Writers, Are You Making A Profit?
April 11, 2008 by Anne Wayman
Filed under Jobs
SlackerManager has a guest post called: Productivity Tip: Know When You’re In the Red The author, Sandy Renshaw, has devised a way to make sure she knows when a project is pro bono and when it’s paid.
I suggest you go further. First of all, one definition of profit is: The return received on a business undertaking after all operating expenses have been met. Simple enough IF you really know what your expenses are. I went around for years in a fog about both my income and expenses, and I know for a fact I’m not the only writer who has done so.
I actually track my income and expenses six days a week. Yeah, that may sound excessive, but it works for me.
- First of all, I bit the bullet and got Quicken. I know I don’t add and subtract reliably, so I’m delighted to let the computer do it for me. I suspect other programs would have worked as well for me.
- I didn’t get a book or take a class – neither is my style, but there are lots of books and classes out there if you want.
- I set up some simple categories – well, the first time I set up way too many. Categories do need to be simple enough for you to use.
- I turned entering my numbers – logging in income and expense – into part of my spiritual practice. If you don’t have a spiritual practice, perhaps you can find another name or reason to do this daily or almost daily.
Some mornings I have nothing to enter, but even when I do, it rarely takes me more than 10 minutes.
I even balance my checkbooks once a week most weeks – not out of virtue, but because if there is an error, I can usually find it – when I had a month or more of items to go through I almost could never find the error, and I hated every minute of it. But now it takes me at most 15 minutes to reconcile two checkbooks – and that means I know where I am financially. I know when I’m making a profit and when I’m not.
What are you doing to bring clarity to your financial situation?
Write well and often,
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I didn’t buy software, but I did hire a bookkeeper and an accountant. I’m probably the worst at keeping records, but the bookkeeper doesn’t go too nuts when I hand her the monthly cigar box full of receipts, some of which actually have some relation to business. I also have a lawyer to look over any contracts, etc. They really don’t cost all that much and I feel pretty safe within the system. Even got my income tax done on time this year.
Most of us have trouble because we don’t charge enough for our work or we work in areas that don’t have much money to offer. If I’m writing magazine articles, for instance, my goal is to have 100 queries in the mail. I’ve never gotten that many going, though, I always seem to get swamped long before I get there. Or if I’m doing direct mail copywriting for publishers, I market to magazine consultants. They have the clients and they are often looking for new copywriting and design talents.
Writing is a business and like any business, you need a plan. I just posted a five-part series on business plans for freelance writers on my own website (www.writingformoney.com). Feel free to stop by and check it out.
A big part of success in freelancing is treating it like a real business. For me, that includes Quickbooks Pro, not just for keeping my business account in order and tracking expenses but for uniform and easy invoicing and especially for the timesheets. Being able to track your hours by job is obviously a blessing (sometimes a curse) in showing just how productive you are during any given week; even better, by logging hours per job, you have a fast reference for future estimating of similar projects.
(For my daily advertising commentary, please visit craigmcnamara.blogspot.com)
Although my writing business is a part-time business, due to necessity, I do keep records.
I have created my own invoices. I tried out Quickbooks/Quicken… found I was making it more difficult then I needed (before I purchased the entire package), so I went back to my Excel program. I can create a file and a program to keep track of all of my invoices, billings, income, and payments received via Excel (all I have to do is let my husband show me how to do it as he writes programs in Excel and ASKEY — I don’t think I spelled that one right :{ —
Otherwise I just have my own “little” system that works for me, thus far.
As I accept most of my payments via PayPal… I get their yearend tally of account activity, copy it into an Excel sheet and copy and paste only my money received for the Writing Business onto a sheet. I allow Excel to total it all up.
I keep my expense receipts and head off to the Taxman very early in the tax season. We began going to a taxman when my investments made my (then new) hubby crazy. But by the end of Feb. each year we are looking at our tax return funds and putting the money to good use.
John and Kathleen, records are the key, however you get them done… right now my business is simple enough not to require a bookkeeper and I like knowing exactly where I am on money wise on a daily basis. But whatever works…