A NEW MOON RISING: The Birth of a Children's Book Publisher

First in a series of monthly updates from Moon Mountain Publishing, as we follow their company from the ground up.
The staff of Moon Mountain Publishing, Inc. gathers for a group portrait. Cate Monroe, President, and Robert Holtzman, VP of Sales & Marketing.

Moon Mountain Publishing has been in business officially for three weeks, and we are up to our ears in work. Even though our first children's books are at least eight months away (probably more like twelve) there is so much to do, all of it of seemingly top priority, all of it needed right away.

We need boilerplate contracts in place now, to bind authors and illustrators to projects. We finalized our company's logo a couple days ago, but work on stationery and business card design has just begun, and we've hardly given a thought yet to collateral materials and a website. We need to register our logo as a trademark, but can't do that until we've begun to show commercial use of the logo„and we can't do that until we've got something, like letterhead, that we've actually used for commercial purposes. We desperately need a second computer, software, peripherals, and a network, but we're not ready to issue a PO until we've researched a few remaining technical specifications (we haven't created a PO form anyway). There are thousands of files, notes, printouts, brochures, newsletters, samples and loose papers„all recently collected from around the house and dumped in undifferentiated heaps into our new basement office„all of which need to be filed into a filing system that has yet to be established. Specifications to write; illustrators' portfolios to request and review; mailing lists to set up; and on and on... Yikes!

To do it all, there are the two of us: Cate Monroe, President and Queen, and Bob Holtzman, VP of Sales & Marketing. Beyond the official titles, Cate is also CFO, bookkeeper, editor, art and production director, book designer, and more, while Bob is also COO, editor, facilities manager, IT director, etc. We're a husband and wife team with a lot of complementary skills and dispositions that mesh well together when they're not in open conflict. Cate's the artistic one: creative, free-associative, and enthusiastic, but with a curiously good grasp of financial issues„in fact, she's a CPA. Bob's analytical, logical, and well organized (Cate might say regimented and obsessive) but also an experienced public relations and marketing pro, and writer/editor with a ready grasp for technologies, and a distaste for finance and numbers.

The Business Plan
In spite of all we need to do to really get going, a great deal has been accomplished since Cate left her job with a small accounting firm in June, in order to devote serious time to planning the new venture. The first order of business„the work that has consumed the majority of her efforts since then, was the development of the financial projections that form the foundation of our business plan.

This was primarily an educational task because, while both of us have lots of relevant experience (e.g., accounting, teaching, library science, marketing communications, journalism), neither has been involved in commercial book publishing before, and so we knew none of the rules of thumb upon which publishers typically base their projections. A few examples: we had no idea what discounts are typically required by retailers and distributors; we didn't know how soon one could expect payment from a distributor; had no clue about what constituted a "reasonable" size print run, or any way to guess the number of re-printings a title might go through.

Our first stab at financial projections, therefore, was based on a lot of pure guesswork. Luckily (perhaps), we're both financially conservative, and that first spreadsheet showed nothing but losses, as far out as we were willing to project. So we started questioning the assumptions behind almost every number, seeking answers from an extremely broad array of resources, and learning at least the basic outlines of sales & marketing, distribution, production, contracts, book design, copyrights, trademarks, etc.

Cate attended a course in print production at the Rhode Island School of Design. We read books by Avery Cardoza, Tom and Marilyn Ross, Lisa Shaw, Jonathan Kirsch, and Kenneth and Sylvia S. Marantz. We've had communications by phone, e-mail, and in-person with people at the publishers Charlesbridge, Aegis, Moyer Bell, and Somerville. Cate attended the Mini Publishing University sponsored by the University of Baltimore, PMA and the Midatlantic Publishing Association, and we both attended the New England Booksellers Association trade show in Providence last weekend. We've found PubForum (www.onelist.com) an immensely helpful and lively source of expertise on almost any publishing-related question imaginable. Among the innumerable other useful Websites we visited, several that come to mind as being particularly helpful include Publishers Weekly (www.publishersweekly.com), the Children's Book Council (www.cbc.org), Publishing Links on About.com (http://publishing.miningco.com/business/industries/publishing), and The Publishing Law Center (http://www.publaw.com).

Writers and illustrators who are personal friends have offered insights and allowed us to look at contracts they've signed with other publishers. Cate's old employer has been generous in providing unpaid consulting services. A graphic designer with whom Bob had previous business dealings (and who is now designing our stationery) has always been willing to spare a few minutes to answer questions about hardware, software, and print production. A kindergarten teacher has even helped us assign proper "ages" to certain book ideas. We've sought and received advice from people at SCORE, the Small Business Administration, the Center for Design and Business (a collaboration of Bryant College and RISD) and a local Chamber of Commerce. In developing cost projections, we spoke with numerous printers' reps, and have found them to be an invaluable source of knowledge. A copyright attorney provided a considerable amount of free advice before we eventually hired him. While people who want to sell you something can be extremely helpful, the amount of assistance we've received out of pure good-heartedness from so many knowledgeable professionals has been both surprising and gratifying. Office Before: In pre-Moon Mountain days, the main basement room was a combination playroom, home office, and overflow site for our personal library.

