Making the Deal and Working It

Ralph and Northwest reached an agreement for publication of Searchlight, Nevada on October 13, 1993. This agreement had Ralph paying Northwest $4,375 to publish ten thousand copies. Northwest’s marketing director wrote Ralph confirming receipt of Ralph’s money and described it as a “joint-venture payment.” The company’s operations officer explained via letter that Ralph’s payment represented about a fourth of production and marketing costs for ten thousand copies.

The agreement required Northwest to give a hundred “free” copies to Ralph and two hundred to major bookstores and book reviewers, to sell 2,500 copies through its “test market program,” and to sell the remaining books in the retail marketplace.

Ralph was to get forty percent of the retail amount of each book sold through the test market program and a royalty of fifteen percent of the retail price of remaining books sold to bookstores and wholesalers.

Northwest was expected to pay royalties January 31^st and July 31^st each year along with interest for late payments. It would do a certain amount of sales promotion, advertising, and publicity. It was to have exclusive rights to the book.

Northwest representatives told Ralph that his book would probably earn him at least $20,000 in royalties.

Northwest published and released the 131-page Searchlight, Nevada in December 1995 with a retail price of $7.95. The book went on sale at Barnes & Noble Booksellers in Boynton Beach, Florida, and Falls Church, Virginia, and at Super Crown Books, store #106. People could also acquire it in Bailey’s Crossroads, Virginia, by special order through Borders Books and Music.

Prior to its release, Ralph worked in all stages of publication. In 1994, having reviewed its galley proofs, he asked about adding two chapters. By letter at the end of February 1995, he suggested cover designs and attached pictures, showing how he thought characters on the cover should look. He promised to provide any additional assistance he could, saying that he realized the cover design equaled the storyline in importance. It didn’t matter if the story was good if readers failed to buy it. Optimistic about the joint venture, he believed they’d have a “hot seller” and sell over 100,000 copies.

Ralph gave Northwest’s public relations department mailing lists and telephone numbers of bookstores, newspapers, magazines, and radio and motion picture companies. On his own, he mailed about sixty complimentary copies of the book along with individualized letters to bookstores, newspapers, magazines, and hotels. He worked with Northwest’s marketing expert to get it stocked with distributors and to set up book signings at major bookstores.

. . . plan well and follow your plan . . .

To start a business, you need a business plan. A resource for the essential elements of a business plan can be found online at the United States Small Business Administration. Also, you might want to check for business planning ideas from writers' sites online .


A great business plan and the IRC (Internal Revenue Code) have something in common. Like a great classic, every time you reread it you find something new. This is not because, like a great classic, your business plan is timeless, but because it’s dynamic. It’s a work in process, a series of actions, changes, or functions bringing about a result. Plan on it.

Just remember, Congress plans. It plans on some people and businesses paying taxes—but not everybody. It takes intricate legislative planning to allow certain contributing constituents of political parties to avoid taxation, but not others. Often when the public discovers hidden taxes, Congress’s solution is not necessarily to do away with the concealed taxes, but to hide them better. In similar fashion, you have to plan well and follow your plan to show that you are in business to make money, whether or not you have made money yet or not.

Start-up Expenses, Office-in-the-Home, and More

JOHN Y. DING faced the IRS in Tax Court relative to what they claimed were his "business expenses." He claimed a bunch of expenses relative to his employment and a prospective business he was trying to get off the ground. It results in an interesting discussion and analysis of various matters including start-up expenses versus business expenses, rules governing an office in the home, and documentation, including the application of the Cohen rule.