Business plan

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FOR INFORMATION ONLY

This memorandum is a business plan. It is not an offering for sale of any securities of the company. It is for your confidential use only and may not be reproduced, sold, or redistributed without the prior approval of Premio Publishing & Gozo Books, LLC.

EXECUTIVE SUMMARY

The Company 

Management Team

The Industry 

Projects

The Market

Distribution

Investment Opportunity & Financial Highlights

1.0 EXECUTIVE SUMMARY

Premio Publishing & Gozo Books has been delighting families and educators since 2004. Our multicultural nonfiction stories and biographies, ebook mysteries, and activity books (geography, astronomy, bilingual and Spanish books with pronunciation guide, finding/counting, opposites, animals and nature, and a kid’s cookbook) have diverse characters in funny, engaging, vivid color. Nationally-lauded (Publisher’s Weekly, ForeWord Reviews, The Horn Book, School Library Journal, Kirkus Reviews) our educational stories capture attention and create repeat readers. Not about ethnic or racial diversity, they simply feature black, white, Asian, Hispanic and mixed-race characters—with family values like courage, sharing, and giving. Find our titles books via: Amazon, Apple, Baker & Taylor, Barnes & Noble, Brodart, EBSCO, Follett, Ingram, SCRIBD, and Premiobooks.com; a gift of laughter, learning & family fun for ages 2 and up.

College media instructor Karl Beckstrand has lived a full life (including abroad). He interned for a Massachusetts publisher and for Congress in D.C. He earned a B.A. in journalism, an M.A. in conflict resolution, and a broadcast/film certificate. He’s been a technical recruiter in Silicon Valley, a Stanford Hospital chaplain, a Spanish interpreter for Angel Flight (aviator nonprofit), and the front man in a rock band. He is the best-selling and award-winning author/illustrator of 27 multicultural/multilingual books and more than 65 ebook titles. His western survival thriller, To Swallow the Earth,won a 2016 International Book Award, and his works have been lauded by Publisher’s Weekly, Kirkus, and School Library Journal. Raised in Silicon Valley, he has worked with people from all continents (except Antarctica). His work reflects cultural diversity—not only in protagonists, but in collaborators (his illustrators hail from Latin America, Europe, and Asia). Since 2004, he has run Premio Publishing. Beckstrand has presented to Taiwan’s Global Leadership for Youth, city and state governments, festivals, and schools. His Y.A. stories, ebook mysteries, nonfiction, Spanish/bilingual, wordless, career, and STEM books feature ethnically diverse characters—and usually end with a twist.

Premio Publishing has a silent (1%) partner and an on-call publicist. It also contracts editing and translation and has relationships with major distributors, consultants, retailers, and other service providers.

2.0 SITUATION ANALYSIS

Premio Publishing has done well by distinguishing its multicultural products in an extremely competitive business. Many of our 200 products have been #1 in their respective Amazon categories. Products (available via all major distribution entities) have garnered accolades from major literature-review organizations (ForeWord Reviews, Publisher’s Weekly, The Horn Book, School Library Journal, Kirkus) as well as news organizations. Still, the challenge remains to get products in front of target audiences and to remain competitive.

2.1 MARKET SUMMARY

Publishing is experiencing great change. Independent publishing has proliferated since the 1990s and, with Print On Demand, ebooks, and audio books all a quality book needs to do well are some good reviews and exposure. Publishing is increasingly international in scope. Premio Publishing feels there is a greater market than ever for those who can reach this broader audience (a major reason many of Premio books are in multiple languages). Premio has appropriate target markets and multiple product series that should do very well in those markets.

Target Markets

· Families in any country (specifically mothers, but also any member wanting entertaining, educational gifts for family)

· North American, European, Indian, and Latin American Educators (especially ESL, language immersion, and bilingual educators)

· Language students (beginners of any age)

· North American, European, Indian, and Latin American Librarians (specifically, those who make purchase decisions for children’s texts)

· North American, European, Indian, and Latin American educators and schools

· Collectors of children’s and gift books

· Specialty organizations (e.g.: Hispanic communities/organizations, National Parks’ Visitors’ Centers, Historical/Genealogical Societies, and faith-based organizations)

2.1.1 MARKET DEMOGRAPHICS

Geographics

· Premio has no geographic limits (markets are domestic, in Latin America, and beyond)

· The target population is over a billion households (more than a billion families on earth. Index Mundi/CIA Factbook, 2012.)

