You're nowhere without software

When I first started Buzzworm, I was amazed at how quickly the magazine grew in complexity. In less than a year we were struggling with the task of projecting response rates for direct-mail efforts, gift orders, insert cards and renewal programs. There was an increasingly urgent need to accurately forecast the relationships between advertising revenue, subscription revenue and newsstand revenue, and a desperate need for realistic expense budgets throughout the company. It was becoming clear that, while we might be ahead of the curve in terms of our concept for a magazine, we were falling behind when it came to managing the company. It was also clear that conventional pencil-to-paper accounting methods were far too slow to play out all our "what-if" scenarios.

Most important, we were preparing a business plan in order to raise capital for the magazine's growth, and we really had no accurate way of knowing just how much money we were going to need. What investor in his or her right mind would write a check before examining a well-supported set of financial projections? We knew it was time to computerize the process.

At first we took a stab at writing our own publication management software--which resulted in a program that worked okay, but that we soon outgrew and were unable to upgrade quickly or easily.

Finally, out of desperation, we bit the proverbial bullet and parted with 5,450 precious dollars for a copy of the Lighthouse Publishing Model, Version 610 VFQ, 3.1. We upgraded one of our computers and hired a consultant for several days of instruction. Total cost: a little under $10,000. A lot of money for us at the time, but some of the best we have ever spent.

The Lighthouse Publishing Model (800-999-8705) is the best known. Greg Jones, its co-author, estimates that more than 600 magazines use his product.

The program is specifically designed for launching a publication. There are about a dozen versions that range in price from approximately $3,000 to $6,500, depending on the features included. Lighthouse runs under DOS (driven by PC Excel or Lotus 123 with or without Windows) or Mac (driven by Mac Excel), and to work most efficiently requires a 386 processor with four megabytes of RAM, a 10-megabyte hard drive and a laser printer.

Training is available from either Lighthouse itself or from an independent consultant familiar with the system. This training will generally cost an additional $2,400 before you feel comfortable on your own. Lighthouse Publishing Services also offers a "one-shot" service for publishers wishing to use a model once in order to prepare a business plan. This service runs between $4,000 and $6,000, but will result in a set of forecasts and financials of the quality needed to raise capital.

Media Services Group (203-329-1170) is the new kid on the block. Their state-of-the-art program, MPM Express, has been on the market just under a year. Although new as a PC product, the software is a rewrite of the excellent Kobak Mainframe Program and has been updated by one of the original authors, David Weber. It has a single version that offers unlimited sources, frequency and forecasting terms, and is used by over 75 national magazines. MPM Express is DOS compatible and runs under Windows. Its requirements: a 386SX processor, four megabytes of RAM, a math co-processor, a 10-megabyte hard drive and a VGA monitor. MPM Express is set up on a lease program of $450 per month for a required 30-month period.

Initial training and support runs $2,000 to $3,000 for the first year. Media Services Group also offers a one-shot service that should be very attractive to first-time publishers. A fee of $2,500 buys you several hours of pre-modeling consultation, two days of modeling and all the final report output you need to prepare a business plan.

Ladd Associates, Inc. (415-921-1001) also offers a PC version of a mainframe program that they call PC/PUBLISH!. According to Tom Edwards, Ladd Associates' director of marketing, the program is in use at more than 50 titles. PC/PUBLISH! comes in a base model and a master model that lease for $3,500 and $5,250 a year, respectively. The main difference between the two is the frequency and chart of accounts detail, but most start-up magazines will find the base model plenty powerful.

Ladd Associates does not sell its model, but does offer a three-month trial lease and will accept lease payments on a quarterly basis. PC/PUBLISH! is Windows compatible. Requirements: A 386 processor (the base model will run on a 286), two megabytes of RAM and a 10-megabyte hard drive. As with the other programs, training is suggested, which will run you about $2,250. One-shot services for the start-up publisher range from $5,000 to $7,500 to prepare a business plan.

There are a few other publishing models available, but these three are the only full financial models on the market. Still, fewer than 10 percent of the magazines published in the United States utilize a computer model. But that 10 percent represents most of the titles we are all familiar with--which says a lot! A good computer model is to a magazine business plan as an engine is to an automobile. There are different kinds, but if you're going to get anywhere, you need to choose one of them.

Joseph E. Daniel is the founder and publisher of Buzzworm, a highly acclaimed, five-year-old independent environmental magazine with a circulation of nearly 100,000.

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