Authors Need to Understand Business Basics

by Hank Quense, @hanque99

Having a book published means you’ll have to deal with business issues.  This situation occurs whether or not you want it to happen.  Since this is a fact, you really do need to learn how to deal with these pesky business concerns.  This statement, while upsetting on the surface, isn’t all that bad.  Thousands of others have coped with the business issues involved and so can you.

“And why do authors need to know this?” I hear you ask.  Because once you publish a book − no matter how it becomes published − the author owns a business.  The mission of this business is to market and sell your book.  Therefore, the author needs to understand business practices.

It’s not the same situation if you write and sell short stories, essays, articles or poems.  In these cases, the market that bought the item will pay a set fee for the right to publish your piece.  Your compensation in this case doesn’t change whether the market sells a hundred or a thousand copies of the magazine.  With book publication, the author’s compensation (royalties) depends entirely on book sales.  No book sales, no royalties.

In the process of selling your books, you will incur expenses.  These could be marketing costs or they could be expenses incurred with publishing another book.

You’ll need money to pay these expenses.  Where does it come from?  Preferably, it comes from royalties or possibly from a loan.  Or you could fund the money from your personal accounts.  If the money earned exceeds these expenses, you and your company will show a profit and you can pay back the loan.

Here’s another factor as to why you need some business skills.  Do you know that selling books is a taxable event?  Say what?

If the book is sold through Amazon, for instance, it will take care of the tax issue.  If you personally sell the book at an event, you will be responsible for addressing the tax issue.

And then there are the royalties: they are taxable income.

To deal with revenue and expenses correctly, you have to develop a business-like approach to your book company.

Do I have your attention yet?  Even if you have a contract with a big publisher, you can still need to know and understand the business issues.

If you self-published a book, and if you don’t plan to market the book, you won’t have much need for business stuff .  In this case most of that information will fall under the category ‘nice to know’ because any royalties from book sales will be more or-less accidental.

If you have a single book published and you plan to market it, you need to know the issues.  If you plan to write and publish more books, you definitely need to know it.

You need to gain insights into business and business planning.  Both are essential to your success.  There is plenty of material on the web and in libraries if you wish to search for it. .

Think like a CEO

I believe a major reason that authors fail to sell books is because they don’t think like a business owner.  Businesses use highly developed marketing plans to introduce a new product to the public.  These businesses do that because it has been proven to work.

Many inexperienced authors use a shotgun approach to marketing (when they do any marketing!).  Their efforts are without a focus and are piecemeal instead of continuous.  In other words, the marketing proceeds without a plan to direct the activities.  Most often, the author business, too, will be without a plan.

A business plan will focus the energies of the company (you!) on the important aspects.  A marketing plan organizes your efforts to tell the world about the book.

You are the Chief Executive Officer or CEO of the author business and you are the also Marketing Manager for the book.  Since you are also responsible for the budget and tracking revenue, you are the Chief Financial Officer or CFO.  Because you are the author, you get to create all the copy required by the marketing manager.

A business needs an organization chart so everyone in the company can see where they stand in the hierarchy.  Here is the organization chart for your company.

A brutal fact about publishing is that several thousand books were published the same day as yours.  With all these books showing up at once, no one knows about your book and no one cares about it.  Your job as Marketing Manager is to tell people about your book and make them care enough to buy a copy.  This requires a marketing plan, not an occasional foray into social media.

With you in the role of all these company executives, you may need help handling the various functions.

One way to access the information you need is in my new book, Business Basics for Authors.  It’s available in ebook format at Amazon and Smashwords.

Hank Quense writes satirical fantasy and sci-fi. Early in his writing career,
he was strongly influenced by two authors: Douglas Adams and his
Hitchhiker’s Guide to the Galaxy and Joseph Heller’s Catch-22. Happily, Hank
has never quite recovered from those experiences.

He lives with his wife in northern New Jersey, a mere 20 miles from
Manhattan, the center of the galaxy (according to those who live in
Manhattan). They have two daughters and five grandchildren all of whom
live nearby.

Photo credit: Donald E. Curtis on VisualHunt