· Organizations and other adult customers could account for another billion

Demographics

· The ratio of male to female target end users is about equal. Other users (parents, educators, librarians, collectors) are slightly weighted toward female

· Ages 2 – 100 (target end users [not necessarily buyer] are ages 2 – 10)

· Of those 15 years and older, the literacy rate is about 83% (lower for young children. UNESCO, 2010)

· A world median household income was not found; but a guess, based on country comparisons would be $15 - 20,000 annually

Behavior Factors

· Most families want to enjoy quality/entertaining time together. They also want their members to be educated (entertainment and education tend to be priority expenditures for families with children).

· Many people want to know more than one language.

· Decision-makers in educational and other organizations seek quality curriculum/tools that will hold learner attention.

2.1.2 MARKET NEEDS

"Even in the face of a down economy, entertainment remains a popular spending category," says Russ Crupnick, entertainment industry analyst for The NPD Group (PC World, 2010). Affordable gifts will also continue to sell in a down economy. Premio Publishing seeks to fulfill customer expectations of quality and value.

· Books that are made of durable, safe, quality materials (2008 CPSIA compliant)

· Well written/illustrated, grammatically correct, engaging, and informative content

· Rather than try to be a bargain bookseller, (because Premio’s books are educational) Premio seeks to price its books at the same level as comparable educational or gift books

2.1.3 MARKET TRENDS

People who purchase books for entertainment and education have many choices. Premio Publishing understands that it has to do more than simply entertain (many competitor’s books don’t even reach parity here). Hybrid books (picture books with more than the usual amount of text—targeted toward adults and gift buyers) are a new trend. Book series and nonfiction books are proven trends. Premio Publishing has multiple successful series, including a series of nonfiction hybrid books (about immigrants) targeted toward adult buyers. Premio is also working on a graphic novel—another trend in literature—and picture books with no text (which can be marketed in any country).

Premio continues to publish Spanish and bilingual books that include pronunciation guides. While offering educational content in multiple areas, Premio acknowledges that many people won’t want to learn/won’t want their children/students to learn Spanish. However, Spanish is one of the top four languages in the world (the use of which is growing—as is the Hispanic population. Listverse, 2012). Premio seeks to offer other—more universal—educational content that can be translated into any language. 

Premio is aware of changing and competing technologies—especially in the fields entertainment and education. While acknowledging that children might always choose video and audio curriculum and entertainment, Premio Publishing knows that educational decision makers and parents (buyers) value, for the most part, literacy; and that these will continue to opt for text, which must be read. However, books are changing. Audio, animation, games, and interactivity are increasingly becoming important parts of ebooks and other “literature” applications. Premio offers all its titles in ebook form and some in audio format.

2.1.4 MARKET GROWTH

Because of a sluggish economy, new entertainment alternatives—and because of smaller families worldwide, children’s literature may fluctuate. However, book purchases overall are strong (O’Dell, 2012) and gift giving isn’t going away. The ever-growing availability of mobile devices and ebooks may spur greater literature consumption worldwide.

2.2 SWOT ANALYSIS

The following highlights Premio Publishing’s critical strengths, weaknesses, opportunities, and threats.

2.2.1 STRENGTHS 

· The rapid pace at which the publishing market is changing will present a challenge for content providers. Premio Publishing embraces, rather than avoids changes in technology. The company offers all of its titles as ebooks (including free ebooks/online books as promotional tools). It has audio content, a nonfiction series of hybrid books, and is developing a graphic novel.

· Premio’s content is critically acclaimed and unique (while some publishers offer educational/language-learning content, few offer it with diverse characters, quality storytelling, and educational tools like image-finding activities and pronunciation guides).

· Premio’s products are contracted in-house and very competitive—saving costs.

