60-Second Business Plan
The pitch: Who knew you could make fruit bowls out of melted Motley Crue LPs? It's simple -- the steps are all spelled out in ReadyMade, the new lifestyle magazine for young hipsters with a hankering for home improvement.
ReadyMade, launched out of a converted Berkeley, Calif., warehouse 15 months ago, is definitely not your mother's shelter magazine. The quarterly aims to break ground in the publishing biz with a mix of humor and how-to articles that celebrate a funky, postMartha Stewart do-it-yourself ethos. "No one was publishing do-it-yourself content of the Martha variety for the younger, less stuffy set," says 33-year-old cofounder and editor-in-chief Shoshana Berger.
ReadyMade's first three issues dished out instructions for all sorts of kitschy crafts and odd projects: homemade wallets, Adirondack chairs, even taxidermy. Plus, there was a steady helping of offbeat lifestyle advice ("How to Become a Rock Star Without Leaving the House") and other cheeky gags.
With 41% of all people age 35 and under owning their own homes, handy hipsters are a potentially lucrative audience. And ReadyMade claims to be reaching them: Berger and publisher Grace Hawthorne, who, like her cofounder, is 33, boast a total circulation of 50,000, with 10,000 paid subscribers and a newsstand sell-through rate of 53%, which is nearly double the average for national magazines.
ReadyMade has already managed to snag such big-name advertisers as Ace Hardware, Levis, and JVC. But as a new outfit, it's either had to charge bargain-basement prices ($5,500 a page) or barter, exchanging ad space for marketing lists and the like.
FOUND OBJECTS: For magazine entrepreneurs Shoshana Berger and Grace Hawthorne, even a junkyard sink can be haute decor.
Berger and Hawthorne are applying ReadyMade's scrappy do-it-yourself approach to put-ting out their magazine. As the only full-time (and unpaid) employees, they've relied on San Francisco's large, recently unemployed labor pool for a gaggle of interns who work on everything from marketing to design. They also get help from readers, who use ReadyMade's Web site to submit ideas for projects.
The two cofounders have been equally re-sourceful with regard to circulation, going beyond the traditional newsstand/subscription method to get ReadyMade into retailers, like Urban Outfitters and Ace Hardware, that cater to their readership.
Still, their march toward a media empire -- brand extensions in the works include a television show, products, and a book -- will be tough in an industry in which 60% of upstarts fail.
Berger and Hawthorne, who are hunting for outside investors, remain almost irrationally optimistic. Indeed, they're talking up plans to double circulation to 100,000 by going bimonthly in 2003. "Starting a magazine at any time is a bit crazy -- you have to be tenacious and slightly nave," Berger says. "It's going to take a whole lot of luck and a whole lot of pluck."
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The Quick Once-Over
The Numbers: $635,000 in revenues, $325,000 net profit in 2002; $1 million in revenues, $600,000 net loss in 2003; $4.1 million in revenues, $400,000 net loss in 2004; $14.8 million in revenues, $2.6 million net profit in 2005
Capital Raised: $150,000 from friends and family; now seeking a $500,000 first round and then a $1.5-million round
First-Year Operating Costs: Approximately $120,000
The Weigh-in: Our Panel Rates the Plan
Crafty or Crazy?
Who: Samir Husni, University of Mississippi journalism professor and author of the annual Samir Husni's Guide to New Consumer Magazines
Rating: 5 (on a scale of 1 to 10, with 10 being the highest)
"It's a solid editorial package in search of a lucrative yet elusive audience. The magazine wants to be the guide to the 'closet' interior designer but aims at a dual audience of men and women. In doing so, they have a time bomb on their hands.
"Not one magazine in a special-interest category in the past 15 years has been able to reach a dual audience of men and women. It was tried recently with the interior-design magazine One, and failed. The only magazines capable of that are those with 1 million-plus readers, like Time and Newsweek. So they have to decide on a core audience (male or female) and modify their projections in line with a special-interest niche magazine."
Who: Kim Mac Leod, managing director of DeSilva & Phillips, a New York Citybased investment bank specializing in the media
"You should always define your magazine by what it is and never by what it's not. A do-it-yourself magazine for younger home and apartment dwellers seems like a concept that would have an audience. However, the magazine doesn't deliver. Take some of their projects, for example. The inside of a cereal box as a gift box? And a seven-page article on the American obsession with lawns? Where's the do-it-yourself in that?
"This is a very tough launch environment for any magazine, particularly financially independent ones. The ones that succeed are run by people who understand just how tough this environment is and how to leverage that to their gain."
Who: Richard B. Stolley, founding editor of People magazine and senior editorial adviser for Time Inc. in New York City
"The staff needs to be bigger, circulation problems need to be addressed by experts, and their pictures need to be reimagined and improved -- in short, they need money. They also need to get the magazine out there more often than quarterly. The major problem is that the founders plan to start working on brand extensions before they've gotten the magazine right. I'd say, 'Get the magazine right -- nothing else matters at this point.' Will ReadyMade survive? Most magazines don't. They die of financial malnutrition. And yet, take heart. A good idea, backed by proper resources, can work."
Who: Gregory Miller, managing director and head of global publishing at investment bank Credit Suisse First Boston in New York City
"The two founders have identified an unserved niche in a dynamic segment of the magazine industry. I also admire their determination to launch an untested concept for an untested demographic in this punishing ad environment.
"But their business plan is short on detail -- it contains fewer numbers than any business plan I've ever analyzed -- which is bound to raise red flags in a funding market where no blue-chip investor will take any assumptions on faith. And the numbers they do have don't seem to add up. For example, I calculated the number of ad pages implied by the projected advertising revenues and number of issues for a given year in the plan. The implied number -- more than 100 full pages of ads on average per issue within a couple years' time -- would be the envy of much larger and well-established publications.
"Until the founders strike a balance between their passion for an unproven concept and basically sound business fundamentals, they should not expect to attract the interest of serious long-term investors."
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