Funding is arguably the toughest hurdle to jump. Jane Goldman, 51, was an editor for The Industry Standard, a magazine covering the dotcom industry, when it folded in August 2001. Goldman then launched her own magazine, Chow, a fun, casual food publication. Chow was named the best new magazine of 2005 by Amazon.com and received a favorable response from advertisers. Nevertheless, due to insufficient funding, Goldman decided to cease publication of her magazine after the November/December 2005 issue and focus exclusively on her website for the time being.
Still looking to get his first issue to print is Brett Garfinkel, founder of JAQK , a magazine catering to the "no risk, no reward" mind-set of young, affluent men. Garfinkel, 34, who formed his business at the end of 2002, has developed a prototype and received verbal commitments from advertisers, but he's still hunting for the $7 million he calculates it will take to launch JAQK and bring it to profitability.
Garfinkel plans to launch nationally with an estimated paid circulation of 300,000. Such high targets require a lot of money, but Garfinkel believes it will come. When approaching investors, "you can't be shy," he says. "You can't be afraid to hear no."
So where do you look for funding? Well, in another chicken-and-egg scenario, getting funding is a lot easier with a prototype (we'll get to that in a moment), but of course, a prototype requires money. To get started, it's best if you tap your own piggy bank. Husni stresses the three F's: family, friends and fools. "Are you willing to take the gamble of borrowing money from your grandma?" asks Husni.
Robert Jeffrey Jr. and his wife, Minty, founded ColorsNW, a Northwest regional magazine covering multiculturalism, in April 2001. They were able to raise roughly $170,000 through a personal investment of $90,000, a $50,000 loan and $30,000 from friends and family. None of them turned out to be fools, as ColorsNW is profitable with sales of just under $1 million in 2005 and projected sales of $1.2 million in 2006.
Regional magazines can be launched for about $100,000, while national magazines require closer to $1 million to make it through a year of publishing. These figures, of course, depend on the publication frequency and circulation. Traditionally, the largest expenses are printing, paper and postage.
When deciding on the amount of funding you'll need, cash flow is key. Once a magazine hits newsstands, Husni warns it may take six months to a year before the publisher sees any cash returns. New magazine publishers often fail because they haven't anticipated how long it will take to put money in the bank.
Put Together a Prototype
Creating your prototype--a mock-up of how the actual magazine will look--helps express your brainchild to potential advertisers and investors. It doesn't have to be elaborate, but it should convey the design, structure and substance of your magazine.
A prototype, like a business plan, conveys a level of commitment. For many ad agencies, prototypes are essential. Garfinkel received verbal pledges from advertisers based on his prototype.
Cynthia Good, 46, and Genevieve Bos, 41, founded Pink , an Atlanta-based magazine for professional women, and give credit to their prototype for helping secure their national distribution deal with Kable News Co. "We showed them a prototype, gave them our resumes and talked to them about our vision," says Bos. Pink, which launched in June 2005, now boasts a national circulation of 110,000 and projects 2006 sales in the seven figures.
The bread and butter of most publications is advertising. In 2004, industry ad revenues totaled over $18 billion in the top 12 advertising categories, according to the Publishers Information Bureau. But getting advertising isn't always as easy as it should be.
Woodward tells a classic industry story of an infant Runner's World having to wait several years before Nike committed to buying ads in the magazine. The founders must have thought this would be a no-brainer for Nike, an endemic advertiser. Endemic advertisers are those whose products or services directly address your audience, like running shoes in a runner's magazine. Nonendemic advertisers seek a broad demographic, like a car company targeting affluent males.
To land big advertisers, you first have to find them. Most national advertisers use ad agencies and can be found in "Advertising Red Books," which are available in libraries. For the most part, you can contact regional advertisers directly. But Gold warns that when you make your phone calls, you should be ready for someone to say yes. Have all your materials--including your prototype and a media kit--ready for your sales pitch.