Helping Mid-sized Firms Prosper

by Steve O’Keefe
(July, 2002)

"Publishing is a passion, but it is also a business," John Huenefeld told me the night before a session in his honor at the Publishers Association of the West Convention. I interviewed him in the lobby of the beautiful Snowbird Resort near Salt Lake City, Utah. It was the perfect environment for a conversation about books: fat leather chairs, incandescent light, and a chill in the air outside inviting people to curl up with a favorite book. How many of those books would not be here without John Huenefeld looking over some publisher’s shoulder, gently scolding with his easy laugh and infectious good cheer?

Once publishers survive the birth pains of building a catalog and arranging for a distribution channel–when they’re ready to grow up–that’s when they call John Huenefeld. "There are 2,950 mid-sized book publishers in the U.S. and Canada," Huenefeld reported with characteristic precision. "That’s my market." He has counseled nearly 400 of these firms, stressing that it’s necessary to make a profit if you hope to survive (Amazon.com not withstanding). And it’s clear from talking with him that the goal of many mid-sized publishers is not to make a profit but to generate enough cash flow to publish one more season.

Toward Better Bottom Lines

In the recently completed "Huenefeld Survey of Book Publishers" (conducted this year by the Publishers Association of the West after Huenefeld bequeathed it to them), mid-sized publishers collectively projected a 3.6% profit for the year 2001. That’s how much they hoped to make! If nothing else convinces you that publishing doesn’t observe standard business practices, the fact that publisher pro-formas are pessimistic should do the trick.

Actually this segment of the industry made a respectable 8.9% profit in 2000. In the dot.com era of superheated speculation, a profit margin like that would have been cause to project world domination by 2005. For mid-sized publishers, it simply meant another dozen manuscripts would make it to press.

At our interview, Huenefeld slipped me the sixth and "final" edition of his book, The Huenefeld Guide to Book Publishing, his paean to publishing management. He is beginning retirement, having penned his last dispatch for The Huenefeld Report, his fortnightly newsletter begun in 1973. "I wrote 734 out of 736 issues myself," he confided. Gone, too, are the professional development seminars Huenefeld used to spread a sermon of sound business practices to publishers who typically focused their attentions well north of the bottom line.

If you’re just starting a publishing company, you can’t read The Huenefeld Guide; it’s too depressing. It would be the equivalent of having a crush on someone and reading Dr. Phil’s Relationship Rescue for courting advice. I told Huenefeld that I first picked up The Guide in 1984 when I was the third spoke of a three-person publishing house.

"What color was the cover?" Huenefeld asked.

"Teal, I believe."

"Fourth Edition," he said.

As I recall, I got to the part where it says you need a minimum of $75,000 capital to start a book publishing company and I put the Guide down. Maybe you need that much to survive, or to start a successful publishing company, but all that’s really required to set up shop is a printer who would give you terms. The Huenefeld Guide is most useful once you have a publishing company and have run out of home equity. That’s when you call in The Doctor.

Prescriptions for an Influential Industry

Huenefeld’s first job, after he got out of the service, was as a newspaper reporter for a few years. "For the next ten years," he recalls, "I worked as an editor at a company that produced financial newsletters. I left them to take my first job with a book publisher–Beacon Press. I stayed with them for three years. That was during the Vietnam War. They published the original, unedited version of The Pentagon Papers."

In 1968, he started The Huenefeld Company, a management consulting firm for book publishers. I asked him if he had any special training for this work–a degree in accounting or maybe an MBA? "My master’s degree is in history," he laughed. "I never took a course in business or math. I guess I just picked it up along the way. Ten years editing financial newsletters must have taught me a thing or two."

When pressed for "war stories" about publishers he’s worked for, Huenefeld talked about the forest and not the trees. "Across the interstate from my office in Bedford, Massachusetts, is the world headquarters of the Raytheon Corporation. They make missiles and such things. Sometimes I look out the window and realize that the gross revenue of this one company exceeds the entire annual revenues of all the U.S. book publishers combined.