· Product quality is good (both in materials and content).

· Premio’s products are being offered to more and more markets worldwide (via a growing list of top distributors that continue to expand their markets).

2.2.2 OPPORTUNITIES
Premio Publishing’s strengths are not in developing technology or speed of delivery (though it is proud of its quick adaptation to publishing innovation and trends). Aside from new content, Premio doesn’t own raw materials/devices (things that are in short supply; indeed, children’s books are NOT in short supply). Where there is an opportunity for Premio Publishing is in offering products in a new or superior way. Most books do not offer anything beyond a story and perhaps pictures. Premio offers:

· Products that adults would purchase: nonfiction hybrid series, gift books, educational books, audio content, and ebooks/products for mobile devices

· Innovative story-telling, plots and diverse characters that capture and hold reader attention (regardless of age), which makes delivery of educational content more effective

· Spanish or bilingual texts with full pronunciation guides for both the native and new language learners

2.2.3 WEAKNESSES & THREATS

Premio’s greatest liabilities lie in its limited capital. So far, the technology to keep up with publishing innovations has been affordable. However, if a new development were to require a large investment in equipment or software, this could hamper the company’s ability to keep up. The company does not have large inventories of books (generally, this is wise). However, were a large customer to seek significant quantities of product, there would be at minimum a delay in providing them. At worst, lack of capital could mean a loss of business.

Because of limited capital, Premio’s best option for competitive pricing is currently out of reach. In the past, the company printed volume quantities in Asia at a significant savings in order to have competitive pricing; but it has not been able to do this since the economic downturn. Costs are relatively low and ebooks/Print On Demand books have kept revenue flowing. New technologies have made a large inventory less important. 

The last major weakness is Premio’s limited marketing outreach. The company believes it could reach much more of its target market were it to invest in greater marketing efforts. Customers unaware of products cannot purchase them.

2.3 COMPETITION

Because of the abundance of book offerings and because large publishers can undercut most providers in price, Premio chooses not to compete with the lowest priced books, but to provide unique/superior product (hybrids, story, activities, educational aspect) of quality materials. While competitors might duplicate Premio’s mixture of story, images, activities, and learning tools (even in multiple languages) at a lower price, they would still have to capture a following like consumers who appreciate Premio’s creativity, edginess, and sincerity. Premio acknowledges (gratefully) that new quality stories are always wanted.

2.4 PRODUCT & DISTRIBUTION

Ideas are cheap—products bring revenue. We have products! Premio’s ebooks often outsell its physical book offerings. Premio has 200 products in multiple languages. The company has several successful series, language-learning books, and products with black, white, Hispanic, Asian, Native, and Islander characters. 

The Bridge of the Golden Wood: A Parable on How to Earn a Living was selected by the State of Vermont for primary financial literacy curriculum; Polar Bear Bowler: A Story Without Words was called “charming…full of…polish and physical comedy,” by Publisher’s Weekly.  To Swallow the Earth won a 2016 International Book Award(and was a Laramie Award finalist); She Doesn't Want the Worms - Ella no quiere los gusanos was named in the top 10 "Best Books" of 2011 – ForeWord Reviews Magazine and featured in School Library Journal; Bright Star, Night Star: An Astronomy Story hit #2 in Amazon's Hot New Children's Books and won a 2014 UP Author’s design award; Butterfly Blink: A Book Without Words won Promoting Picture Books’ cover contest; Crumbs on the Stairs - Migas en las escaleras: A Mystery has ranked in Amazon's top 10 best-selling books for ESL, large print, and Spanish children’s titles; Bad Bananas: A Story Cookbook for Kids was praised by The Horn Book; Sounds in the House – Sonidos en la casa: A Mystery was given a nod by Kirkus Reviews.

Premio has many more manuscripts in process (for all ages). It also distributes titles by three other authors. The company is looking at adding graphic novel and other format options. Manuscripts (in pre-publication) include: Robot Kid on Planet Eyeball; Dog & Horse Adventures; Clatter, Shatter, Tatter, Splatter; and This Pie is Mine (on fractions).

