How to Make a Business Plan for a Newspaper
Newspapers fit into the same business-plan templates as any other enterprise, including the 25 sections that the Small Business Administration suggests. Your primary challenge, however, is to prove to potential investors and possibly lenders that you can make a profit in what "The Orange County Register," in reporting about its own sale in 2012, termed “an industry whose obituary many have already written.” The most crucial sections are your five-year projections, the assumptions upon which those are based, your local market conditions, your newspaper’s physical assets and your experience. Your marketing strategy for making a newsprint product more palatable to readers and advertisers, while not unimportant, is a guess like everyone else’s, and you know it.
Target your audience. As longtime industry analyst John Morton wrote in 2012 in "American Journalism Review," banks are no longer eager to finance newspaper purchases even though most publications are managing about a 10 percent profit margin that would be enviable in most industries. Likely you will be addressing your business plan to private equity groups or to local investors with established roots in the community. They have different motives – the former entirely seeks profit, the latter sometimes has a desire to meddle that must be preempted before you accept their money.
Chart your five-year plan. According to the Pew Research Center’s “State of the News Media 2012” report, most newspapers in the 21st century have been averaging a yearly 10 percent decline in print advertising revenue and a 20 percent increase in online advertising. But online revenue still composes only about 14 percent of an average newspaper’s revenue. Your chart should show when these lines are expected to meet.
Provide any tangible reasons why your projections are above or below those industry norms. For example, local competition might affect whether you can raise the newspaper’s cover price or place online content behind a pay wall to generate additional revenue.
Evaluate your market. Stress your readers’ income, spending habits and level of engagement with the community. For example, strong turnout for local elections indicates high interest in local news. If your advertising base has a core of independent retailers, stress the economic health of these businesses and their loyalty to the newsprint product.
Note opportunities that might occur as competitors retreat. For example, in 2012 after "The Times-Picayune" of New Orleans announced plans to print only three times per week, a Baton Rouge newspaper, "The Advocate," said it would begin printing a New Orleans edition.
Detail with great diligence the newspaper’s physical assets. Private equity groups in particular want an exit strategy. In some recent newspaper transactions, such as in San Diego and Philadelphia, the value of the newspapers’ real estate was a significant factor in the sales. If you own or plan to buy printing presses that are more modern than those of nearby newspapers, you can arrange to print those newspapers at a profit. Contract printing, in fact, is a business line that could help you diversify your revenue stream.
Explain your experience realistically. Everyone’s track record has taken a beating since about 2005 because no one has discovered an easy answer to the industry’s struggles. Your potential investors likely will not demand that you be the one person who will reinvent the wheel. Rather, they will want some assurance that you will not recklessly lose money over the next five years while seeking a solution.