Bob took a week of vacation from his employer (a small public relations agency) to work on the sales and marketing component of the business plan, and to help Cate feed the appropriate numbers into the financial projections. As the areas of uncertainty diminished, the multiple, linked spreadsheets grew and grew, going through a half-dozen versions with numerous scenarios on each.

The initial plan had called for five main product areas: hardbound illustrated children's books for conventional trade distribution; a line of proprietary books intended for distribution by a manufacturer (yet to be identified) of a line of related children's products; a series of educational flash cards; a line of how-to booklet series for various adult recreational markets; and an "-of the month club" type of subscription product that we're not yet talking about publicly.

Looking back with the benefit of two months' hindsight, we see now how foolish we were to even consider a business launch of such complexity. We soon realized that the proprietary distribution plan was unpredictable„that there was no way to project when or if we might be able to structure such a deal, or what its size might be. We couldn't make the flashcards profitable in the format we wanted, even after numerous iterations of specification, RFP, re-specification, and discussion with printers. We were not getting good response from vendors of the countertop displays that we envision as an integral part of the marketing plan for the booklet series. And the logistics and assumed marketing costs of the subscription product were so daunting that we didn't have the heart to even start collecting real numbers on it. Rather than spend many additional weeks trying to resolve all these problems, and wanting to simplify the business plan to a manageable scale for a two-person startup, we elected to concentrate on trade children's books, and leave the other lines for later, or never.

We pummeled the numbers so hard that they eventually cried uncle and showed a profit after three years of operation, with a complete payback of loan financing after an additional three. The start-up costs were higher than we had hoped (by 75 percent or so), a function of the very slow cash flow that seems to apply in trade publishing, but we resigned ourselves to that as an apparently unavoidable fact. We were fairly confident that a relative would provide start-up capital. If the family connection proved unavailing, Cate thought, we could probably get a commercial loan. Bob was considerably less sanguine about that, given our lack of industry experience, but the question was moot, as the relative came through most willingly. Our attorney is now in the process of drawing up loan documents. Prior to closing the deal, we'd like to put the finishing touches on the business plan for the relative's review (even though the relative insists it isn't necessary).

The plan now calls for Moon Mountain to publish three books during 2000; four in 2001, and six in each of the succeeding three years. We intend to promote ourselves as custom publishers as well, and to launch the how-to booklet series, but aside from a few dollars dedicated to sales and marketing, these activities are mostly absent from the business plan as it now stands.

Getting Real, Suddenly
In the interests of maintaining a household income during start-up, we intended that Bob would remain with his current employer for approximately a year, while Cate launched the company. Bob would provide Moon Mountain with off-hours advice and assistance until such time that the company was truly up and running and in need of full-time marketing efforts. But Bob and his employer parted ways with unexpected suddenness and so, on the last day of September, Bob officially joined Moon Mountain.

Bob consequently dates the creation of the business from that date, while Cate, who had been working on the incipient company for months, places it at some earlier, but undefined, date. For the purposes of having an exact date upon which to recognize our 10th anniversary in business (yeah!), we should probably agree upon September 17, 1999, the date of incorporation, as the "official" start of Moon Mountain Publishing, Inc. (We are, by the way, an "S Corp.")

In the last two or three weeks, we have:

... Converted the basement from a generic "home office" plus guest bedroom into a "worldwide corporate" office and design studio of roughly 500 square feet. This involved moving four rooms worth of furniture, installing shelves, turning a whole wall into a cork-faced layout review board, installing two additional phone lines, purchasing and installing (and debugging) multi-line telephones, and hanging pictures. Virtually all the office furniture is used, but most of it looks presentable. A dead photocopier was carted off to a repair facility and is being resurrected.

... Nearly completed an agreement with a vendor for a new Apple G4 computer, monitor, Ethernet hub and wiring, laser printer, and scanner, plus Photoshop, Illustrator, Quark Express, QuickBooks Pro, and associated hard- and software odds and ends.

... Met with our regular business attorney and one specializing in copyrights and trademarks. In addition to becoming incorporated, we began work on boilerplate contracts, trademark registration, and the drafting of loan documents.

... Researched local regulations concerning home-based businesses (we're in the clear), and registered the business with the appropriate state authorities and the IRS.

... Opened a bank account.

... Registered a domain name (www.moonmountainpub.com and we receive e-mail at cate@ and bob@).

... Investigated health insurance, including programs available through several Chambers of Commerce, and reached a decision on coverage.

... Finalized work on a logo, and began design of stationery and business cards.

