Becoming a future publishing mogul doesn’t have a free cost of entry. It takes a little change to start-up: buying equipment, getting the word out, legal & accounting services, and, of course, that first run of books. The Ultimate Beer Journal, Chicago Beer Journal, and Ultimate (Deluxe Edition) Beer Journal, will cost me $7.16, $8.74, and $11.61 to make. If I retail them for $20, $20, and $30 each, after I take out distribution costs and the retailer’s cut I’m left with a little less than $4 profit for each book. THAT money will be further diced up to equipment, marketing, and professional fees. That is before I even consider compensating myself for my time and work on this venture (apart from the money already budgeted for physically making the books themselves).
So, profits to move forward – to grow – would trickle in slowly if I started by doing a run of 100 books, then slowly increased as demand increased. Also, every time I do a separate run of books the set-up costs of printing is the majority of the cost: Printing materials for 2,000 books vs. 1,000 books can have as little as a 10% marginal cost in some cases. $3500 for 1,000 book covers is nice, but $4000 for 2,000 book covers is way better!
So, clearly, getting into the publishing business is going to take a significant upfront investment. I have already spent nearly $1000 just building a few prototype books and paying legal fees. I still need to buy ISBN & UPC codes, spiral binding equipment, a corner rounding cutter, and a letterpress for some of the printing process I am handling on my own. If I want to print 1,000 of each of the two books (excluding the Deluxe version), that will cost about $15,900 alone.
Kickstarter is this amazing service that has become the default name for what is now known as crowdfunding. In essence, crowdfunding is where individuals connect over the internet to pledge a little bit of money here and there to help a project raise the minimum necessary capital to get started. If the project doesn’t raise the minimum amount in a set amount of time, no one’s pledges are charged through. The project just “fails” and the creators go back to the drawing board.
But money isn’t just given away on Kickstarter. People backing projects expect something in return for their pledges. Generally, these start out as “trinket” rewards (bottle opener, tee shirt), intangible goods (digital files, a thank you, etc.), or recognition (name on website, in book, as a founding backer). Most Kickstarters offer the actual thing being backed as a reward. It is like pre-selling a product before it is ever made.
That is where this “all or nothing” aspect of Kickstarter project backing is very helpful. If there is not enough interest on Kickstarter to sell X amount of units of your product – and X amount of units is the bare minimum you need to produce, then maybe you were lucky and avoided getting stuck with all your money tied up in unwanted inventory for a product that nobody wants.
I decided that I need a minimum of $15,000 to get started with just 500 of each book. I can put in my own $5,000 and the rest I would raise from Kickstarter. If all goes well, I won’t need to put in my own $5,000 – I can raise that upfront by selling the nearly $9,000+ in sponsorship space for The Chicago Beer Journal. If all goes really well, I can raise an excess of funds from Kickstarter and start with a larger run of books and enable a more rapid expansion into new territories.
Based on that, in order to raise a minimum of $10,000 on Kickstarter I needed to set my minimum funding level at $15,000. You see, Kickstarter costs money. They charge you 5% for the service, Amazon.com charges 5% for processing payments, and the physical rewards for backers cost money too! In my case, I estimated that a majority of my physical rewards would be providing the book itself – so I calculated that into my figures since that is, after all, what they money is being raised for. However, I also plan on offering some cool swag at various pledge levels, and even some high dollar donor rewards (VIP invitation to launch party in Chicago).
I ran calculations for several mixes of donations and the resulting costs and profits and $15,000 turned out to be the safest minimum fundraising level to prevent me from getting completely screwed if most of the people pledging just wanted my most expensive, lowest profit margin piece of swag.
A key element of my fundraising and overall business strategy of providing rewards to people for unlocking achievements while using The Chicago Beer Journal is going selling sponsorship to bars and breweries. Selling sponsorship for something that doesn’t physically exist yet and have a set number of customers already is really hard. I know, because I started a ran a newspaper once – talk about a tough startup, but we pulled it off.
The beauty of Kickstarter is that if the pre-sales of The Chicago Beer Journal are high, I can leverage that information to help me better convince potential sponsors that they want to be in this book. So, besides just crowdfunding 2/3 of my startup capital outright, Kickstarter could be a springboard into raising the remaining 1/3 of my startup capital and then some and making this whole project come together successfully. In other words, there is a lot riding on this.
So, I have spent the past several months studying Kickstarter in depth. I have analyzed hundreds of projects that succeed and failed – paying special attention to the failing projects – to gain valuable knowledge about what makes a Kickstarter successful. I have also been reading dozens of blogs and expert analysis on Kickstarter. There is an entire cottage industry of Kickstart consultants – some legit, some charlatans – who will help you build the best Kickstarter for your project. Here are the main lessons I’ve learned.
- I need a very compelling video. This video has to short and to the point, tell my personal story, talk up my product, and sell people on the rewards offered.
- I need smart rewards. My rewards have to be low cost but high value to potential backers. They need to be simple and easy to understand and compelling enough to make backers want them the first time they see my page (because people rarely come back).
- I need media coverage and evangelists. Most Kickstarts fail or succeed before they even launch. Getting other people to share and talk about your Kickstarter is probably the single most important element to your success. If no one knows about it, you’re going to fail – regardless of what you do right or wrong in other areas.
- I need a gorgeous Kickstarter page. It has to have beautiful product photos, infographics laying out my timeline, process, and reward levels, and information that will make Kickstarter backers confident that I have my plan together and this is a legit enterprise they will love to be a part of. Oh, and unlike my blogging, it has to be pithy.
- I need to plan for success. Some of the biggest Kickstarter failures are the projects that look like they had overwhelming success. They raised $150,000 when all they asked for was $5,000 for example. They fail because the project creators didn’t in a million years expect that many backers – and that many rewards to fulfill, and they became buried in the logistics or worse yet they didn’t accurately calculate their costs for reward fulfillment and now they were going to lose money just to fulfill rewards. I needed to have a solid plan in place so that if this happened I could be celebrating rather than locking myself in my room for months on end lying in bed as my life crumbles around me (this has actually happened to Kickstarter project creators).
There are plenty of other key elements to success on Kickstarter, but these are the ones I felt needed my strongest focus. And thus began my adventure to launch a Kickstarter. Currently, I have a projected launch date of January 30 for this project. Mark your calendars.
In the meantime, I have hired a videographer, a P.R. agency, and some other Kickstarter marketing service consultants to make sure this project has the absolute most chance for success. But, if I am really going to be successful, I am going to need everyone I know to help me rally around this project and get the word out. I’ll talk more about that in a few days. So, check back!
Coming up next: Strategy for Growth – How I plan to grow this business from just a couple of simple notebooks into a publishing empire!