Distribution

Premio Publishing’s books are now available via the largest book distributors in the United States: Ingram, Baker & Taylor, Apple, Follett School Solutions, Brodart, Amazon/Kindle, EBSCO, Kobo, SCRIBD, and BN.com/Nook. In addition to domestic channels and online distribution, Premio has a foreign rights agent and has been in discussions with publishers in China. 

2.5 KEYS TO SUCCESS

Because the company publishes in more than one language, one book can equate to six products (English, Spanish, bilingual print books and English, Spanish, bilingual ebooks). There is no cost to upload ebook or POD book files. Each generates $2 – 4 per purchase. With more manuscripts in pre-publication—including valuable series—Premio could have more than 300 products in a couple of years—each cross-promoting the others to a global audience. Products must continue to be of quality content and material, affordable, have literary/entertainment value, and offer extras like interactivity and educational activities.

2.6 CRITICAL ISSUES

· Build brand awareness, author and series recognition

· Add sales channels in new markets

· Build a reputation for entertaining stories and educational activities—especially among families, librarians and educators

· Increase bulk capabilities via capital 

3.0 MARKETING STRATEGY

Premio Publishing seeks to offer superior entertainment-educational products to families and educational institutions worldwide at non-prohibitive prices.

3.1 MISSION

Premio Publishing has three main objectives:

1. To produce widely-distributed/profitable book series that educate as they entertain (in as many venues/formats as exist, i.e.: print, Print On Demand [POD], ebooks, apps, etc.)

1. To      increase literacy, learning, family togetherness, and wise choices 
2. To      produce products that represent all readers

Slogan

Funny, inspiring STEM, language, and nonfiction books/ebooks with black, white, Asian, Islander, Native American Indian & Hispanic characters

3.2 TARGET MARKETS

Premio Publishing wishes to target middle-aged women with its series. It also seeks to increase global penetration by focusing on countries with growing economies (like China and Brazil) and on countries where there is a significant English- or Spanish-speaking population (like those in Europe, North and South America, Australia, India, and South Africa).

3.3 POSITIONING

Premio Publishing’s strength is its creativity, trendy book series, nonfiction, and quality educational products. It distinguishes its products with hybrid content, high-contrast, eye-catching images, entertaining stories, diverse protagonists, educational activities, and clever twists. Extras that add value to products include: messages of courage, sharing, service, friendship, sacrifice, and examples of character (sometimes embodied in protagonists that really lived). The company will also offer its products in multiple formats using traditional and high-tech methods of delivery.

Premio’s Spanish/bilingual books can be superior to similar products because they include full text and pronunciation guides in both English and Spanish. They are also written in Spanish by the original author and edited by native Spanish-speaking editors to maximize clarity and solid story-telling. Other companies send English texts to be translated, which translations tend to emphasize literalism rather than the richness of story and language.

3.4 MARKETING OBJECTIVES

Our marketing objective is to continually put our books in front of families, educators, reviewers, award committees, influencers, and readers. We seek non-traditional venues for sales (many books do better outside of bookstores). Other publishers don’t do this.

1. Increase brand/series/author awareness among families, libraries, and educational institutions 

2. Offer products in more countries (this may include publishing agreements in those countries)

3. Produce new product on an ongoing basis and offer them in more formats and on more platforms

3.5 FINANCIAL OBJECTIVES

Premio Publishing wants to increase revenues by 100% in 2023, then double revenues over the next several years. Besides producing more products, the company must maintain low overhead costs (which it does by doing most tasks in house and contracting only the most specialized tasks) and decrease publishing costs. See more strategies below.

3.6 STRATEGIES & TACTICS

To meet both marketing and financial objectives, Premio Publishing must:

1. Generate more products (especially add to its nonfiction offerings)

2. Offer products on more platforms and in more venues (provide superior offerings to more distributors, retailers, schools, and libraries)

3. Increase brand/series/author awareness and equity via professional literary, influencer, and customer reviews

4. Expose target audience/customer base to positive reviews via traditional advertising, social media, press coverage, email campaigns, author appearances, word of mouth, and other direct sales approaches

The company has email lists with more than 15,000 contacts including educator, library, retailer, customer, and prospect contacts used whenever there are new products. It also publicizes products and events to more than 1,500 Facebook/Instagram fans, a growing Twitter following, and more than 1,000 LinkedIn connections. The company also books the author on local TV and radio shows and submits news releases regularly. Premio has promotional videos on YouTube. Maintaining contact/mailing lists of librarians, educators, and families is critical.

