the smallest publisher needs to know:

• basic accounting terms,
• how to compute the variable and fixed costs associated with each book,
• what return rates are common in your part of the market,
• how to track the money due from each customer, and
• how to collect that money.

The larger your company gets, the more you can benefit from additional knowledge.

More sophisticated topics and models include:

• multi-tiered inventory tracking,
• P&L projection,
• what-if scenarios for every title at key points in the life-cycle from acquisition onward,
• departmental expense analysis,
• editor by editor operating margin analysis, and
• tracking profitability by sales channel.

The least expensive way to accumulate this knowledge is to buy and read books on publishing. (I review some here.) Books on publishing finance are scarce on the ground, but general tomes might be useful, with the addition of a little industry knowledge.

Seminars and courses are another way to improve your skills. You might consider courses at various universities' extension programs. NYU and Stanford both have good programs training budding publishers, for example. Another option is to take seminars or classes from private sources, such as PMA or SPAN. Many individual consultants also offer inexpensive courses as part of their product mix. Ours are listed here.

  If you want a jumpstart that is both quick and free, you may wish to consult other articles online (See our Reference Desk for an assortment, and for a web directory pointing the way to more.)

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• Opinions presented are based upon our assessment of best practices for the mythical "average publisher." Please use your own business judgment in applying this information.