We’re not asking a bank for finance,but we do need to clarify every aspect of our planning,so yes,we do need one. But what we want like a bullet in the kneecap is a business model designed for the last century,and given how fast everything is changing we mustn’t create a strait jacket for ourselves

So what we need is a clear description of how we intend to create value,deliver that value to people,and retrieve enough of that value to enable us to keep functioning. This must be done in a way that is easy for us to understand,and fits the way we want things to be. We are slightly mad,and we’re not businessmen –yet.

I’m going to use a structure taken from Business Model Generation by Alexander Osterwalder,Yves Pigneur,and 470 other people they consulted. Amazon charged me £12.93 for the book,and it’s great fun as well as solid.  If you don’t mind me being rewarded for any sale then there’s a link below. If you find the stuff below at all helpful then buy the book!

This is quite a long post,for reasons that will become obvious. Go on,give it a skim! You know you want to.

 The blueprint for our publishing business will have nine elements. Here’s a broad outline of where we are at the moment,with details to follow.

Customer Segments

 Who will we provide value to?

We want to be multi-sided,and provide value to two distinct groups of people.

1. We want to provide a warm,personal,professional service to authors. We want them to feel valued and involved. Their ideas and needs matter. They need to get a fair slice of any cake.

2. We want to sell books (printed and electronic) to a target of 100 –1000 people a book,and we want them to thoroughly enjoy the books,consider them great value,be amused,and be stumulated. We want them to finish one of our books which a deeper and richer understanding of life.

Of course it’s likely all our customers in the first group will also buy some of our books.

We are aiming for a number of niche markets which we haven’t yet defined properly.

And we need to clarify what type of people are in our (hate this term) target markets.

Value Propositions

Sorry,that makes it sound more complicated than it is. The question we have to ask ourselves is:

What will we be offering people in terms of products and services that will be of value to them?

The two groups described above have to be considered separately.

1. Value for authors:well,for a start and a summary,we want our authors not only to feel valued,but also to be valued,as unique individual people who matter and who are part of the team. We’ll do this by offering:

• warm,personal service,
• easy communication over the web,though we intend to meet up with every author we accept,and contracts will need to be posted,
• guidance and encouragement in transforming what they have written (or want to write) into something that is marketable,while ensuring their voice and message are retained,
• warm and professional editing,design,programming (for e-books),and marketing,
• involvement and a genuine voice in the various stages of publishing:editing,copy editing,use of pictures,layout and graphic design,setting of price,publicity,marketing,and customer relations,
• a share in our brand image,
• involvement in future decisions about what might be worth publishing,
• and a fair slice of the cake.

Question:do we ask authors to share the financial risk on each book published? Both author and publisher will be putting in a lot of time,skill and energy. Beyond that,the total financial investment per book will be probably about £250. Should we ask prospective authors to contribute half that once the product is fully ready for market? We will NOT be a vanity press –we’ll only publish stuff we believe in,but why not ask the author to share the financial risk? After all,the well known self-publishing companies would charge roughly 600% more for what we think would be an inferior product with inferior service. To us,people matter more … than money.

2. Value for readers:which is much harder to nail down. Some of it is listed above,but we need to work on clarifying this further in terms of what people will see as value before they purchase as well as afterwards.

Channels

 How will we communicate with our authors and readers,and how will we deliver stuff (value) to them?

Let’s break this down into five phases,and again the analysis for our own business will be expanded later –it must be.

a) Awarenes:how do we make sure a good number of our target authors and readers know whqat we have to offer?

b) Evaluation:how do we help our authors and readers figure out if we’re offering the right value for their individual needs? How do we evaluate what may rapidly become a deluge of submissions from authors? Probably by creating a team using the web.

c) Purchase:if a potential author/reader likes what we’re offering,how do they buy in?

d) Delivery:and,obviously,how do we get our services/products delivered to our authors/readers? For authors,mainly by co-working over the web. For readers,initially via Amazon bookstore and Kindle –Kindle because it has the lion’s share of the e-book market at the moment,and anything bought for Kindle can be read on many other platforms including PC,iPad,phone. Love to go for iBooks and hig street stores too,but that’s harder.

e) After sales:every single customer matters,and we want to respond to everyone in a warm,considerate,helpful,and personal way. We’re thinking this probably requires a team of like-minded people working together over the web. Lik-minded? Agreeing that people matter more …

We can’t afford traditional paid advertising,or a paid sales force. We want our products to be so good that our customers will want to tell other people about them. Initially we plan to use partner channels and web sales.

