5 Reasons Why Publishers Fail (and How to Avoid Them)

When a self-publishing author has published several books successfully, they may decide to go into business helping others publish their books. That's a wonderful goal, but it's not as easy as it sounds. Acting as a professional publisher for multiple authors introduces obligations and complications that can overwhelm the unwary entrepreneur.

The publisher may struggle to stay profitable, so they take on more business. Work piles up. Quality slips. Each month becomes an increasingly precarious juggling act.

And then, something happens to upset that balance: an illness, legal trouble, an unexpected expense. Royalties are late as the publisher scrambles to deal with accounting, or worse, because they've tapped into the authors' payments to cover bills. Questions start trickling into the publisher's inbox as the delays pile up, at first gentle, then concerned, then angry. The publisher responds with a litany of excuses, then falls silent.

Authors go into a panic as they realize that their royalties and their writing are now in limbo. Finally, the publisher announces their closure, promising to reimburse authors when “things are back to normal”. This may never happen.

It's a syndrome I call the small publisher death spiral, and I've seen it more times than I care to count. So why do so many good intentions end in disaster?

The Small Publisher Death Spiral

The collapse of a publishing house may be blamed on a critical incident where the company's decline became apparent, but the real causes can always be traced further back. Many of these issues are hidden from the public view, so it can be difficult to see the coming train wreck until you hear the screams.

But when you do see hints of these problems, take notice. They may be a warning of impending disaster.

1. Not recognizing the limits of ability or knowledge.

Experience is a crucial factor in the success of a publisher. Having self-published their own work, a novice publisher may feel they are now seasoned and capable of handling anything the industry can throw at them. But the Dunning-Kruger Effect kicks in with a vengeance here. I've seen authors who have published two or three books assume themselves to be experts, only to discover that what they don't know could fill far more books than they've published.

This can spell disaster when one of the little surprises they encounter is, for example, an obscure Amazon rule they've violated that leads to the termination of their account.

When vetting a publisher, look into their credentials and find out how many books they've published. If you're considering launching a publishing business, ensure that you've been doing this for enough years to recognize the various pitfalls of publishing. And if you're short on experience, look for a mentor in an established publishing house who can help you find your footing while you take on some of the work load.

2. Using authors as guinea pigs.

Authors entrust a publisher with their books because they have been implicitly (or explicitly) promised competence, skill, and care, for which they give up a cut of their sales.

Novice publishers may leap into the fray with the expectation that they know enough to get by, and can learn the rest as they go. That adventurous attitude is an essential trait when publishing one's own books, but it's a liability when putting someone else's livelihood on the line. Authors are entrusting their work to the publisher because they have confidence in the publisher's expertise, not because they are volunteering to be on-the-job training.

That expertise only comes with firsthand experience, so be wary of publishers with minimal time in the field who position themselves as experts. Publishers should be up front with their authors; untested programs and services should be clearly identified as such, and the risks spelled out.

3. Cutting corners by doing everything in-house.

It's rare to find someone who is skilled in all aspects of publishing. Time and again, we see authors and small publishers with limited skills turning out covers that are “good enough”. (Spoiler alert: they're usually not.)

This is death by DIY, and it's one of the most difficult realities an indie author must face. We fall in love with our creations, and that blinds us to their faults. That's why it's vitally important to have an unbiased, critical eye evaluate that work, free of the emotional attachment and ego that bind an artist to their creation.

That's no less difficult for a publisher. Publishing is a business, and it requires business decisions — one of which may be “throw that cover on the fire immediately, it's hideous”. A publisher must have the objectivity to coldly assess the product they've created, and to acknowledge when their skills are not currently up to a task, or they must have oversight from someone who can make those tough calls.

As an author assessing a publisher, always look at the work they've published. Do the covers look amateurish? When placed next to titles from well-established publishers, are they easily identified as the lesser of the two? If so, this publisher is setting their authors up for failure.

4. Poor/nonexistent business plan.

As we've said, publishing is a business, and it needs to be approached with that mindset. That means a business plan, profit and loss projections, a budget, an estimate of staffing requirements, and careful research into the details of operating that business.

In the U.S., 20% of small business startups fail in their first year, and 80% have failed by their fifth year. The odds are stacked against any new venture, but identifying challenges and developing a plan to meet them increases a publisher's chance of success — and that of their authors.

As a publisher, a business plan is an essential tool for discovering challenges before they become problems. It will help you identify weaknesses in your business model and prevent them from becoming fatal flaws.

5. No contingency plans.

Often, publishers don't consider what will happen if their business goes under: failure is not an option! But while it's not an option we want to contemplate, it's a very real possibility. The majority of small businesses fail, and if things go south, the publisher needs a way to scale back operations while they regroup, or to wrap up the business cleanly so that authors are impacted as little as possible.

Too many publishers fail to plan for this, and when something disrupts the business — a natural disaster, a serious illness, income that falls far short of projections — they begin to flounder. Without an exit strategy, the publisher gets deeper and deeper in trouble. Lines may be crossed, and they can no longer extricate themselves.

Some publishers dip into author royalties to cover immediate expenses, a grossly unethical and potentially criminal practice that ultimately does little to stay the inevitable crash. We've seen those publishers in court, and we've seen some in the news, wearing orange jumpsuits.

Some failing publishers take on even more authors, gambling that the new business will sustain them until things improve. That's when the death spiral begins in earnest: more work and more obligations leads to overwhelm and neglected tasks, until the publisher implodes spectacularly under the pressure.

Part of running a business is planning for contingencies, including the failure of the business. For a publisher, that means ensuring that authors are paid and that their rights are returned swiftly if the business must close.

As an author vetting a publisher, don't be shy about asking for their contingency plans. It's expected that the publisher will reassure you that it's nothing to worry about, but if they're evasive or defensive when pressed, they may not have a plan at all. If that's the case, find a publisher better equipped to deal with the realities of business. You're entrusting your hard work to their care, and you have a right to know whether it's being protected.

Over to you

Have you witnessed the dissolution of a publisher? Was it a smooth transition, or a disaster? Let us know in the comments below!