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How I Set Up a Small Publishing Company

Eleanor set up a small publishing company in 2019. Here, she shares her experience and insight as a newcomer to the industry.

Tips for setting up a small publishing company

Tips for setting up a small publishing company

Why We Set Up a Small Publishing Company

I set up a small publishing company, together with a friend, in 2019. It was a completely new field for both of us. At the time, I considered myself a writer, but I had no experience in the publishing world.

I had never worked on any publication. I had never been an editor. I hadn't even done any proofreading except for myself.

The path into publishing was unexpected. My friend, a scientist, wanted to develop creative story books for children based on a niche topic. I rewrote a story she had worked on years before. But it had never been our intention to start up our own private limited company. That came after a meeting with a business advisor in residence at a local university.

We had the idea of producing computer games linked to our books, so the idea of total control and the retention of publishing rights was appealing. You don't get that if you publish with someone else.

Another reason why setting up as a limited company was recommended to us is that it protects your personal assets, as they are considered separate from that of the company.

But Why Set Up a Company at All?

Well, we were publishing our own books. But, rightly or wrongly, self-publishing can be viewed as inferior to traditional publishing. Bookstores often won't accept a self-published book.

We wanted our books to be published under the umbrella of a traditional company.

Also, it was exciting!

How Did We Set Up Our Publishing Company?

There were several administrative tasks and costs involved. These included:

  • Registering with Companies House
  • Taking out business insurance
  • Setting up a business bank account
  • Buying a domain name for a company website
  • Paying for a host for the website and setting it up
  • Paying someone to design a company logo
  • Purchasing ISBN numbers (you can't sell or register a book unless it has one!)
  • Setting up our company with Xero accounting software
  • Setting up social media handles on Facebook, Twitter and Instagram
setting-up-a-small-publishing-company
setting-up-a-small-publishing-company

How We Produced Our First Book

First, we used inexpensive publishing software to separate the text onto the correct amount of pages, leaving space for the illustrations. It's important to do this so that you can see how the finished product will be. We were careful to leave a suitable amount of pages for the inside title page etc. (look inside any book to see what I mean). The story doesn't begin on the first page!

The number of pages is important as it affects printing costs. If you go over a certain amount, you will run onto another sheet at the printers. That means that it will be more expensive to produce, but you probably won't be able to charge more for it. If your book seems more expensive than other, similar books, fewer people will be happy to purchase it.

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Illustrations

We hired the same illustrator to illustrate both our first two books. Our first book was an early readers chapter book, which was illustrated at least partially on each page. We only had full colour on around one-fifth of the pages – this was due to cost. The remainder of the pages were in monochrome. This was a great cost-saving decision, which we first learned about after leafing through a selection of similar books in our local Waterstones branch.

Our second book was a typical 32-page picture book, with full-colour illustrations throughout.

But it's not as simple as writing a book and getting someone to illustrate it.

We Edited It, Edited It Again, and Edited It Again . . . and Again . . . and Again

You've got it. We spent a huge amount of time editing. Editing is really, really important. If we had been a larger company, with more than three people (yes, someone else had joined us by now), we would have had an editing department. And a proofreading department.

But at our tiny company, the editing and proofreading department was ourselves, together with some free outside help I recruited: namely, my mum, my sister (who has completed a proofreading course), a friend I called up out of the blue who had had his own book published, a neighbour who is an English teacher . . . well, you have to find who you can. New eyes are essential and see things that have been staring you in the face.

Typesetting

Our illustrator did our typesetting for us. We didn't have a clue about it! Two books in, and I still couldn't do it. It is not the same as arranging the text using the cheap publishing software (I mentioned that earlier).

As a brand new, small publishing company with zero experience, I'm happy to admit that we were still learning right up until our book was released. And beyond.

We Found a Printer

We chose to keep things local; we didn't want to print our books in China. To the contrary, we decided to keep production completely local, choosing a printers that was based just outside our home city. It might have been a little more expensive, but it was lovely to be able to build a relationship with the printers. We were able to book an appointment to sit around a table with the proprietor and sample different paper and finishes. We were even taken on a tour of the printing area itself.