As demand increases, printing costs can be reduced via bulk printing in Asia, where costs are near half of US printing.

3.7 MARKETING PROGRAM

Premio Publishing seeks to maximize marketing at the most modest expenditures possible.

· Pricing is on par with competing products (though the company priority is not to compete based on price; it wants to offer superior experiences and content).

· Distribution channels must expand.

· Ongoing professional reviews is critical to each title’s success.

· Advertising and promotion can be cost effective if most efforts are those of publicity and press coverage combined with targeted online advertising to niche organizations and customer/influencer reviews.

· Customer service is most important in relation to businesses that distribute Premio’s products. Timely service at a fair price with reasonable return policies are essential.

3.8 MARKETING RESEARCH

Premio Publishing is headquartered in Utah, a cosmopolitan state with high population growth, education level, and families with children. Because it has more children per capita than other states—and more educational institutions—it is the ideal place to interview educators, librarians, and families regarding entertainment preferences, effective language instruction, and other educational activities (desired curriculum).

4.0 FINANCIALS

4.1 BREAK-EVEN ANALYSIS

While it has some debt, Premio has almost no overhead. After royalties and other expenses, the company makes about $1.50 per book (average of ebook, Print On Demand [POD], and direct sales). Since most costs are postage, advertising, online fees, and licenses our break-even is often met mid-month, with the rest being profit. However, when print runs are required, profits can be replaced by inventory.

4.2 REVENUE MODEL

Premio Publishing seeks to meet our financial goals via a hybrid revenue model that combines advertising, new product production, and licensing in foreign markets.

4.3 SALES FORCAST

Due to a painful learning curve for the above scenario of printing books in volume and slowly selling them over time (vs. POD and ebook sales, which are much more efficient) and for Amazon advertising (which is finally profitable for us) Premio has some bills to pay. Understanding the value of POD and ebooks, the company now only prints in volume when large orders require it. As new products are added in various formats and platforms, and as new distribution agreements are made, revenue should increase to reflect the following:

Sales Forecast

SALES

Total   Sales (revenue) 

2022: $15,000,  7.5k units—all   titles

2023: $30,000

2024: $60,000

Cost   of Sales

2022: $8,500

2023: $15,000

2024: $25,000

4.4 EXPENSE FORCAST

This monthly forecast will help keep the marketing department on budget, as well as indicate when modifications to the plan may be needed.

Monthly Expense Budget

Marketing  

2022

2023

2024

Web Presence

$50

$100

$100

Advertising

$500

$700

$1,100

Printed   Material

$150

$300

$800

Total   Monthly Expenses

$700

$1,100

$2,000

Percent   of Sales

50

50

30

Contribution   Margin

35%

35%

40%

Contribution   Marg/Sales?

$5,000

$10,000

$24,000

5.0 CONTROLS

This plan will serve as a reference for Premio Publishing. The company will monitor the following items, evaluate performance, and adjust the plan as necessary.

· Monthly and annual revenues

· Expenses

· New products and platforms

· Distribution channel expansion

· Product reviews and press coverage

5.1 IMPLEMENTATION

Milestones will identify key programs related to marketing. Tracking these will help the company be efficient with time and money.

Milestones

Start   Date: 2005

Completion   Date: ongoing

Budget

Manager: Karl   Beckstrand

Department: Marketing/Sales/Creative/IT

Marketing   Plan 

$500

Web   Site 

$500

Library   Distribution

$50

Ebook/POD   Distribution

$500

Foreign   Market Publishing

$250

Press/Advert.   Campaign

$10,000

New   Product, translation, editing

$7,000

Total: $18,800

5.2 MARKETING ORGANIZATION

Karl Beckstrand will handle all marketing activities (though he also has access to a publicist).