Customer Relationships

How will we set up our systems to handle relationships with our authors and our readers?

We have four key motivations:

• we need to gain customers,or we’re wasting our time (and getting pretty down),
• we want  existing customers to want more from us,partly because we really want our services to be that good,
• we want our customers to talk about us,
• we genuinely care about people as individuals,and we really want them to believe this.

If we can find the right programmer it would be incredible to be able to guide existing readers to other books they might love,and that includes books not published by us. This would need to be either automated,or driven by a community,or both. Apart from this,no,we hate the idea of automated customer responses,and we hate the idea of employing someone to the answer the phone or e-mails who isn’t a committed part of the team. And actually we’d prefer to build a community that wants to be involved. We want to be part of the community we create. We want to be part of a friendly team that creates together.

Revenue Streams

In order to keep going and to keep giving value to authors and readers we have to generate some income.

Our costs in terms of time and energy will be very high indeed,especially to start with before a community forms to help us. No problem.

Our financial costs will be extremely low compared with traditional publishers,but they exist. We’ve already invested a fair amount,and need to buy/hire the right software for producing e-books at the high standard we intend. On top of that,we need to buy ISBNs,upload each book for print-on-demand publication,pay Amazon to keep several copies in stock (people hate waiting a fortnight for their order these days),and buy 50-100 copies of each book for publicity purposes. That done,profit = income –costs. And we need to make a profit in order to share it with our authors,and provide Adam with enough income to go full time on this business.

Our books need to be priced with great care,taking into account the conflicting sales protocols of Amazon and Apple. We will use a fixed price model which encourages our partners (Amazon etc) to offer variable discounts. We’ll not charge for advertising:if something really is good then it deserves our recommendation freely given.

Key Resources

Physical:initially the business will own no physical resources,but instead make free use of hardware owned by Adam and Nigel –computer equpment,printers,ink,paper,software.

Intellectual:at present we have just three books,none of which is ready for publication.

Human:aha,yes,we’ve got that. We have the time,energy,enthusiasm,skills,and talents of Adam and Nigel. Plus friends are listening and advising.

Financial:the business has none,so we are investing some of our own money –but very little finance is needed.

Key Activities

What must we do in order to create books worth buying,make them available,publicise them,build good customer relations,and make enough money?

Partial answers are included above,but a key aspect is building a platform for our authors,a brand,a community.

Then there’s the more obvious stuff of editing,checking,design,programming,communicating,and problem solving.

Key Partnerships

We expect our most significant partners to be:

• our authors,who create the books with our help,
• our community,who guide us on what to publish,where to publish it,how to design it,how to price it,and so on.
• Lightning Source,with their UK operation based in Milton Keynes,who provide an excellent print-on-demand service that exactly fits our plans.
• Amazon,whose Kindle store is likely to be our first outlet for e-books.

We’d also love to become partners with high street bookstores,especially independent ones,but that will be a slow process. First we need to establish ourselves and our brand.

Cost Structure

There is no question that our cost structure will be value-driven. Of key importance to us are the following factors:

• create an enthusiastic community that is genuinely involved,
• give both authors and readers the best value we can achieve given our time and financial limitations,
• customer service must be personal,thoughtful,individual,and warm.

Fixed costs:include purchase of ISBNs,initial charge by Lightning Source for each book uploaded (and for subsequent modifications),charge by Amazon for keeping copies in stock,cost of advance (free) copies to relevant people who may wish to publicise,and at least one web site. As the business develops we may need to subcontract some aspects of our work,depending who joins the team. Later there will be paying Adam salary,perhaps providing a small business premises with phone and internet access,registering annually with professional organisations,cost of new software and hardware. There will be stuff we haven’t thought of,obviously.

Core business type.

John Hagel and Marc Singer have usefully proposed and analysed three core types of business:

• Product innovation
• Customer relationship management
• Infrastructure management

This may at first surprise you,but we fall clearly into the product innovation group. This makes sense because the other two types of business have high costs,require rapid consolidation,and the markets are dominated by a few large players. However we do overlap into customer relationship management in that we place very high value on our customers as individuals.

  This is a great book and fun to read even if you don’t then set up a business. This blog will be applying the book’s ideas highly specifically to us and our publishing dreams. If you’re not us (which you aren’t) then buy the book to get the full story.

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