How can authors pay themselves first?
December 18, 2012
There is a financial principle that makes perfect sense to me: Pay yourself first.
That doesn’t mean you should spend your paycheck on electronic gadgets before you pay the light bill.
From a business perspective, I have always taken this to mean that a business owner must be willing to funnel his profits back into his company in order to make it grow in value.
I know, I said the word unknown to most authors: profits.
How about earnings? Is that any better?
Still nothing comes to mind?
Okay. Here’s the deal. For most Indie writers, books aren’t a paying gig. The spectrum goes like this: 1. those who lost a lot of money on a book or a series of books, 2. those who lost some money, 3. those that barely broke even (if you don’t count the value of time spent in writing the damn book/s), 4. those who made chump change and 5. those who made enough to pay the rent. There may be authors in categories above #5, but I don’t run in their circles.
The thing is that the continuum I just described for authors and books is really no different from how any small business works. And books are a business.
Any person who hopes to succeed with a new business start up has to have a business plan. That plan has to factor in the fact that it takes time to build something from scratch. A new business has to establish its clientele by producing a good product and/or providing great service. If a person wants to become the best mobile car detailer in town, he buys cleaning supplies, has some cards and flyers printed and gets with it. He works the crowd and hopes for the best.
And he works two or three jobs while he waits for his dream job to build to the point where it becomes his main job.
Still sounds like the book business, doesn’t it?
So how does an author pay himself first if his writing gig is operating in the red?
First, he can add elbow grease. It’s free, but you have to steal it from another project. In other words, a writer can always devote more time to writing. This doesn’t cost cash, just time and discipline.
Second, she can set a budget for the business of writing. I mean that an author should look at her financial reserves, if she has any, and decide how much money she is willing to invest in her writing business.
This is a critical point for most writers. The decision usually goes one of two ways. Either a person will take his life savings and pay an unscrupulous publisher a big chunk of it with nothing to show for it but a bunch of books in the garage. Or a person will decide that the book business is something he can do for free or on the cheap. This is the author who doesn’t see the need for any paid services, such as editing, obtaining cover art, book design and formatting, etc.
The really hard part of the book business, as I see it, is determining how to allocate your resources. Even if you understand that success in business involves time and money, where do you spend your time and where your money?
In other words, how can authors pay themselves first?
(Stephen Woodfin is an attorney and author of legal thrillers.)