"Book publishing is a relatively small industry, and a lot less concentrated than most people think. There are 50 major book publishers with annual revenues over $50 million, each. There are another 5,000 mid-size and small publishers with annual revenues between $10,000 and $50 million. Finally, there are anywhere from 25,000 to 55,000 self-publishers, depending on whose numbers you use. All these companies together don’t add up to one Raytheon.

"But look at the impact these publishers have had! They’ve changed the way we think, the way we dress, the way we act. They’ve led the peace movement, civil rights, equal rights for women, religious freedom, the environmental movement. They’ve toppled world leaders, stopped wars, and shared the knowledge that fueled the new economy. They have changed the world. That’s something."

You could see the pride in Huenefeld’s eyes… the awe he has for the profession he is associated with and its efficiency in generating more social changes per dollar invested than any other form of entertainment. That’s the way his mind works.

Content Rules the Roost

Given his level of concern with financial performance, you’d think Huenefeld would be a big fan of the trend toward marketing-driven publishing. But asked who occupies the most important slot in the organizational chart, he was unambiguous. "Acquisitions editors. They are the stars of our profession. They control the relationship with the creators of content."

What’s the project he felt proudest of? "I’m a confidential consultant," Huenefeld replied–a promise he takes seriously. When pressed, he shared one anecdote from his roster of hundreds of clients. "It was such a long time ago," he said, "I don’t think they’ll mind. There was this printer by the name of John Ballantine, and he was asked by an author to publish a book about bottle collecting. John published it, and he enjoyed the experience so much he decided to publish a book of his own, called something like 50 Great Hikes in New Hampshire. It sold very well locally and spread throughout New England.

"That led to 50 Great Hikes in Vermont, 50 Great Hikes in Connecticut, and so on. All these fresh-air types started sending in suggestions, which became manuscripts. The New Hampshire Publishing Company kept growing, and John would send his staff over to me, one by one, to be trained.

"When he ran out of places in New England, he consulted with me about expanding the hiking line nationally. I advised him to stick to the regional market. He had account relationships with vendors throughout the region. It would be easier and more profitable for him to come up with new books to sell into this market than to endure the risks of building bookseller relationships farther afield.

"So out he comes with 50 Great Canoe Trips, 50 Great Fishing Holes, 50 Great Ski Trails, and so on. He was very successful and eventually sold his publishing operation to a big company for a lot of money."

The Persistent Passion for Publishing

End of story? Not so fast. "Once he sold the company, he retired to publish books about the history of little towns in New England. That’s what he wanted to do all along. He finally had enough money and free time where he felt he could do it." Oh, the lure of publishing!

As John Huenefeld winds down his own career, I can’t help but wonder how permanent his retirement will be. The final chapter of the final edition of The Huenefeld Guide to Book Publishing holds some key clues, and perhaps so does his answer to the last question he was asked at the PubWest Conference: "If you were thirty years old today, knowing all you do about the business, would you start a publishing company?"

"Absolutely," Huenefeld replied. "I’m very keen on this POD technology. Even though the profit margin is smaller, it moderates the risk of overstock returns. Two-thirds of the cost of inventory is manufacturing. With that capital freed up, I could publish a lot more books."

Steve O’Keefe is the Executive Director of Patron Saint Productions–a publishing consultancy specializing in online marketing strategies, campaigns, and training–and author of the "Complete Guide to Internet Publicity" (John Wiley & Sons, Inc.). If you have suggestions for future Publishing Portraits, please e-mail them to info@PatronSaintPR.com.

"The Huenefeld Guide to Book Publishing," Revised 6th Edition, is available from the publisher, Mills & Sanderson, P.O. Box 665, Bedford, MA, 01730-0665 (ISBN 0-938179-40-3, 405 pages, paperback, $45 postpaid).