When our book was finally printed – we first received a dummy copy, to check for any problems before the big run – it was promptly delivered to us in the company van. We also received at least 100 free copies, so that was a nice surprise!

The Costs of Publishing

A good publishing company has professionality at its core. You need your books to be as professional as those of the biggest and most successful publishing houses. Reputation is everything.

The quality of paper, the finish of the cover, professional binding – these things really matter.

But producing a quality product comes at a cost.

As I've described, we chose to publish illustrated children's books for our first two releases. It was not cheap! The hard truth is that we will not make any money at all on our first print runs. The key to our success is definitely long-term sales.

In big publishing houses, many titles don't even earn their advance. They compensate for this with bestsellers that rake in huge profits. But as a small publisher, we need all our books to generate income. We don't have that mega-successful bestseller yet!

On the plus side, most big publishing houses will take your book out of print if it doesn't sell well enough. But having our own publishing company means that we have control over that – we can keep it in print forever if we choose to!

Injection of Capital

Because we were setting ourselves up as a traditional publisher and not using a print-on-demand service, we needed an injection of capital in order to publish our first books.

We needed money for:

  • Printing
  • Paying an advance to an illustrator to illustrate the book and cover
  • Typesetting (our illustrator also did this, at an extra cost)
  • Paying an author advance

My friend (and business partner) injected the initial capital. It's what is known as a director's loan and can be paid back over time.

A Brief Breakdown of the Costs of Publishing

As I've already mentioned, traditional print publishing is not cheap, particularly if your books are heavily illustrated.

To offer a bit of insight into the amount of money we had to spend on our first book, I compiled a list of the figures:

Book 1

  • Illustrator advance £4350 (approx $5000)
  • Printing costs £1800 (approx $2100)
  • Author advance £4000 (approx $4680)

You can see from this that the costs to produce our first book (1000 copies) come to around £10000 ($11700).

When you consider the average price of a children's book (in this case, £8.99), it is easy to see why we will not make any form of profit except on subsequent print runs. That is why our publishing company has to be in it for the long haul, to even break even.

An even harsher truth is that whether we make money on the second print run will depend on how we sell the book. For, if you choose to sell in bookstores, you have to account for anything between 30% and 55% discount. After all, it's how bookstores make their money!

(We could have saved on the cost per book by printing more copies, but this is a huge gamble for a first print run with a new company.)

Profits in Publishing

In publishing, as in many other fields, profit margins can be very tight.

If you publish a book and want to sell it in bookstores, you will have to offer a discount in excess of 30% to the store. The actual amount will depend on what terms the store is prepared to agree upon.

If you sell on Amazon, there will also be a charge. The best way is to set up a fulfillment account, whereby Amazon distributes for you. This incurs a cost per month, but it is still a lot more profitable than the bookstore if you sell enough books per month. Otherwise, you can set up a basic seller account with a fee per item sold.

If the advance earns out, you will have to pay author and/or illustrator royalties. This is likely upwards of 7.5%.

When you take into account the costs to produce the book and add to that the bookstore fees, royalties, etc, you can see that book publishing is definitely not a get-rich-quick scheme! In fact, it's probably not a get-rich scheme at all.

Couldn't We Just Sell on Amazon?

In my opinion, if you don't sell your printed book in bookstores, the downside is that you don't get that visibility. How will people even know you're there unless you're a prolific social media user with thousands of potential customers?

You also don't get that heady feeling that comes with walking into a bookstore and seeing your book on the shelves.

To us, seeing our book on the shelf next to some of the most highly regarded authors just seemed more professional.

In my opinion, it's important to try to sell your books both online and offline.

Registering Our Books

We had to register our books on Neilsen Book Data. It's important.

We also registered with Gardner's Books – they are the distributor for Waterstones. It doesn't mean your books will end up on the shelves of Waterstones, but they can be requested from the stores.

Publishing Other Authors

Initially, we set up the company to publish our own books. But we don't want to stop there.

By only publishing our own books, we still feel a little bit like self-publishers, albeit with a more professional shop window.

Our plan is to gradually expand and take on other authors when business allows.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

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