5.3 CONTINGENCY PLANNING

Difficulties & Risks

· Competitors may offer products similar in purpose and quality at a lower price

· Challenge of publicity and product and brand awareness in multiple countries

Worst-case Risks

· Company may not be able to remain competitive due to changes in technology and limited capital

Premio Publishing plans to expand its nonfiction offerings for older audiences (nonfiction hybrid series, graphic novel, biographies, political, and spiritual titles). Since content is copyrighted and cannot be duplicated by competitors, Premio hopes this will be sufficient hedge against the first difficulties.

We would seek a loan of $25,000 to edit and print our next projects (among our most popular products), translate existing titles, record audio versions, and pay advertising expenses. Hard cover books cost approximately $11.75 each to print, including customs and shipping. We could come up with a few thousand of the total on our own. A competitive retail price per adult hard cover book would be $30 (stores to take 30% of the retail price, distributors take another 10 - 30%, and illustrators are paid 6% of sale price or 40% of POD or ebook price [marketing costs are not factored here, see table]).

We project that, with competitive pricing and great distribution to traditional, online, and non-traditional outlets, we can recover the entire amount plus have several thousand dollars in profit from new products. Since ebook and POD revenues are residual, we anticipate ongoing profit, enabling us to continue to print our other titles with no need of outside funding.

Each new title cross promotes the others (and their print, electronic, and audio versions). We continually seek new revenue sources and distribution. One example is that our ebooks and POD books have been offered on more platforms (like Target.com and Walmart.com) each year. 

We recognize that consumer pocketbooks are tighter, yet we know that entertainment spending does not typically decrease in a down economy. We feel confident in our ability to compete (in price and quality) with the big publishers, and be profitable via sustained marketing to an ever-broader worldwide audience (most publishers only conduct initial marketing, if any).

References

Cain Miller, C. & Bosman, J. (2011.). Ebooks Outsell Print Books at Amazon. New York Times, May 19. Retrieved from 

http://www.nytimes.com/2011/05/20/technology/20amazon.html.

IndexMundi (2012.) World Demographics Profile 2012 [CIA World Fact Book]. Retrieved from

http://www.indexmundi.com/world/demographics_profile.html

see also: https://www.cia.gov/library/reports/general-reports-1/Demo_Trends_For_Web.pdf.

Kotler, P. & Keller, K. L. (2012). Marketing Management. Upper Saddle River, NJ: Prentice Hall.

LISTVERSE (2008.) Top 10 Most Spoken Languages in the World

(by flamiejamie), June 26. Retrieved from

http://listverse.com/2008/06/26/top-10-most-spoken-languages-in-the-world/.

O'Dell, J. (2012.) Ebooks Are the Fastest-growing Area of Book Sales, Especially for Youngsters. Venturebeat News, March 29. Retrieved from

http://venturebeat.com/2012/03/29/ebook-sales-growth/.

Paul, I. (2010.) Amazon's Ebook Sales Up 80%: Hardcovers Not Dead Yet. PCWorld, Jul 20. Retrieved from

http://www.pcworld.com/article/201470/amazons_ebook_sales_up_80_hardcovers_not_dead_yet.html.

UNESCO Institute for Statistics (2010.) Adult & Youth Literacy: Global Trends in Gender Parity. September. Retrieved from 

http://www.uis.unesco.org/FactSheets/Documents/Fact_Sheet_2010_Lit_EN.pdf.

NOTE: 83% of Americans between the ages of 16 and 29 read a book in the past year. Some 75% read a print book, 19% read an ebook, and 11% listened to an audiobook. – Dan Poynter

See also: Publishing Perspectives. Looking at U.S.  Ebook Statistics & Trends

http://publishingperspectives.com/2012/10/looking-at-us-ebook-statistics-and-trends/

ebook trends: http://www.i-programmer.info/news/152-epub/4064-ebook-trends-revealed.html

http://theconversation.edu.au/a-last-gasp-from-a-dying-industry-analysing-the-penguin-random-house-deal-10422