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And when I die…

Posted in Business, and Just for Writers

Image of steps for business succession planningAnd when I die,
and when I'm dead, dead and gone,
There'll be one child born in this
world to carry on,
There'll be one child born
to carry on.

–Laura Nyro

Let's talk about estate planning for independent-author/publishers. Not a fun topic, I know, but there's no point shoving our heads into the sand in the enthusiasm of the young indie-author revolution and pretending that we're going to live forever.

Business succession planning

All businesses face succession issues — who will take over for key managers and employees. In larger firms, this is just a normal plan, part of the annual review of the business's readiness to handle change.

Family businesses have additional challenges — what will be the role of the family members in the business once the founder dies or retires? Will they run the business, or will they just own it and let others run it? Will they sell it, and how?

A business is an engine for making money. Without the right people in place to make it work, or someone to sell it to, it falls apart.

We indie-authors/publishers are typically one-man businesses. We don't think in terms of key employees, since we haven't got any, but we are ourselves the key employee, and we need to make plans for what will happen when we are no longer able to run our business. And if we've managed to grow large enough to have actual employees, we have the same issues as any other small business. We need a business succession plan.

Survey of family business succession plansWhat are the choices?

Let's look at the typical situation for family businesses. Most of us can't expect our heirs to run the business. As one-man operations, we haven't trained them for it, and they are probably not interested or qualified to do it. So that knocks out steps (1) and (2) above.

What does that leave? I suspect that almost all of us fall into step (4), the “Don't know” step, instead of trying to find ways to embrace step (3).

And let's not forget that many of us are not young — many writers are already retired, and this is a more urgent need than we like to contemplate.

What if we do nothing?

Let's say we actually manage to write down, in an estate document, all the business accounts and passwords for all the elements of our indie-author/publisher business.

Our poor heir has a sheet of paper, and no idea what to do. Proceeds for our sales will still go into our bank account, for a while, but who will pay royalties to any other author we may be publishing? Who will monitor advertising daily spends?

Because we don't have employees like a larger business, there are not enough automated systems in place for the business to just run on autopilot, and there's no one to turn to.

If we are very fortunate, there's an understudy within the family that's been introduced into some or all of the business processes, but I doubt that very many of us have that option.

So, the business at best will simply wind down, and at worst there will be continuing spending to be tracked or shut down, and contractual obligations to other authors.

Speaking of contracts, if we contract with another author to be their publisher, we must have some sort of succession planning in place, or we will fail in or contractual obligations.

What can we do?

We can make plans and arrangements. Most small businesses in this situation (perhaps you built a small hardware store) would sell the business if there's no one available to run it as is. We should do the same.

As a micro-publisher, I could take on the catalogue of business of another micro-publisher — their own titles, and their author contracts. What I can't do is buy it outright — most of us don't have capital for that sort of thing, even if we can agree on how to value it.

But there's no reason I couldn't pay the seller or the seller's heirs a percentage of the earnings of that catalogue for some defined period of time. That fits with the cashflow of the natural indie-author/publisher business and aligns my interests with those of the seller's heirs.

On my side, I would make a similar arrangement with another micro-publisher for my own succession planning.

Rolling up micro-publisher businesses

As the indie-author/publisher business explosion matures, I believe this sort of business roll-up will become the natural way to address business succession planning. Authors and micro-publishers will seek out potential partners and make tentative or firm plans with them, recorded and triggered in their estate plans or executed when the seller retires from the business. Acquiring micro-publishers will evolve practices for managing and paying royalties on such acquisitions, just as they evolve practices for managing and paying royalties for their published authors.

In the absence of this, heirs would need to seek out such buyers on their own, or watch the business decay in their hands.

I'd love to speak with other micro-publishers about their plans in this area as we all evolve best practices for that contingency that none of us can dodge forever.

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3 Comments

  1. If I don’t get the Pride’s Children trilogy finished, there will be no business to sell.

    But one-book authors (a single book it would have been except Createspace didn’t have big enough bindings!) can have a good property in some cases (think Gone with the Wind or To Kill a Mockingbird) – and indie makes that property worth more and possibly harder to manage.

    But obscurity and/or public domain will happen if you do nothing.

    You are very smart to make plans. I’ll do them soon, too.

    November 27, 2018
    |Reply
  2. Great and I important piece, Karen. It’s been on my mind that I should make a plan. Hope you’ll let Debbie know about this! K

    December 3, 2018
    |Reply
    • Thanks, Karen.

      I sent it to Debbie, but I’m in the 1-month wait bin at the moment. I imagine she’ll get to in in a couple of weeks.

      UPDATE — it’s scheduled for early-mid January. Too depressing for the pre-Xmas audience… 🙂

      December 3, 2018
      |Reply

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