That's the way to do it

Market changes have put small publishers under intense financial pressure. But practical guides publisher How To Books has re-invented itself and survived, Liz Bury writes</p><p>
When Giles Lewis bought How To Books (HTB), the Oxford-based independent publisher of practical guides, in 1996, he little knew what a turbulent period lay ahead for such companies.</p><p>
In 2000, HTB became one of hundreds of small UK publishers to catch a chill caused by stock clearouts at their largest customers, including Waterstone's, Blackwell's and Bertrams. This year, Waterstone's latest backlist "range repair" initiative (The Bookseller, 5th July) will put small independents under continued pressure. </p><p>
To survive, HTB has evolved from a series publisher producing a range of titles in uniform jackets to a publisher of stand-alone, author-led books with distinct copyrights, unique jackets and varying formats and prices. Its list includes such perennial strong-sellers as Be the Best Best Man&amp;Make a Stunning Speech!, guides to business and self-employment, management, career development, and home and reference titles.</p><p>
At the time of Mr Lewis' acquisition of HTB, its attraction was in its past performance as a strong cash-generating business. "You wound the handle at one end and cash fell out of the other," he says. In the three years from 1996 to 1999, it grew by 100% a year to reach &#163;1m in sales.</p><p>
But January 2000 brought the first in a wave of returns that forced change in the company's finances as well as its approach to publishing. "Every major customer was reducing their inventory and independent publishers felt that more than most. The Independent Publishers Guild was rocked," Mr Lewis says.</p><p>
Previously head of publishing at Oxford University Press, he left aged 40 to work on a turnround at IRS, a small, specialist publisher of financial newsletters. Later, he worked with Thomson to integrate Nelson ELT with Collins ELT before the whole lot was sold to Longman. In 1996 he bought HTB from its founder, Roger Ferneyhough.</p><p>
His experience in company turnaround proved invaluable during the returns crisis of 2000, when he was faced with unexpectedly high costs, especially in depreciation and stock write-off. In 2001, when returns continued at high levels, HTB refinanced by taking a loan--which was repaid this year.</p><p>
The publisher began to refocus the list, reviewing each title and transforming its content and format from a series product into a stand-alone book. Its authors have been built up gradually as specialists in their fields. The loan was used in part to pay creditors, and in part to raise spending on new and reissued titles, which grew by 15% as it attempted to become more competitive.</p><p>
The first of the new non-series jackets appeared 18 months after the first signs of de-stocking. Now about 60 titles have been reissued and 75 discontinued. "We took the hard decision to bury those titles that we didn't think would stand on their own two feet."</p><p>
HTB has 250 titles in its current catalogue and will reduce its output from 75 new titles this year to 60 in 2003. "We have designed a more focused list, evolving from a series publisher to a trade publisher with stand-alone copyrights," Mr Lewis explains.</p><p>
While profit margin remains lower than it was before the de-stocking began, HTB is optimistic. Sales gains do not raise margin, because the fixed costs in sales and distribution--by John Wilson Booksales and Plymbridge Distributors respectively--rise in direct proportion to turnover. But the company has ambitious aims to grow to twice its current size of &#163;1m sales within the next five years.</p>