I’d like to preface this article by saying, this is not a doomsday type article, and nor are we in that type of situation. But, we are in a volatile economy and small writing businesses can be affected. So, it is important to address how to manage a difficult economy as a writer.
This has been a difficult week for the economy with now three straights days of the Dow dropping over 2,000 points and the signs that many of us saw coming to light. After all, I learned in Econ 101 that an inflated deficit may increase numbers, but only temporarily. As a global economy, all suffer when the second largest economy in the world is stumbling. So, with hiring dropping, manufacturing and mining industries suffering again for about the last year we need to think about, what next? This isn’t a doomsday scenario. We as a country and world have faced these challenges before, but as a small writing business – especially a new one – you may wonder, how does this impact me at all. Well, this is how it impacts you from someone who’s been through this a couple times.
For small businesses, the last three years have been difficult. A trade war with China meant that businesses all over country weren’t seeing the sales they needed, plus two bouts of tariff hikes led to a trickle down affect that caused a lot of writers to lose their businesses. The deficit has seen massive increases which initially create jobs, but within a few years can expect to see job loss, and market imbalance if not decreased. That is where we are now. I still have two clients from the first trade war who have not recovered and lost their homes to foreclosure because they couldn’t afford to ship their product to the U.S. The reason this affects writing is that struggling companies need to eliminate non-essential workers, and writing is something they attempt to do in house. Even valuable writers are vulnerable to the trickle down effect of a difficult economy. The good thing is that when that when your clients are doing well again, they will often hire you back, and in many cases at a higher rate than before.
So, when this happens and you are drowning, or about to, in a negative trickle down economy, what do you do? How do you prepare?
I’ve told my kids for a long time now that you survive difficult times and you excel in good times. These times fluctuate often and as a business it is important to be prepared for both. Here are 4 ways to keep your business strong in a challenging economy.
Pay yourself a salary
To be fair, for me, this has been one of the most difficult challenges in my business. A writer often receives multiple payments each week from a variety of clients. That means with a steady flow of money you may not always track what you are spending and can often spend that money. So, whether you make $1,000 one week, or $6,000 the next it can spend just as quickly. This may work for the now, but in the future it is very difficult to manage your income when you lose or suspend projects due to a challenging economy. Even in the day-to-day of a good economy this can hit you hard if you go on vacation, get injured, or just can’t work for a period of time.
What I do is give myself a salary each week. I pay myself on Fridays, and by using Square’s payroll system they take out taxes and other benefits I offer to employees. Even if you have no employees this can work well. I pay myself an hourly rate, set my hours each week, and then each Friday receive a direct deposit. I base my salary on my average hourly rate. So, if my business’s average hourly rate this year is $80/hour, my pay would be $40/hour. This way half of my businesses money is going back into the business to cover overhead costs, payroll, etc.
Like I said, this can be difficult to build yourself to, but in the long run you will have consistent pay, and can build up a little nest of cash in case you need to pay yourself when business is slow.
Balance your clients
You’ve heard it before that having a niche is the key to success in writing. There is truth to that, but if you focus on one industry you can also fail. For example, if you were a real estate writer during the housing crisis you went bottoms up with the industry. I do write a lot for real estate and that is why I am emphatic that you must diversify your clients as much as you do your financial portfolio.
The way I try to manage this is to find clients that generally do well, but when one industry is failing the other may be improving. I learned this during the previous turn with tariffs. During the first tariffs all of my clients were small startup businesses focused on sustainable products such as bamboo, and agricultural products to improve the farming industry. You can guess what happened. Well, after losing those clients I was contacted by several crypto currency businesses who were flourishing. I don’t know that anyone has figured out how the crypto currency market moves up and down, but they essentially saved me even though I had a steep learning curve.
A good way to look at this is when our economy is really good, the precious metals market stabilizes or even drops as people become confident in buying stocks. When stocks fall, gold, silver, and platinum go up. So, by writing for both, you should be able to build a balanced client base.
Another way to do this is by working with one or two companies not typically affected by the economy and they will be your foundation for income, and then choosing niches you love to add to your foundation. However you do it, balance is key.
Consider logical “emergency” cut backs
As a rule of thumb it is a good idea to plan for emergencies as well as regularly look at where you can cut expenses. I have about $500 in costs each month and that doesn’t include processing fees. This number is for subscription fees, software, general upkeep and replacement of my equipment. I work from home, so overhead costs like utilities, internet, etc., I don’t really consider.
When I look at where I can cut costs, I would likely look at things in this order:
- Extras: Extras I’m talking about is your morning trip to Starbucks, the donuts you grab at the gas station, and things like that.
- Travel expenses: Many writers travel to interview clients and take on the costs. I will do this locally, but I no longer travel outside my local area. When, or if, I do travel, I charge the client each week. With programs like Skype and Zoom, or even your Iphone it is no longer required to travel for an interview.
- Unneeded subscriptions: Keep in mind that I used unneeded. Otherwise I fully endorse these services. For example, paid programs like Grammarly are nice, but not needed. Grammarly has a free program that is good in the meantime and without a subscription you can save $30/month or $160 a year. Even transcription software like Trint which I love is not needed in difficult times and can save you $60-$120/month. By moving your word processing from a Microsoft Office subscription to Google Drive which is acceptable for most, you can knock out Microsoft’s $10/mo., Dropbox’s $10/mo., and various business management software programs for $50/mo. When I started using Google Drive, I decreased monthly costs by around $200/month.
- Work area: I work at home and over the years have usually had a dedicated office. Now, I use our sun room which also seconds as an art room where I can sketch and watercolor and the kids can paint, color, or draw. However, I would like to eventually have a second building to work in on our property and have even considered leasing an office in town. But, when it comes to saving money, if you lease an office you may consider moving everything to the house. It may be a little more difficult managing your time, but will save you money.
- Decrease employees or contract: Many of us who have been around awhile have been using contractors for some time. I’ve recently added most of my contractors as part time employees of which I have eight. I have two graphic designers for covers, one illustrator who helps with a variety of client requests from web to books, an interior designer for complicated book interiors, a transcriptionist if I am too busy, two additional editors if a client wants a second set of eyes, and a virtual assistant who handles a lot of tasks for me. While I added these people as part time employees, if I must suspend their work for a period of time they understand how the industry works and will continue at a limited basis until business picks up again. Except for illustration I already do much of this on my own, so I’ll need to find that time.
Add more skillsets
You may already do this and most writers do, but if you don’t you should. Writers naturally crossover into several different types of work, and if you have time, need the money, or are growing your business, it doesn’t hurt to learn add a few more paid opportunities to your list. For most writers, the learning curve for these tasks is low since you are likely doing them, or have in the past. Additional opportunities for writers are:
- Interior book layout
- Formatting and publishing ebooks
- Writing coach
- Website design
While writing may be slow, some of these other types of projects may be in demand.
Writing is a fluctuating business that is often affected by a negative trickle down economy when times are challenging. It’s important to be prepared ahead of time by managing your money, balancing your clients, knowing which cutbacks you can make, and offering more services.
I am a full-time freelance writer specializing in books, though I also write blogs, web-content, and handle several other types of projects. To see what I offer visit my rates page or contact me with specific queries and questions. I’d love to work with you, and if you know anyone else looking for a writer I offer a generous referral fee.