... Made a bit of progress toward publishing some books. Oh, right. Books. Office After: Improved lighting, acquired and rearranged furniture and computers, and installed new phone lines and a complete wall of corkboard.

Books Under Way
We have three books at various stages of development or negotiation, each proceeding along very different lines, with distinct legal issues involved.

Work on Book One began months before the company officially came into being. Cate was still making preliminary investigations when a good friend, who has worked as a business writer/editor, showed her a manuscript of a charming bedtime story for ages 2 to 5. Cate received permission to show the MS to a designer whom she had met in a course on children's book illustration„a woman with experience in website design, and obvious talent as an illustrator, but no professional experience in children's books. With nothing more than good faith between them„no contract, no commitment...not even a publishing company in existence„the designer began a series of illustrations. These have progressed so well that we intend to contract with the author and illustrator as soon as we have the boilerplate in place. Because we're not 100 percent confident in our own ability to produce this, our first book, right the first time, we plan a small initial print run, to minimize the cost of any really terrible mistakes we might make.

Book Two was originally published almost 30 years ago, and has been out of print for quite some time. Ground-breaking in its time (it was one of the first popular children's books with an explicitly feminist theme), it was written by the author of more than 80 children's books, one who was successful and respected when he died in the 1970s. The illustrations were equally professional, but the style is now terribly unfashionable. The story, we agreed, held up well, and deserved to be re-issued, but with completely new illustrations.

We were familiar with the book because the author's daughter is one of Cate's closest friends. As his heir, she holds the rights to her father's books, and has agreed in principle to let Moon Mountain publish this one. We don't know yet if she'll want some degree of editorial control over the new illustrations, and we haven't yet selected an illustrator, although we've looked at a few portfolios. We will probably ask her to write an introduction to the new edition, and we think she'll be a strong marketing asset, as she is experienced at organizing feminist and artistic events and conducting workshops. At this point, we're taking it on faith that she is in a position to sell us the rights unencumbered by earlier agreements between her father and the original publisher. We'll review the original contract if she can come up with it, but otherwise, that's what warranties and indemnification clauses are for.

Book Three will be a sequel to one that was published by one of the Really Big Houses in 1994, and is currently in backlist. The author/illustrator is a distant cousin of Cate's, whom she had never met, but with whom she had been in correspondence concerning family genealogy, and learned just by-the-way that he was an in-demand children's book illustrator. Although the original book received excellent reviews in Publishers Weekly and Kirkus, it wasn't a best seller, and the Really Big House declined to publish the sequel.

When the cousin visited us a few weeks ago to show us his pencil sketches, text, and layout for the sequel, Cate and I were both so excited that we had trouble restraining ourselves from making an offer there and then, without the benefit of a private conference. But excited we were, and we made the offer by phone the next day. To our relief and mild surprise, the cousin was equally excited about Moon Mountain publishing his book. Given his far greater experience in the children's book field, we were concerned that he might view us as too green to produce the book to his accustomed standards, and to market it adequately. There's a firm verbal agreement in place, and we expect a congenial signing when the contracts are ready. We'll be looking carefully into available rights, and possible conflicts, concerning the first book of the series.

The book has a summertime theme, and we'd like to publish it at the beginning of summer for some publicity event tie-ins we have in mind. Timing now looks too tight to hit the summer of 2000, so we're looking at 2001. Because we intend to publish three books during our first year, Book Three actually becomes Book Four, and we've got to identify a new Book Three, pronto.

More Lessons Learned
Although we came by all three books through personal contacts, we're quickly becoming aware that we will have no troubles finding eager talent for future projects. It seems that every third person to whom we explain our plans is, or has a friend or relative who is, or who wants to become, a children's book author or illustrator, and who is just waiting for someone to express a shred of patience for, if not actual interest in, their manuscript or portfolio. It's abundantly clear that there will be no shortage of materials to review in short order. The problem„as readers of Independent Publisher know far better than we„will be sorting through the volume to cull the items of value, and then sorting through them again to select the few we have time and capital to publish.

We have, in fact, serious soul-searching to do in order to define what kind of books we publish, and to refine our vision of what kind of children's book publisher we are. We realize this is critically important„not only for the purposes of market positioning, and to serve as a filter for assessing manuscripts, but also for our own spiritual comfort. Thus far, we have a motto ("To Delight, and Occasionally Inspire"), and a general notion of what we're seeking (books with a positive outlook on life and an ethical, but not moralistic, message), but we haven't got it down to a succinct description that would enable us to adequately characterize our line to a distributor, or help a distributor properly present our line to a retail account.

That's one more must-do, right away item for the list. But there will always, we expect, be plenty of those. Right now, we feel we're making good progress toward transforming a concept into a company, and we're optimistic that, come next October, there will be a few buyers out there who are familiar with three good children's books from the new Moon Mountain imprint.